10QSB/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A

Amendment No. 1
 

(Mark One)

xQuarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2005

o Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from ____________ to ____________

Commission File Number:0-50894

Western Goldfields, Inc.

(Exact name of small business issuer as specified in its charter)

Idaho	38-3661016
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

 6520 E. Highway 78

Brawley, California 92227

(Address of principal executive offices)

(928) 341-0041

(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o

Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes oNo x

The number of shares of common stock outstanding as of: October 31, 2005 was 38,891,809.

Transitional Small Business Disclosure Format (Check one): Yes o No x

EXPLANATORY NOTE

Western Goldfields, Inc. (the "Company") is filing this Amendment on Form 10-QSB/A (the “Amendment”) to amend its quarterly report for the period ended September 30, 2005, as filed with the Securities and Exchange Commission (the “Commission”) on November 14, 2005 (the "Original Filing"). The purpose of this Amendment is to restate the Company’s financial statements to account for the conversion option of its Series A Preferred Stock as a “beneficial conversion feature” under EITF 98-5. Previously, the Company had not recognized any conversion benefit arising to holders of the Series A Preferred Stock when the Company granted an option to Romarco Minerals Inc. on August 25, 2005. The Company has since valued the conversion benefit arising to holders of the Series A Preferred Stock and warrants as $1,700,000 and has accounted for this as a deemed dividend as at the date of the trigger event, August 25, 2005. This resulted in the following changes for the nine months ended September 30, 2005: preferred stock deemed dividend increased $1,700,000, net loss to common shareholders increased by $1,700,000, basic and diluted net loss per share increased by $0.04, additional paid-in capital preferred increased by $1,700,000, and accumulated deficit increased by $1,700,000.

WESTERN GOLDFIELDS, INC.

Form 10-QSB

Index

PART I.FINANCIAL INFORMATION	1
Item 1. Financial Information	1
Consolidated Balance Sheets	1
Consolidated Statements of Operations and Comprehensive Income (Loss)	2
Consolidated Statement of Stockholders’ Equity	3
Consolidated Statements of Cash Flows	4
Notes to Consolidated Financial Statements	5
Item 2. Plan of Operations	9
Item 3. Controls and Procedures	14
PART II.OTHER INFORMATION	15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 6. Exhibits	16

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

Western Goldfields, Inc
CONSOLIDATED BALANCE SHEETS
		September 30,			December 31,
		2005			2004
		(Unaudited)			(Audited)
		Restated (Note 7)
ASSETS
CURRENT ASSETS
Cash	$	40,089		$	1,534,778
Accounts receivable		24,518			12,956
Inventories		846,800			1,574,249
Prepaid expenses		227,844			404,100
Deposits		-			4,050
TOTAL CURRENT ASSETS		1,139,251			3,530,133
Property, plant, and equipment, net of
accumulated depreciation		5,120,774			5,863,944
Construction in progress		10,853			-
Investments - remediation and reclamation		6,210,780			6,089,572
Investments - other		-			21,400
Long-term deposits		316,772			309,674
Long-term prepaid expenses		1,199,116			1,312,853
Deferred loan fees and expenses, net of amortization		9,869			208,501
TOTAL ASSETS	$	14,007,415		$	17,336,077
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	796,195		$	659,087
Accrued expenses		532,856			709,377
Accrued expenses - related party		24,325			38,043
Accrued interest		54,688			40,000
Loan payable, current portion		1,500,000			3,000,000
TOTAL CURRENT LIABILITIES		2,908,064			4,446,507
LONG-TERM LIABILITIES
Loan payable, net of current portion		-			-
Reclamation and remediation liabilities		6,358,994			6,358,994
TOTAL LONG-TERM LIABILITIES		6,358,994			6,358,994
PROVISION FOR FORWARD SALES DERIVATIVE MARKED -
TO-MARKET		233,320			678,867
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 25,000,000 shares authorized;
1,000,000 shares issued and outstanding		10,000			10,000
Common stock, $0.01 par value, 100,000,000 shares authorized;
38,891,809 and 38,721,810 shares issued
and outstanding, respectively		388,918			387,218
Additional paid-in capital		10,337,530			9,891,305
Additional paid-in capital preferred		2,175,000			475,000
Stock options and warrants		4,722,442			4,779,018
Accumulated deficit		(12,884,933	)		(9,003,365	)
Accumulated other comprehensive income (loss)		(241,920	)		(687,467	)
TOTAL STOCKHOLDERS' EQUITY		4,507,037			5,851,709
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	14,007,415		$	17,336,077

The accompanying notes are an integral part of these consolidated financial statements.

1

WESTERN GOLDFIELDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
	Three Months Ended September 30,							Nine Months Ended September 30,
		2005			2004			2005			2004
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
		Restated (Note 7)						Restated (Note 7)
REVENUES
Gross revenue	$	2,153,160		$	2,766,463		$	7,851,647		$	8,109,877
Royalties		(97,677	)		(251,181	)		(700,654	)		(837,616	)
Net revenue		2,055,483			2,515,282			7,150,993			7,272,261
COST OF GOODS SOLD
Mine operating costs		1,599,709			1,727,253			4,761,649			5,402,999
Mine site administration		376,097			505,496			1,079,553			1,455,396
Selling, transportation, and refining		8,423			11,646			28,712			76,987
Depreciation, depletion & amortization		290,931			554,070			954,678			1,042,449
Inventory adjustment		27,764			302,106			791,263			(354,457	)
Total cost of goods sold		2,302,924			3,100,571			7,615,855			7,623,374
GROSS PROFIT (LOSS)		(247,441	)		(585,289	)		(464,862	)		(351,113	)
EXPENSES
General and administrative		444,892			625,435			1,371,881			1,712,443
Exploration - other		26,424			40,448			143,222			230,011
Total expenses		471,316			665,883			1,515,103			1,942,454
OPERATING LOSS		(718,757	)		(1,251,172	)		(1,979,965	)		(2,293,567	)
OTHER INCOME (EXPENSE)
Interest income		40,150			33,223			133,263			112,120
Interest expense		(82,814	)		(72,991	)		(177,107	)		(259,696	)
Gain on sale of assets		-			-			26,334			27,132
Financing expenses		(22,794	)		-			(184,093	)		(10,734	)
Total other income (expense)		(65,458	)		(39,768	)		(201,603	)		(131,178	)
LOSS BEFORE INCOME TAXES		(784,215	)		(1,290,940	)		(2,181,568	)		(2,424,745	)
INCOME TAXES		-			-			-			-
NET LOSS		(784,215	)		(1,290,940	)		(2,181,568	)		(2,424,745	)
Preferred Stock Deemed Dividends		(1,700,000	)		-			(1,700,000	)		-
Net Loss to Common Stockholders		(2,484,215	)		(1,290,940	)		(3,881,568	)		(2,424,745	)
OTHER COMPREHENSIVE INCOME (LOSS)
Change in market value of securities		-			(17,800	)		-			(68,425	)
Provision for forward sales derivative marked-to-market		60,934			(262,217	)		445,547			349,591
Total other comprehensive income (loss)		60,934			(280,017	)		445,547			281,166
NET COMPREHENSIVE LOSS	$	(723,281	)	$	(1,570,957	)	$	(1,736,021	)	$	(2,143,579	)
BASIC AND DILUTED NET LOSS PER SHARE	$	(0.06	)	$	(0.03	)	$	(0.10	)	$	(0.06	)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING		38,891,809			38,277,699			38,836,700			38,236,003

The accompanying notes are an integral part of these consolidated financial statements.

2

WESTERN GOLDFIELDS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
	Preferred Stock			Common Stock						Additional			Stock Options						Other
	Number			Number						Paid-in			and			Accumulated			Comprehensive
	of Shares		Amount	of Shares			Amount			Capital			Warrants			Deficit			Income (Loss	)		Total
Balance, December 31, 2003	-	$	-	38,149,078		$	381,491		$	10,057,384		$	3,601,478		$	(4,584,552	)	$	(792,163	)	$	8,663,638
Options issued for directors' services	-		-	-			-			-			451,095			-			-			451,095
Options issued for officers' services	-		-	-			-			-			579,998			-			-			579,998
Options issued for services by related party	-		-	-			-			-			22,500			-			-			22,500
Options issued for services by employees	-		-	-			-			-			84,628			-			-			84,628
Options issued for services by consultants	-		-	-			-			-			19,600			-			-			19,600
Common stock issued for services	-		-	109,000			1,090			86,110			-			-			-			87,200
Common stock issued for penalty	-		-	444,231			4,442			(4,442	)		-			-			-			-
Return of capital for penalty	-		-	-			-			(257,152	)		-			-			-			(257,152	)
Extension of warrants due to expire	-		-	-			-			-			5,319			-			-			5,319
Common stock issued for exercise of warrants	-		-	20,000			200			9,400			(600	)		-			-			9,000
Preferred stock and warrants issued for cash	1,000,000		10,000	-			-			475,000			15,000			-			-			500,000
Retire treasury stock	-		-	(500	)		(5	)		5			-			-			-			-
Net loss for the year ended December 31, 2004	-		-	-			-			-			-			(4,418,813	)		-			(4,418,813	)
Other comprehensive income	-		-	-			-			-			-			-			104,696			104,696
Balance, December 31, 2004	1,000,000		10,000	38,721,809			387,218			10,366,305			4,779,018			(9,003,365	)		(687,467	)		5,851,709
Options issued for directors' services (unaudited)	-		-	-			-			-			98,780			-			-			98,780
Options issued for officers' services (unaudited)	-		-	-			-			-			170,502			-			-			170,502
Options issued for services by employees (unaudited)	-		-	-			-			-			28,504			-			-			28,504
Options issued for services by consultants (unaudited)	-		-	-			-			-			2,075			-			-			2,075
Common stock issued for services (unaudited)	-		-	170,000			1,700			66,800			-			-			-			68,500
Expiration of warrants & options (unaudited)	-		-	-			-			13,125			(13,125	)		-			-			-
Extension of warrants due to expire (unaudited)	-		-	-			-			-			5,333			-			-			5,333
Surrendered warrants - Newmont (unaudited)	-		-	-			-			366,300			(366,300	)		-			-			-
Options issued for directors' services (unaudited)	-		-	-			-			-			20,164			-			-			20,164
Expiration of warrants & options (unaudited)	-		-	-			-			-			(2,922	)		-			-			(2,922	)
Options issued for services by consultants (unaudited)	-		-	-			-			-			413			-			-			413
Net loss for the nine months ended September 30, 2005 (unaudited)	-		-	-			-			-			-			(2,181,568	)		-			(2,181,568	)
Deemed and accrued dividend on preferred stock (Restated Note 7)	-		-	-			-			1,700,000			-			(1,700,000	)		-			-
Other comprehensive income (unaudited)	-		-	-			-			-			-			-			445,547			445,547
Balance, September 30, 2005 (unaudited) (Restated Note 7)	1,000,000	$	10,000	38,891,809		$	388,918		$	12,512,530		$	4,722,442		$	(12,884,933	)	$	(241,920	)	$	4,507,037

The accompanying notes are an integral part of these consolidated financial statements.

3

WESTERN GOLDFIELDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
		Nine Months Ended September 30,
		2005			2004
		(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,181,568	)	$	(2,424,745	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation and depletion		743,170			515,844
Amortization of loan fees		198,632			526,605
(Gain) on sale of assets and investments		(26,334	)		(29,854	)
Interest accrued on investments - reclamation and remediation		(121,208	)		(90,260	)
Common stock, options and warrants issued for services		386,016			963,537
Exploration fees funded by stock		-			80,000
Cost of extending expiry date of warrants		5,333			-
Common stock adjustment		-			1
Changes in assets and liabilities:
Decrease (increase) in:
Restricted cash		-			3,897,229
Accounts receivable		(11,562	)		(580,435	)
Inventories		727,449			(264,041	)
Prepaid expenses		289,993			409,528
Deposits		(3,048	)		573,671
Increase (decrease) in:
Accounts payable		137,108			(347,679	)
Accrued expenses		(176,521	)		525,624
Accrued expenses - related parties		(13,718	)		(22,500	)
Accrued interest expense		14,688			(20,608	)
Net cash provided (used) by operating activities		(31,570	)		3,711,917
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment, including Construction
in Progress		(10,853	)		(854,562	)
Principal payments received on loan receivable		-			40,000
Proceeds from sale of investments		47,734			7,606
Purchase of assets		-			(15,764	)
Proceeds from sale of assets		-			407,231
Net cash provided (used) by investing activities		36,881			(415,489	)
CASH FLOWS FROM FINANCING ACTIVITIES
Deferred debt offering costs		-			(22,594	)
Payments on loans		(1,500,000	)		(2,250,000	)
Net cash provided (used) by financing activities		(1,500,000	)		(2,272,594	)
Change in cash		(1,494,689	)		1,023,834
Cash, beginning of period		1,534,778			373,500
Cash, end of period	$	40,089		$	1,397,334
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid	$	162,419		$	280,303
Income taxes paid	$	-		$	-

NON-CASH FINANCING AND
INVESTING ACTIVITIES:
Stock and warrants issued for services	$	391,349	$	7,200
Stock options issued for services	$	-	$	956,337
Exploration fees paid by issuance of stock	$	-	$	80,000
Stock issued for 2% penalty	$	-	$	4,464
Accounts payable increased for 2% penalty	$	-	$	256,069
Interest reinvested, investments - reclamation & remediation	$	-	$	90,260

The accompanying notes are an integral part of these consolidated financial statements.

4

WESTERN GOLDFIELDS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2005 AND 2004

NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such consolidated financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004. Operating results for the nine months ended September 30, 2005 may not be indicative of the results that may be expected for the year ending December 31, 2005.

Net Loss Per Share

Statement of Financial Accounting Standards No. 128, “Earnings per Share,” requires dual presentation of basic earnings per share (“EPS”) and diluted EPS on the face of all income statements issued after December 15, 1997, for all entities with complex capital structures. Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. For the periods ended September 30, 2005 and 2004, the effect of the Company’s outstanding options and common stock equivalents would have been anti-dilutive. Accordingly, only basic EPS is presented.

NOTE 2 - GOING CONCERN

The Company’s continued existence and plans for future growth depend on its ability to obtain the capital necessary to operate through the generation of revenue and the issuance of additional debt or equity. The Company may need to raise additional capital to fund normal operating costs and exploration and development efforts. If the Company is not able to generate sufficient revenues and cash flows or obtain additional or alternative funding, it will be unable to continue as a going concern. As disclosed in the report of independent auditors on the Company’s financial statements in the Company’s Annual Report or Form 10-KSB for the fiscal year ended December 31, 2004, the Company’s losses from operations, lack of sufficient revenue to support operational cash flows and working capital deficit raise substantial doubt regarding its ability to continue as a going concern.

5

NOTE 3 - INVENTORIES

Inventories consist of the following:

		September 30, 2005		December 31, 2004
		(unaudited)
Bullion	$	-	$	-
Metal-in-process		684,797		1,476,058
Supplies		162,003		98,191
	$	846,800	$	1,574,249

Metal-in-process inventory contained approximately 1,706 and 4,004 ounces of gold as of September 30, 2005, and December 31, 2004, respectively.

	September 30, 2005			December 31, 2004
	(unaudited)
Beginning Metal-in Process Inventory	$	1,476,058		$	1,634,966
Operating Costs for the Period		5,869,916			8,960,614
Depreciation, Depletion & Amortization for the Period		954,678			1,413,646
Less Cost of Metal Sales		(7,615,855	)		(10,533,168	)
	$	684,797		$	1,476,058

NOTE 4 - PROPERTY AND EQUIPMENT

The following is a summary of property, equipment, and accumulated depreciation at September 30, 2005 and December 31, 2004:

		September 30, 2005			December 31, 2004
		(unaudited)
Buildings	$	3,550,000		$	3,550,000
Equipment		3,465,323			3,465,323
		7,015,323			7,015,323
Less accumulated depreciation		(1,894,549	)		(1,151,379	)
Net Property and Equipment	$	5,120,774		$	5,863,944

Depreciation expense for the nine months ended September 30, 2005 and the year ended December 31, 2004 was $743,170 and $1,151,379, respectively. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the present value of future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.

6

NOTE 5 - STOCK OPTIONS AND WARRANTS

The Company estimates the fair value of options and warrants using the Black-Scholes Option Price Calculation. The Company used the following assumptions in estimating fair value: the risk-free interest rate of 4%, volatility ranging from 20% to 30%, and the expected life of the options and warrants from two to ten years. The Company also assumed that no dividends would be paid on common stock. Some warrants may be exercised under the cash-less method requiring a corresponding reduction in the amount of common stock issued in relationship to its cash value at the time the warrants are exercised.

In the third quarter of 2005, the Company did not grant any options.

The following is a summary of stock options:

	Shares			Weighted Average Exercise Price		Weighted Average Fair Value
Balance January 1, 2005	5,023,084		$	0.78
Granted	1,673,500			0.41
Expired	(91,334	)		-
Exercised	-			-
Outstanding at September 30, 2005	6,605,250		$	0.70
Exercisable at September 30, 2005	5,698,500		$	0.70
Weighted average fair value of options granted during the nine months ended September 30, 2005					$	0.41

The above stock options have been issued under an equity compensation plan approved by the directors but not by the shareholders.

NOTE 6 - MATERIAL EVENTS

On September 21, 2005, Western Mesquite Mines, Inc. (the “Borrower”), a wholly owned subsidiary of the Company, Calumet Mining Company, a wholly-owned subsidiary of the Company, and the Company entered into a Supplemental Agreement (the “Supplemental Agreement”) amending certain terms of the Facility Agreement (the “Facility Agreement”) with RMB International (Dublin) Limited (the “Lender”) and RMB Resources Limited (together with the Lender, “RMB”). Pursuant to the terms of the Supplemental Agreement, RMB agreed that it would not demand that the Borrower pay the base repayment amount otherwise due on July 31, 2005, and that the Borrower will make such payment on October 30, 2005.

In addition, the Supplemental Agreement amended the Facility Agreement by providing that a default under the Facility Agreement shall occur if, prior to the final repayment date under the Facility Agreement, the preliminary merger agreement between the Company and Romarco Minerals, Inc. is terminated, either the Company or Romarco announces that the merger is not proceeding or a definitive merger agreement between the Company and Romarco was not entered into before September 15, 2005. On September 21, 2005 the Supplemental Agreement was amended such that the date by which the definitive merger agreement between the Company and Romarco had to be executed in order to avoid a default was extended to October 15, 2005.

On September 30, 2005, the Company, Romarco Minerals Inc. (“Romarco”) and Romarco Merger Corporation (“Merger Sub”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation  and being a wholly-owned subsidiary of Romarco (the “Merger”).  On the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), and as a result thereof, each share of common stock, par value $0.01 per share, of the Company (“Western Common Stock”) will be converted into the right to receive two shares of common stock, no par value, of Romarco (the “Merger Consideration”). Each share of Series “A-1” Convertible Preferred Stock of the Company issued and outstanding immediately prior to the Effective Time shall be canceled and shall be converted into shares of Western Common Stock, which shall then be cancelled and converted into the right to receive the Merger Consideration.

NOTE 7. CORRECTION OF ERROR

Subsequent to release of its audited financial statements for the year ended December 31, 2005, the Company has determined that the conversion option of its Series A Preferred stock constitutes a contingent "beneficial conversion feature" in terms of EITF 98-5. Previously, the Company had not recognized any conversion benefit arising to holders of the Series A Preferred stock when the Company granted an option to Romarco Minerals Inc. on August 25, 2005. The Company has valued the conversion benefit arising to holders of the Series A Preferred stock and warrants as $1,700,000 and has accounted for this as a deemed dividend as at the date of the trigger event, August 25, 2005. The Company has revised its financial statements for the three months and nine months ended September 30,2005 to reflect this error correction.

	September 30, 2005
	As Originally
	Reported			As Restated
Financial Position:
Additional paid-in capital preferred	$	475,000		$	2,175,000
Accumulated deficit	$	(11,184,933	)	$	(12,884,933	)

	Three months ended
	September 30, 2005
	As Originally
	Reported			As Restated
Statements of Operations and Comprehensive Loss
Preferred stock deemed dividend	$	-		$	(1,700,000	)
Net loss to common shareholders	$	(784,215	)	$	(2,484,215	)
Basic and diluted net loss per share	$	(0.02	)	$	(0.06	)

	Nine months ended
	September 30, 2005
	As Originally
	Reported			As Restated
Statements of Operations and Comprehensive Loss
Preferred stock deemed dividend	$	-		$	(1,700,000	)
Net loss to common shareholders	$	(2,181,568	)	$	(3,881,568	)
Basic and diluted net loss per share	$	(0.04	)	$	(0.10	)

NOTE 8 - SUBSEQUENT EVENTS

On October 25, 2005 Thomas Mancuso, President, CEO and a Director, and Thomas Callicrate, Vice-President Exploration and a Director, resigned from their respective positions with the Company effective October 21, 2005. Douglas Newby, previously Executive-Vice President and a Director, was appointed Chairman of the Board, President and CEO with effect from October 21, 2005. Also on October 25, 2005, James Mancuso, Chairman of the Board of the Company stepped down although he remains in independent Director, and Mr. Newby was elected by the Board to be Chairman.

7

On October 28, 2005 the Company and RMB entered into a verbal agreement whereby the final payment of $1,500,000 due under the Facility Agreement would be extended until April 28, 2006 subject to certain conditions including but not limited to the achievement of certain milestones in connection with the merger between the Company and Romarco to be executed in a Second Supplemental Agreement amending certain terms of the Facility Agreement (the “Facility Agreement”) with RMB International (Dublin) Limited (the “Lender”) and RMB Resources Limited (together with the Lender, “RMB”).

8

Item 2.Plan of Operation

Overview

We are an independent precious metals production and exploration company with operations focused in the western United States. In early 2003 we began exploring the possibility of acquiring the Mesquite Mine from a subsidiary of Newmont Mining Corporation. In July 2003, we issued 111,859 shares of our common stock to Newmont Mining Corporation for an exclusive option to purchase the Mesquite Mine. In November 2003, the purchase of the Mesquite Mine from Newmont Mining Corporation was completed for:

·    assumption of reclamation responsibility and provision of approximately $7.8 million in reclamation bonds to various governmental authorities; which have since been reduced to $7.0 million;

·    additional shares of our common stock and warrants to purchase our common stock. As a result of the transaction, Newmont Mining Corporation acquired 3,454,468 shares of our common stock and warrants to purchase an additional 8,091,180 shares of our common stock;

·    a perpetual net smelter return royalty ranging from 0.5% to 2.0% on any newly-mined ore; and

·    a net operating cash flow royalty equal to 50% of the proceeds received, minus certain operating costs, capital expenses and other allowances and adjustments, from the sale of ore or products derived from ore that was placed on the heap leach pads as of the acquisition date.

The purchase included all existing infrastructure and permits necessary to operate the mine.

In November 2003, we obtained a $6 million credit facility in connection with the acquisition of the Mesquite Mine. In addition, in November - December 2003, we conducted a private placement of 12,500,000 units consisting of two shares of our common stock and warrants to purchase an additional share of our common stock, which resulted in aggregate net proceeds to us of approximately $9.1 million. The warrants are exercisable for a period of two years from the date of issuance for a purchase price of $1.00 per share, subject to anti-dilution adjustments.

Production from the Mesquite Mine operations during 2004 resulted in the sale of 27,357 ounces of gold. Total gold production (poured into doré bars) from the Mesquite Mine during the first six months of 2005 amounted to 12,532 ounces. Our management at the Mesquite Mine continues to optimize production schedules and leach cycle rotation in order to match gold production and sales to our forward sales commitments. During the first two quarters of 2005 the average poured gold production was 979 ounces above budget.

A bonding plan is in place through American Home Assurance Company for the operation of the Mesquite Mine whereby American Home Assurance Company provides a series of environmental insurance programs designed to cap sponsor, vendor and partner liability for reclamation and closure costs, including cost overruns that may be a result of unexpected contamination, increased costs and legislative changes. The insurance company charged an initial premium based on their estimate of the net present value of the completion of the reclamation, plus an annual fee. In exchange, the insurance company insures the reclamation and closure process and provides the surety bond. We plan to make claims against the insurance policy and funds will be released to pay for the reclamation and closure expenditures as they are incurred. Any revenue from the sale of material is to the account of the project sponsor and any profits from cost savings in the actual program versus the bonded amount are released to the sponsors when the project bonding is released.

There are two phases of the Mesquite Mine Expansion Project. The first phase is comprised of the continuing leaching operations of minerals inventoried on the pads prior to September 2001. Since we took over operations, we have implemented various programs directed at increasing recovery from the pads. These include optimizing solution management procedures to control flow and application rates as well as modifications to the solution chemistry. Over the course of the past year and into this year, our management at the mine has been able to optimize solution management within the re-leaching program. Additional modifications have been made to site infrastructure including re-commissioning of the gold refinery, construction of reagent addition pumping stations, and installation of improved flow monitoring systems.

For the second phase of the Mesquite Mine Expansion Project, we intend to develop a detailed mine plan and model to be used to conduct a definitive, “bankable” feasibility study of the expanded operation. We plan to implement this work during the second half of 2005 and the first half of 2006. Additional exploration drilling may be required to validate the previous operator's data.

During 2004 we evaluated the expansion of the Big Chief open pit to the north, where a mineralized resource was estimated to contain 19 million tons of mineralized material. An internal scoping study was carried out to determine the viability of mining this zone on a stand-alone basis. Preliminary conclusions suggest that the optimum scenario for launching the expansion of the Mesquite operations will be through the initiation of mining activities on as large a scale as possible.

9

We are also engaged in the acquisition of advanced-level precious metal properties throughout the western United States, primarily Nevada. We believe that this area may have some of the most important geological terrain conducive to hosting world-class economic gold deposits. Our goal is to obtain precious metal projects that are favorable for project development and mine production in a cost effective, efficient manner.

We have continued with our strategy of contacting peer companies to explore joint venture possibilities and opportunities with respect to potential additional minerals developments. We have previously entered into non-binding letters of intent for joint venture arrangements with respect to the Lincoln Hill Property, and the Mining Joint Venture Agreement on the Sunny Slope Gold Project with 321 Gold. The Sunny Slope agreement covers 16 claims in Mineral County, Nevada, plus an area of interest including all lands within approximately one mile beyond the boundary of the claims.

On May 12, 2005, we filed an application and preliminary prospectus to have our common stock listed on the Toronto Stock Exchange. We have diligently advanced the application and have responded to various queries from the exchange. The Toronto Stock Exchange put a hold on finalizing the application pending the outcome of the merger with Romarco Minerals, Inc.

In June 2005, Romarco Minerals, Inc. entered into separate binding agreements with us and U.S. Gold Corporation to combine the companies and create an emerging intermediate gold producer with a strong portfolio of exploration projects. U.S. Gold later terminated its agreement with Romarco Minerals.

On September 30, 2005, the Company and Romarco Minerals, Inc. (“Romarco”) entered into an Agreement and Plan of Merger and Reorganization. The merger, which was approved by the boards of directors of Western Goldfields and Romarco, will combine the two companies to create an emerging gold producer with what we believe to be a strong pipeline of exploration projects.

Under the terms of the merger agreement, Romarco will issue two (2) shares of its common stock for shares of every one (1) outstanding share of Western Goldfields common stock.

The transaction is subject to customary closing conditions, regulatory approval and shareholder approval. We expect the shares of Romarco to be listed on the TSK Exchange following the merger.

The proposed transaction will combine Western Goldfields’ Mesquite Mine, which is currently producing gold from ore placed on the existing pads from the previous owner, with Romarco’s portfolio of advanced stage exploration projects in North and South America.

Results of Operations

Three Months Ended September 30, 2005 Compared to the Three Months Ended September 30, 2004

During the three months ended September 30, 2005, we had net revenues of $2,055,483 from the sale of 5,244 ounces of gold produced from the Mesquite Mine. During the three month period ended September 30, 2004, we had net revenue of $2,515,282 from the sale of 7,008 ounces of gold.

Mine operating costs were $1,599,709 in the three months ended September 30, 2005 compared to $1,727,253 for the three months ended September 30, 2004. Mine site administration was $376,097 in the three months ended September 30, 2005 compared to $505,496 in the three months ended September 30, 2004. Depreciation, depletion and amortization were $290,931 in three months ended September 30, 2005 compared with $554,070 in the three months ended September 30, 2004. After a decrease adjustment to the inventory account of $27,764 in the three months ended September 30, 2005 compared with an adjustment in the three months ended September 30, 2004 to increase inventory by $302,106, total cost of goods sold was $2,302,924 in the three months ended September 30, 2005 compared to $3,100,571 in the three months ended September 30, 2004. We reported a gross loss of $247,441 for the three months ended September 30, 2005 compared to a gross loss of $585,289 in the three months ended September 30, 2004.

We incurred exploration expenses of $26,424 during the three months ended September 30, 2005 compared with $40,448 in the three months ended September 30, 2004. General and administrative expenses decreased to $444,892 during the three months ended September 30, 2005, compared with $625,435 in the three months ended September 30, 2004 due to a decrease in staff and corporate overhead. We reported an operating loss of $718,757 during the three months ended September 30, 2005 compared to an operating loss of $1,251,172 in the three months ended September 30, 2004.

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Other income/expense totaled $(65,458) during the three months ended September 30, 2005 compared with other income/expense of $(39,768) in the three months ended September 30, 2004. We reported a net loss of $784,215 for the three months ended September 30, 2005 compared with a net loss of $1,290,940 for the three months ended September 30, 2004.

Preferred stock deemed dividends of $1,700,000 arose from the granting on August 25, 2005 to Romarco of an option to purchase, under certain circumstances, 19.9% of the shares of the Company at a price of $0.16 per share. This resulted in a reduction in the conversion prices applicable to the Company’s Series A Preferred stock which constitutes a “beneficial conversion feature” in terms of EITF 98-5, which has been valued and accounted for as a deemed dividend.

Nine Months Ended September 30, 2005 Compared to the Nine Months Ended September 30, 2004.

During the nine months ended September 30, 2005, we had net revenues of $7,150,993 from the sale of 19,336 ounces of gold produced from the Mesquite Mine. During the nine month period ended September 30, 2004, we had net revenue of $7,272,261 from the sale of 20,687 ounces of gold.

Mine operating costs were $4,761,649 in the nine months ended September 30, 2005 compared to $5,402,999 for the nine months ended September 30, 2004. During the first quarter and part of second quarter of 2004 we had an outside contractor managing the mine as well as temporary employees. Mine site administration was $1,079,553 in the nine months ended September 30, 2005 compared to $1,455,396 in the nine months ended September 30, 2004. Depreciation, depletion and amortization were $954,678 in nine months ended September 30, 2005 compared with $1,042,449 in the nine months ended September 30, 2004. After a increase adjustment to the inventory account of $791,263 in the nine months ended September 30, 2005 compared with an adjustment in the nine months ended September 30, 2004 to decrease inventory by $354,457, total cost of goods sold was $7,615,855 in the nine months ended September 30, 2005 compared to $7,623,374 in the nine months ended September 30, 2004. We reported a gross loss of $464,862 for the nine months ended September 30, 2005 compared to a gross loss of $351,113 in the nine months ended September 30, 2004.

We incurred exploration expenses of $143,222 during the nine months ended September 30, 2005 compared with $230,011 in the nine months ended September 30, 2004. General and administrative expenses decreased to $1,371,881 during the nine months ended September 30, 2005, compared with $1,712,443 in the nine months ended September 30, 2004. We reported an operating loss of $1,979,965 during the nine months ended September 30, 2005 compared to an operating loss of $2,293,567 in the nine months ended September 30, 2004.

Other income/expense totaled $(201,603) during the nine months ended September 30, 2005 compared with other income/expense of $(131,178) in the nine months ended September 30, 2004. We reported a net loss of $2,181,568 for the nine months ended September 30, 2005 compared with a net loss of $2,424,745 for the nine months ended September 30, 2004. We also reported a net loss to common stockholders of $3,881,568 for the nine months ended September 30, 2005 compared with a net loss to common stockholders of $2,424,745 for the nine months ended September 30, 2005.

Preferred stock deemed dividends of $1,700,000 arose from the granting on August 25, 2005 to Romarco of an option to purchase, under certain circumstances, 19.9% of the shares of the Company at a price of $0.16 per share. This resulted in a reduction in the conversion prices applicable to the Company’s Series A Preferred stock which constitutes a “beneficial conversion feature” in terms of EITF 98-5, which has been valued and accounted for as a deemed dividend.

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Liquidity and Capital Resources; Recent Developments

As of September 30, 2005 there is limited historical financial information upon which to base an evaluation on our performance. We began our operation of the Mesquite Mine in November 2003. As a result, our operating profile and the reasons for fluctuation in the expense amounts between the periods prior to and following November 2003 changed significantly. Prior to November 2003, we primarily concentrated our business on the acquisition of propertiesand raising funds to advance our business. After our acquisition of the Mesquite Mine, we intend to dedicate the majority of our expenditures to retrieve gold from heap leach pads or from new mining and processing at the Mesquite Mine.

The expansion of operations at the Mesquite Mine, and plans for future growth depend on our ability to obtain additional capital through the issuance of additional debt or equity and through the generation of revenue. Operating cash flows commenced in the first quarter of 2004, and therefore, we have no historical comparative performance data.

As of September 30, 2005, the cash balance was $40,089. As of September 30, 2005, we had an accumulated deficit of $12,884,933. As of September 30, 2005, we had a working capital deficit of $1,768,813.

In November 2003, Western Mesquite Mines, Inc., our wholly-owned subsidiary, entered into a $6 million credit facility agreement with RMB International (Dublin) Limited and RMB Resources Limited. We guaranteed the obligations of Western Mesquite Mines, Inc. under the facility agreement and issued warrants to purchase 780,000 shares of our common stock to RMB Resources Limited. The warrants are exercisable for a period of three years from the date of the facility agreement for a purchase price of $1.00 per share, subject to adjustments.

Western Mesquite Mines, Inc. commenced making principal and interest payments under this loan in January 2004. Western Mesquite Mines, Inc. made six principal payments under the facility agreement of $750,000 at the end of January, April, July and October 2004 and at the end of January and April 2005. Borrowings under the facility agreement bear interest at a base interest rate of LIBOR plus 6 percent. The facility agreement also provides for contingent additional interest if cash flows from the gold production from the materials currently located on the heap facilities in the project areas described in the facility agreement exceed certain defined levels. No additional interest has been paid under this facility to date.

Western Mesquite Mines, Inc. may prepay all or part of the outstanding principal on any quarterly date after January 2004 and before the final repayment date in an amount of not less than $200,000. If Western Mesquite Mines, Inc. does not make a quarterly payment, it must pay an additional amount of not less than $750,000 on the next quarterly payment date as a reduction in principal. It is an event of default under the facility agreement if Western Mesquite Mines, Inc. fails to pay an amount of not less than $750,000 on two consecutive quarterly payment dates. In addition, Western Mesquite Mines, Inc. must pay 50% of its excess cash flow for each quarter as a prepayment of principal.

Our credit facility also restricts us from making expenditures that have not been approved by the credit facility agent. Under the facility agreement, we have agreed with the credit facility agent on a corporate budget as well as a detailed operating budget for the Mesquite Mine. We provide the credit facility agent with monthly reports that reconcile the actual results with that budget. If we wish to make material expenditures not agreed to in the budget, we have to seek the credit facility agent’s prior approval. In particular, the facility agreement provides that we may not dispose of, or create any encumbrance over, any assets other than in the normal course of business, or incur indebtedness in excess of $250,000.

On August 2, 2005, we and Western Mesquite Mines, Inc. (the “Borrower”), our wholly owned subsidiary, and Calumet Mining Company, our wholly-owned subsidiary, entered into a Supplemental Agreement (the “Supplemental Agreement”) amending certain terms of the facility agreement with RMB International (Dublin) Limited (the “Lender”) and RMB Resources Limited (together with the Lender, “RMB”). Pursuant to the terms of the Supplemental Agreement, RMB agreed that it would not demand that the Borrower pay the base repayment amount otherwise due on July 31, 2005, and that the Borrower will make such payment on October 30, 2005.

In addition, the Supplemental Agreement amended the facility agreement by providing that a default under the facility agreement shall occur if, prior to the final repayment date under the Facility Agreement, the preliminary merger agreement between the Company and Romarco Minerals, Inc. is terminated, either the Company or Romarco announces that the merger is not proceeding or a definitive merger agreement between the Company and Romarco was not entered into before September 15, 2005. On September 21, 2005 the Supplemental Agreement was amended such that the date by which the definitive merger agreement between the Company and Romarco had to be executed in order to avoid a default was extended to October 15, 2005.

On October 28, 2005 we entered into a verbal agreement with RMB whereby the final payment of $1,500,000 due under the facility agreement would be extended until April 28, 2006 subject to certain conditions, including but not limited to the achievement of certain milestones in connection with our proposed merger with Romarco to be executed in a Second Supplemental Agreement amending certain terms of the facility agreement.

In January 2004, we closed a private placement we conducted in November - December 2003 of 12,500,000 units at a price of $0.80 per unit. Units consisted of one share of our common stock, a warrant to purchase one share of our common stock exercisable for two years at an exercise price of $1.00 per share and the right to receive one share of our common stock issued in escrow under certain circumstances. Each purchaser of a unit in the private placement was entitled to receive the additional escrow share per unit purchased if we did not close a transaction with another company before February 28, 2004 which resulted in the listing of the resulting company’s securities on the Toronto Stock Exchange. We entered into a letter of intent with Tandem Resources, Ltd. for a potential merger transaction to satisfy this condition of the private placement, but we terminated the letter of intent in February 2004 due to potential tax and regulatory issues associated with the transaction. The escrow agent released the escrowed shares to the purchasers in March 2004.

12

We also agreed to register under the Securities Act of 1933, as amended, the shares of common stock issued in the private placement, issued upon exercise of the warrants issued in the private placement and shares of any resulting entity in a merger transaction. In addition, we agreed under certain circumstances, upon the request of the holders, to include those shares of our common stock in a securities registration that we undertake on our behalf or on behalf of others by June 30, 2004. In the agreements, we agreed to pay certain amounts to the holders based on 2% of the average closing sale price of our common stock for each 30 days following June 30, 2004 in which the registration statement is not effective. The Securities and Exchange Commission declared our SB-2 registration statement effective on August 12, 2004, and these amounts totaled $479,267. We have offered to satisfy the payment of these amounts with shares of our common stock and have issued 446,398 shares of our common stock to these holders to satisfy $223,299 of this obligation.

In December 2004, we closed a private placement of 1,000,000 shares of our Series "A-1" Convertible Preferred Stock and warrants to purchase up to 500,000 shares of our Series "A-1" Convertible Preferred Stock for an aggregate purchase price of $500,000.   We entered in a registration rights agreement with the investor whereby we agreed to prepare and file a registration statement with the Securities and Exchange Commission with respect to the common stock issuable upon conversion of the Series "A-1" Convertible Preferred Stock.  We filed a registration statement on Form SB-2 in January 2005.

Except for the Mesquite Mine, none of our properties has commenced commercial production. While we may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of our properties, there is no assurance that any such activity will generate funds that will be available for operations.

Our operations of the Mesquite Mine began in November 2003. We accumulated metal-in-process inventory during 2003 and produced 2,593 ounces of poured gold during operations in December 2003, produced an additional 27,398 ounces and sold 27,357 ounces during 2004, and kept in inventory 5,593 ounces at an outside refiner for deliveries of gold under our forward sales contract at the end of January 2005. Production for the nine months ended September 30, 2005 was 867 ounces higher than budget. We have implemented programs at the mine to reduce and control monthly expenditures with the objective of reducing the operating cash cost.

Sales of metal will be recorded at both the spot price and under the forward sales agreement in 2004, with the related costs charged from inventory to cost of goods sold.

As part of our credit facility agreement we entered into a cash flow hedging program under which we sold forward through RMB International (Dublin) Limited 26,399 ounces of gold at $382.95 per ounce, or approximately 50% of expected production of gold from the heaps. These ounces were scheduled for delivery beginning January 30, 2004 and every three months thereafter until October 30, 2005 as follows: 2,380, 4,368, 3,733, 3,324, 3,577, 3,523, 2,897 and 2,597 ounces. On each of the settlement dates, we settle in cash for the difference between the sales price and the hedged price times the number of scheduled ounces to be sold for that three month period. Unlike a conventional hedge, we were not required to put up collateral, and we are not subject to any margin requirements. Since we sold gold for more than the hedged price in the following periods and made the following payments under the hedging program and reduced revenue by corresponding amounts: $64,379 as of January 31, 2004; $24,242 as of April 30, 2004; $31,544 as of July 31, 2004; $141,602 as of October 29, 2004, $185,838 as of January 29, 2005, $140,218 as of April 29, 2005, and $133,407 as of July 31, 2005. As of July 31, 2005, we paid approximately $721,230 to RMB International (Dublin) Limited under this agreement and had 2,597 ounces of gold outstanding subject to this hedge facility.

We have a long-term strategy of selling our gold production at prevailing market prices. Under our risk management policy, we periodically review our exposure under this hedge and adjust our risk profile accordingly. Furthermore, to manage a portion of our revenue risk and provide additional comfort to the lender under our facility agreement, we entered into this forward sale. We believe this program to be effective for its purpose and do not expect that it will be ineffective during the hedge period.

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Our calculation of the derivative effects of the forward sales contract as of September 30, 2005 and December 31, 2004 is as follows:

		September 30, 2005			December 31, 2004
Afternoon Fix on the London Metal Exchange	$	437.10		$	438.00
Undelivered ounces of gold sold forward		2,597			12,594
(Gain) Loss recognized as other comprehensive income		($445,547	)	$	(176,921	)
Value of provision for forward sales derivative - marked-to-market	$	233,320		$	678,867

We are currently spending approximately $120,000 per month for our ongoing corporate functions. In addition, we plan to spend between $300,000 and $500,000 over the next 12 months to advance our current portfolio of properties or to acquire and advance other strategically important projects. We have not budgeted specific amounts for exploration or development for any of our properties.

Our credit facility restricts us from making expenditures that have not been approved by the credit facility agent. We may need to obtain additional funds, either through equity offerings or debt, to fund our general and administrative expenses, make the advance royalty payments required on our properties and conduct exploration programs on our properties. Failure to obtain such additional financing will result in the loss by us of our interests in our mineral properties. These conditions raise doubt as to our ability to continue as a going concern. Management’s plans for the continuation of our company as a going concern include financing our operations through issuance of our common stock and the eventual profitable development of our mining properties. We have commenced the process for an offering of our securities in Canada and the listing of our common stock on the Toronto Stock Exchange. The terms of the offering, including the amount to be raised, have not been finalized. There are no assurances, however, with respect to the future success of these plans. The financial statements do not contain any adjustments which might be necessary if we are unable to continue as a going concern.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Forward Looking Statements

This report contains several “forward-looking statements.” Forward-looking statements are those that use words such as “believe,”  “expect,”  “anticipate,”  “intend,”  “plan,”  “may,”  “will,”  “likely,”  “should,”  “estimate,”  “continue,”  “future” or other comparable expressions. These words indicate future events and trends. Forward-looking statements are our current views with respect to future events and financial performance. These forward-looking statements are subject to many assumptions, risks and uncertainties, many of which are beyond our control, that could cause actual results to differ significantly from historical results or from those we anticipated. The most significant risks are detailed from time to time in our filings and reports with the Securities and Exchange Commission.

Item 3.Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Accounting Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Principal Executive Officer and Principal Accounting Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.Legal Proceedings

None

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

On October 21, 2005 Thomas K. Mancuso, President/CEO and Director, tendered his resignation effective October 21, 2005.

On October 25, 2005 Thomas E. Callicrate, Vice President of Exploration and Director, tendered his resignation effective October 21, 2005.

On October 25, 2005, James D. Mancuso, Chairman of the Board of Directors, tendered his resignation as Chairman effective October 21, 2005. Mr. Mancuso still remains on the Board of Directors of the Company.

On October 25, 2005, Douglas J. Newby, was appointed as the Company’s President/CEO and Chairman of the Board of Directors, effective October 21, 2005. Mr. Newby ceased to serve as Executive Vice President under an existing consulting agreement the Company and Proteus Capital Corp. of which he is President, entered into April 1, 2003. The terms of his new employment have yet to be agreed.

On October 28, 2005 we entered into a verbal agreement with RMB whereby the final payment of $1,500,000 due under the facility agreement would be extended until April 28, 2006 subject to certain conditions, including but not limited to the achievement of certain milestones in connection with our proposed merger with Romarco to be executed in a Second Supplemental Agreement amending certain terms of the facility agreement.

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Item 6.Exhibits

Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Accounting Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Accounting Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WESTERN GOLDFIELDS, INC.
Date: August 14, 2006	/s/ Raymond Threlkeld
	Raymond Threlkeld President and Chief Executive Officer Principal Executive Officer

EXHIBIT INDEX

Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Accounting Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Accounting Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Raymond Threlkeld, President and Chief Executive Officer of Western Goldfields, Inc., certify that:

1.I have reviewed this quarterly report on Form 10-QSB/A for the quarter ended September 30, 2005 of Western Goldfields, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5.The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: August 14, 2006	/s/ Raymond Threlkeld
	Raymond Threlkeld President and Chief Executive Officer Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Brian Penny, Chief Financial Officer of Western Goldfields, Inc., certify that:

1.I have reviewed this quarterly report on Form 10-QSB/A for the quarter ended September 30, 2005 of Western Goldfields, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5.The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Dated: August 14, 2006	/s/ Brian Penny
	Brian Penny
	Chief Financial Officer Principal Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PERIODIC REPORT PURSUANT TO SECTION 906

OF SARBANES-OXLEY ACT OF 2002

I, the undersigned Raymond Threlkeld, President and Chief Executive Officer of Western Goldfields, Inc. (the “Company”), do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.The Quarterly Report on Form 10-QSB/A of the Company for the quarter ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2006	/s/ Raymond Threlkeld
	Raymond Threlkeld
	President and Chief Executive Officer Principal Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF PERIODIC REPORT PURSUANT TO SECTION 906

OF SARBANES-OXLEY ACT OF 2002

I, the undersigned Brian Penny, Chief Financial Officer of Western Goldfields, Inc. (the “Company”), do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.The Quarterly Report on Form 10-QSB/A of the Company for the quarter ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2006	/s/ Brian Penny
	Brian Penny
	Chief Financial Officer Principal Accounting Officer