UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2009

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 000-51718

COLORADO GOLDFIELDS INC.

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

Nevada	20-0716175
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10920 W. Alameda Avenue, Suite 207, Lakewood, Colorado, 80226, USA
(Address of principal executive offices)

303-984-5324
(Issuer’s telephone number, including area code)

N/A
(Former Name, Former Address if Changed Since last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PROCEEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Shares Outstanding at July 9, 2009
Class A Common Stock, $0.001 Par Value	400,358,627
Class B Common Stock (Restricted), No Par Value	35,509,705

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION	1
Item 1. Financial Statements	1
Balance Sheets	1
Statements of Operations	2
Statements of Cash Flows	3
Statements of Stockholders’ Equity (Deficit)	4
Notes to the Unaudited Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 4T. Controls and Procedures	26
PART II—OTHER INFORMATION	27
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3. Defaults Upon Senior Securities	30
Item 4. Submission of Matters to a Vote of Security Holders	30
Item 5. Other Information	30
Item 6. Exhibits and Financial Statement Schedules	31
Exhibit Index	31
SIGNATURES	33
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Colorado Goldfields Inc. (An Exploration Stage Company)

Balance Sheets

	May 31,			August 31,
	2009			2008
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	4,344		$	134,856
Prepaid expenses and other		10,656			79,656
Total Current Assets		15,000			214,512
Non-Current Assets
Property, plant and equipment (Note 3)		1,782,297			1,819,834
Restricted cash (Note 3)		318,154			318,154
Other		13,520			13,520
Total Non-Current Assets		2,113,971			2,151,508
Total Assets	$	2,128,971		$	2,366,020
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable (Note 8)	$	352,376		$	398,671
Accrued liabilities (Note 8)		66,665			38,236
Notes payable, including accrued interest — related parties (Note 4)		255,333			—
Promissory note payable, including accrued interest (Note 5)		140,878			—
Mortgage notes payable (Note 3)		650,000			650,000
Total Current Liabilities		1,465,252			1,086,907
Non-Current Liabilities
Asset retirement obligation (Note 3)		561,660			525,000
Total Non-Current Liabilities		561,660			525,000
Total Liabilities		2,026,912			1,611,907
Contingencies and Commitments (Notes 3, 4, 5 ,6, 8, 9, 10 and 11)
Stockholders’ Equity (Note 7)
Class A common stock, 1,185,000,000 shares authorized, $0.001 par value; 360,462,427 and 135,726,120 shares issued and outstanding, respectively		302,201			77,465
Class B common stock, 500,000,000 shares authorized, no par value; 28,307,598 and zero shares issued and outstanding		—			—
Additional paid in capital		8,384,785			4,745,977
Donated capital		29,250			29,250
Deficit accumulated during the exploration stage		(8,614,177	)		(4,098,579	)
Total Stockholders’ Equity		102,059			754,113
Total Liabilities and Stockholders’ Equity	$	2,128,971		$	2,366,020

The accompanying notes are an integral part of these financial statements

1

Colorado Goldfields Inc. (An Exploration Stage Company)

Statements of Operations

(Unaudited)

													Accumulated
													from February 11,
	For the Three			For the Three			For the Nine			For the Nine			2004 (Date of
	Months Ended			Months Ended			Months Ended			Months Ended			Inception) to
	May 31, 2009			May 31, 2008			May 31, 2009			May 31, 2008			May 31, 2009
Revenue	$	—		$	—		$	—		$	—		$	—
Operating expenses
Donated rent		—			—			—			—			9,750
Donated services		—			—			—			—			19,500
General and administrative		1,732,414			317,256			3,783,822			1,372,463			6,455,271
Mineral property and exploration costs		90,222			14,892			499,908			200,470			1,216,139
Professional fees		77,365			101,001			197,051			347,348			836,232
Total operating expenses		(1,900,001	)		(433,149	)		(4,480,781	)		(1,920,281	)		(8,536,892	)
Other income (expense)
Other income		—			—			2,500			—			3,548
Interest income		1,348			5,063			13,997			13,239			29,835
Interest expense		(19,442	)		(11,375	)		(51,314	)		(36,841	)		(110,668	)
Total other expense		(18,094	)		(6,312	)		(34,817	)		(23,602	)		(77,285	)
Net Loss	$	(1,918,095	)	$	(439,461	)	$	(4,515,598	)	$	(1,943,883	)	$	(8,614,177	)
Net Loss Per Class A Common Share — Basic and Diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)
Weighted Average Number of Class A Common Shares Outstanding		299,605,103			96,843,600			218,406,571			94,254,379

The accompanying notes are an integral part of these financial statements

2

Colorado Goldfields Inc. (An Exploration Stage Company)

Statements of Cash Flows

(Unaudited)

							Accumulated from
	For the Nine			For the Nine			February 11, 2004
	Months Ended			Months Ended			(Date of Inception) to
	May 31, 2009			May 31, 2008			May 31, 2009
Cash Flows Used in Operating Activities:
Net loss	$	(4,515,598	)	$	(1,943,883	)	$	(8,614,177	)
Adjustments to reconcile net loss to cash used in operating activities:
Donated services and rent		—			—			29,250
Depreciation		41,657			87			50,439
Stock issued for services		3,455,220			—			4,324,959
Stock-based compensation — options		4,094			900,747			899,303
Accrued interest on debt		14,088			—			14,088
Accretion expense on asset retirement obligation		36,660			—			61,660
Change in operating assets and liabilities:
Decrease (increase) in restricted cash		—			19,965			(318,154	)
Decrease (increase) in prepaid expenses and other		69,000			(149,450	)		(10,656	)
Increase in accounts payable		388,058			18,956			786,729
Increase in accrued liabilities		28,429			30,325			66,665
Increase in reclamation bond		—			(318,154	)		—
Increase in other assets		—			(11,983	)		(13,520	)
Net cash used in operating activities		(478,392	)		(1,453,390	)		(2,723,414	)
Cash Flows from Investing Activities:
Increase in note receivable		—			(100,000	)		—
Proceeds from sale of property, plant and equipment		—			—			35,000
Acquisition of property, plant and equipment		(4,120	)		(340,773	)		(717,736	)
Net cash used in investing activities		(4,120	)		(440,773	)		(682,736	)
Cash Flows From Financing Activities:
Advances received		—			—			405,733
Repayment of advances		—			(400,733	)		(405,733	)
Proceeds from notes from related parties		352,000			—			362,052
Repayment of advances from related party		—			—			(10,052	)
Proceeds from note payable		—			—			100,000
Repayment of note payable		—			(100,000	)		(100,000	)
Net proceeds from issuance of common stock		—			3,007,343			3,058,494
Net cash provided by financing activities		352,000			2,506,610			3,410,494
(Decrease) increase in cash and cash equivalents		(130,512	)		612,447			4,344
Cash and cash equivalents — Beginning of Period		134,856			22,046			—
Cash and cash equivalents — End of Period	$	4,344		$	634,493		$	4,344
Supplemental Disclosures:
Interest paid	$	15,783		$	36,841		$	71,586
Income taxes paid	$	—		$	—		$	—
Non-cash investing and financing activities:
Exchange of accounts payable for promissory note	$	135,294		$	—		$	135,294
Issuance of common stock to satisfy accounts payable	$	299,059		$	—		$	243,804
Issuance of common stock for prepaid expenses	$	—		$	—		$	34,000
Purchase of property, plant and equipment included in accounts payable				$	17,483		$	17,483
Forgiveness of related party debt and accrued interest	$	105,171					$	105,171
Acquisition of land and building:
Cash paid	$	—		$	—		$	250,677
Mortgage note given to seller		—			—			650,000
Asset retirement obligation assumed		—			—			500,000
Assets acquired	$	—		$	—		$	1,400,677

The accompanying notes are an integral part of these financial statements

3

Colorado Goldfields Inc. (An Exploration Stage Company)

Statements of Stockholders’ Equity (Deficit)

From February 11, 2004 (Date of Inception) to May 31, 2009

													Deficit
													Accumulated			Total
	Class A				Class B				Additional				During the			Stockholders’
	Common Stock				Common Stock				Paid in		Donated		Exploration			Equity
Number of Shares	Shares		Amount		Shares		Amount		Capital		Capital		Stage			(Deficit)
Balances — February 11, 2004 (Date of inception)		—	$	—		—	$	—	$	—	$	—	$	—		$	—
Issuance of common stock for cash		51,350,000		2,500		—		—		—		—		—			2,500
Donated services and rent		—		—		—		—		—		4,500		—			4,500
Net loss		—		—		—		—		—		—		(5,898	)		(5,898	)
Balances — August 31, 2004		51,350,000		2,500		—		—		—		4,500		(5,898	)		1,102
Issuance of common stock for cash		63,160,500		53,750		—		—		—		—		—			53,750
Donated services and rent		—		—		—		—		—		9,000		—			9,000
Net loss		—		—		—		—		—		—		(35,319	)		(35,319	)
Balances — August 31, 2005		114,510,500		56,250		—		—		—		13,500		(41,217	)		28,533
Donated services and rent		—		—		—		—		—		9,000		—			9,000
Net loss		—		—		—		—		—		—		(36,148	)		(36,148	)
Balances — August 31, 2006		114,510,500		56,250		—		—		—		22,500		(77,365	)		1,385
Donated services and rent		—		—		—		—		—		6,750		—			6,750
Net loss		—		—		—		—		—		—		(300,193	)		(300,193	)
Balances — August 31, 2007		114,510,500		56,250		—		—		—		29,250		(377,558	)		(292,058	)
Issuance of common stock for cash (net of offering costs of $282,231)		11,386,180		11,386		—		—		2,990,858		—		—			3,002,244
Shares issued for services		9,829,440		9,829		—		—		859,910		—		—			869,739
Stock-based compensation — options		—		—		—		—		895,209		—		—			895,209
Net loss		—		—		—		—		—		—		(3,721,021	)		(3,721,021	)
Balances — August 31, 2008		135,726,120		77,465		—		—		4,745,977		29,250		(4,098,579	)		754,113
Shares issued for services (Note 7)		209,063,798		209,064		—		—		3,246,156		—		—			3,455,220
Issuance of common stock to satisfy accounts payable (Note 7)		15,672,509		15,672		—		—		283,387		—		—			299,059
Stock-based compensation — options (Note 7)		—		—		—		—		4,094		—		—			4,094
Stock issued to beneficial owners of Class A Common Stock (Note 7)		—		—		28,307,598		—		—		—		—			—
Forgiveness of related party debt and accrued interest (Note 4)										105,171							105,171
Net loss		—		—		—		—		—		—		(4,515,598	)		(4,515,598	)
Balances — May 31, 2009 (unaudited)		360,462,427	$	302,201		28,307,598	$	—	$	8,384,785	$	29,250	$	(8,614,177	)	$	102,059

The accompanying notes are an integral part of these financial statements

4

Colorado Goldfields Inc. (An Exploration Stage Company)

Notes to the Unaudited Financial Statements

May 31, 2009

1.	Organization, Nature of Business, Going Concern and Management’s Plans
	Organization and Nature of Business:
	The Company was incorporated in the State of Nevada on February 11, 2004. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No. 7 Accounting and Reporting for Development Stage Enterprises. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether the properties it intends to acquire contain mineral reserves that are economically recoverable.
	Going Concern and Management’s Plans:
	The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception in February 2004, the Company has not generated revenue and has incurred net losses. The Company has a working capital deficit of $1,450,252 at May 31, 2009, incurred net losses of $1,918,095 and $4,515,598 for the three and nine months ended May 31, 2009, respectively, and has incurred a deficit accumulated during the exploration stage of $8,614,177 for the period from February 11, 2004 (inception) through May 31, 2009. Accordingly, it has not generated cash flow from operations and has primarily relied upon advances from stockholders, promissory notes and advances from unrelated parties, and equity financing to fund its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts or classification of liabilities that may result from the possible inability of the Company to continue as a going concern. Management’s plans with regards to these conditions are described below.
	The Company continues to explore sources of additional financing to satisfy its current operating requirements. The Company currently faces a severe working capital shortage and is not currently generating any revenues. The Company will need to obtain additional capital to fund its operations, continue mining exploration activities and plans, and fulfill its obligations under its mineral property option agreements and satisfy existing creditors.
	Considering the difficult U.S. and global economic conditions, along with the substantial stability problems in the capital and credit markets, there is a significant possibility that the Company will be unable to obtain financing to continue its operations.
	There is no assurance that required funds during the next twelve months or thereafter will be generated from operations, or that those funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on the Company’s existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.

5

2.	Summary of Significant Account Policies
	Basis of Presentation
	The accompanying interim financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments (consisting of only normal recurring entries) that, in the opinion of management, are necessary to present fairly the financial position at May 31, 2009 and the results of operations and cash flows of the Company for the three and nine months ended May 31, 2009 and 2008, respectively. Operating results for the three and nine months ended May 31, 2009 are not necessarily indicative of the results that may be expected for the year ending August 31, 2009.
	These unaudited financial statements should be read in conjunction with the Company’s audited financial statements and footnotes thereto included in its Annual Report on Form 10-K for the year ended August 31, 2008.
	Basic and Diluted Net Loss Per Share
	The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share. SFAS No. 128 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares of the Class A Common Stock outstanding (denominator) during the period. During the three months ended May 31, 2009, the Company issued Class B Common Stock, which are not publicly traded shares, share dividends equally with Class A Common Stock, are defined as participating securities under US Generally Accepted Accounting Principles, but have no contractual obligation to share in losses of the Company. The Company has therefore not included the Class B Common Stock in determining basic EPS. Diluted EPS gives effect to all potential dilutive common shares outstanding during the period using the treasury stock method (for options and warrants) and the two-class method (for Class B common stock). In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. For the three and nine months ended May 31, 2009 and 2008, the effect the conversion of outstanding options and warrants and Class B common shares would have been anti-dilutive.
	The following table presents information regarding the potential dilutive securities for the periods presented, which were not included in diluted EPS:

	Three months		Three months		Nine months		Nine months
	ended May 31,		ended May 31,		ended May 31,		ended May 31,
	2009		2008		2009		2008
Stock options		—		1,516,666		—		1,516,666
Class B Common Stock		28,307,598		—		28,307,598		—
Class B warrants		28,307,598		—		28,307,598		—

Recent Accounting Pronouncements

Effective September 1, 2008, the Company partially adopted SFAS No. 157, Fair Value Measurements. This statement does not require any new fair value measurements but provides guidance on how to measure fair value and clarifies the definition of fair value under accounting principles generally accepted in the United States of America. The statement also requires new disclosures about the extent to which fair value measurements in financial statements are based on quoted market prices, market-corroborated inputs, or unobservable inputs that are based on management’s judgments and estimates. In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. FAS 157-2, Effective Dates of FASB Statement No. 157 (the “FSP”). The FSP amends SFAS No. 157 to delay its effective date for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). For items within its scope, the FSP defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The statement will be applied prospectively by the Company for any fair value instruments that arise after the date of adoption. The partial adoption of SFAS No. 157 did not have a material impact on the Company’s financial statements.

6

To increase consistency and comparability in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs into valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

As of May 31, 2009, the Company had the following financial assets and liabilities which are measured at fair value:

	Level 1		Level 2		Level 3
Restricted cash		—	$	318,154		—

	The Company has no financial assets or liabilities measured at fair value using Level 1 or Level 3 inputs.
	Effective September 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. This statement permits entities to choose to measure eligible items at fair value at specified election dates. The adoption of SFAS No. 159 did not have a material impact on the Company’s financial statements.
3.	Property, Plant and Equipment
	On June 29, 2007, the Company acquired the Pride of the West Mill (the “Mill”) located in Howardsville, Colorado for consideration of $900,677 plus the assumption of an estimated asset retirement obligation of $500,000 for a total cost of $1,400,677. The Company paid the seller cash of $250,677 and the remaining $650,000 was paid through a mortgage with the seller, which is collateralized by the property bearing interest at 7% per year with interest only payable monthly for two years, with all unpaid principal due June 29, 2009. Subsequent to May 31, 2009, the due date on the mortgage was extended until June 29, 2010. In exchange for the extension, the Company agreed to pay 5% late charges on all delinquent principal payments, including interest payments that became due after July 10, 2009. In addition, the mortgage now accrues interest at a rate of 12% from August 29, 2008 until the mortgage is paid in full. Interest expense related to the Mill note for the three and nine months ended May 31, 2009 and 2008 was $11,375 and $34,125, respectively for both years.
	In connection with the acquisition of the Mill, the Company was obligated to replace a financial warranty that the seller had provided to the Colorado Division of Reclamation, Mining, and Safety (“DRMS”). In December 2007, the Company replaced the financial warranty by purchasing a certificate of deposit, which is restricted, to secure an irrevocable standby letter of credit (the “LOC”) totaling $318,154, with a financial institution. The LOC is used to secure possible future payment requests made by the State of Colorado.

7

Property, plant and equipment consist of the following as of May 31, 2009 and August 31, 2008:

	May 31,			August 31,
	2009			2008
Computer equipment	$	2,118		$	2,118
Vehicle		3,267			3,267
Mine and drilling equipment		116,379			116,379
Mobile mining equipment		143,796			140,585
Land and mill		1,567,176			1,566,267
		1,832,736			1,828,616
Less accumulated depreciation		(50,439	)		(8,782	)
	$	1,782,297		$	1,819,834

	Depreciation expense was $13,885 and $41,657 for the three and nine months ended May 31, 2009, respectively and $65 and $87 for the three and nine months ended May 31, 2008, respectively. Property, plant and equipment are depreciated on a straight line basis over their estimated useful lives ranging from three to five years. However, a significant portion of the of the Company’s property, plant and equipment has not yet been placed in service.
4.	Notes payable — related parties
	During the nine months ended May 31, 2009, the Company borrowed $72,500 and $279,500 from its chief executive officer (“CEO”) and its chief financial officer (“CFO”), respectively. In connection with the borrowings, the Company executed unsecured promissory notes (“Notes”) which are due six months from the dates of issue and accrue interest at 6.5% per annum (or 18% per annum, if the Notes are in default). The Company subsequently entered into amended note agreements with its CEO to extend the due dates an additional six months from the original due dates. During the three months ended May 31, 2009, the Company’s CFO forgave certain notes and accrued interest which has been accounted for as a capital transaction resulting in an increase in equity of $105,171. During the three and nine months ended May 31, 2009, the Company recorded interest expense of $4,288 and $8,504 respectively, relating to the Notes. The notes outstanding at May 31, 2009 are due at varying times between July 12, 2009 and November 25, 2009.
5.	Promissory note payable
	On October 2, 2008, the Company executed an unsecured promissory note with one of its vendors for services rendered totaling $135,294. The promissory note bears interest at 6.25% per annum and the principal and interest were due on December 19, 2008. The Company recorded interest expense of $2,131 and $5,584 for the three and nine months ended May 31, 2009. The promissory note is in default and the Company is currently negotiating a modification and amendment to the note. See Note 9 for additional details.
6.	Mineral properties interests

a) On June 17, 2007, the Company entered into an option agreement, amended November 8, 2007, July 10, 2008 and again on September 25, 2008, among the Company as Optionee, and San Juan Corp., a company controlled by Mr. Todd C. Hennis (“Hennis”) and Hennis as Optionors, whereby the Company was granted the exclusive right and option to acquire an 80% undivided right, title and interest in certain properties located in San Juan County, Colorado, which option is to be exercised by the Company in stages as follows:

(i) an undivided 40% interest in the properties is to vest upon the Company incurring expenditures of not less than $6,000,000 on the properties within five years from the date of the option agreement;

8

(ii)

an additional undivided 20% interest in the properties is to vest upon: (a) the Company incurring additional expenditures of not less than $3,500,000 on the properties within 7.5 years from the date of the option agreement, and (b) the issuance by the Company, subject to compliance with applicable securities laws, of 13,000,000 shares (adjusted for stock splits) of the Company’s Class A common stock; and

(iii)

an additional undivided 20% interest in the properties is to vest upon: (a) the Company incurring additional expenditures of not less than $3,500,000 on the properties within 10 years from the date of the option agreement, and (b) the issuance by the Company, subject to compliance with applicable securities laws, of 13,000,000 shares (adjusted for stock splits) of the Company’s Class A common stock.

In addition, in order to keep the option in good standing, the Company must make payments to the Optionors as follows:

(i)	cash payment of $50,000 within 30 days from the date of the option agreement (which was paid by the Company in August 2007 and recorded as expense);
(ii)	cash payment of $100,000 within one year from the date of the option agreement (which was extended to March 15, 2009 and includes accrued interest at 8.5% per annum from the original date of June 17, 2008);
	The Company did not make the cash payment of $100,000 on March 15, 2009. On March 16, 2009, the Company received a notice of default from the Optionor, Hennis and San Juan Corp. In accordance with the option agreement, the Company has 30 days within which to cure the default by making such payment. The Company did not cure the stated default within 30 days. See Note 9 for additional details.
	Additionally, Hennis has made demand for the return of original drill core, maps, geological data, copies of these items, and certain equipment. Hennis is also asserting that the Company is required to provide a comprehensive report of all geological data, core samples, analyses and reports derived from the properties.
(iii)	cash payment of $200,000 within two years from the date of the option agreement, originally due on June 17, 2009, which was not made. See Note 9 for additional details.
(iv)	100 troy ounces of gold contained in gold ore, or the cash equivalent thereof, within three years of the date of the option agreement, and annually thereafter up to and including the 10th year from the date of the option agreement, which payments shall only be made if the Company successfully operates the Mill during any part of the year in which payment is due.
(v)	Pursuant to the option agreement, the Company has been appointed as the initial operator on the properties, with certain rights and obligations as described in the option agreement.

The option agreement: (i) will terminate in the event the Company fails to make any of the payments required to maintain the option in good standing; and (ii) notwithstanding anything else in the option agreement, may be terminated by the Company within 18 (amended to 12), months from date of the option agreement by providing 10 days’ written notice to the Optionors. See Note 9 for additional details.

9

In connection with the option agreement, the Company also entered into a surface rights agreement with the Optionors whereby the Company was granted a right-of-way to enter upon the San Juan Properties to perform mining exploration activities while the option agreement is in good standing. Under the surface rights agreement, the Company is required to:

(i)	prepare and present to the Optionors a development plan which details the scope and timing of exploration and mining activities on the San Juan Properties;
(ii)	maintain the roads and power line right-of-ways;
(iii)	construct safety fences and maintain surface facilities on the San Juan Properties;
(iv)	maintain automobile insurance in connection with the Company’s vehicles traveling over the San Juan Properties;
(v)	perform restoration and reclamation on the San Juan Properties upon termination of the Company’s operations on the land, including returning the land to “Range Land” post-mining use standard as that term is used in the Colorado Mined Land Reclamation Act;
(vi)	protect existing water resources, including mitigating or eliminating the impact of the Company’s activities on domestic or stock water wells in the vicinity of the San Juan Properties;
(vii)	properly store and remove hazardous materials; and
(viii)	indemnify the Optionors for losses and liabilities they may incur due to the Company’s activities on the San Juan Properties.

The Company is also required to pay or reimburse the Optionors for all annual property taxes on the San Juan Properties and for any additional taxes that may be assessed on the San Juan Properties because of improvements that the Company places on the San Juan Properties. The surface rights agreement terminates upon the earlier of (i) termination of the mineral rights on the San Juan Properties; (ii) complete reclamation and restoration of the San Juan Properties; (iii) termination of the option agreement prior to our exercising the option; (iv) failure to pay the property or other taxes on the San Juan Properties; or (v) June 17, 2032.

b) The mining claims that are subject to the Company’s Option Agreement with Hennis and San Juan Corp. are subject to the following pre-existing royalties: (i) 3.0% net smelter return royalty on Gold King Mine, (ii) 2.5% net profits interest on Gold King Mine, (iii) 2.0% net smelter return royalty on the Mayflower Group, (iv) 2.5% net profits interest in the Mayflower Group, and (v) a 2% net smelter royalty on the Gold King Mine. The Company finalized an option agreement on December 19, 2007, with an unrelated party, whereby the Company paid $10,000 for the rights to acquire the royalties. The original expiration date of the option was November 21, 2008. However, the expiration was extended until June 21, 2009. The Company did not exercise the option agreement on June 21, 2009. The Company and the unrelated party are discussing a further extension of the option agreement to acquire the royalties; however, as of the date of this report, no further extension has been reached.

7.	Stockholder’s Equity
	Common shares
	On February 20, 2009 the Company effected a reclassification and exchange of its common stock to Class A Common Stock on a 1 for 1 basis, obtained a new CUSIP number (19647Y302), and began trading under the symbol CGFIA.
	Also in February 2009, the Company authorized a new series of common stock entitled Class B Common Stock with no par value. Class B Common Stock is not convertible, has no preference over Class A Common Stock and shares equally in dividends with Class A Common Stock. The total number of authorized Class B Common Stock is 500,000,000 shares and each share of Class B common stock is entitled to two votes.

10

On February 27, 2009 the Company announced that the beneficial owners of Class A Common Stock as of that date will be issued one share of restricted Class B Common Stock and one restricted Class B warrant, (“Class B Securities”) for every four shares of Class A common stock. The Class B warrants have a term of one year from date of issuance at an exercise price of $.50 per share. The Class B Securities will be issued only to, and in the name of bona fide and verified beneficial owners of Class A common stock. In order for Series A common stockholders to receive Class B Securities, certain conditions must be met. As of May 31, 2009, 28,307,598 (out of a potential of 40,920,837) Class B Securities have been issued. The pay date of any future issuances of Class B Securities is uncertain.

In October 2008, the Company effected a stock split in the form of a 30% stock dividend for its shareholders of record as of November 6, 2008. The dividend was paid on November 28, 2008. Where applicable, the Company has restated its capital accounts, shares outstanding, weighted average shares and loss per share calculations for all periods presented in these financial statements and related footnotes to reflect the stock dividend. The par value per share was not changed.

During the nine months ended May 31, 2009, the Company issued 975,000 shares of restricted Class A Common Stock to a consultant for corporate communications services valued at $0.02 to $0.04 per share ($0.03 to $0.05 per share, pre-stock split, the quoted market prices at the dates of the respective stock grants) and an additional 1,250,000 shares of its restricted stock valued at $0.0175 to $0.02 per share (the quoted market prices at the dates of the respective stock grants), which resulted in $51,250 being recorded as expense. Also during the nine months ended May 31, 2009, the Company issued 50,000,000 shares of restricted Class A Common Stock to employees, directors and consultants valued at $.0133 per share (the quoted market prices at the dates of the respective stock grants), which resulted in $665,000 being recorded as expense.

In February 2008, the Company approved the 2008 Stock Incentive Plan (“2008 Plan”) which provides incentive stock and non-statutory options to be granted to select employees, directors and consultants of the Company. The 2008 Plan provides that awards may be granted for up to 12,480,000 shares of the Company’s common shares.

Pursuant to the 2008 Plan the Company issued 4,579,770 shares of its Class A Common Stock to employees, directors and consultants for services rendered during the nine months ended May 31, 2009. The common shares were valued based upon the quoted market price on the date of the respective stock grants, which ranged from $0.02 to $0.08 per share ($0.03 to $0.11 per share, pre-stock split). The total grant date fair value of these shares was $224,250, of which $55,250 was expensed upon issue. Of the 12,412,270 common shares issued under the 2008 Plan as of May 31, 2009, 3,809,000 common shares, valued at $278,200, have vesting requirements and are being amortized and recorded to expense over the requisite service period, which is six to eighteen months. During the nine months ended May 31, 2009, the Company recorded expense of $154,200 related to the 3,809,000 shares.

In September 2008, the Company approved the 2008 Non-qualified Consultants and Advisors Stock Compensation Plan (“2008 Consultants Plan”) whereby the Company may grant up to 65,000,000 shares of the Company’s stock in exchange for services rendered to the Company. In January 2009 and again in March 2009, the Company authorized an additional 50,000,000 shares under the 2008 Consultants Plan. During the nine months ended May 31, 2009, the Company has issued 146,695,586 shares of its Class A Common Stock under the 2008 Consultants Plan for services rendered by various consultants valued at $0.0091 to $0.08 per share ($0.03 to $0.11 per share, pre-stock split, the quoted market prices at the dates of the respective stock grants), which resulted in $2,515,369 being recorded as expense.

In November 2008, the Company approved the 2008 Employee and Director Stock Compensation Plan (“2008 Employee Plan”), whereby the Company may grant up to 46,800,000 shares of the Company’s stock in exchange for services rendered to the Company. In January 2009, the Company authorized an additional 39,000,000 shares under the 2008 Employee Plan. During the nine months ended May 31, 2009, 21,235,950 shares of Class A Common Stock were issued to employees for services valued at $313,211.

11

Stock options

The Company recorded compensation expense related to stock options for the three and nine months ended May 31, 2009 of zero and $4,094, respectively, and $38,410 and $900,747 for the three and nine months ended May 31, 2008, respectively. As of May 31, 2009, the Company had no unrecognized compensation cost related to stock options. During the nine months ended May 31, 2009, the Company did not grant options to purchase the Company’s Class A Common Stock, 600,000 options were cancelled and 650,000 options were forfeited. No options are currently outstanding under the 2008 Plan.

A summary of option activity under the 2008 Plan for the nine months ended May 31, 2009 is as follows:

						Weighted-
				Weighted-		Average		Aggregate
				Average		Remaining		Intrinsic
	Shares			Exercise Price		Contractual Life		Value
Outstanding at September 1, 2008		1,250,000		$	0.50
Granted		—			—
Forfeited		(650,000	)		0.32
Cancelled		(600,000	)		0.70
Outstanding at May 31, 2009		—		$	—		—	$	—
Exercisable at May 31, 2009		—		$	—		—	$	—

The following table presents information relating to nonvested stock options as of May 31, 2009:

				Weighted Average Grant-Date
	Shares			Fair Value
Nonvested at September 1, 2008		500,000		$	0.13
Granted		—			—
Vested		(125,000	)		(0.13	)
Forfeited		(375,000	)		(0.13	)
Nonvested at May 31, 2009		—		$	—

8. Related Party Transactions

a) For the three and nine months ended May 31, 2008, the Company recognized zero and $41,540, respectively, for mineral property and exploration costs that were incurred directly or from a company partially owned by a former officer and director of the Company. For the three and nine months ended May 31, 2009, the Company recognized zero and $6,000, respectively, for mineral property and exploration costs that were incurred from a company owned by a former president of the Company. For the three and nine months ended May 31, 2008, the Company recognized zero and $26,611, respectively, for mineral property and exploration costs and general and administrative costs that were incurred from a company owned by a former president of the Company.

b) Accounts payable and accrued liabilities at May 31, 2009 and August 31, 2008, include $39,167 and $24,258, respectively, due to affiliated companies for mineral property and exploration costs and general and administrative costs.

12

9. Litigation

The Company is involved in the following legal proceedings.

On March 2, 2009 the Company’s former legal counsel, filed a Complaint in District Court, Denver, Colorado, claiming breach of contract of the promissory note executed by the Company October 2, 2008 (Note 5). The Company disputes the breach. The Complaint has been answered, the parties have exchanged basic discovery information, and a trial date has been set for September 18, 2009. The ultimate outcome of the litigation is uncertain.

On April 6, 2009, Todd C. Hennis (the former President and CEO of the Company), and entities San Juan Corp., and Salem Minerals Inc. (which are substantially owned by Mr. Hennis), served upon the Company a Complaint seeking among other things, a $100,000 payment pursuant to the option agreement (Note 6a), and release from his shareholder lock-up agreement and from Rule 144 trading restrictions on approximately 50,000,000 shares of Class A Common Stock held by Hennis. Company counsel advises that the Hennis complaint is barred due to Hennis’s affiliate and control person status and moreover is filed in bad faith, since among other things, on June 17, 2008 as President and CEO of the Company, Hennis elected not to pay the option fee then due. The Company received a written settlement offer from Mr. Hennis two days after the Company was served on April 8, 2009. A counter-claim with jury demand has been filed against Mr. Hennis and his entities for wrongful conversion, breach of duty of loyalty, lack of good faith, breach of fiduciary duty, and significant conflicts of interest. No trial date has been set. At this early stage, the outcome of the litigation is not certain; however, it does appear that the Company has legitimate defenses to mitigate damages, if any exist. Even though the Company has valid claims against Mr. Hennis, the Company continues to pursue settlement. The Company intends and is confident that a mutually acceptable settlement will be reached in the near future. However, the ultimate outcome of the proceeding is uncertain.

10. Commitments and contingencies

On July 1, 2008, the Company entered into a twelve month executive employment agreement with its CFO. Under the terms of the Agreement, the CFO will receive a salary of $12,500 per month for the first six months, after which the compensation may be adjusted if deemed necessary. The CFO is also entitled to one month’s salary if terminated by the Company for convenience and one month’s salary for each year of service if terminated due to a change of control. This agreement expired on July 1, 2009, and as of the date of this report, a new employment agreement has not been entered into.

11. Subsequent Events

Subsequent to May 31, 2009, (through July 9, 2009), the Company has issued 39,896,200 shares of its Class A Common Stock to employees and consultants for services valued at approximately $273,660 under the various stock compensation plans of the Company and has issued 7,202,107 shares of Class B Common Stock.

On June 22, 2009, the Company authorized an increase of 100,000,000 shares under the 2008 Consultants Compensation Plan.

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This form 10-Q may contain certain “forward-looking” statements as such term is defined in the private securities litigation reform act of 1995 and by the securities and exchange commission in its rules, regulations and releases, which represent the company’s expectations or beliefs, including but not limited to, statements concerning the company’s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “intent”, “could”, “estimate”, “might”, “plan”, “predict” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the company’s control, and actual results may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth, the operations of the company and its subsidiaries, volatility of stock price and any other factors discussed in this and other registrant filings with the securities and exchange commission. The company does not intend to undertake to update the information in this form 10-Q if any forward-looking statement later turns out to be inaccurate.

This discussion addresses matters we consider important for an understanding of our financial condition and results of operations as of and for the three and nine months ended May 31, 2009, as well as our future results. It consists of the following subsections:

• “Introduction and Plan of Operation,” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results, as well as a summary of our expectations for 2009;

• “Liquidity and Capital Resources,” which contains a discussion of our cash flows and liquidity, investing activities and financing activities, contractual obligations, and critical obligations;

• “Results of Operations and Comparison,” which sets forth an analysis and comparison of the three and nine months ended May 31, 2009 compared to the three and nine months ended May 31, 2008.

• “Critical Accounting Policies,” which provides an analysis of the accounting policies we consider critical because of their effect on the reported amounts of assets, liabilities, income and/or expenses in our financial statements and/or because they require difficult, subjective or complex judgments by our management;

• “Recent Accounting Pronouncements and Developments,” which summarizes recently published authoritative accounting guidance, how it might apply to us, and how it might affect our future results.

14

Introduction and Plan of Operation

The following discussion updates our plan of operation for the foreseeable future. The discussion also summarizes the results of our operations for the three and nine months ended May 31, 2009 and compares those results to the three and nine months ended May 31, 2008.

We hold an exclusive right and option to acquire an 80% undivided right, title and interest in certain properties located in San Juan County, Colorado (the “San Juan Properties”). The option is currently exercisable as follows:

(i) an undivided 40% interest in the San Juan Properties will vest when we have incurred expenditures of not less than $6,000,000 on the San Juan Properties, provided that such expenditures must be incurred within five years from the date of the option agreement;

(ii) an additional undivided 20% interest in the San Juan Properties will vest when: (a) we have incurred additional expenditures of not less than $3,500,000 on the San Juan Properties, provided that such expenditures must be incurred within 7.5 years from the date of the Option Agreement, and (b) we issue, subject to compliance with applicable securities laws, 13,000,000 (adjusted for stock splits) shares of our common stock to the Optionors; and

(iii) an additional undivided 20% interest in the San Juan Properties (for an aggregate of 80%) will vest when: (a) we have incurred additional expenditures of not less than $3,500,000 on the San Juan Properties, provided that such expenditures must be incurred within 10 years from the date of the option agreement, and (b) we issue, subject to compliance with applicable securities laws, an additional 13,000,000 (adjusted for stock splits) shares of our common stock to the Optionors.

Our plan of operation for fiscal 2009 is to continue seeking funding for our operations and mining exploration program on the San Juan Properties that began in the fall of 2007. Our option agreement to acquire an 80% interest in the San Juan Properties requires us to expend $13 million on the properties, and we currently believe that expenditure of that amount will ready the mine for production assuming that economically feasible reserves exist, although we cannot give any assurances that additional funds will not be necessary.

Our planned exploration activities may include data review, geologic mapping, resource modeling, geophysical surveys (including gravity and IP surveys), modeling, re-logging of available drill core and rotary cuttings and rock chips and soil sampling programs. All of these activities are designed to assist us in identifying additional targets for drilling and increasing our understanding of the San Juan Properties.

Liquidity and Capital Resources

We were formed in early 2004 and have primarily had limited activity until our acquisition of the option to acquire interests in the San Juan Properties. Since we have received no revenue from the production of gold or other metals, we have relied on funds received in connection with our equity and debt offerings to finance our ongoing operations. We have experienced net losses since inception, and we expect we will continue to incur losses for the next 2 or 3 years. As of the date of this filing, we do not have any available external source of funds. We require additional capital in the near term to maintain our current operations. Although we are actively seeking additional equity and debt financing, such financing may not be available on acceptable terms, if at all.

Our financial statements included in this report have been prepared assuming that we will continue as a going concern. Since our inception in February 2004, we have not generated revenue and have incurred net losses. We had a working capital deficit of $1,450,252 at May 31, 2009, incurred a net loss of $1,918,095 and $4,515,598 for the three and nine months ended May 31, 2009, respectively, and have incurred a deficit accumulated during the exploration stage of $8,614,177 for the period from February 11, 2004 (inception) through May 31, 2009. Accordingly, we have not generated cash flow from operations and have primarily relied upon advances from stockholders, promissory notes and advances from unrelated parties, and equity financing to fund our operations. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts or classification of liabilities that may result from our possible inability to continue as a going concern.

15

We currently have minimal cash on hand. Accordingly, we do not have sufficient cash resources or current assets to pay our obligations, and we have been meeting some of our obligations through the issuance of our common stock to our employees, consultants and advisors as payment for services. Considering the foregoing, we are dependent upon additional financing to continue our operations and exploration efforts and, if warranted, to develop and commence mining operations. Our capital requirements for the foreseeable future include continued exploration of the San Juan Properties, payments required to keep the San Juan Properties option in good standing, reclamation work related to the Pride of the West Mill, payment of a $650,000 promissory note that is collateralized by the Pride of the West Mill, and our corporate overhead expenses.

On August 29, 2008 we entered into a Standby Equity Distribution Agreement (“SEDA”) with YA Global Investments, LP (“YA”), whereby we intended to sell common shares of the Company under the SEDA in tranches over the next two years up to a maximum of $5,000,000. The terms of the SEDA would have become effective pursuant to the acceptance by the Securities Exchange Commission (“SEC”) of a Form S-1 registration statement, which was filed on October 15, 2008. In February 2009, due to the reclassification of the Company’s common stock to Class A common stock effective February 20, 2009 and due to the passage of time since it was originally filed, we withdrew the Form S-1 registration statement on February 17, 2009. On April 6, 2009, we confirmed the termination of the SEDA with YA.

We are actively seeking additional equity or debt financing. However, there can be no assurance that funds required during the next twelve months or thereafter will be available from external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on our existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.

As of May 31, 2009, we had cash and cash equivalents of approximately $4,000, other current assets of approximately $11,000 and current liabilities of approximately $1,465,000. We used cash and cash equivalents of $478,000 in operating activities for the nine months ended May 31, 2009. Investing activities for the nine months ended May 31, 2009 consisted of the purchase of property, plant and equipment of $4,000. Financing activities for the nine months ended May 31, 2009 included cash proceeds of $352,000 from the issuance of notes payable from related parties.

Contractual Obligations

The table below summarizes contractual obligations as of May 31, 2009 due in the future.

			Less than 1
Contractual Obligations	Total		Year		2 and 3	4 and 5
Principal payment on Pride of the West Mill(1)	$	650,000	$	650,000
Principal and accrued interest on notes payable — related parties(2)		255,333		255,333
Principal and accrued interest on promissory note(3)		140,878		140,878

(1)	This amount is due on June 29, 2010, along with any unpaid interest. The note is secured by the Mill; thus, a default on this obligation could result in foreclosure on our Mill.
(2)	This amount consists of loans from our chief executive officer and chief financial officer. See Note 4 of the Notes to the Unaudited Financial Statements.
(3)	The promissory note is payable to the Company’s former law firm, Jackson Kelly, PLLC. See Note 5 and Note 9 of Notes to the Financial Statements for additional information.

16

Critical Obligations

The following, although not contractual obligations, represent payments critical to executing our business plan. Failure to make the following payments, or amend the underlying agreements, would be extremely detrimental to us.

			Less than 1
Critical Obligations	Total		Year		2 and 3	4 and 5
Option payment to San Juan Corp.(1)	$	300,000	$	300,000
Royalty option exercise(2)	$	250,000	$	250,000

(1) If we fail to resolve the dispute regarding the Option Agreement with San Juan Corp., (see Note 6 and Note 9 of the Notes to the Financial Statements), our only remaining fixed asset would be the Pride of the West Mill, which is subject to a $650,000 Deed of Trust in favor of Tusco, Inc.

The Company did not make the cash payment of $100,000 on March 15, 2009. On March 16, 2009, the Company received a Notice of Default from the Optionor, Todd C. Hennis and San Juan Corp. Additionally, we did not make a $200,000 payment originally due on June 17, 2009.

Additionally, Mr. Hennis has made demand for the return of original drill core, maps, geological data, copies of the same items, and certain equipment. Mr. Hennis asserts that Colorado Goldfields Inc. is required to provide to him a comprehensive report of all geological data, core samples, analyses and reports derived from the properties. The Company is seeking a compromised settlement with Mr. Hennis.

(2) The original expiration date of the option was November 21, 2008. However, the expiration was extended until June 21, 2009. The Company did not exercise the option agreement on June 21, 2009. The Company and the unrelated party are discussing a further extension of the option agreement to acquire the royalties; however a definitive agreement has not yet been reached. Should we be unable to re-negotiate an economically acceptable Option Contract to purchase the legacy royalties described in Note 6(b) of the Notes to the Financial Statements, then those royalties would remain payable to the royalty holder and would reduce our ultimate profitability.

17

Results of Operations

We are presently in the exploration stage of our business and have not earned any revenues to date, and we do not anticipate earning revenues until we acquire and develop mining properties with proven reserves. For most of fiscal year 2007, our operations were limited. In the last two fiscal quarters of 2007, we began negotiations for and completed (i) the acquisition of the Pride of the West Mill in Howardsville, Colorado and (ii) the option agreement with Todd C. Hennis and his company, San Juan Corp., with respect to the San Juan Properties. During fiscal year 2008, we completed our exploration drilling program.

The 2008 drilling program encountered the vein system in its projected location. The vein system that was highly productive in the Gold King mine runs generally N 25° E. Two sets of cross structures running N 7° W and N 34° W appear to have localized ore deposition and yielded the most productive stopes in the mine.

On December 10, 2008, we announced silver assay results for selected intervals of drill hole CG08-01 from the 2008 exploration drilling program on the Gold King Extension project.

Ore grade values returned from two strong structures confirm a weighted average of 269.62 grams per metric ton of silver over a 6 foot interval between 669-675 feet, and 85.27 grams per metric ton of silver over a 4.8 ft interval between 639.2-644 feet. Included in these averages is one 0.5 foot interval containing 1,646 grams of silver per metric ton.

Assay silver results for the “A Vein Zone” in hole CG08-01 are listed below:

						Weighted
	Interval	Ag		Total Length		Average Ag
Sample No.	(ft.)	(g/tonne)		(ft)		(g/tonne)
543254	669 - 670		95.0
543255	670 - 671		136.5
543256	671 - 671.6		217.6
543257	671.6 - 672.1		1,646.0
543258	672.1 - 672.7		32.6
543259	672.7 - 673.4		100.8
543260	673.4 - 675		214.1		669 - 675		269.62

						Weighted
	Interval	Ag		Total Length		Average Ag
Sample No.	(ft.)	(g/tonne)		(ft)		(g/tonne)
543239	639.2 - 640.1		178.7
543240	640.1 - 640.7		98.6
543241	640.7 - 642		81.3
543242	642 - 644		41.8		639.2 - 644		85.27

• Samples are sent as whole rock (no prep) and represent ¹/2 split drill core material, with the second ¹/2 retained for security.

• Ag Fire assay performed with 30g split of sample material.

• Prep by crush and grind to -150 mesh.

On December 16, 2008, we announced final summary gold assay results from the 2008 Gold King Extension Exploration Program. The Company confirms that the Gold King Extension has gold-bearing dense mineralization structures continuing from historical Gold King Mine workings into new unexplored ground.

18

The following diagram depicts the overall plan of the Gold King Extension drilling program.

Fire assay analysis, by internationally certified Assayers Canada, of 409 core samples is summarized in the table below.

		From		To		Interval			Gold		Silver
Hole ID	Zone	(ft)		(ft)		(ft)			(oz per ton)		(oz per ton)
CG08-01	A		639.2		644.0		4.8			0.01		2.50
CG08-01	A		669.0		675.0		6.0			0.02		7.90
CG08-01	B		818.5		822.0		3.5			0.00		0.36
CG08-01	B		869.0		870.7		1.7			0.03		0.54
CG08-01	B		922.0		924.0		2.0			0.31		2.71
Including			922.7		923.5		0.8	ft		0.75		4.69
CG08-01	D		1,162.0		1,165.0		3.0			0.01		0.74
CG08-01	E		1,313.0		1,317.0		4.0			0.04		2.36
CG08-02	A		667.3		670.6		3.3			0.01		1.33
CG08-02	B		823.1		826.0		2.9			0.10		0.88
Including			824.2		825.0		0.8	ft		0.33		1.38
CG08-02	B		839.0		841.9		2.9			0.01		0.56
CG08-03	A		636.0		639.0		3.0			0.01		2.15
CG08-03	A		656.0		659.0		3.0			0.05		4.85
CG08-03	A		680.0		688.5		8.5			0.01		1.14
CG08-03	B		862.0		867.0		5.0			0.13		4.48
Including			862.0		863.0		1	ft		0.40		4.29

19

• all widths are drill widths, not corrected for true thickness

• assays reported in g/tonne (ppm), converted by using 34.285 factor

• internal standards and blanks submitted by QA/QC policy

• samples sent to Lab as whole rock drill core

Significant intervals are as follows.

• Hole CG08-01 contains 2 feet of 0.31 ounces per ton gold and 2.71 ounces per ton silver, which includes 0.8 ft of 0.75 ounces per ton gold and 4.69 ounces per ton silver.

• Hole CG08-02 contains 2.9 ft of 0.10 ounces per ton gold and 0.88 ounces per ton silver, which includes 0.8 ft of 0.33 ounces per ton gold and 1.38 ounces per ton silver.

• Hole CG08-03 contains 5 ft of 0.13 ounces per ton gold and 4.48 ounces per ton silver, which also includes 1 ft of 0.40 ounces per ton gold and 4.29 ounces per ton silver.

• All three of these significant intercepts confirm that ‘ore grade’ gold and silver mineralization is present in the newly recognized structures (veins) continuing northeast from the Gold King Mine.

On February 20, 2009, we re-classified our common stock to Class A common stock.

In February 2009, we initiated the issuance of restricted Class B Securities. Class B Common Stock is not convertible, has no preference over Class A Common Stock and shares equally in dividends with Class A Common Stock. The total number of authorized Class B Common Stock is 500,000,000 shares and each share of Class B common stock is entitled to two votes. The effective date of the action was February 27, 2009. Accordingly, the following instruction letter was issued to beneficial owners of our Class A Common Stock through the Depository Trust Clearing Corporation.

This instruction letter is being sent to the Beneficial Owners (as defined below) of Colorado Goldfields Inc. (“Company”) Class A Common Stock, together with brokers making presentment of lists of Beneficial Owners of Company’s Class A Common Stock (“Class A Common Stock”) to Corporate Stock Transfer, Inc. (the “Transfer Agent”), in connection with the issuance of Class B Common Stock and Class B Common Stock Warrants:

1. Effective February 27, 2009, the Company shall issue to beneficial owners of record (as determined by Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Beneficial Owners”)), of the Company’s Class A Common Stock, for every four shares of Class A Common Stock, one share of restricted Class B Common Stock, and one restricted Class B Warrant. There will be no pro-ration, and in the event a fractional number of Class B shares and class B warrants were to be issued, the number to be issued will be rounded down to the nearest whole number of shares. Each restricted Class B Common share shall enjoy two votes per share. The Class B Warrant shall have a term of one year, at an exercise price of $.50 per share. No fraction of a share will be issued upon any exercise of a Warrant. If the holder of a Warrant would be entitled to receive a fraction of a Share upon any exercise of a Warrant, the Company shall, upon such exercise, round up to the nearest whole number the number of Shares to be issued to such holder.

2. Instructions for Class A Common Shares Held in Certificated Form Held Directly by the Beneficial Owners: Certificated Class A Common shareholders, who are Beneficial Owners, shall receive Class B Common Stock shares and Class B Common Stock Warrants without further action on their part.

3. Instructions for Shares Held on Behalf of Beneficial Owners: In order for a Beneficial Owner of Class A Common Stock held through a broker to receive Class B Common Stock shares and Class B Warrants, the following instructions and compliance conditions must be met:

a. All brokers whose customers beneficially own shares of Class A Common Stock are hereby instructed to present their respective lists of named Class A Common Stock Beneficial Owners, as of the Record Date, (include shareholder individual or legal entity legal name, complete street address, landline telephone number, email address (if available), and number of Class A Common Stock shares beneficially owned), to the Company’s Transfer Agent via facsimile transmission (303) 777-7363, no later than 3:30 o’clock p.m. MST on Friday, February 27, 2009. The Transfer Agent will, within four business days of receipt of same, send a copy of all such brokers’ submissions to the Company.

20

b. Upon receipt and immediate verification of each broker’s list, the appropriate number of Class B Common Stock shares and Class B Warrants shall be issued in the name of each named Beneficial Owner.

c. Regarding brokers who do not timely provide a list of their account customers Class A Common Stock Beneficial Owners as per Section 3(a) above by February 27, 2009, such brokers no later than 3:30p.m. MST on March 2, 2009 shall provide to the Transfer Agent in writing a statement indicating the reasons for such delay and affirmatively state the date upon which they will submit to the Transfer Agent the required list of Beneficial Owners and supplemental information, which shall be a date no later than 3:30 o’clock p.m. MST on Thursday March 5, 2009.

d. At any time after March 5, 2009, and without risk of forfeiture, should such brokers fail to timely comply with Sections 3(a) and (c) hereinabove, then at any time after March 5, 2009 at the time of presentment by such brokers to the Transfer Agent of the information required by Section 3(a) and (c), such brokers shall submit to the Transfer Agent a signed written statement affirmatively stating, that:

“There presently exist no ‘open fails to deliver’ in Colorado Goldfields Inc. Class A Common Stock settlements resulting from short sales of Class A Common Stock shares CUSIP 19647Y302 as associated with the broker’s customer accounts representing Beneficial Owners.”

All submissions provided by brokers pursuant to Section 3 to the Transfer Agent are to be copied by the Transfer Agent to the Company within four business days of the Transfer Agent’s receipt of same.

e. All brokers’ lists of Beneficial Owners must reconcile with records on file with The Depository Trust & Clearing Corporation (DTCC) as of the Record Date before Class B Common Stock and Class B Common Stock Warrants will be issued in the name of such Beneficial Owners.

4.

In accordance with 17 CFR Sec. 240.13d-3, DTCC and its nominee, Cede & Co. are not in fact, nor at law, Beneficial Owners of Class A Common Stock. Thus, certificated ownership of Class A Common Stock as a predicate for obtaining Class B Common Stock and Class B Warrants, and Class B Warrant shares, excludes nominee possession of Class A Common Stock in certificate form in the name of DTCC and/or Cede & Co. or any other nominee in possession in certificate form. In connection with this Information Letter and the instructions and compliance conditions set forth hereinabove, we have instructed the Transfer Agent that it may NOT under any circumstances provide Class B Common Stock shares, or Class B Warrants to any Class A Common Stock certificated nominee in possession including Cede & Co. and/or the DTCC.

5.

All Class B Common Stock certificates shall bear the following Notice, in addition to a customary restricted stock legend:

CLASS B COMMON STOCK CUSIP NUMBER 19647Y500
NOTICE

PENALTIES AND SANCTIONS REGARDING OPEN FAILS TO DELIVER IN
COLORADO GOLDFIELDS INC. COMMON SHARES
SECURITIES AND EXCHANGE ACT OF 1934,
ANTI-FRAUD RULE 17 CFR 242.10B-21

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, AND APPLICABLE RULES AND REGULATIONS PROMULGATED THEREUNDER REGARDING “SHORT SALES” , THE ISSUER’S CLASS B COMMON STOCK EVIDENCED BY THIS CERTIFICATE AND ASSIGNED CUSIP 19647Y500, MAY NOT BE TRANSFERRED, PLEDGED, HYPOTHECATED, REHYPOTHECATED, PLEDGED IN A BUY-IN, SHARE BORROW, OR USED AS SHARES TO CLOSE, TO FILL, OR OFF-SET ANY OPEN “FAILS TO DELIVER,” RESULTING FROM SHORT SALE TRANSACTIONS IN ISSUER’S CLASS A COMMON STOCK CUSIP 19647Y302 NOR BE DEPOSITED OR TRANSFERRED IN FULFILLMENT OF AN INTRA OR INTER BROKER/DEALER ELECTRONIC BOOK ENTRY, INCLUDING “SHARES DUE BILL” RESULTING FROM SHORT SALE TRANSACTIONS IN ISSUER’S CLASS A COMMON STOCK.

21

6. All Class B Common Stock Warrant certificates shall bear the following Notice, in addition to a customary restricted securities legend:

CLASS B COMMON STOCK WARRANT CUSIP NUMBER 19647Y120
NOTICE

PENALTIES AND SANCTIONS REGARDING OPEN FAILS TO DELIVER IN
COLORADO GOLDFIELDS INC. COMMON SHARES
SECURITIES AND EXCHANGE ACT OF 1934,
ANTI-FRAUD RULE 17 CFR 242.10B-21

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, AND APPLICABLE RULES AND REGULATIONS PROMULGATED THEREUNDER REGARDING “SHORT SALES” , THE ISSUER’S CLASS B COMMON STOCK WARRANT EVIDENCED BY THIS CERTIFICATE AND ASSIGNED CUSIP 19647Y120, MAY NOT BE TRANSFERRED, PLEDGED, HYPOTHECATED, REHYPOTHECATED, PLEDGED IN A BUY-IN, SHARE BORROW, OR USED AS SHARES TO CLOSE, TO FILL, OR OFF-SET ANY OPEN “FAILS TO DELIVER,” RESULTING FROM SHORT SALE TRANSACTIONS IN ISSUER’S CLASS A COMMON STOCK CUSIP 19647Y302 NOR BE DEPOSITED OR TRANSFERRED IN FULFILLMENT OF AN INTRA OR INTER BROKER/DEALER ELECTRONIC BOOK ENTRY, INCLUDING “SHARES DUE BILL” RESULTING FROM SHORT SALE TRANSACTIONS IN ISSUER’S CLASS A COMMON STOCK.

The issuance process is still in progress, as of May 31, 2009 we had issued 28,307,598 Class B restricted common shares and Class B restricted warrants to 2,148 properly presented beneficial owners. As of July 9, 2009, we have issued 35,509,705 Class B restricted common shares and Class B restricted warrants to 3,119 properly presented beneficial owners.

On March 2, 2009, we announced the re-activation agenda for the Pride of the West Mill. Maisel Excavating, LLC will perform initial redistribution of surplus milling by-products to areas on the property that will clear the way for delivering new ore.

We have received many more solicitations for custom milling since the first of the year than we anticipated. We believe that accelerating re-activation of the Mill is a wise strategic move.

The Company’s comprehensive re-activation plan has several components developed collaboratively with the Colorado Division of Reclamation Mining and Safety including a new pond high water line and re-grading for proper drainage for sand tailings or inert material from the upper pond. A new perforated piping system will constantly monitor the ground water level. We will be accelerating mill re-activation activities during the coming quarter.

On July 7, 2009, we announced a milestone completion, which moves the Pride of the West Mill closer to production.

Along with the Company’s operations team and crew, Silverton-based contractor, Maisel Excavating, LLC conducted a redistribution of 19,000 tons of waste rock to other approved areas on the property. This will clear the way for the delivery of new ore. This material is abandoned stockpile which included approximately 12,000 tons of dump material from the Red Mountain Mining District. This material was received by a previous operator as part of a clean up program involving several entities including the EPA, Colorado Division of Minerals and Geology, and the Animas River Stakeholders group. The removal of all this material to the tailing pond is a part of the reclamation plan approved by the Colorado Division of Reclamation and Mining Safety (“DRMS”). The earth moving equipment involved in this phase of the Mill reactivation program includes dump trucks, an excavator, D6 dozer and Colorado Goldfields’ 5 cubic yard LH (Load Haul Dump). The LHD is normally an underground machine but is perfectly adapted to the short hauls involved in this operation.

In accordance with the reclamation plan, a lift of inert rock was placed in the tailings pond adjacent to a sand berm. A portion of the rock lift was in an area of wet slimes. In this area the rock was placed on a geotextile fabric to prevent the rock from being pushed into the slime. This is a technique of construction which was first implemented in the construction of roads, air fields, and helipads in the jungles of Southeast Asia during the 1960s. Above the rock fill, a layer of high clay content material was placed to reduce any transfer of fluids from above or below the waste material fill.

22

On top of this barrier level, sand from the leached out portion of the upper tailings pond was placed to a level higher than the existing lined pond adjacent to the disposal area. Moving the sand entailed the relocation of an additional 2500-3000 cubic yards of material. The dump rock is then placed on the sand to a level close to the level of the top of the berm. The finished disposal area will be covered with bank run inert material or screened material from the same source. This will be graded such as to allow all water to run off onto the lower tailings pond.

Three Months Ended May 31, 2009 Compared to the Three Months Ended May 31, 2008

For the three months ended May 31, 2009, we incurred a net loss of approximately $1,918,000 compared to a net loss of approximately $439,000 for the three months ended May 31, 2008.

General and administrative costs were $1,732,000 and $317,000 for the three months ended May 31, 2009 and 2008, respectively, an increase of $1,415,000 primarily due to an increase in consulting services, stock based compensation and website design and maintenance costs. The Company incurred consulting expense of $546,000 during the three months ended May 31, 2009 compared to $15,000 during the same period in fiscal year 2008. The increase is due to expenses related to capital structure analysis, technology improvements, and increasing shareholder value through extensive corporate communications. Stock based compensation increased $682,000 from $38,000 for the three months ended May 31, 2008 to $720,000 for the three months ended May 31, 2009. During the three months ended May 31, 2009 the Company approved the issuance of 50,000,000 Class A common shares to key employees, directors and consultants which resulted in the recognition of $665,000 in stock based compensation. Website design and maintenance costs increased to $224,000 from $400 for the three months ended May 31, 2009 and 2008, respectively, due to the hiring of independent consultants to re-design the Company’s website.

For the three months ended May 31, 2009 and 2008, mineral property and exploration costs were $90,000 and $15,000, respectively. The increase during the three months ended May 31, 2009 is due to accretion of $10,000 related to the asset retirement obligation of the Company, $64,000 of consulting services regarding the exploration properties and best use of the surrounding land and $20,000 of geological consulting.

Professional fees were $77,000 and $101,000 for the three months ended May 31, 2009 and 2008, respectively. The decrease for the three months ended May 31, 2009 is due to lower legal securities related fees due to the fact that during the three months ended May 31, 2008, the Company incurred over $24,000 related to the Company’s S-8 and S-1 registrations, $16,000 in financing issues and $5,000 regarding a potential acquisition. The Company did not incur similar expenses during the three months ended May 31, 2009 but did incur cost relating the litigation relating to the Company’s former CEO and other securities matters.

Interest expense was $19,000 and $11,000 for the three months ended May 31, 2009 and 2008, respectively. For both periods the Company incurred interest expense related to the mortgage on the Pride of the West Mill, which was purchased in June 2007. The Company also incurred interest expense on its notes payable and promissory notes payable during the three months ended May 31, 2009.

Nine Months Ended May 31, 2009 Compared to the Nine Months Ended May 31, 2008

For the nine months ended May 31, 2009 and 2008, we incurred a net loss of approximately $4,516,000 and approximately $1,944,000, respectively.

General and administrative costs were $3,784,000 and $1,372,000 for the nine months ended May 31, 2009 and 2008, respectively, an increase of $2,412,000 primarily due to increases in consulting services, employee related expenses and website design. The Company incurred consulting expense of $1,892,000 during the nine months ended May 31, 2009 compared to $15,000 during the same period in fiscal year 2008. The increase is due to expenses related to capital structure analysis, technology improvements, and increasing shareholder value through extensive corporate communications. Salary and related payroll tax expense was $451,000 and $182,000 for the nine months ended May 31, 2009 and 2008, respectively. The increase in salary and payroll tax expense is due to the Company having three employees during the majority of the nine months ended May 31, 2009 and the issuance of $163,000 in stock based bonuses to the Company’s Chief Financial Officer. Website design and maintenance costs increased to $224,000 from $2,000 for the nine months ended May 31, 2009 and 2008, respectively, due to the hiring of consultants to re-design the Company’s website during April 2009.

23

For the nine months ended May 31, 2009 and 2008, mineral property and exploration costs were $500,000 and $200,000, respectively. The increase during the nine months ended May 31, 2009 is due to the completion of an extensive drilling program on the Gold King property, which commenced during the summer of 2008 and concluded during the fall of 2008, compared to the completion of a small drill program during the same period in the prior year.

Professional fees were $197,000 and $347,000 for the nine months ended May 31, 2009 and 2008, respectively. The decrease for the nine months ended May 31, 2009 is due to lower legal fees. Legal fees were lower due to the fact that during the nine months ended May 31, 2008, the Company incurred over $84,000 related to the Company’s SB-2 registration and subsequent amendment, $60,000 related to the Company’s August 31, 2007 Form 10-KSB filing, $24,000 in S-1 and S-8 registrations and $18,000 in environmental compliance issues. The Company was able to reduce its legal fees during the nine months ended May 31, 2009 due to the absence of the SB-2 registration and more efficiency in all other regulatory filings.

Interest expense was $51,000 and $37,000 for the nine months ended May 31, 2009 and 2008, respectively. For both periods the Company incurred interest expense related to the mortgage on the Pride of the West Mill, which was purchased in June 2007. The Company also incurred interest expense on its notes payable and promissory notes payable of $6,000 and $8,000, respectively for the nine months ended May 31, 2009.

Critical Accounting Policies

We have identified the following critical accounting policies, which were used in the preparation of our financial statements.

Exploration and Development Costs: Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially minable property. When it has been determined that a mineral property can be economically developed as a result of established proven and probable reserves, the costs to develop such property will be capitalized. Costs of abandoned projects will be charged to operations upon abandonment.

Long-lived Assets: We periodically evaluate the carrying value of property, plant and equipment costs, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for Impairment or Disposal of Long-Lived Assets.

Property Retirement Obligation: SFAS 143, Accounting for Asset Retirement Obligations, requires the fair value of a liability for an asset retirement obligation to be recognized in the period that it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Accretion expense is recorded in each subsequent period to recognize the changes in the liability resulting from the passage of time. Changes resulting from revisions to the original fair value of the liability are recognized as an increase or decrease in the carrying amount of the liability and the related asset retirement costs capitalized as part of the carrying amount of the related long-lived asset.

Stock- Based Compensation: SFAS 123(R), Share-Based Payment, requires the recognition of the cost of employee services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. SFAS 123(R) also requires the stock option compensation expense to be recognized over the period during which an employee is required to provide service in exchange for the award (the requisite service period). We utilize the Black-Scholes option-pricing model to determine fair value, which requires us to make judgments relating to the inputs required to be included in the model. In this regard, the expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected life of the stock options. The U.S. Treasury bill rate for the expected life of the stock options is utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding. We do not have historical exercise trends to analyze. Therefore, the expected term used by management was calculated in accordance with the Staff Accounting Bulletin 107 Share-Based Payment (“SAB 107”) for “plain-vanilla” options.

24

Recent Accounting Pronouncements

Effective September 1, 2008 the Company partially adopted SFAS No. 157, Fair Value Measurements. This statement does not require any new fair value measurements but provides guidance on how to measure fair value and clarifies the definition of fair value under accounting principles generally accepted in the United States of America. The statement also requires new disclosures about the extent to which fair value measurements in financial statements are based on quoted market prices, market-corroborated inputs, or unobservable inputs that are based on management’s judgments and estimates. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Dates of FASB Statement No. 157 (the “FSP”). The FSP amends SFAS 157 to delay its effective date for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). For items within its scope, the FSP defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The statement will be applied prospectively by the Company for any fair value instruments that arise after the date of adoption. The partial adoption of SFAS No. 157 did not have a material impact on our financial statements.

To increase consistency and comparability in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs into valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

As of May 31, 2009, the Company had the following financial assets and liabilities which are measured at fair value:

	Level 1		Level 2		Level 3
Restricted cash		—	$	318,154		—

The Company has no financial assets or liabilities measured at fair value using Level 1 or Level 3 inputs.

Effective September 1, 2008 the Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. This statement permits entities to choose to measure eligible items at fair value at specified election dates. The adoption of SFAS No. 159 did not have a material impact on our financial statements.

25

Item 4T. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

Under the supervision of, and the participation of, our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of our disclosure controls and procedures as of May 31, 2009. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of May 31, 2009 as a result of the material weakness in internal control over financial reporting due to lack of segregation of duties and a limited corporate governance structure as discussed in Item 9A of the Company’s Form 10-K for the fiscal year ended August 31, 2008.

While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in most exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.

(b) Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

26

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Except for the proceedings described below, we are not currently subject to any legal proceedings, and to the best of our knowledge no such proceeding is threatened the results of which would have a material impact on our properties, results of operation or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

Mines and mining claims nearby the San Juan Properties are owned by other parties. Because the various mines possibly have interconnections between adits and tunnels and common stormwater conveyances and treatment sites, the environmental issues are both factually complex and legally complex. Disputes among the various property owners, over environmental liabilities, responsibility for clean-up and maintenance of the sites and facilities, and responsibility for site remediation continue.

The Gold King Property is subject to federal, state and local regulations regarding environmental conditions at the site and activities at the site. In August 2007, we filed a “Notice of Intent to Conduct Prospecting Operations for Hard Rock/Metal Mines” with the State of Colorado, Division of Reclamation, Mining and Safety governing our proposed surface drilling activities at the Gold King and Mogul Properties, and we were approved for drilling on five pads. In addition, in June 2008 we filed a Notice of Intent seeking approval for drilling on another four pads.

The Gold King Property has an active, acid mine drainage occurring from the Gold King #7 Level. This mine water flow has substantially increased in volume since 2000, and recent flow measurements have shown a large increase in flows. This water discharge is believed by our management to originate substantially from the 2150 vein workings of the Sunnyside Mine, which is owned by another company, and which vein workings extend into the Gold King Property. To date, our management has not been able to prove the origin of this water flow.

We are in negotiations with the Water Quality Control Division (“WQCD”) of the Colorado Department of Public Health and Environment to authorize us and San Juan Corp. to undertake reconnaissance and mitigate activities to hopefully prevent a potential “blow out” of underground blockages at the Gold King Mine, which if it occurred could be a potential threat to public health. We are also in negotiations with the WQCD to obtain a discharge permit and we are working towards plans to develop the support necessary to construct the treatment works necessary to comply with a discharge permit. In connection with our environmental and permitting efforts, we have hired an environmental remediation specialist to assist us with our negotiations and permitting process with the WQCD.

We received correspondence from the State of Colorado Attorney General’s Office stating that the Company was required to apply for a stormwater discharge permit for the Gold King Mine by the end of January 2008. We applied for the stormwater discharge permit in January 2008, and received Permit COR-040237 for the Gold King Mine on January 28, 2008. The stormwater permit requires a Stormwater Management Plan for the site, and we have incorporated such a plan into an existing Environmental Management Plan for the Gold King Mine.

Permitting requirements can be a costly undertaking and we could be at risk for fines and penalties if required permits are not timely in place.

The Pride of the West Mill is currently under a Cease and Desist Order from the Colorado Division of Reclamation, Mining and Safety that was issued against a previous operator. The Cease and Desist Order prohibits operation of the Pride of the West Mill until deficiencies in the mill tailing impoundment area, the mill drain water impoundment area, and other problems are corrected.

We have met with personnel from the Colorado Division of Reclamation, Mining and Safety to discuss the correction of these deficiencies. In September-October 2007, we engaged contractors to re-roof a substantial portion of the main mill building at a cost of approximately $90,000. The Company engaged an engineering firm to design a new tailings impoundment for the Pride of the West Mill and to address claimed deficiencies in the mill drainwater impoundment; we received a design on June 17, 2008. This design will be submitted to DRMS as a “technical revision” of the Pride of the West Mill permit M-1984-049.

27

As part of their annual inspection in November 2008, the Division of Reclamation, Mining and Safety has notified the Company that an additional $37,827 is required as a financial warranty for the Company’s reclamation work at the Pride of the West Mill. After discussions and negotiations with the Division of Reclamation, Mining and Safety, the Notice of Increase in Financial Warranty has been withdrawn.

On March 2, 2009 our former legal counsel, filed a Complaint in District Court, Denver, Colorado, claiming breach of contract of the promissory note executed by the Company October 2, 2008 (Note 5). The Company disputes the breach. The Complaint has been answered, the parties have exchanged basic discovery information in accordance with Rule C.R.C.P. 26(a), and a trial date has been set for September 18, 2009. The ultimate outcome of the litigation is uncertain.

On April 6, 2009, Todd C. Hennis (the former President and CEO of the Company), and entities San Juan Corp., and Salem Minerals Inc. (which are substantially owned by Mr. Hennis), served upon the Company a Complaint seeking among other things, a $100,000 payment pursuant to the option agreement (Note 6a), and release from his shareholder lock-up agreement and from Rule 144 trading restrictions on approximately 50,000,000 shares of Class A Common Stock held by Hennis. Our counsel advises that the Hennis complaint is barred due to Hennis’s affiliate and control person status and moreover is filed in bad faith, since among other things, on June 17, 2008 as President and CEO of the Company, Hennis elected not to pay the option fee then due. We received a written settlement offer from Mr. Hennis two days after the Company was served on April 8, 2009. A Counter-claim with jury demand has been filed against Mr. Hennis and his entities for wrongful conversion, breach of duty of loyalty, lack of good faith, breach of fiduciary duty, and significant conflicts of interest. No trial date has been set. At this early stage, the outcome of the litigation is not certain; however, it does appear that we have legitimate defenses to mitigate damages, if any exist. Even though we have valid claims as against Mr. Hennis, we continue to pursue settlement. We intend and are confident that a mutually acceptable settlement will be reached in the near future. However, the ultimate outcome of the proceeding is uncertain.

28

Item 1A. Risk Factors.

A restated description of some of the risk factors associated with our business is set forth below. This description includes any material changes to and supersedes the description of the risk factors included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2008. The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations and financial condition.

We Have Material Future Financing Needs

Our business model requires additional financing. No assurance can be given that additional financing will be available to us on acceptable terms, if at all. If we raise additional funds by issuing additional equity securities, further dilution to existing equity holders will result. If adequate additional funds are not available, we may be required to curtail significantly our long-term business objectives and our results from operations may be materially and adversely affected. Accordingly, there is substantive doubt whether we can fulfill our business plan or commence revenue generating operations.

The Market Price for Our Common Stock Will Likely Be Volatile and May Change Dramatically At Any Time

The market price of our common stock, like that of the securities of other early-stage companies, may be highly volatile. Our stock price may change dramatically as the result of announcements of our quarterly results, the rate of our expansion, significant litigation or other factors or events that would be expected to affect our business or financial condition, results of operations and other factors specific to our business and future prospects. In addition, the market price for our common stock may be affected by various factors not directly related to our business, including the following:

• intentional manipulation of our stock price by existing or future stockholders;

• Short selling activity by certain investors, including any failures to timely settle short sale transactions;

• a single acquisition or disposition, or several related acquisitions or dispositions, of a large number of our shares;

• the interest, or lack of interest, of the market in our business sector, without regard to our financial condition or results of operations;

• the adoption of governmental regulations and similar developments in the United States or abroad that may affect our ability to offer our products and services or affect our cost structure;

• developments in the businesses of companies that purchase our products; and

• economic and other external market factors, such as a general decline in market prices due to poor economic indicators or investor distrust.

In addition to the other information provided in this Form 10-Q, you should carefully consider the risk factors contained in our Annual Report on Form 10-K, which may be accessed at:

http://www.sec.gov/Archives/edgar/data/1344394/000136231008007763/0001362310-08-007763-index.htm,

in evaluating our business before purchasing our common stock. Our exploration activities are highly risky and speculative; accordingly, an investment in our common stock shares involves a high degree of risk. You should not invest in our common stock if you cannot afford to lose your entire investment. In considering an investment in our common shares, you should carefully consider all of the other information contained in our filings with the Securities and Exchange Commission.

29

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.

30

Item 6. Exhibits and Financial Statement Schedules.

Exhibit Index

Exhibit
Number		Description
	2	Articles of Merger between Colorado Goldfields Inc. (surviving entity) and Garpa Resources, Inc., effective June 18, 2007. Filed with Form 8-K dated June 20, 2007, and incorporated herein by reference.
	3.2	Amended and Restated Bylaws filed as Exhibit 3.1 to Form 8-K dated September 4, 2008 and incorporated herein by reference.
	4.1	2008 Non-Qualified Consultants & Advisors Stock Compensation Plan. Filed as Exhibit 4.1 to the Registration Statement on Form S-8 dated September 17, 2008 (SEC file # 333-153528) and incorporated herein by reference.
	10.1	Option Agreement, Gold King, Mayflower and Mogul Properties, between San Juan Corp., Todd C. Hennis, and Garpa Resources, Inc., dated June 17, 2007. Filed as Exhibit 10.1 to Form 8-K dated June 26, 2007, and incorporated herein by reference.
	10.2	Executive Employment Agreement between Garpa Resources, Inc. and Todd C. Hennis dated June 17, 2007. Filed as Exhibit 10.2 to Form 8-K dated June 26, 2007, and incorporated herein by reference.
	10.3	Purchase and Sale Agreement between Tusco Incorporated and Garpa Resources, Inc. dated June 13, 2007, relating to the Pride of the West Mill. Filed as Exhibit 10.1 to Form 8-K/A dated June 28, 2007, and incorporated herein by reference.
	10.4	Amendment to Option Agreement between San Juan Corp., Todd C. Hennis, and Colorado Goldfields Inc. (fka Garpa Resources, Inc.), dated November 8, 2007. Filed as Exhibit 10.1 to Form 8-K dated November 13, 2007, and incorporated herein by reference.
	10.5	Form of Private Placement Subscription Agreement (Offshore Subscribers). Filed as Exhibit 10.1 to Form 8-K dated November 15, 2007, and incorporated herein by reference.
	10.6	Form of Private Placement Subscription Agreement (U.S. Subscribers). Filed as Exhibit 10.2 to Form 8-K dated November 15, 2007, and incorporated herein by reference.
	10.7	Option Contract (for Royalties) between Recreation Properties LTD., Thomas A. Warlick and Colorado Goldfields Inc. dated December 19, 2007. Filed with the Registration Statement on Form SB-2, filed January 11, 2008 and incorporated herein by reference.
	10.8	2008 Stock Incentive Plan. Filed as exhibit 10.11 to Form 8-K filed February 20, 2008, and incorporated herein by reference.
	10.9	Letter of Intent between Colorado Goldfields Inc. dated March 17, 2008 and C.P. Victor Salas Gamero, Ing., Victor Salas Martos, and Liliana Salas (“Sellers”) owners of 100% of the capital stock of Besmer, S.A. de C.V. Filed as exhibit 10.12 to Form 8-K filed March 18, 2008, and incorporated herein by reference.
	10.10	Addendum To The Letter Of Intent dated March 12, 2008. Filed as exhibit 10.1 to Form 8-K filed May 5, 2008, and incorporated herein by reference.
	10.11	Employment Agreement: C. Stephen Guyer dated July 31, 2008. Filed as Exhibit 10.1 to Form 8-K filed August 4, 2008, and incorporated herein by reference.
	10.12	Standby Equity Distribution Agreement dated August 29, 2008 between YA Global Investments, L.P. and Colorado Goldfields Inc. Filed as Exhibit 10.1 to Form 8-K filed September 4, 2008, and incorporated herein by reference.
	10.13	Registration Rights Agreement dated August 29, 2008 between YA Global Investments, L.P. and Colorado Goldfields Inc. Filed as Exhibit 10.2 to Form 8-K filed September 4, 2008, and incorporated herein by reference.

31

Exhibit
Number		Description
	10.14	2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on September 17, 2008 and incorporated herein by reference.
	10.15	2008 Employee and Director Stock Compensation Plan. Filed as exhibit 10.1 to Form 8-K filed on November 14, 2008 and incorporated herein by reference.
	10.16	Employment Agreement: Lee R. Rice dated September 10, 2008. Filed as Exhibit 10.1 to Form 8-K filed December 17, 2008, and incorporated herein by reference.
	10.17	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on January 23, 2009 and incorporated herein by reference.
	10.18	Amendment to 2008 Employee and Director Stock Compensation Plan. Filed as exhibit 4.1 to Form S-8 filed on January 23, 2009 and incorporated herein by reference.
	10.19	Form RW filed with the Securities and Exchange Commission on February 17, 2009 and incorporated herein by reference.
	10.20	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on April 3, 2009 and incorporated herein by reference.
	10.21	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on June 26, 2009 and incorporated herein by reference.
	14	Code of Business Conduct and Ethics. Filed as Exhibit 14 to Form 8-K filed February 20, 2008, and incorporated herein by reference.
	31.1	Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Executive Officer*
	31.2	Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Financial Officer*
	32.1	Certification Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Principal Executive Officer*
	32.2	Certification Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Chief Financial Officer*

* Filed herewith.

32

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.

Colorado Goldfields Inc.
By:	/s/ Lee R. Rice
	Lee R. Rice
	Chief Executive Officer
By:	/s/ C. Stephen Guyer
	C. Stephen Guyer
	Chief Financial Officer & Principal Accounting Officer

10 July 2009

33

CERTIFICATIONS