UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549




**Form
      10-Q**




x
            Quarterly
                report pursuant Section 13 or 15(d) of the Securities Exchange Act
                of
                1934


For
      the
      quarterly period ended September 30, 2008




o
            Transition
                report pursuant Section 13 or 15(d) of the Securities Exchange Act
                of
                1934


For
      the
      transition period from _______ to _______.




Commission
      file number 000-30995




**SEARCHLIGHT
      MINERALS CORP.**




**(Exact
      name of registrant as specified in its charter)**




**Nevada**
              **(State
                or other jurisdiction of incorporation or
                organization)**
            **98-0232244**
              **(I.R.S.
                Employer Identification No.)****#120
                - 2441 West Horizon Ridge Pkwy.**
              **Henderson,
                Nevada**
              **(Address
                of principal executive offices)**
            **89052**
              **(Zip
                code)**




**(702)
      939-5247**


**(Registrant’s**  **telephone
      number, including area code)**




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
x 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 xNon-accelerated
                filer o
            Smaller
                reporting company o(Do
                not check if a smaller reporting company)




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




Yes
o  No
x





As
      of
      November 10, 2008, the registrant had 105,847,345 outstanding shares of common
      stock.









TABLE
      OF
      CONTENTS


PART
                  I – FINANCIAL INFORMATION
              3Item
                  1. Financial Statements
              3Item
                  2. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operations
              32Item
                  3. Quantitative and Qualitative Disclosures About Market
                  Risk
              52Item
                  4. Controls and Procedures
              52PART
                  II - OTHER INFORMATION
              52Item
                  1. Legal Proceedings
              52Item
                  1A. Risk Factors
              53Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              53Item
                  3. Defaults Upon Senior Securities
              53Item
                  4. Submission of Matters to a Vote of Security Holders
              53Item
                  5. Other Information
              53Item
                  6. Exhibits
              55SIGNATURES
              56




2




**PART
      I** **–
      FINANCIAL INFORMATION**




**Item
      1. Financial Statements**




SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
          BALANCE SHEETS
 (UNAUDITED)


September
                  30, 2008
              
              December
                  31, 2007(restated)ASSETSCurrent
                  assetsCash
                  and cash equivalents
              
              $
              9,809,302
              
              $
              12,007,344Prepaid
                  expenses
              
              
              254,272
              
              
              192,789Total
                  current assets
              
              
              10,063,574
              
              
              12,200,133Property
                  and equipment, net
              
              
              11,377,569
              
              
              5,064,460Mineral
                  properties
              
              
              16,947,419
              
              
              12,702,258Slag
                  project
              
              
              120,766,877
              
              
              120,766,877Land
                  - smelter site and slag pile
              
              
              5,916,150
              
              
              5,916,150Land
              
              
              3,300,000
              
              
              3,300,000Reclamation
                  bond and deposits, net
              
              
              103,100
              
              
              183,000Total
                  non-current assets
              
              
              158,411,115
              
              
              147,932,745Total
                  assets
              
              $
              168,474,689
              
              $
              160,132,878LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilitiesAccounts
                  payable
              
              $
              900,494
              
              $
              849,910Accounts
                  payable - related party
              
              
              65,526
              
              
              41,974VRIC
                  payable, current portion
              
              
              190,912
              
              
              179,830Capital
                  lease payable, current portion
              
              
              23,761
              
              
              22,983Total
                  current liabilities
              
              
              1,180,693
              
              
              1,094,697Long-term
                  liabilitiesVRIC
                  payable, net of current portion
              
              
              2,008,928
              
              
              2,153,530Capital
                  lease payable, net of current portion
              
              
              46,399
              
              
              64,317Deferred
                  tax liability
              
              
              50,914,652
              
              
              50,619,658Total
                  long-term liabilities
              
              
              52,969,979
              
              
              52,837,505Total
                  liabilities
              
              
              54,150,672
              
              
              53,932,202Stockholders'
                  equityCommon
                  stock, $0.001 par value; 400,000,000 sharesauthorized,
                  105,847,345 and 96,865,391 shares,respectively,
                  issued and outstanding
              
              
              105,847
              
              
              96,865Additional
                  paid-in capital
              
              
              126,809,741
              
              
              116,223,907Common
                  stock subscribed
              
              
              -
              
              
              108,000Accumulated
                  deficit during exploration stage
              
              
              (12,591,571
              )
              
              (10,228,096
              )Total
                  stockholders' equity
              
              
              114,324,017
              
              
              106,200,676Total
                  liabilities and stockholders' equity
              
              $
              168,474,689
              
              $
              160,132,878




See
      Accompanying Notes to these Consolidated Financial
      Statements




3


SEARCHLIGHT
          MINERALS CORP.
 (AN
            EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
            STATEMENTS OF OPERATIONS
 (UNAUDITED)


For
                  the three months ended
              
              For
                  the nine months ended
              
              For the period
                  from
                  January 14,
                  2000
                  (Date of
                  Inception)
                  ThroughSeptember
                  30, 2008
              
              September
                  30, 2007
              
              September
                  30, 2008
              
              September
                  30, 2007
              
              September
                  30, 2008(restated)
              
              
              
              (restated)Revenue
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  expensesMineral
                  exploration and evaluation expenses
              
              
              392,323
              
              
              199,961
              
              
              841,231
              
              
              810,539
              
              
              4,902,941Mineral
                  exploration and evaluationexpenses
                  - related party
              
              
              90,000
              
              
              90,000
              
              
              270,000
              
              
              270,000
              
              
              1,125,000Administrative
                  - Clarkdale site
              
              
              310,822
              
              
              -
              
              
              818,730
              
              
              -
              
              
              1,332,489General
                  and administrative
              
              
              573,302
              
              
              471,209
              
              
              1,854,331
              
              
              1,374,668
              
              
              5,462,181General
                  and administrative - related party
              
              
              33,335
              
              
              23,017
              
              
              60,460
              
              
              23,017
              
              
              85,721Depreciation
              
              
              15,658
              
              
              11,710
              
              
              46,210
              
              
              25,952
              
              
              91,220Total
                  operating expenses
              
              
              1,415,440
              
              
              795,897
              
              
              3,890,962
              
              
              2,504,176
              
              
              12,999,552Loss
                  from operations
              
              
              (1,415,440
              )
              
              (795,897
              )
              
              (3,890,962
              )
              
              (2,504,176
              )
              
              (12,999,552
              )Other
                  income (expense):Rental
                  revenue
              
              
              7,740
              
              
              8,515
              
              
              24,780
              
              
              28,095
              
              
              61,190Loss
                  on equipment disposition
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,526
              )Interest
                  expense
              
              
              (832
              )
              
              (1,049
              )
              
              (2,669
              )
              
              (1,049
              )
              
              (4,731
              )Interest
                  and dividend income
              
              
              48,369
              
              
              94,580
              
              
              187,209
              
              
              246,320
              
              
              578,572Total
                  other income (expense)
              
              
              55,277
              
              
              102,046
              
              
              209,320
              
              
              273,366
              
              
              569,315Loss
                  before income taxes
              
              
              (1,360,163
              )
              
              (693,851
              )
              
              (3,681,642
              )
              
              (2,230,810
              )
              
              (12,369,047
              )Income
                  tax benefit
              
              
              449,263
              
              
              270,094
              
              
              1,318,167
              
              
              810,282
              
              
              3,920,644Loss
                  from continuing operations
              
              
              (910,900
              )
              
              (423,757
              )
              
              (2,363,475
              )
              
              (1,420,528
              )
              
              (8,448,403
              )Discontinued
                  operations:Loss
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,143,168
              )Net
                  loss
              
              $
              (910,900
              )
              $
              (423,757
              )
              $
              (2,363,475
              )
              $
              (1,420,528
              )
              $
              (12,591,571
              )Loss
                  per common share - basic and dilutedLoss
                  from continuing operations
              
              $
              (0.01
              )
              $
              (0.005
              )
              $
              (0.02
              )
              $
              (0.02
              )Loss
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  loss
              
              $
              (0.01
              )
              $
              (0.005
              )
              $
              (0.02
              )
              $
              (0.02
              )Weighted
                  average common shares outstanding -Basic
                  and diluted
              
              
              105,766,452
              
              
              93,003,914
              
              
              103,831,592
              
              
              87,427,516


See
        Accompanying Notes to these Consolidated Financial
        Statements
  4
 
 SEARCHLIGHT
              MINERALS CORP.
 (AN
                EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
                STATEMENT OF STOCKHOLDERS' EQUITY
 (UNAUDITED)
 AccumulatedAdditional
                  
                  Common
                  
                  Deficit
                      During
                  
                  TotalCommon
                      Stock
                  
                  Paid-in
                  
                  Stock
                  
                  Exploration
                  
                  Stockholders'Shares
                  
                  Amount
                  
                  Capital
                  
                  Subscribed
                  
                  Stage
                  
                  EquityBalance,
                      December 31, 2007 (restated)
                  
                  
                  96,865,391
                  
                  $
                  96,865
                  
                  $
                  116,223,907
                  
                  $
                  108,000
                  
                  $
                  (10,228,096
                  )
                  $
                  106,200,676Issuance
                      of common stockfor
                      cash, $0.65 per sharefrom
                      exercise of warrants
                  
                  
                  3,890,000
                  
                  
                  3,890
                  
                  
                  2,524,610
                  
                  
                  (65,000
                  )
                  
                  -
                  
                  
                  2,463,500Issuance
                      of common stockfor
                      cash Reg. S - PrivatePlacement,
                      $1.60 per share
                  
                  
                  1,637,500
                  
                  
                  1,638
                  
                  
                  2,618,362
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,620,000Issuance
                      of common stockfor
                      cash Reg. D - PrivatePlacement,
                      $1.60 per share
                  
                  
                  1,643,750
                  
                  
                  1,644
                  
                  
                  2,628,356
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,630,000Issuance
                      of commonstock
                      as commissionin
                      connection withforeign
                      offering
                  
                  
                  80,000
                  
                  
                  80
                  
                  
                  (80
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -Amortization
                      of stock optionsissued
                      to officer overvesting
                      period
                  
                  
                  -
                  
                  
                  -
                  
                  
                  859
                  
                  
                  -
                  
                  
                  -
                  
                  
                  859Issuance
                      of common stockfor
                      cash, $0.25 per shareexercise
                      of nonemployee stock options
                  
                  
                  200,000
                  
                  
                  200
                  
                  
                  49,800
                  
                  
                  (25,000
                  )
                  
                  -
                  
                  
                  25,000Issuance
                      of common stockfor
                      directors' compensation
                  
                  
                  11,768
                  
                  
                  11
                  
                  
                  35,989
                  
                  
                  (18,000
                  )
                  
                  -
                  
                  
                  18,000Issuance
                      of common stockfor
                      mining claims
                  
                  
                  1,400,000
                  
                  
                  1,400
                  
                  
                  2,630,600
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,632,000Effect
                      of modification of stock optionsissued
                      to an employee
                  
                  
                  -
                  
                  
                  -
                  
                  
                  36,457
                  
                  
                  -
                  
                  
                  -
                  
                  
                  36,457Common
                      stock subscribedfor
                      directors' compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  18,000
                  
                  
                  -
                  
                  
                  18,000Issuance
                      of common stockfor
                      cash, $0.25 per share fromexercise
                      of nonemployee stock options
                  
                  
                  100,000
                  
                  
                  100
                  
                  
                  24,900
                  
                  
                  -
                  
                  
                  -
                  
                  
                  25,000Issuance
                      of common stockfor
                      directors' compensation
                  
                  
                  18,936
                  
                  
                  19
                  
                  
                  35,981
                  
                  
                  (18,000
                  )
                  
                  -
                  
                  
                  18,000Net
                      loss September 30, 2008
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (2,363,475
                  )
                  
                  (2,363,475
                  )Balance,
                      September 30, 2008
                  
                  
                  105,847,345
                  
                  $
                  105,847
                  
                  $
                  126,809,741
                  
                  $
                  -
                  
                  $
                  (12,591,571
                  )
                  $
                  114,324,017
 See
          Accompanying Notes to these Consolidated Financial
          Statements
  5
 SEARCHLIGHT
                MINERALS CORP.
 (AN
                  EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
                  STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Period
                          fromJanuary
                          14, 2000(Date
                          of inception)For
                          the nine months ended
                      
                      throughSeptember
                          30, 2008
                      
                      September
                          30, 2007
                      
                      September
                          30, 2008(restated)CASH
                          FLOWS FROM OPERATING ACTIVITIESNet
                          loss
                      
                      $
                      (2,363,475
                      )
                      $
                      (1,420,528
                      )
                      $
                      (12,591,571
                      )Deduct:
                          Loss from discontinued operations
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (4,143,168
                      )Loss
                          from continuing operations
                      
                      
                      (2,363,475
                      )
                      
                      (1,420,528
                      )
                      
                      (8,448,403
                      )Adjustments
                          to reconcile loss from operatingto
                          net cash used in operating activities:Depreciation
                      
                      
                      46,210
                      
                      
                      25,946
                      
                      
                      91,220Stock
                          based expenses
                      
                      
                      91,316
                      
                      
                      -
                      
                      
                      1,049,478Loss
                          on disposition of fixed assets
                      
                      
                      -
                      
                      
                      -
                      
                      
                      5,875Amortization
                          of prepaid expense
                      
                      
                      131,235
                      
                      
                      26,453
                      
                      
                      301,648Allowance
                          for bond deposit recovery
                      
                      
                      180,500
                      
                      
                      -
                      
                      
                      180,500Changes
                          in operating assets and liabilities:Other
                          current assets
                      
                      
                      (179,960
                      )
                      
                      (225,606
                      )
                      
                      (543,162
                      )Other
                          assets
                      
                      
                      (100,600
                      )
                      
                      -
                      
                      
                      (283,600
                      )Accounts
                          payable and accrued liabilities
                      
                      
                      (279,889
                      )
                      
                      (360,319
                      )
                      
                      (113,563
                      )Deferred
                          income taxes
                      
                      
                      (1,318,167
                      )
                      
                      (810,282
                      )
                      
                      (3,920,644
                      )Net
                          cash used in operating activities
                      
                      
                      (3,792,830
                      )
                      
                      (2,764,336
                      )
                      
                      (11,680,651
                      )Net
                          cash used in operating activities from discontinued
                          operations
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (2,931,324
                      )CASH
                          FLOW FROM INVESTING ACTIVITIESCash
                          paid on mineral property claims
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (87,134
                      )Cash
                          paid for joint venture and merger option
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (890,000
                      )Cash
                          paid to VRIC on closing date
                      
                      
                      -
                      
                      
                      (9,900,000
                      )
                      
                      (9,900,000
                      )Cash
                          paid for additional acquisition costs
                      
                      
                      -
                      
                      
                      (130,105
                      )
                      
                      (130,105
                      )Capitalized
                          interest
                      
                      
                      (136,480
                      )
                      
                      (114,934
                      )
                      
                      (298,652
                      )Purchase
                          of property and equipment
                      
                      
                      (5,881,572
                      )
                      
                      (3,016,149
                      )
                      
                      (10,078,954
                      )Net
                          cash used in investing activities
                      
                      
                      (6,018,052
                      )
                      
                      (13,161,188
                      )
                      
                      (21,384,845
                      )Net
                          cash used in investing activities from discontinued
                          operations
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (452,618
                      )CASH
                          FLOW FROM FINANCING ACTIVITIESProceeds
                          from stock issuance
                      
                      
                      7,763,500
                      
                      
                      21,713,817
                      
                      
                      43,539,501Stock
                          issuance costs
                      
                      
                      -
                      
                      
                      (677,570
                      )
                      
                      (677,570
                      )Principal
                          payments on capital lease payable
                      
                      
                      (17,140
                      )
                      
                      (23,351
                      )
                      
                      (46,079
                      )Principal
                          payments on deferred purchase liability
                      
                      
                      (133,520
                      )
                      
                      (125,066
                      )
                      
                      (301,348
                      )Proceeds
                          from subscribed stock
                      
                      
                      -
                      
                      
                      25,000
                      
                      
                      360,000Net
                          cash provided by financing activities
                      
                      
                      7,612,840
                      
                      
                      20,912,830
                      
                      
                      42,874,504Net
                          cash provided by financing activities from discontinued
                          operations
                      
                      
                      -
                      
                      
                      -
                      
                      
                      3,384,236NET
                          CHANGE IN CASH AND CASH EQUIVALENTS
                      
                      
                      (2,198,042
                      )
                      
                      4,987,306
                      
                      
                      9,809,302CASH
                          AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                      
                      
                      12,007,344
                      
                      
                      3,684,248
                      
                      
                      -CASH
                          AND CASH EQUIVALENTS AT END OF PERIOD
                      
                      $
                      9,809,302
                      
                      $
                      8,671,554
                      
                      $
                      9,809,302
 See
              Accompanying Notes to these Consolidated Financial
              Statements
 6
 SEARCHLIGHT
                      MINERALS CORP.
 (AN
                        EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
                        STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Period
                                fromJanuary
                                14, 2000(Date
                                of inception)For
                                the nine months ended
                            
                            throughSeptember
                                30, 2008
                            
                            September
                                30, 2007
                            
                            September
                                30, 2008CONSOLIDATED
                                STATEMENTS OF CASH FLOWS (continued)SUPPLEMENTAL
                                INFORMATIONInterest
                                Paid, net of capitalized amounts
                            
                            $
                            2,669
                            
                            $
                            1,049
                            
                            $
                            55,482Income
                                Taxes Paid
                            
                            $
                            -
                            
                            $
                            -
                            
                            $
                            -Non-cash
                                investing and financing activities:Capital
                                equipment purchased throughaccounts
                                payable and financing
                            
                            $
                            341,267
                            
                            $
                            116,239
                            
                            $
                            785,957Assets
                                acquired for common stock issued for the acquisition
                            
                            $
                            -
                            
                            $
                            66,879,375
                            
                            $
                            66,879,375Assets
                                acquired for common stock issued for mineral properties
                            
                            $
                            2,632,000
                            
                            $
                            -
                            
                            $
                            10,710,000Assets
                                acquired for liabilities incurred in the acquisition
                            
                            $
                            -
                            
                            $
                            2,501,187
                            
                            $
                            2,501,187Net
                                deferred tax liability assumed
                            
                            $
                            1,613,161
                            
                            $
                            48,076,734
                            
                            $
                            55,197,465Merger
                                option payment applied to the acquisition
                            
                            $
                            -
                            
                            $
                            200,000
                            
                            $
                            200,000Reclassify
                                joint venture option agreement to slag project
                            
                            $
                            -
                            
                            $
                            690,000
                            
                            $
                            690,000Warrants
                                issued in connection with joint venture optionagreement
                                related to slag project
                            
                            $
                            -
                            
                            $
                            -
                            
                            $
                            1,310,204Stock
                                options for common stock issued in satisfaction of
                                debt
                            
                            $
                            -
                            
                            $
                            -
                            
                            $
                            1,200,000Capitalization
                                of related party liability to equity
                            
                            $
                            -
                            
                            $
                            -
                            
                            $
                            742,848Stock
                                issued for conversion ofaccounts
                                payable, 100,000 shares at $0.72
                            
                            $
                            -
                            
                            $
                            -
                            
                            $
                            72,000Stock
                                issued for compensation50,000
                                shares at $2.06
                            
                            $
                            -
                            
                            $
                            -
                            
                            $
                            103,000
 See
                    Accompanying Notes to these Consolidated Financial
                    Statements


7


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





1.
            DESCRIPTION
                OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
                POLICIES





Basis
      of presentation - The
      accompanying unaudited financial statements have been prepared in accordance
      with Securities and Exchange Commission requirements for interim financial
      statements. Therefore, they do not include all of the information and footnotes
      required by accounting principles generally accepted in the United States for
      complete financial statements. The financial statements should be read in
      conjunction with the Form 10-KSB for the year ended December 31, 2007 (as
      restated) of Searchlight Minerals Corp. (the “Company”).





The
      interim financial statements present the balance sheet, statements of operations
      and cash flows of the Company. The financial statements have been prepared
      in
      accordance with accounting principles generally accepted in the United States.





These
      financial statements have been prepared by the Company without audit, and
      include all adjustments (which consist solely of normal recurring adjustments,
      except as described in Note 15) which, in the opinion of management, are
      necessary for a fair presentation of financial position and results of
      operations. Certain information and footnote disclosures normally included
      in
      financial statements prepared in accordance with generally accepted accounting
      principles have been condensed or omitted, although the Company believes that
      the disclosures are adequate to make the information presented not misleading.
      It is suggested that these financial statements be read in conjunction with
      the
      Company’s audited financial statements and the notes thereto for the year ended
      December 31, 2007 (as restated).





Description
      of business -
      Searchlight Minerals Corp. is an exploration stage company and the Company
      has
      not yet realized any revenues from its planned operations. The Company is
      primarily focused on the exploration, acquisition and development of mining
      and
      mineral properties. Upon the identification of commercially minable reserves,
      the Company plans to prepare for mineral extraction and enter the development
      stage.




History - The
      Company was incorporated on January 12, 1999 pursuant to the laws of the State
      of Nevada under the name L.C.M. Equity, Inc. From 1999 to 2005, the Company
      operated primarily as a biotechnology research and development company with
      its
      headquarters in Canada and an office in the UK. On November 2, 2001, the Company
      entered into an acquisition agreement with Regma Bio Technologies, Ltd. pursuant
      to which Regma Bio Technologies, Ltd. entered into a reverse merger with us
      with
      the surviving entity named “Regma Bio Technologies Limited”. On November 26,
      2003, the Company changed its name from “Regma Bio Technologies Limited” to
“Phage Genomics, Inc.”




In
      February, 2005, the Company announced its reorganization from a biotechnology
      research and development company to a company focused on the development and
      acquisition of mineral properties. In connection with its reorganization the
      Company entered into mineral option agreements to acquire an interest in the
      Searchlight Claims. The Company has consequently been considered an exploration
      stage enterprise. Also in connection with its corporate restructuring, its
      board
      of directors approved a change in its name from “Phage Genomics, Inc.” (Phage)
      to "Searchlight Minerals Corp.” effective June 23, 2005 .




Principles
      of consolidation - The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries, Clarkdale Minerals, LLC (CML) and Clarkdale Metals,
      Corp. (CMC). Significant intercompany accounts and transactions have been
      eliminated.





8


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





1.
            DESCRIPTION
                OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)





Going
      concern - The
      Company incurred cumulative net losses of $12,591,571 as of September 30, 2008
      and has not commenced its mining and mineral processing operations, rather,
      we
      are still in the exploration stage, raising substantial doubt about the
      Company’s ability to continue as a going concern.





The
      Company will seek additional sources of capital through the issuance of debt
      or
      equity financing, but there can be no assurance the Company will be successful
      in accomplishing its objectives. The ability of the Company to continue as
      a
      going concern is dependent on additional sources of capital and the success
      of
      the Company’s plan. The financial statements do not include any adjustments that
      might be necessary if the Company is unable to continue as a going
      concern.





Use
      of
      estimates - The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenue and expenses during the reporting
      period. Actual results could differ from those estimates.





Cash
      and cash equivalents - Cash
      and cash equivalents consist of all cash balances and highly liquid investments
      with a remaining maturity of three months or less when purchased and are carried
      at fair value.





Mineral
      rights - The
      Company capitalizes acquisition and option costs of mineral property rights.
      The
      amount capitalized represents fair value of the mineral rights
      acquired.





The
      Company capitalizes acquisition and option costs of mineral rights as tangible
      assets in accordance with Emerging Issues Task Force abstract 04-02 (“EITF
      04-02”), “Whether Mineral Rights are Tangible or Intangible Assets and Related
      Issues”. Upon completion of a bankable feasibility study, the mineral rights
      will be amortized using the unit-of-production method over the life of the
      mineral rights. If the Company does not continue with exploration after the
      completion of the feasibility study, the mineral rights will be expensed at
      that
      time. The Company evaluates the carrying value of capitalized mining costs
      and
      related property and equipment costs, to determine if these costs are in excess
      of their recoverable amount whenever events or changes in circumstances indicate
      that their carrying amounts may not be recoverable. The periodic evaluation
      of
      carrying value of capitalized costs and any related property 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.”





Capitalized
      interest cost - The
      Company capitalizes interest cost related to acquisition, development and
      construction of property and equipment which is designed as integral parts
      of
      the manufacturing process of this project. The capitalized interest is recorded
      as part of the asset it relates to and will be amortized over the asset’s useful
      life once production commences. Interest cost capitalized from imputed interest
      on acquisition indebtedness was $298,653 and $114,934 for the periods ended
      September 30, 2008 and 2007, respectively.





Exploration
      costs -
      Mineral exploration costs are expensed as incurred.





Expenses
      of offering - The
      Company accounts for specific incremental costs directly to a proposed or actual
      offering of securities as a direct charge against the gross proceeds of the
      offering.





9


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





1.
            DESCRIPTION
                OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)





Property
      and equipment -
      Property and equipment is stated at cost less accumulated depreciation.
      Depreciation is provided principally on the straight-line method over the
      estimated useful lives of the assets, which are generally 3 to 39 years. The
      cost of repairs and maintenance is charged to expense as incurred. Expenditures
      for property betterments and renewals are capitalized. Upon sale or other
      disposition of a depreciable asset, cost and accumulated depreciation are
      removed from the accounts and any gain or loss is reflected in other income
      (expense).





The
      Company periodically evaluates whether events and circumstances have occurred
      that may warrant revision of the estimated useful lives of property and
      equipment or whether the remaining balance of property and equipment should
      be
      evaluated for possible impairment. If events and circumstances warrant
      evaluation, the Company uses an estimate of the related undiscounted cash flows
      over the remaining life of the property and equipment in measuring their
      recoverability.




Impairment
      of long-lived assets - The
      Company reviews and evaluates long-lived assets for impairment when events
      or
      changes in circumstances indicate the related carrying amounts may not be
      recoverable. The assets are subject to impairment consideration under SFAS
      No.
      144 if events or circumstances indicate that their carrying amount might not
      be
      recoverable. As of September 30, 2008 exploration progress on these properties
      is on target with the Company’s exploration and evaluation plan and no events or
      circumstances have happened to indicate the related carrying values of the
      properties may not be recoverable. When the Company determines SFAS 144
      impairment analysis should be done, the analysis will be performed using the
      rules of EITF 04-03, “Mining Assets: Impairment and Business
      Combinations.”




Various
      factors could impact our ability to achieve forecasted production schedules.
      Additionally, commodity prices, capital expenditure requirements and reclamation
      costs could differ from the assumptions the Company may use in cash flow models
      used to assess impairment. The ability to achieve the estimated quantities
      of
      recoverable minerals from exploration stage mineral interests involves further
      risks in addition to those factors applicable to mineral interests where proven
      and probable reserves have been identified, due to the lower level of confidence
      that the identified mineralized material can ultimately be mined economically.





Material
      changes to any of these factors or assumptions discussed above could result
      in
      future impairment charges to operations.





Reclassifications -
      Certain amounts in the prior period financial statements have been reclassified
      to conform to current period presentation.





10


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





1.
            DESCRIPTION
                OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
                POLICIES(continued)





Asset
      retirement obligation - The
      Company has adopted Statement of Financial Accounting Standards No. 143 (“SFAS
      143”), “Accounting for Asset Retirement Obligations”, which requires that an
      asset retirement obligation (“ARO”) associated with the retirement of a tangible
      long-lived asset be recognized as a liability in the period in which it is
      incurred and becomes determinable, with an offsetting increase in the carrying
      amount of the associated asset. The cost of the tangible asset, including the
      initially recognized ARO, is depleted, such that the cost of the ARO is
      recognized over the useful life of the asset. The ARO is recorded at fair value,
      and accretion expense is recognized over time as the discounted liability is
      accreted to its expected settlement value. The fair value of the ARO is measured
      using expected future cash flow, discounted at the Company’s credit-adjusted
      risk-free interest rate. To date, no significant asset retirement obligation
      exists due to the early stage of exploration. Accordingly, no liability has
      been
      recorded.





Fair
      value of financial instruments - The
      Company’s financial instruments consist of accounts payable, accrued
      liabilities, capital lease payable and mineral property purchase obligations.
      The carrying value of these financial instruments approximates their fair value
      based on their liquidity or their short-term nature. The Company is not exposed
      to significant interest or credit risk arising from these financial instruments.





Revenue
      recognition -
      Revenues are recognized during the period in which the revenues are earned.
      Costs and expenses are recognized during the period in which they are
      incurred.




Research
      and development - All
      research and development expenditures are expensed as incurred.




Earnings
      (loss) per share - The
      Company follows Statement of Financial Accounting Standard No. 128 (“SFAS 128”),
“Earnings Per Share” and Statement of Financial Accounting Standard No. 150
      (“SFAS 150”), “Accounting for Certain Financial Instruments with Characteristics
      of Both Liabilities and Equity,” which establish standards for the
      computation, presentation and disclosure requirements for basic and diluted
      earnings per share for entities with publicly-held common shares and potential
      common stock issuances. Basic earnings (loss) per share are computed by dividing
      net income by the weighted average number of common shares outstanding. In
      computing diluted earnings per share, the weighted average number of shares
      outstanding is adjusted to reflect the effect of potentially dilutive
      securities, such as stock options and warrants. Common stock equivalent shares
      are excluded from the computation if their effect is antidilutive. Weighted
      average of common stock equivalents, which include stock options and warrants
      to
      purchase common stock, on September 30, 2008 and December 31, 2007 that were
      not
      included in the computation of diluted EPS because the effect would be
      antidilutive were 23,699,591 and 25,352,205, respectively. In addition, the
      Company issued 200,000 stock options to new director on October 6, 2008 subject
      to a four year vesting schedule, increasing the total antidilutive share to
      23,899,591.





Expenses
      of Offering - The
      Company accounts for specific incremental costs directly to a proposed or actual
      offering of securities as a direct charge against the gross proceeds of the
      offering.




11


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





1.
            DESCRIPTION
                OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)





Income
      taxes - The
      Company accounts for its income taxes in accordance with the Statement of
      Financial Accounting No. 109 (“SFAS 109”), “Accounting for Income Taxes”, which
      requires recognition of deferred tax assets and liabilities for future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases and tax credit carry-forwards. Deferred tax assets and liabilities are
      measured using enacted tax rates expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the enactment
      date.





On
      July
      13, 2006, the Financial Accounting Standards Board (“FASB”) issued Financial
      Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes - An
      Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the
      accounting for uncertainty in income taxes recognized in an entity’s financial
      statements in accordance with SFAS No. 109, and prescribes a recognition
      threshold and measurement attributes for financial statement disclosure of
      tax
      positions taken or expected to be taken on a tax return. Under FIN 48, the
      impact of an uncertain income tax position on the income tax return must be
      recognized at the largest amount that is more-likely-than-not to be sustained
      upon audit by the relevant taxing authority. An uncertain income tax position
      will not be recognized if it has less than 50% likelihood of being sustained.
      Additionally, FIN 48 provides guidance on de-recognition, classification,
      interest and penalties, accounting in interim periods, disclosure and
      transition. The Company adopted the provision of FIN 48 on January 1, 2007,
      which did not have any impact on the consolidated financial
      statements.





For
      acquired properties that do not constitute a business as defined in Emerging
      Issues Task Force Issue No. 98-03 (“EIFT 98-03”), “Determining Whether a
      Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business”,
      deferred income tax liability is recorded on GAAP basis over income tax basis
      using statutory federal and state rates. The resulting estimated future federal
      and state income tax liability associated with the temporary difference between
      the acquisition consideration and the tax basis is computed in accordance with
      EITF 98-11 “Accounting for Acquired Temporary Differences in Certain Purchase
      Transactions That Are Not Accounted for as Business Combinations” and SFAS 109,
      and is reflected as an increase to the total purchase price which is then
      applied to the underlying acquired assets in the absence of there being a
      goodwill component associated with the acquisition transactions.





Stock-based
      compensation - On
      December 16, 2004, the FASB issued Statement of Financial Accounting
      Standard No. 123R (“SFAS 123R”), “Share-Based Payment”, which replaces
      Statement of Financial Accounting Standard No. 123 (“SFAS 123”),
“Accounting for Stock-Based Compensation” and supersedes APB Opinion
      No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R requires
      all share-based payments to employees, including grants of employee stock
      options, to be recognized in the financial statements based on the grant date
      fair value of the award. Under SFAS No. 123R, the Company must determine the
      appropriate fair value model to be used for valuing share-based payments, the
      amortization method for compensation cost and the transition method to be used
      at date of adoption. The transition methods include prospective and retroactive
      adoption option. Under the retroactive option, prior periods may be restated
      either as of the beginning of the year of adoption or for all periods presented.
      The prospective method requires that compensation expense be recorded for all
      unvested stock options and restricted stock at the beginning of the first
      quarter of adoption of SFAS No. 123R, while the retroactive methods would record
      compensation expense for all unvested stock options and restricted stock
      beginning with the first period restated. The Company adopted the requirements
      of SFAS No. 123R for the fiscal year beginning after December 31,
      2004.


12
 SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


1.
            DESCRIPTION
                OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)





New
      accounting pronouncements - The
      FASB issued FASB Staff Position (FSP) FAS 157-3, “Determining the Fair Value of
      a Financial Asset When the Market for that Asses Is Not Active”. The FSP
      clarifies the application of FASB Statement No. 157, “Fair Value Measurements”,
      in a market that is not active and provides an example to illustrate key
      considerations in determining the fair value of a financial asset when the
      market for that financial asset is not active. The FSP is effective October
      10,
      2008, and for prior periods for which financial statements have not been issued.
      Revisions resulting from a change in the valuation technique or its application
      should be accounted for as a change in accounting estimate following the
      guidance in FASB Statement No. 154, “Accounting Changes and Error Corrections”.
      However, the disclosure provisions in Statement 154 for a change in accounting
      estimate are not required for revisions resulting from a change in valuation
      techniques or its application. The
      Company has determined that the adoption of this statement will have little
      or
      no effect on the Company’s consolidated financial position, results of
      operations, and disclosures.





In
      May
      2008, the FASB issued SFAS No. 162, “Hierarchy of Generally Accepted Accounting
      Principles”. This statement is intended to improve financial reporting by
      identifying a consistent framework, or hierarchy, for selecting accounting
      principles to be used in preparing financial statements of nongovernmental
      entities that are presented in conformity with GAAP. This statement will be
      effective 60 days following the U.S. Securities and Exchange Commission’s
      approval of the Public Company Accounting Oversight Board amendment to AU
      Section 411, “The Meaning of Present Fairly in Conformity with Generally
      Accepted Accounting Principles.” The Company is currently evaluating the
      potential impact, if any, of the adoption of SFAS 162 on its consolidated
      financial statements.





On
      March
      19, 2008, the FASB issued Statement of Financial Accounting Standard No. 161
      (“SFAS 161”), “Disclosures about Derivative Instruments and Hedging Activities.”
This statement is intended to improve financial reporting about derivative
      instruments and hedging activities by requiring enhanced disclosures. This
      statement is effective for financial statements issued for fiscal years and
      interim periods beginning after November 15, 2008, with early application
      encouraged. The Company is currently evaluating the impact that SFAS 161 will
      have on the consolidated financial statements.





In
      December 2007, the FASB issued Statement of Financial Accounting Standard
      No. 141(R) (“SFAS 141(R)”), “Business Combinations,” which amends
      SFAS No. 141, and provides revised guidance for recognizing and measuring
      identifiable assets and goodwill acquired, liabilities assumed, and any
      noncontrolling interest in the acquiree. It also provides disclosure
      requirements to enable users of the financial statements to evaluate the nature
      and financial effects of the business combination. SFAS 141(R) is effective
      for the Company’s fiscal year beginning January 1, 2009 and is to be
      applied prospectively. The Company is currently evaluating the potential impact
      of adopting this statement on the Company’s consolidated financial position,
      results of operations or cash flows.





In
      December 2007, the FASB issued Statement of Financial Accounting Standard
 No. 160 (“SFAS 160”), “Noncontrolling Interests in Consolidated
      Financial Statements- an amendment of ARB No. 51” which establishes
      accounting and reporting standards pertaining to ownership interests in
      subsidiaries held by parties other than the parent, the amount of net income
      attributable to the parent and to the noncontrolling interest, changes in a
      parent’s ownership interest, and the valuation of any retained noncontrolling
      equity investment when a subsidiary is deconsolidated. SFAS 160 also
      establishes disclosure requirements that clearly identify and distinguish
      between the interests of the parent and the interests of the noncontrolling
      owners. SFAS 160 is effective for the Company’s fiscal year beginning
      January 1, 2009. The Company is currently evaluating the potential impact
      of adopting this statement on the Company’s consolidated financial position,
      results of operations or cash flows.








13


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





1.
            DESCRIPTION
                OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)





In
      September 2007, the FASB published Proposed FASB Staff Position (“FSP”) No.
      APB 14-a, “Accounting for Convertible Debt Instruments That May Be Settled
      in Cash upon Conversion.” The proposed FSP applies to convertible debt
      instruments that, by their stated terms, may be settled in cash (or other
      assets) upon conversion, including partial cash settlement, unless the embedded
      conversion option is required to be separately accounted for as a derivative
      under SFAS 133. Convertible debt instruments within the scope of the
      proposed FSP are not addressed by the existing APB 14. The proposed FSP
      would require that the liability and equity components of convertible debt
      instruments within the scope of the proposed FSP shall be separately accounted
      for in a manner that reflects the entity’s nonconvertible debt borrowing rate.
      This will require an allocation of the convertible debt proceeds between the
      liability component and the embedded conversion option (i.e., the equity
      component). The difference between the principal amount of the debt and the
      amount of the proceeds allocated to the liability component would be reported
      as
      a debt discount and subsequently amortized to earnings over the instrument’s
      expected life using the effective interest method. The Company is currently
      evaluating the impact that Proposed FSP may have on the consolidated financial
      statements of the Company.





In
      February 2007, the FASB issued Statement of Financial Accounting Standard
      No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and
      Financial Liabilities — Including an amendment of FASB Statement
      No. 115”, which permits entities to choose to measure many financial
      instruments and certain other items at fair value that are not currently
      required to be measured at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. SFAS 159 also
      establishes presentation and disclosure requirements designed to facilitate
      comparisons between entities that choose different measurement attributes for
      similar types of assets and liabilities. SFAS 159 does not affect any
      existing accounting literature that requires certain assets and liabilities
      to
      be carried at fair value, nor eliminate disclosure requirements included in
      other accounting standards, including requirements for disclosures about fair
      value measurements included in Statement of Financial Accounting No. 157
      (“SFAS 157”), “Fair Value Measurements,” and SFAS 107. SFAS 159 is
      effective for our fiscal year beginning after November 15, 2007. The
      adoption of this statement had little or no effect on the Company’s consolidated
      financial position, results of operations, and disclosures.








14


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)





2.
            PROPERTY
                AND EQUIPMENT





Property
      and equipment consisted of the following as of September 30, 2008 and December
      31, 2007:





September
                30,
              2008
            
            December
                31, 2007Furniture
                and fixtures
            
            $
            35,813
            
            $
            34,694Lab
                equipment
            
            
            2,804
            
            
            2,804Computers
                and equipment
            
            
            49,266
            
            
            32,594Income
                property
            
            
            309,750
            
            
            309,750Construction
                in progress
            
            
            10,584,464
            
            
            4,408,796Capitalized
                interest
            
            
            298,653
            
            
            162,173Vehicles
            
            
            38,175
            
            
            38,175Site
                equipment
            
            
            148,586
            
            
            119,20311,467,511
            
            
            5,108,189Less
                accumulated depreciation
            
            
            89,942
            
            
            43,729$
            11,377,569
            
            $
            5,064,460





Depreciation
      expense was $46,210 and $25,946 for the nine months ended September 30, 2008
      and
      2007, respectively.





3.
            CLARKDALE
                SLAG PROJECT




On
      February 15, 2007, the Company completed a merger with Transylvania
      International, Inc. (TI) which provided the Company with 100% ownership of
      the
      Clarkdale Slag Project in Clarkdale Arizona, through its wholly owned subsidiary
      CML. This acquisition superseded the joint venture option agreement to acquire
      a
      50% ownership interest as a joint venture partner pursuant to Nanominerals
      Corp.
      (“NMC”) interest in a joint venture agreement (“JV Agreement”) dated May 20,
      2005 between NMC and Verde River Iron Company, LLC (“VRIC”).




The
      Company believes the acquisition of the Clarkdale Slag Project was beneficial
      because it provides for 100% ownership of the properties, thereby eliminating
      the need to finance and further develop the projects in a joint venture
      environment.




This
      merger was treated as a statutory merger for tax purposes whereby, CML was
      surviving merger entity.




The
      Company applied EITF 98-03 with regard to the acquisition of the Clarkdale
      Slag
      Project. The Company determined that the acquisition of the Clarkdale Slag
      Project did not constitute an acquisition of a business, as that term is defined
      in EITF 98-03, and the Company recorded the acquisition as a purchase of
      assets.




The
      Company also formed a second wholly owned subsidiary CMC, for the purpose of
      developing a processing plant at the Clarkdale Slag Project.


15
 SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


3.
            CLARKDALE
                SLAG PROJECT(continued)





Closing
      of the TI acquisition occurred on February 15, 2007 (the “Closing Date”) and was
      subject to, among other things, the following terms and conditions:





a)
            The
                Company paid $200,000 in cash to VRIC on the execution of the Letter
                Agreement;





b)
            The
                Company paid $9,900,000 in cash to VRIC on the Closing
                Date;





c)
            The
                Company issued 16,825,000 shares of its common stock, valued at $3.975
                per
                share using the average of the high and low on the Closing Date,
                to the
                designates of VRIC pursuant to Section 4(2) and Regulation D of the
                Securities Act of 1933;




In
      addition to the cash and equity consideration paid and issued upon closing,
      the
      acquisition agreement contains the following payment terms and
      conditions:




d)
            The
                Company agreed to pay VRIC $30,000 per month until the earlier of:
                (i) the
                date that is 90 days after receipt of a bankable feasibility study
                by the
                Company (the “Project Funding Date”), or (ii) the tenth anniversary of the
                date of the execution of the letter agreement. The Company accounted
                for
                the monthly payment stream using an imputed interest rate of 8%,
                and
                recorded a discounted net present value of
                $2,501,187;




The
      acquisition agreement also contains additional contingent payment terms which
      are based on the Project Funding Date as defined in the agreement.




e)
            The
                Company has agreed to pay VRIC $6,400,000 on the Project Funding
                Date;




f)
            The
                Company has agreed to pay VRIC a minimum annual royalty of $500,000,
                commencing on the Project Funding Date (the “Advance Royalty”), and an
                additional royalty consisting of 2.5% of the “net smelter returns” on any
                and all proceeds of production from the Clarkdale Slag Project (the
                “Project Royalty”). The Advance Royalty remains payable until the first to
                occur of: (1) the end of the first calendar year in which the Project
                Royalty equals or exceeds $500,000; or (2) February 15, 2017. In
                any
                calendar year in which the Advance Royalty remains payable, the combined
                Advance Royalty and Project Royalty will not exceed $500,000 in any
                calendar year; and,




g)
            The
                Company has agreed to pay VRIC an additional amount of $3,500,000
                from the
                net cash flow of the Clarkdale Slag Project.





In
      accordance with SFAS 141 and Staff Views of the SEC, the Company has accounted
      for the payments based on the Project Funding Date and the payments based on
      future cash flow as contingent payment. Upon meeting the contingency
      requirements, the purchase price of the Clarkdale Slag Project with be adjusted
      to reflect the additional consideration.


16


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)




3.
            CLARKDALE
                SLAG PROJECT(continued)




The
      following table reflects the recorded purchase consideration for the Slag
      Project:





Purchase
                price:Cash
                payments
            
            $
            10,100,000Joint
                venture option acquired in 2005 for cash
            
            
            690,000Warrants
                issued for joint venture option
            
            
            1,918,481Common
                stock issued
            
            
            66,879,375Monthly
                payments, current portion
            
            
            167,827Monthly
                payments, net of current portion
            
            
            2,333,360Acquisition
                costs
            
            
            127,000Total
                purchase price
            
            
            82,216,043Net
                deferred income tax liability assumed - slag project
            
            
            48,076,734$
            130,292,777





In
      accordance with EITF 98-11 the purchase price of $130 million was allocated
      to
      the assets acquired and liabilities assumed, based on their respective fair
      values at the date of acquisition. The purchase price allocated to the real
      properties was based on fair market values determined using an independent
      real
      estate appraisal firm (Scott W. Lindsay, Arizona Certified General Real Estate
      Appraiser No. 30292) and the fair value of the remaining assets acquired and
      liabilities assumed were based on management’s best estimates taking into
      account all available information at the time.




The
      following table reflects the components of the Slag Project :




Allocation
                of acquisition cost:Slag
                project (including net deferred tax liability assumed of
                $48,076,734)
            
            $
            120,766,877Land
                - slag pile site
            
            
            5,916,150Land
            
            
            3,300,000Income
                property and improvements
            
            
            309,750Net
                assets acquired
            
            $
            130,292,777  17
 SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


4.
            MINERAL
                PROPERTIES - MINING CLAIMS





As
      of
      September 30, 2008 mining claims consisted of 3,200 acres located near
      Searchlight, Nevada. The 3,200 acre property is staked as twenty 160 acre
      claims, most of which are also double-staked as 142 twenty acre
      claims.





The
      mining claims were acquired during 2005 with issuance of 1,400,000 shares of
      the
      Company’s common stock and the provision that the Company, at its option, issue
      an additional 1,400,000 shares each year in June for three remaining years.
      On
      June 25, 2008, the Company issued the remaining 1,400,000 shares and received
      the title to the mining claims in consideration of the satisfaction of the
      option agreement.





On
      August
      26, 2005, the Company paid $180,500 to the Bureau of Land Management as a bond
      for future reclamation work in Searchlight, Nevada. As of September 30, 2008,
      the recovery of the reclamation bond is uncertain, therefore the Company has
      established a full allowance against the reclamation bond with the offsetting
      expense to project exploration costs.





The
      mining claims are capitalized as tangible assets in accordance with EITF 04-02.
      Upon completion of a bankable feasibility study, the claims will be amortized
      using the unit-of-production method over the life of the claim. If the Company
      does not continue with exploration after the completion of the feasibility
      study, the claims will be expensed at that time.





The
      following table summarizes the changes of mineral properties for the nine months
      ended September 30, 2008:





Total
                mineral properties balance, December 31, 2007
            
            $
            12,702,258Share
                issuance to obtain mineral properties, June 25, 2008
            
            
            2,632,000Net
                deferred income tax liability assumed
            
            
            1,613,161Total
                mineral properties balance, September 30, 2008
            
            $
            16,947,419








18


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)




5.
            CAPITAL
                LEASE PAYABLE




The
      Company leases equipment under a capital lease. Capital lease payable consisted
      of the following at September 30, 2008 and December 31, 2007,




Lender
            
            Collateral
            
            Monthly
              Payment
            
            Interest
              Rate
            
            Maturity
            
            September
                30,
              2008
            
            December
                31, 2007Caterpillar
                Financial ServicesCorporation
            
            Equipment
            
            $
            2,200
            
            
            4.45
            %
            
            Jul-11
            
            $
            70,160
            
            $
            87,30070,160
            
            
            87,300Capital
                lease payable, current portion
            
            
            
            
            
            
            
            
            
            
            (23,761
            )
            
            (22,983
            )Capital
                lease payable, net of current portion
            
            
            
            
            
            
            
            
            
            $
            46,399
            
            $
            64,317




The
      following table represents future minimum lease payments on capital lease
      payable for each of the twelve month periods ending September 30,


2009
              
              $
              26,4012010
              
              
              26,4012011
              
              
              22,0012012
              
              
              --Thereafter
              
              
              --Total
                  future minimum lease payments
              
              $
              74,803Imputed
                  interest
              
              
              (4,643
              )Present
                  value of future minimum lease payments
              
              $
              70,160





The
      following assets acquired under the capital lease and the related amortization
      were included in property, plant and equipment at September 30, 2008 and
      December 31, 2007,





September
                30, 2008
            
            December
                31, 2007Site
                Equipment
            
            $
            116,239
            
            $
            116,239Accumulated
                amortization
            
            
            (38,746
            )
            
            (16,952
            )$
            77,493
            
            $
            99,287







19


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


6.
            CLARKDALE
                ACQUISITION PAYABLE





Pursuant
      to the Clarkdale acquisition agreement the Company agreed to pay VRIC $30,000
      per month until the Project Funding Date.





The
      Company has recorded a liability for this commitment using imputed interest
      based on its best estimate of future cash flows. The effective interest rate
      used was 8.00%, resulting in an initial present value of $2,501,187 and imputed
      interest of $1,128,813. The expected term used was 10 years which represents
      the
      maximum term the VRIC liability is payable if the Company does not obtain
      Project Funding.





The
      following table represents future principal payments on VRIC payable for each
      of
      the twelve month periods ending September 30,


2009
              
              $
              190,9122010
              
              
              206,7582011
              
              
              223,9192012
              
              
              242,5042013
              
              
              262,631Thereafter
              
              
              1,073,116$
              2,199,840VRIC
                  payable, current portion
              
              
              190,912VRIC
                  payable, net of current portion
              
              $
              2,008,928




The
      acquisition agreement also contains payment terms which are based on the Project
      Funding Date as defined in the agreement. The terms of and conditions of these
      payments are discussed in more detail in Note 3 and 11.





20


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


7.
            STOCKHOLDERS’
                EQUITY





During
      the nine months ended September 30, 2008 the Company’s stockholders’ equity
      activity consisted of the following:





a)
            On
                September 30, 2008, the Company awarded and issued 5,142 shares each
                to
                its two non officer directors pursuant to its directors’ compensation
                policy. The share award was priced at $1.75 and has been recorded
                as
                directors’ compensation expense of $18,000 and additional paid-in
                capital.





b)
            On
                August 26, 2008, the Company issued 100,000 shares of common stock
                from
                the exercise of nonemployee stock options resulting in cash proceeds
                of
                $25,000. Options exercised were for 100,000 shares of common stock
                at
                $0.25 per share. These stock options were subject to an expiration
                date of
                November 22, 2010.





c)
            On
                June 30, 2008, the Company awarded 4,326 shares each to its two non
                officer directors pursuant to its directors’ compensation policy. The
                share award was priced at $2.08 and has been recorded as directors’
                compensation expense of $18,000 and additional paid-in capital. The
                Company issued the shares on September 30, 2008.





d)
            On
                June 25, 2008, the Company issued 1,400,000 million shares to the
                owners
                of the Searchlight Claims. This issuance is the final of four required
                share payments to complete the acquisition of the mining claims totaling
                5,600,000 million shares.





e)
            On
                June 16, 2008, the Company issued 100,000 shares of common stock
                from the
                exercise of nonemployee stock options resulting in cash proceeds
                of
                $25,000. Options exercised were for 100,000 shares of common stock
                at
                $0.25 per share. These stock options were subject to an expiration
                date of
                February 10, 2010.





f)
            On
                May 5, 2008, the Company issued 100,000 shares of common stock from
                the
                exercise of nonemployee stock options resulting in cash proceeds
                of
                $25,000, which were received on August 16, 2007. Options exercised
                were
                for 100,000 shares of common stock at $0.25 per share. These stock
                options
                were subject to an expiration date of February 10,
                2010





g)
            On
                March 31, 2008, the Company awarded 2,670 shares each to its two
                non
                officer directors pursuant to its directors’ compensation policy. The
                share award was priced at $3.37 and has been recorded as directors’
                compensation expense of $18,000 and additional paid-in capital. The
                Company issued the shares on May 15, 2008.





h)
            On
                February 7, 2008, the Company completed a private placement offering
                for
                gross proceeds of $2,620,000 to non-US persons in reliance of Regulation
                S
                promulgated under the Securities Act of 1933. A total of 1,637,500
                units
                were issued at a price of $1.60. Each unit sold consisted of one
                share of
                the Company’s common stock and one-half of one share purchase warrants.
                Each whole share purchase warrant entitles the holder to purchase
                one
                additional share of the Company’s common stock at a price of $2.40 per
                share for a period of two years from the date of issuance. A total
                of
                80,000 shares of the Company’s common stock were issued by the Company as
                commission to agents in connection with the
                offering.





21


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


7.
            STOCKHOLDERS’
                EQUITY(continued)





i)
            On
                February 7, 2008, the Company completed a private placement offering
                for
                gross proceeds of $2,630,000 to US accredited investors pursuant
                to Rule
                506 of Regulation D promulgated under the Securities Act of 1933.
                A total
                of 1,643,750 units were issued at a price of $1.60. Each unit sold
                consisted of one share of the Company’s common stock and one-half of one
                share purchase warrants. Each whole share purchase warrant entitles
                the
                holder to purchase one additional share of the Company’s common stock at a
                price of $2.40 per share for a period of two years from the date
                of
                issuance. There was no commission paid or payable to agents in connection
                with this offering.





j)
            On
                January 30, 2008, the Company received gross proceeds of $2,528,500
                by
                issuing an aggregate of 3,890,000 shares of its common stock on the
                exercise of warrants issued by the Company in January, 2006. Each
                warrant
                entitled the holder to purchase one share of the Company’s common stock at
                a price of $0.65 per share on or before January 18, 2008. The warrant
                holders delivered their notices of exercise, and paid the exercise
                price
                of $0.65 per share, prior to January 18, 2008 expiration date. A
                total of
                3,690,000 shares were issued to US accredited investors as defined
                in Rule
                501 of Regulation D promulgated under the Securities Act of 1933.
                An
                additional 200,000 shares were issued to one non-US person as defined
                in
                Regulation S of the Securities Act.





8.
            STOCKOPTION
                PLAN AND WARRANTS





On
      April
      30, 2007, the Board of Directors adopted the 2007 Stock Option Plan (the “2007
      Plan”) and determined to cease granting any further options under the Company’s
      2006 Stock Option Plan. Under the terms of the 2007 Plan, options to purchase
      up
      to 40,000,000 shares of common stock of the Company may be granted to eligible
      Participants. On May 8, 2007, the Board of Directors determined to cease
      granting any further options under the Company’s 2003 Nonqualified Stock Option
      Plan and amended the number of shares of the Company’s common stock available
      for issuance under the 2007 Plan to a maximum of 4,000,000. On June 15, 2007,
      shareholders of the Company approved the 2007 Plan.





The
      2007
      Plan provides that the option price for incentive stock options be the fair
      market value of the stock at the date of the grant and the option price for
      non-qualified stock options be no less than 85% of the fair market value of
      the
      stock at the date of the grant. The maximum term of an option shall be
      established for that option by the Board of Directors or, if not so established,
      shall be ten years from the grant date. Options granted under the 2007 Plan
      become exercisable and expire as determined by the Board of Directors.





During
      the nine months ended September 30, 2008, the Company did not grant any stock
      options or any other equity incentive plan awards.




Expenses
      for the nine months ended September 30, 2008 and 2007 related to vesting and
      granting of stock options were $859 and $144,415, respectively and are included
      in general and administrative expense. The
      Company recorded $36,457 in stock option modification expense for one employee
      during the nine months ended September 30, 2008. No such stock option
      modifications occurred before.





Stock
      options -  During
      the nine months ended September 30, 2008, the Company did not grant any stock
      options awards. As of September 30, 2008 stock options outstanding totaled
      3,352,946 with a weighted average strike price of $0.99 per share.





22


SEARCHLIGHT
      MINERALS CORP.


(AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


8.
            STOCK
                OPTION PLAN AND WARRANTS(continued)





On
      May
      30, 2008, the Company extended the term of stock options previously issued
      to an
      employee for 50,000 shares of common stock for an additional 3 years. The
      Company accounted for the impact of the amended stock option grant as a stock
      option modification under SFAS 123R. As a result of the modification, the
      Company recognized $36,457 of additional stock-based compensation expense due
      to
      the increase in the fair market value of this stock option grant that is
      recorded in general and administrative expense.





The
      following table summarizes the Company’s stock option activity for the nine
      months ended September 30, 2008:


Number
                of
              Shares
            
            Weighted
                Average Exercise PriceBalance,
                December 31, 2007
            
            
            3,652,946
            
            $
            0.93Options
                granted and assumed
            
            
            --
            
            
            --Options
                expired
            
            
            --
            
            
            --Options
                cancelled
            
            
            --
            
            
            --Options
                exercised
            
            
            (300,000
            )
            
            0.25Balance,
                September 30, 2008
            
            
            3,352,946
            
            $
            0.99





The
      Company estimates the fair value of these options granted by using the Binomial
      Lattice option pricing-model with the following assumptions used for
      grants:





2008
            
            2007Dividend
                yield
            
            
            --
            
            
            --Expected
                volatility
            
            
            --
            
            
            76.6
            %Risk-free
                interest rate
            
            
            --
            
            
            2.88%
                to 4.68
            %Expected
                life (years)
            
            
            --
            
            
            2
                to 5





The
      Company believes this model provides the best estimate of fair value due to
      its
      ability to incorporate inputs that change over time, such as volatility and
      interest rates, and to allow for actual exercise behavior of option
      holders .





The
      Company estimates expected volatility using a representative peer group average,
      because of limited historical equity transactions of the Company. The risk-free
      interest rate is based on the implied yield available on U.S. Treasury
      zero-coupon issues over equivalent lives of the options.




23


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


8.
            STOCK
                OPTION PLAN AND WARRANTS(continued)





The
      following table summarizes the changes of the Company’s stock options subject to
      vesting for the nine months ended September 30, 2008:




Number
                of
              Shares
            
            Weighted
                Average
              Grant
                Date
              Fair
                ValueUnvested,
                December 31, 2007
            
            
            50,000
            
            $
            0.21Options
                granted
            
            
            --
            
            
            --Options
                vested
            
            
            (50,000
            )
            
            0.21Options
                cancelled
            
            
            --
            
            
            --Unvested,
                September 30, 2008
            
            
            --
            
            $
            --





As
      of
      September 30, 2008, there were no unvested stock options and as such, there
      is
      no related unrecognized compensation expense.





Stock
      options/warrants - During
      the nine months ended September 30, 2008 the Company granted stock warrants
      related to common stock issued through a private placement totaling 1,640,625
      with a strike price of $2.40 per share.





The
      value
      of the warrants was allocated against additional paid in capital as part of
      the
      overall offering cost of the private placement.





The
      value
      of 12 million warrants issued in 2005 in connection with the Clarkdale Slag
      Project option were computed using the binomial lattice method were allocated
      to
      the acquisition cost of the project and were computed based on the following
      assumptions:





Dividend
                yield
            
            
            --Expected
                volatility
            
            
            79
            %Risk-free
                interest rate
            
            
            3.91
            %Expected
                life (years)
            
            
            10





The
      following table summarizes information about options/warrants granted during
      the
      nine months ended September 30, 2008:





Number
                of
              Shares
            
            Weighted
                Average Exercise PriceBalance,
                December 31, 2007
            
            
            24,944,708
            
            $
            1.26Options/warrants
                granted and assumed
            
            
            1,640,625
            
            
            2.40Options/warrants
                expired
            
            
            --
            
            
            --Options/warrants
                cancelled
            
            
            --
            
            
            --Options/warrants
                exercised
            
            
            (4,190,000
            )
            
            (0.62
            )Balance,
                September 30, 2008
            
            
            22,395,333
            
            $
            1.46








24


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


9.
            PROPERTY
                RENTAL AGREEMENTS AND LEASES





The
      Company through its subsidiary CML has the following lease and rental agreements
      as lessor:





Clarkdale
      Arizona Central Railroad - Lease





CML
      has a
      month-to month rental agreement with Clarkdale Arizona Central Railroad. The
      rental payment is $1,700 per month.





Commercial
      Building - Lease




CML
      rents
      commercial building space to two tenants. The rental arrangements for both
      tenants stem from expired leases and are month-to-month. Rent under these
      agreements totaled $1,260 per month.




Land
      Lease - Wastewater Effluent





CML
      assumed a lease as lessor on February 15, 2007 that was entered into by TI
      on
      August 25, 2004 with the Town of Clarkdale, AZ (Clarkdale). The Company provides
      approximately 60 acres of land to Clarkdale for disposal of Class B effluent.
      In
      return, the Company has first right to purchase up to 46,000 gallons per day
      of
      the effluent for its use at fifty percent (50%) of the potable water rate.
      In
      addition, if Class A effluent becomes available, the Company may purchase that
      at seventy five percent (75%) of the potable water rate.





The
      term
      of the lease is 5 years with a one year extension available. At such time as
      Clarkdale no longer uses the property for effluent disposal, and for a period
      of
      twenty five (25) years measured from the date of the lease, the Company has
      a
      continuing right to purchase Class B, and if available, Class A at then market
      rates.




25


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


10.
            INCOME
                TAXES





The
      Company is a Nevada corporation and is subject to federal and Arizona income
      taxes. Nevada does not impose a corporate income tax.





The
      income tax benefit consisted of the following at September 30, 2008 and
      2007,





September
                30,
              2008
            
            September
                30,
              2007Income
                tax benefit per financial statements
            
            $
            (1,399,024
            )
            $
            (847,708
            )Non-deductible
                and other
            
            
            3,579
            
            
            3,789Change
                in valuation allowance
            
            
            77,278
            
            
            (16,821
            )Rate
                change
            
            
            -
            
            
            50,458Income
                tax benefit
            
            $
            (1,318,167
            )
            $
            (810,282
            )





Significant
      components of the Company’s net deferred income tax assets and liabilities at
      September 30, 2008 and December 31, 2007 were as follows:





September
                30,
              2008
            
            December
                31, 2007**Deferred
                income tax assets:**Net
                operating loss carryforward
            
            $
            4,282,813
            
            $
            2,964,646Option
                compensation
            
            
            339,142
            
            
            324,962Reclamation
                bond
            
            
            68,590
            
            
            -Gross
                deferred income tax asset
            
            
            4,690,545
            
            
            3,289,608Valuation
                allowance
            
            
            (400,476
            )
            
            (323,198
            )4,290,069
            
            
            2,966,410**Deferred
                income tax liabilities:**Property,
                plant & equipment
            
            
            7,256
            
            
            1,764Acquisition
                related liabilities
            
            
            55,197,465
            
            
            53,584,304Net
                deferred income tax liability
            
            $
            50,914,652
            
            $
            50,619,658





A
      valuation allowance for deferred tax related to option compensation and
      reclamation bond was established for net deferred tax assets not allocated
      to
      offset acquisition related deferred tax liabilities due to the uncertainty
      of
      realizing these deferred tax assets based on conditions existing at September
      30, 2008 and December 31, 2007.





Deferred
      income tax liability was recorded on GAAP basis over income tax basis using
      statutory federal and state rates with the corresponding increase in the
      purchase price allocation to the assets acquired.





The
      resulting estimated future federal and state income tax liability associated
      with the temporary difference between the acquisition consideration and the
      tax
      basis as computed in accordance with EITF 98-11 and SFAS 109, is reflected
      as an
      increase to the total purchase price which has been applied to the underlying
      mineral and slag project assets in the absence of there being a goodwill
      component associated with the acquisition transactions.





26


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


10.
              INCOME
                  TAXES(continued)





The
      Company had cumulative net operating losses of approximately $11,270,561 and
      $7,801,699 as of September 30, 2008 and December 31, 2007, respectively for
      federal income tax purposes. The Company had cumulative state net operating
      losses of approximately $3,883,008 and $1,795,792 as of September 30, 2008
      and
      December 31, 2007, respectively. The net operating loss carryforwards will
      be
      expiring between 2025 and 2028.





As
      of
      January 1, 2007, the Company did not have any unrecognized tax benefits. The
      adoption of FIN 48 did not result in any cumulative effect adjustment to the
      January 1, 2007 balance of the Company’s accumulated deficit. Upon adoption of
      FIN 48, the Company did not accrue for interest and penalties as there were
      no
      unrecognized tax benefits. If interest and penalties were to be assessed, we
      would charge interest to interest expense, and penalties to general and
      administrative expense. It is not anticipated that unrecognized tax benefits
      would significantly increase or decrease within 12 months of the reporting
      date.





The
      Company and its subsidiary file income tax returns in the United States. These
      tax returns are subject to examination by taxation authorities provided the
      years remain open under the relevant statues of limitations, which may result
      in
      the payment of income taxes and/or decrease its net operating losses available
      for carryforwards. While the Company believes its tax filings do not include
      uncertain tax positions, the results of potential examinations or the effect
      of
      changes in tax law cannot be ascertained at this time. The Company currently
      has
      no tax years under examination.





27


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


11.
            COMMITMENTS
                AND CONTINGENCIES





Lease
      obligations - The
      Company rents office space in Henderson, Nevada. The lease terms expired in
      November 2006 and the company continues to rent the existing space under
      month-to-month terms for $4,900 per month.





Rental
      expense, resulting from this operating lease agreement, approximated $44,100
      and
      $32,151 for the nine months ended September 30, 2008 and 2007,
      respectively.





Employment
      contracts - Ian R.
      McNeil, President and Chief Executive Officer. The Company has an employment
      agreement with Mr. McNeil effective since January 1, 2006. Under the terms
      of
      the agreement, as updated February 16, 2007, Mr. McNeil is paid a salary of
      $190,000. Mr. McNeil is also eligible for discretionary bonus to be determined
      based on factors considered relevant by the Company’s board of directors, and
      may be granted, subject to the approval of the board of directors, incentive
      stock options to purchase shares of the Company’s common stock in such amounts
      and at such times as the board of directors, in its absolute discretion, may
      from time to time determine. The term of the agreement is for an indefinite
      period, unless otherwise terminated pursuant to the terms of the agreement.
      In
      the event that the agreement is terminated by the Company other than for cause,
      the Company will provide Mr. McNeil with six months written notice or payment
      equal to six months of his monthly remuneration.





Carl
      S.
      Ager, Treasurer and Secretary. The Company has an employment agreement with
      Mr.
      Ager effective since January 1, 2006. Under the terms of the agreement, as
      updated February 16, 2007, Mr. Ager is paid a salary of $160,000. Mr. Ager
      is
      also eligible for discretionary bonus to be determined based on factors
      considered relevant by the Company’s board of directors, and may be granted,
      subject to the approval of the board of directors, incentive stock options
      to
      purchase shares of the Company’s common stock in such amounts and at such times
      as the board of directors, in its absolute discretion, may from time to time
      determine. The term of the agreement is for an indefinite period, unless
      otherwise terminated pursuant to the terms of the agreement. In the event that
      the agreement is terminated by the Company other than for cause, the Company
      will provide Mr. Ager with six months written notice or payment equal to six
      months of his monthly remuneration.





Melvin
      L.
      Williams, Chief Financial Officer. The Company has an employment agreement
      with
      Mr. Williams effective since January 1, 2006. Under the terms of the agreement,
      as updated February 16, 2007, Mr. Williams is paid a salary of $130,000, based
      on 600-800 hours worked. Mr. Williams is also eligible for discretionary bonus
      to be determined based on factors considered relevant by the Company’s board of
      directors, and may be granted, subject to the approval of the board of
      directors, incentive stock options to purchase shares of the Company’s common
      stock in such amounts and at such times as the board of directors, in its
      absolute discretion, may from time to time determine. The term of the agreement
      is for an indefinite period, unless otherwise terminated pursuant to the terms
      of the agreement. In the event that the agreement is terminated by the Company
      other than for cause, the Company will provide Mr. Williams with thirty days
      written notice or payment equal to three months of his monthly
      remuneration.








28


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


11.
            COMMITMENTS
                AND CONTINGENCIES





Purchase
      consideration Clarkdale Slag Project - In
      consideration of the acquisition of the Clarkdale Slag Project from VRIC, the
      Company has agreed to certain additional contingent payments. The acquisition
      agreement contains payment terms which are based on Project Funding Date as
      defined in the agreement:





a)
            The
                Company has agreed to pay VRIC $6,400,000 on the Project Funding
                Date;




b)
            The
                Company has agreed to pay VRIC a minimum annual royalty of $500,000,
                commencing on the Project Funding Date (the “Advance Royalty”), and an
                additional royalty consisting of 2.5% of the net smelter returns
                (“NSR”)
                on any and all proceeds of production from the Clarkdale Slag Project
                (the
                “Project Royalty”). The Advance Royalty remains payable until the first to
                occur of: (1) the end of the first calendar year in which the Project
                Royalty equals or exceeds $500,000; or (2) February 15, 2017. In
                any
                calendar year in which the Advance Royalty remains payable, the combined
                Advance Royalty and Project Royalty will not exceed $500,000 in any
                calendar year; and,




c)
            The
                Company has agreed to pay VRIC an additional amount of $3,500,000
                from the
                net cash flow of the Clarkdale Slag Project.




The
      Advance Royalty shall continue for a period of ten (10) years from the Agreement
      Date or until such time that the Project Royalty shall exceed $500,000 in any
      calendar year, at which time the Advance Royalty requirement shall end
      forever.








29


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


12. CONCENTRATION
      OF CREDIT RISK





Financial
      instruments that potentially subject the Company to concentration of credit
      risk
      consist of cash investments. The Company places its temporary cash investments
      in United States Treasury instruments and with two financial institutions.
      Cash
      accounts at these financial institutions are insured by the Federal Deposit
      Insurance Corporation for up to $250,000 per financial institution.





13. CONCENTRATION
      OF ACTIVITY





For
      the
      nine months ended September 30, 2008, the Company purchased services from two
      major vendors, Talson Corporation and Cimetta Engineering, which exceeded more
      than 10% of total purchases and amounted to approximately $1,650,126 and
      $1,013,258, respectively.





14. RELATED
      PARTY TRANSACTIONS





During
      the nine months ended September 30, 2008, the Company utilized the services
      of
      NMC to provide technical assistance and financing related activities. These
      services related primarily to the Clarkdale Slag Project and Searchlight Claims
      project.





In
      addition to the above services, NMC provided dedicated use of its laboratory,
      instrumentation, milling equipment and research facilities. NMC provided
      invoices for these fees plus expenses.





For
      the
      nine months ended September 30, 2008, the Company incurred total fees and
      reimbursement of expenses to NMC of $270,000 and $56,942, respectively. At
      September 30, 2008, the Company had an outstanding balance due to NMC of
      $32,191.





During
      the nine months ended September 30, 2008, the Company utilized Cupit, Milligan,
      Ogden & Williams, CPAs (CMOW) to provide accounting support services. The
      Chief Financial Officer of the Company is affiliated with CMOW.





The
      Company incurred total fees and reimbursement of expenses to CMOW of $60,330
      and
      $130, respectively, for the nine months ended September 30, 2008. At September
      30, 2008, the Company had an outstanding balance due to CMOW of
      $33,335.





30


SEARCHLIGHT
        MINERALS CORP.
 (AN
          EXPLORATION STAGE ENTERPRISE)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


15. RESTATEMENT
      OF PRIOR FINANCIAL STATEMENTS





The
      following table summarizes consolidated statements of operations for the three
      and nine months ended September 30, 2007 and reconciles the reported amounts
      to
      the restated amounts:





Summarized
                Consolidated Statement of Operations -For
                the three months ended September 30, 2007
            
            As
                Reported
            
            Adjustments
            
            
            
            As
                RestatedTotal
                operating expenses
            
            $
            796,946
            
            $
            (1,049
            )
            
            a
            
            $
            795,897Loss
                from operations
            
            
            (788,431
            )
            
            (7,466
            )
            
            b
            
            
            (795,897
            )Total
                other income (expense)
            
            
            94,580
            
            
            7,466
            
            
            b
            
            
            102,046Income
                tax benefit
            
            
            -
            
            
            270,094
            
            
            c
            
            
            270,094Net
                loss
            
            $
            (693,851
            )
            $
            270,094
            
            
            c
            
            $
            (423,757
            )Loss
                per common share
            
            $
            (0.01
            )
            
            
            
            
            
            
            $
            (0.005
            )




Summarized
                Consolidated Statement of Operations -For
                the nine months ended September 30, 2007
            
            As
                Reported
            
            Adjustments
            
            
            
            As
                RestatedTotal
                operating expenses
            
            $
            2,505,225
            
            $
            (1,049
            )
            
            a
            
            $
            2,504,176Loss
                from operations
            
            
            (2,477,130
            )
            
            (27,046
            )
            
            b
            
            
            (2,504,176
            )Total
                other income (expense)
            
            
            246,320
            
            
            27,046
            
            
            b
            
            
            273,366Income
                tax benefit
            
            
            -
            
            
            810,282
            
            
            c
            
            
            810,282Net
                loss
            
            $
            (2,230,810
            )
            $
            810,282
            
            
            c
            
            $
            (1,420,528
            )Loss
                per common share
            
            $
            (0.03
            )
            
            
            
            
            
            
            $
            (0.02
            )





The
      restatements had no impact on the Company’s cash or cash flows.





The
      restatement adjustments are as follows:





a.
            Reclassify
                interest expense from operating expenses to other income
                (expense).


b.
            Reclassify
                interest expense and rental revenue from operations to other income
                (expense).


c.
            Restate
                for deferred income tax benefit related to mineral properties
                acquisition.




31




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




*Certain
      statements in this Quarterly Report on Form 10-Q, or the Report, are
“forward-looking statements.” These forward-looking statements include, but are
      not limited to, statements about the plans, objectives, expectations and
      intentions of Searchlight Minerals Corp., a Nevada corporation (referred to
      in
      this Report as “we,” “us,” “our” or “registrant”) and other statements contained
      in this Report that are not historical facts. Forward-looking statements in
      this
      Report or hereafter included in other publicly available documents filed with
      the Securities and Exchange Commission, or the Commission, reports to our
      stockholders and other publicly available statements issued or released by
      us
      involve known and unknown risks, uncertainties and other factors which could
      cause our actual results, performance (financial or operating) or achievements
      to differ from the future results, performance (financial or operating) or
      achievements expressed or implied by such forward-looking statements. Such
      future results are based upon management’s best estimates based upon current
      conditions and the most recent results of operations. When used in this Report,
      the words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,”
“estimate” and similar expressions are generally intended to identify
      forward-looking statements, because these forward-looking statements involve
      risks and uncertainties. There are important factors that could cause actual
      results to differ materially from those expressed or implied by these
      forward-looking statements, including our plans, objectives, expectations and
      intentions and other factors that are discussed under the section entitled
“Risk
      Factors,” in this Report and in our Annual Report on Form 10-KSB for the year
      ended December 31, 2007.*




*The
      following discussion and analysis summarizes our plan of operation for the
      next
      twelve months, our results of operations for the three and nine month periods
      ended September 30, 2008 and changes in our financial condition from our year
      ended December 31, 2007. The following discussion should be read in conjunction
      with the Management’s Discussion and Analysis or Plan of Operation included in
      our Annual Report on Form 10-KSB for the year ended December 31,
      2007.*




**Executive
      Overview**




We
      are an
      exploration stage company engaged in the acquisition and exploration of mineral
      properties and slag reprocessing projects. Our business is presently focused
      on
      our two mineral projects: (i) the Clarkdale Slag Project, located in Clarkdale,
      Arizona, is a reclamation project to recover precious and base metals from
      the
      reprocessing of slag produced from the smelting of copper ores mined at the
      United Verde Copper Mine in Jerome, Arizona; and (ii) the Searchlight Gold
      Project, which involves exploration for precious metals on mining claims near
      Searchlight, Nevada.




**Clarkdale
      Slag Project**




Since
      our
      acquisition of 100% of the Clarkdale Slag Project in 2007, we have devoted
      considerable effort designing and engineering our first production module,
      which
      included finalizing the production flow sheet, sourcing and purchasing equipment
      as well as refurbishing the module building and construction of the
      electrowinning building. During the first three quarters of 2008, we have been
      executing our 2008 plan of operation on the Clarkdale Slag Project which
      includes the completion and operation of the first production module. The module
      and electrowinning buildings will be used to house the first production module,
      which has been designed to allow for the grinding, leaching, filtering and
      extraction of precious and base metals from the slag material (see Figure 1
      below). The production module, which continues to be in the development stage,
      is expected to process between 100 and 250 tons per day of slag material.





32









**Figure
      1. Production Module Outline**




On
      August
      8, 2008, we received a Certificate of Occupancy for the module building,
      allowing us to operate the grinding, leaching, filtering and resin extraction
      equipment within the module building. On June 17, 2008, we received a
      Certificate of Occupancy for the laboratory facilities located within the module
      building, allowing our chemists to conduct immediate, on-site analyses of
      leaching results to further optimize the metals extraction process.




The
      electrowinning building, which will house the copper and zinc electrowinning
      circuits, is currently under construction and expected to be completed in the
      fourth quarter of 2008. An additional occupancy certificate will be required
      for
      the electrowinning building in order to operate the electrowinning equipment. We
      have received and installed most of the equipment necessary for the assembly
      of
      the production module and any outstanding equipment has been ordered and is
      expected to be delivered in the fourth quarter of 2008.




33





We
      are
      now actively engaged in the testing and start-up phase of the project.
      Currently, the installed equipment is being tested, and it is anticipated that
      this will be followed by the integration of all major equipment components,
      including the grinding, leaching, filtering and extraction circuits. Component
      integration involves the fabrication, installation and connection of the
      equipment circuits to each other and to the buildings’ centralized electrical,
      plumbing and air-flow systems. Testing and start-up of the full production
      module is anticipated to commence when systems integration is complete.




We
      have
      faced challenges during the development of our production module, including
      delays in receiving large pieces of equipment from the manufacturers and longer
      than expected engineering-related issues due to the complexity of designing
      an
      upgrade in our electrowinning systems. Consequently, the completion timeline
      of
      the production module has been extended from what was originally anticipated.
      We
      continue to be encouraged by the progress we have made in the development of
      the
      production module and remain committed to its completion and
      operation.




We
      anticipate that our production module will allow us to determine the economics
      of the project and serve as the basis for the final feasibility of the project.
      If the feasibility of the project proves economically viable, we expect to
      commence construction of a full-scale production facility where we intend to
      install subsequent modules in parallel which would be comparable in technology,
      scale and cost to the initial production module. The number of subsequent
      modules required to attain full-production of 2,000 tons per day will be
      determined once the initial production module capacity is determined. We have
      estimated the cost of the full-production facility (including a multiple number
      of modules) to be approximately $70,000,000. However, this is only an estimate.
      A more thorough economic analysis of the full-scale production facility is
      expected to occur during the feasibility of the initial production
      module.




We
      have
      budgeted $9,100,000 for our work program on the Clarkdale Slag Project over
      the
      next twelve months, which includes assembling and operating the production
      module, performing the feasibility study as well as Phase II expansion
      preparations. In the first quarter of 2008, we expended approximately $1,000,000
      to immediately address Phase II long lead-time items such as grading 12 acres
      of
      land, drilling a well and preparing the architecture and engineering drawings
      for the proposed full-scale production facility. A decision on allocating
      approximately $6,000,000 of additional funds for the Phase II expansion will
      be
      made once the first production module is operational and its results are
      analyzed.




We
      expect
      that there will be significant financing requirements in order to finance the
      construction of a full-scale, production facility, and cannot assure you that
      such funding will be available at all or on terms that are reasonably acceptable
      to us. If the results from our feasibility study and the results from the
      operation of the production module do not support a basis for us to proceed
      with
      the construction of our proposed, full-scale production facility, we will have
      to scale back or abandon our proposed operations on the Clarkdale Slag
      Project.




**Searchlight
      Gold Project**




Since
      2005, we have maintained an ongoing exploration program on our Searchlight
      Gold
      Project and have contracted with Arrakis, Inc. (“Arrakis”), an unaffiliated
      mining and environmental firm, to perform a number of metallurgical tests on
      surface and bulk samples taken from the project site under strict
      chain-of-custody protocols. In 2007, results from these tests validated the
      presence of gold on the project site, and identified reliable and consistent
      metallurgical protocols for the analysis and extraction of gold, such as
      microwave digestion and autoclave leaching. Autoclave methods typically carry
      high capital and operating costs on large scale projects, however, we were
      encouraged by these results and in the first quarter of 2008, we approved a
      continuation of the metallurgical work program with Arrakis. The goal of this
      work program is to attempt to further improve upon the extraction grades of
      gold
      from samples taken from the project and explore in more detail the potential
      capital and operating costs of implementing methods, such as autoclave
      leaching.




34





The
      Searchlight Claim owners had previously obtained a BLM approved Plan of
      Operations, which included permission to drill 18 holes on the 3,200 acre
      project area and to mine a 36 acre pit on the RR304 claim. Although the Plan
      of
      Operations was accepted and registered in the name of a Searchlight Claim owner,
      which is an affiliate of K. Ian Matheson, one of our principal stockholders
      and
      a former officer and director, in September 2007, we learned that the BLM had
      issued an “Immediate Suspension of All Activities” notice on May 12, 2006
      against Mr. Matheson and certain of his affiliates (Pass Minerals, Inc.,
      Kiminco, Inc. and Pilot Plant Inc., which also were prior Searchlight Claim
      owners and are our stockholders) with respect to a dispute with the BLM on
      a
      project unrelated to the Searchlight Gold Project. The dispute between the
      BLM
      and Mr. Matheson arose due to the BLM’s determination that Mr. Matheson and his
      affiliates had engaged in willful mineral trespass for the unauthorized removal
      of sand and gravel from public lands on an association placer mining claim
      located by Mr. Matheson and his affiliates or their predecessors. The BLM had
      demanded payment of approximately $2,530,000 for the willful trespass. On May
      12, 2006, after failure by Mr. Matheson and his affiliates to pay the amount,
      the BLM issued an order for “Immediate Suspension of All Activities.” An appeal
      of the BLM’s order with the Interior Board of Land Appeals affirmed the BLM’s
      decision, keeping the order for “Immediate Suspension of All Activities” in
      effect. The order effectively covered all projects tied to Mr. Matheson,
      including the Searchlight Gold Project Plan of Operations, our planned drilling
      operations and our ability to fulfill our plan of operation with respect to
      the
      Searchlight Gold Project.




In
      late
      December 2007, we were verbally informed by the BLM that if we obtained title
      to
      the claims (without Mr. Matheson as a claim owner) and we applied for a new
      Plan
      of Operations under our name, the BLM would cooperate with us in granting
      approval of the new Plan of Operations. During the second quarter of 2008,
      the
      Searchlight Claim owners transferred title to the Searchlight Claims to us
      in
      consideration of our agreement to issue to the Searchlight Claim owners by
      June
      30, 2008 the balance of the 1,400,000 shares of common stock issuable under
      the
      2005 agreement pursuant to which we had obtained an option to acquire the
      Searchlight Claims. On June 25, 2008, we issued the balance of the 1,400,000
      shares of common stock to the Searchlight Claim owners.




During
      the second quarter of 2008, we "double staked" the Searchlight property by
      filing, with the BLM and the Clark County Recorder, 142 new and separate
      20-acre placer claims overtop of the twenty existing 160-acre
      claims.   We believe that "double staking" the property will enhance
      our existing claims because "double staking" with 20-acre claims provides a
      more
      secure basis for asserting our claim rights than our existing 160-acre
      claims.  We were only able to "double stake" 2,840 acres out of the
      3,200 acre site due to various regulatory restrictions on staking of certain
      of
      the smaller land parcels on the site. If the BLM challenges the validity of
      the
      160-acre claims or we are forced to abandon such claims, we would revert to
      the 20-acre claims covering only the 2,840 acres.  At that point, any
      regulatory permits that we have applied or may apply for (i.e., drilling,
      and mining) would have to be conducted within the related 2,840
      acres.  We do not believe that the inability to "double stake" the entire
      3,200 acre site will have a material adverse effect on our operations.





We
      have
      maintained the twenty prior 160-acre claims to provide us with a basis to
      maintain the priority of and defend our existing 160-acre mining
      claims.  However, we are subject to the risk that when we, a single entity,
      acquire title to association placer claims from an association of prior,
      multiple locators, there could be potential problems for us in the future. 
First, the validity of the association of the prior locators could always be
      challenged by the BLM if the BLM believed that the association was not properly
      assembled or if there were any "dummy locators" (place-holder locators who
      did
      not contribute to the association).  Second, if there were a mineral
      discovery on the 160-acre claim following the transfer to us, the claims could
      implode to a 20-acre parcel surrounding the point of discovery and potentially
      leave the surrounding 140 acres unavailable for re-staking.  Third, the
      location of the 20-acre claims may cause an implied abandonment of the older
      claims.  Should a problem occur in the future with the 160-acre claims, we
      could revert to the 20-acre claims, if necessary.  Also, there are
      additional costs to us due to the fact that we have to maintain two sets of
      claims.





In
      addition, the BLM has been excluding significant amounts of land in
      southern Nevada from mining and development over the past few decades.  The
      BLM has designated this excluded land as "environmental concern
      areas." Any person that wishes to stake mining claims would not be able to
      do so
      in these affected areas.  However, if a person already owns valid claims
      before the land is designated as an environmental concern area, the
      claimant would have those claims grandfathered in.  In the case
      of the Searchlight Claims, the Searchlight Project has not yet
      been designated as an environmental concern area.  If the
      BLM decides in the future to designate the Searchlight
      Project site as an environmental concern area, and also challenges our
      160-acre claims, we would have to rely on our "double staked" claims to
      preserve the Searchlight Claims. Although we believe that, in such
      event, our "double staked" claims would survive a challenge by the BLM,
      there can be no assurances to that effect and the successful challenge of all
      of
      the Searchlight Claims would have a material adverse effect on the Searchlight
      Project and our operations.





35




In
      the
      third quarter of 2008, we submitted a new Plan of Operations to the BLM
      substantially similar to the original Plan of Operations, which includes a
      request to drill 18 holes on the project area and to mine a 36 acre mining
      pit.
      On August 27, 2008, the BLM notified us that they had certain questions and
      needed some clarifications to the Plan of Operations that we submitted. These
      issues included clarifying the equipment to be used in the operations, any
      chemicals that may be used, location of and total amount of mined material
      as
      well as intention of crushed rock that will be hauled off-site. The BLM also
      requested clarification on any differences between our new Plan of Operations
      and the one previously obtained by Mr. Matheson’s affiliate. The BLM also
      advised that the previous bond that we posted of $180,500 for the previous
      Plan
      of Operations would not be transferrable to the new one and that a new bond
      would have to be posted. Hence, the recovery of the reclamation bond is
      uncertain and therefore we have established a full allowance against the
      reclamation bond with the offsetting expense to project exploration
      costs.




On
      September 24, 2008, we amended the Plan of Operations to only include 18
      500-foot drill holes on the project area and removed the 36 acre mining pit
      from
      consideration. We believe this amendment will help us obtain the desired
      drilling permits in a more timely manner. On October 10, 2008, we received
      a
      comment letter from the BLM regarding the revised Plan of Operations, which
      included a request to clarify the exact depth of each drill hole, whether the
      drill holes will be cased to prevent internal caving, the length of time each
      drill hole will remain open, a revised reclamation cost estimation and a minor
      revision to one of the maps. We addressed these comments and submitted our
      latest amendment to the Plan of Operations to the BLM on October 22, 2008 and
      we
      are now currently waiting for their response. If we obtain the necessary
      permission from the BLM, we intend to commence our drilling program in the
      first
      quarter of 2009. If the BLM has additional questions regarding our Plan of
      Operations, we intend to respond to them quickly in order to maintain our goal
      of commencing the drilling program in the first quarter of 2009. Should we
      be
      granted permission to drill under the Plan of Operations, we will be required
      to
      post a reclamation bond of approximately $16,000 with the BLM.




We
      have
      budgeted $1,000,000 to our twelve month work program for the Searchlight Gold
      Project. This amount is based on approximately $50,000 per month for our testing
      program and approximately $400,000 total over the next twelve months for our
      drilling program. Our work program is focused on continuing the testing program
      with Arrakis, including metallurgical tests, bulk sampling, milling, leaching
      and extraction tests to optimize recovery of precious metals from samples taken
      from the project and exploring in more detail the potential capital and
      operating costs of implementing methods, such as autoclave leaching. We will
      also continue to work with the BLM, our consultants and our attorneys to help
      us
      obtain approval of the Plan of Operations, containing the necessary permits
      to
      execute on our desired drilling program. The drilling and pre-feasibility
      program, which we anticipate will include an 18-hole drill program,
      chain-of-custody sampling and assaying of drill hole material, pilot plant
      tests
      and a pre-feasibility report, is expected to commence shortly after receiving
      the BLM’s approval of the Plan of Operations.




If
      our
      Plan of Operations is approved by the BLM, our work on the project site will
      be
      limited to the scope within the Plan of Operations. If we would like to perform
      any additional drilling or mining on the project, we would be required to submit
      a new application to the BLM for approval prior to the commencement of these
      additional activities. There is no assurance of the timeline for approval by
      the
      BLM or that the BLM will grant approval. Our drilling and mining program on
      this
      project is dependent on obtaining the necessary approval from the BLM,
      therefore, if approval is not obtained, we may have to scale back or abandon
      exploration efforts on the project.




**Anticipated
      Cash Requirements**




Over
      the
      next twelve months, our management anticipates that the minimum cash
      requirements for funding our proposed exploration and development program and
      our continued operations will be approximately $9,200,000. At September 30,
      2008, we had cash reserves in the amount of $9,809,302. Our cash position at
      September 30, 2008 exceeds our anticipated minimum 12 month budget of $9,200,000
      by approximately $609,302.




36




Our
      current twelve month budget also includes anticipated expenditure of $6,000,000
      on Phase II of our Clarkdale Slag Project. Although our current cash position
      is
      sufficient to meet our minimum anticipated costs for our development and
      exploration activities during the next twelve months, we will require additional
      funding to fulfill our entire anticipated plan of operations. In addition,
      the
      actual costs of completing those activities may be greater than anticipated.




Our
      estimated cash requirements for the next twelve months are as
      follows:


**EXPENSE**
              
              **COST**Administrative
                  Expenses
              
              $
              2,000,000Legal
                  and Accounting Expenses
              
              $
              1,100,000Consulting
                  Services
              
              $
              2,000,000**SUBTOTAL**
              
              **$**
              **5,100,000****Clarkdale
                  Slag Project**Building
                  Rehabilitation
              
              $
              400,000Production
                  Module Assembly
              
              $
              1,000,000Production
                  Module Operation
              
              $
              1,200,000Feasibility
                  Study
              
              $
              500,000Phase
                  II - Preparation for expansion to 2,000 tons per day
              
              $
              6,000,000**SUBTOTAL**
              
              **$**
              **9,100,000****Searchlight
                  Gold Project**Metallurgical
                  Testing Program
              
              $
              600,000Drilling
                  and Pre-Feasibility Program
              
              $
              400,000**SUBTOTAL**
              
              **$**
              **1,000,000****TOTAL**
              
              **$**
              **15,200,000**




**Critical
      Accounting Policies**




***Use
      of estimates*** - The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenue and expenses during the reporting
      period. Actual results could differ from those estimates.





37




***Mineral
      rights*** - We
      capitalize acquisition and option costs of mineral property rights. The amount
      capitalized represents fair value of the mineral rights acquired.




We
      capitalize acquisition and option costs of mineral rights as tangible assets
      in
      accordance with Emerging Issues Task Force abstract 04-02 (“EITF 04-02”),
“Whether Mineral Rights are Tangible or Intangible Assets and Related Issues”.
      Upon completion of a bankable feasibility study, the mineral rights will be
      amortized using the unit-of-production method over the life of the mineral
      rights. If we do not continue with exploration after the completion of the
      feasibility study, the mineral rights will be expensed at that time. We evaluate
      the carrying value of capitalized mining costs and related property and
      equipment costs, to determine if these costs are in excess of their recoverable
      amount whenever events or changes in circumstances indicate that their carrying
      amounts may not be recoverable. The periodic evaluation of carrying value of
      capitalized costs and any related property and equipment costs based upon
      expected future cash flows and/or estimated value in accordance with Statement
      of Financial Accounting Standards (SFAS) No. 144, “Accounting for Impairment of
      Disposal of Long-Lived Assets.”




***Exploration
      costs*** -
      Mineral exploration costs are expensed as incurred.




***Property
      and Equipment*** –
      Property and equipment is stated at cost less accumulated depreciation.
      Depreciation is provided principally on the straight-line method over the
      estimated useful lives of the assets, which are generally 3 to 39 years. The
      cost of repairs and maintenance is charged to expense as incurred. Expenditures
      for property betterments and renewals are capitalized. Upon sale or other
      disposition of a depreciable asset, cost and accumulated depreciation are
      removed from the accounts and any gain or loss is reflected in other income
      (expense).




We
      periodically evaluate whether events and circumstances have occurred that may
      warrant revision of the estimated useful life of property and equipment or
      whether the remaining balance of property and equipment should be evaluated
      for
      possible impairment. If events and circumstances warrant evaluation, we use
      an
      estimate of the related undiscounted cash flows over the remaining life of
      the
      fixed assets in measuring their recoverability.




**Capitalized
      interest cost** - We
      capitalize interest cost related to development and construction of property
      and
      equipment. The capitalized interest is recorded as part of the asset it relates
      to and will be amortized over the asset’s useful life once production
      commences.




**Restatement
      of 2007 and Prior Financial Statements**




**Overview**




During
      the second quarter of 2008, we identified certain errors in our previously
      issued financial statements related to our purchase accounting treatment of
      the
      acquisition of the Clarkdale Slag Project and the resultant computation of
      future deferred income tax liability assumed. We have restated certain items
      on
      our consolidated balance sheets and statements of operations as
      follows:




·
            Amounts
                recorded for the Clarkdale Slag Project on our consolidated balance
                sheets
                have been restated to reflect changes to the purchase accounting
                of the
                acquisition of Transylvania International, Inc. based on the acquisition
                agreement and the recomputation of the value of the 12,000,000 warrants
                issued to Nanominerals Corp. in connection with the assignment of
                the
                option for the Clarkdale Slag Project. The amount recorded for the
                Clarkdale Slag Project was also affected by the recomputation of
                the
                deferred future federal and state income tax liability in connection
                with
                our acquisition of the Clarkdale Slag
                Project.




·
            Amounts
                recorded for the Searchlight Gold Project on our consolidated balance
                sheets have been restated to include the impact of the recomputation
                of
                the deferred future income tax liability and state income tax liability.
                This recomputation was required because changes made to the acquisition
                accounting of the Clarkdale Slag Project affected the computation
                of the
                deferred future income tax liability related to the mineral claims
                making
                up the Searchlight Gold Project. Other than the impact of the deferred
                tax
                computation, there was no change to the purchase accounting of the
                Searchlight Gold Project.




38




·
            Our
                consolidated statement of operations for the period from inception
                to
                December 31, 2007 has been restated to reflect the recomputation
                of the
                tax benefits related to net operating losses as a result of changes
                to the
                purchase accounting for the Clarkdale Slag Project. There was no
                other
                impact on the results of
                operations.




·
            Our
                consolidated statement of operations for the three months and nine
                months
                ended September 30, 2007 has been restated to reclassify related
                party
                mineral exploration and evaluation expense not stated separately
                in
                previous reports. There was no change to the underlying expense or
                results
                of operations as previously
                reported.




The
      restatements had no impact on our cash or cash flows.




**Clarkdale
      Slag Project**




***Acquisition
      of Transylvania International, Inc*** .
      During
      the second quarter of 2008, we determined that the acquisition accounting method
      used in prior periods to record the purchase accounting for the Clarkdale Slag
      Project was not appropriate for the 2007 acquisition of Transylvania
      International, Inc.




The
      adjustments included revision of the acquisition accounting related to payment
      terms and conditions contained in the acquisition agreement. The overall
      recorded acquisition purchase consideration was reduced by $7,546,217 with
      a
      corresponding reduction in recorded liabilities of $7,546,217. The recorded
      liabilities were adjusted, as follows:




·
            the
                recorded current portion (relating to the $30,000 monthly obligation
                due
                to VRIC) decreased on the balance sheet by
                $227,174




·
            the
                recorded long-term portion (relating to****the
                $30,000 monthly obligation due to VRIC) decreased on the balance
                sheet by
                $919,043




·
            the
                payment due to VRIC (with respect to the date that a feasibility
                study
                relating to the Clarkdale Slag Project proves that the project is
                economically viable and “bankable,” or the “Project Funding Date”)
                decreased on the balance sheet by
                $6,400,000.




We
      have
      accounted for the payments based on the Project Funding Date and the payments
      based on future cash flow as contingent consideration. If the contingency
      requirements are met, the purchase price of the Clarkdale Slag Project will
      be
      adjusted accordingly at that time.




The
      original terms of the underlying purchase agreement were unchanged and this
      adjustment had no effect on the acquisition agreement.




39




***Warrants
      issued in connection with option assignment*** .
      During
      the second quarter of 2008, we also determined that the accounting treatment
      for
      the 12,000,000 warrants to Nanominerals issued in connection with the original
      Clarkdale Slag Project option assignment made on June 1, 2005 related to the
      Clarkdale Slag Project was not appropriate and we have assigned a value to
      the
      warrants of $1,310,204 by using the sales price of shares of common stock issued
      in connection with a private placement conducted at the time the warrants were
      issued. The adjustment also included the deferred future income tax liability
      assumed of $608,277 for a total increase in purchase consideration of
      $1,918,481.




The
      value
      of the warrants, as restated, was computed using the binomial lattice method
      based on the following assumptions:




Dividend
                yield
            
            
            —Expected
                volatility
            
            
            79
            %Risk-free
                interest rate
            
            
            3.91
            %Expected
                life (years)
            
            
            10





40




***Overall
      summary of restated purchase consideration*** .
      The
      following table reflects the restatement to the recorded purchase consideration
      for the Clarkdale Slag Project:




December 31, 2007
              As Reported
            
            Adjustments
            
            December 31, 2007
              As RestatedPurchase
                price:Cash
                payments
            
            $
            10,100,000
            
            $
            -
            
            $
            10,100,000Joint
                venture option acquired in 2005 for cash
            
            
            690,000
            
            
            -
            
            
            690,000Warrants
                issued for joint venture option
            
            
            -
            
            
            1,918,481
            
            
            1,918,481Common
                stock issued
            
            
            66,879,375
            
            
            -
            
            
            66,879,375Monthly
                payments, current portion
            
            
            395,001
            
            
            (227,174
            )
            
            167,827Monthly
                payments, long-term portion
            
            
            3,252,403
            
            
            (919,043
            )
            
            2,333,360Due
                to VRIC
            
            
            6,400,000
            
            
            (6,400,000
            )
            
            -Acquisition
                costs
            
            
            127,000
            
            
            -
            
            
            127,000Total
                purchase price
            
            
            87,843,779
            
            
            (5,627,736
            )
            
            82,216,043Net
                deferred income tax liability assumed - slag project
            
            
            52,198,489
            
            
            (4,121,755
            )
            
            48,076,734$
            140,042,268
            
            $
            (9,749,491
            )
            $
            130,292,777




As
      a
      result of the revisions in recorded acquisition purchase consideration, the
      total deferred future income tax liability assumed for the acquisition of the
      Clarkdale Slag Project decreased by $4,121,755.




In
      accordance with Emerging Issues Task Force Issue 98-11 “Accounting for Acquired
      Temporary Differences in Certain Purchase Transactions That Are Not Accounted
      for as Business Combinations” (EITF 98-11), the purchase price of $130 million
      was allocated to the assets acquired and liabilities assumed, based on their
      respective fair values at the date of acquisition. The purchase price allocated
      to the real properties was based on fair market values determined using an
      independent real estate appraisal firm (Scott W. Lindsay, Arizona Certified
      General Real Estate Appraiser No. 30292) and the fair value of the remaining
      assets acquired and liabilities assumed were based on management’s best
      estimates taking into account all available information at the
      time.




The
      following table reflects the restated components of the Clarkdale Slag
      Project :




December 31, 2007
              As Reported
            
            Adjustments
            
            December 31, 2007
              As RestatedAllocation
                of acquisition cost:Slag
                project (including net deferred tax liability assumed of
                $48,076,734)
            
            $
            130,516,368
            
            $
            (9,749,491
            )
            $
            120,766,877Land
                - slag pile site
            
            
            5,916,150
            
            
            -
            
            
            5,916,150Land
            
            
            3,300,000
            
            
            -
            
            
            3,300,000Income
                property and improvements
            
            
            309,750
            
            
            -
            
            
            309,750Net
                assets acquired
            
            $
            140,042,268
            
            $
            (9,749,491
            )
            $
            130,292,777




41




**Searchlight
      Gold Project Claims**




We
      also
      restated the Searchlight Gold Project claims as of December 31, 2007 for the
      effect of the deferred future income tax liability assumed in the acquisition
      of
      the Searchlight Claims. The restatement of the Clarkdale Slag Project affected
      the overall computation of deferred future income tax liability for the amounts
      of deferred future income tax liability allocated to the Searchlight Claims.
      There were no other changes to the accounting treatment of the acquisition
      of
      the claims.





As Originally
              Reported
            
            Adjustments
            
            As RestatedCash
                and shares issuance to obtain mineralproperties,
                July 7, 2005
            
            $
            577,134
            
            $
            —
            
            $
            577,134Net
                deferred income tax liability assumed
            
            
            145,090
            
            
            97,218
            
            
            242,308Mineral
                properties balance, December 31, 2005
            
            
            722,224
            
            
            97,218
            
            
            819,442Share
                issuance to obtain mineral properties, July 27, 2006
            
            
            3,080,000
            
            
            —
            
            
            3,080,000Net
                deferred income tax liability assumed
            
            
            446,472
            
            
            1,085,376
            
            
            1,531,848Mineral
                properties balance, December 31, 2006
            
            
            4,248,696
            
            
            1,182,594
            
            
            5,431,290Share
                issuance to obtain mineral properties, June 29, 2007
            
            
            4,508,000
            
            
            —
            
            
            4,508,000Net
                deferred income tax liability assumed
            
            
            2,762,968
            
            
            —
            
            
            2,762,968Total
                mineral properties balance, December 31, 2007
            
            $
            11,519,664
            
            $
            1,182,594
            
            $
            12,702,258




42




**Restatement
      of Consolidated Balance Sheet December 31, 2007**




The
      following table summarizes overall restatements to our consolidated balance
      sheet as of December 31, 2007 and reconciles the previously reported amounts
      to
      the restated amounts:





Summarized
                Consolidated Balance Sheet -
            
            December 31, 2007
            
            
            
            December 31, 2007December 31,
                2007
            
            As
                Reported
            
            Adjustments
            
            As
                RestatedProperty
                and equipment, net(1)
            
            $
            4,902,287
            
            $
            162,173
            
            $
            5,064,460Mineral
                properties(2)
            
            
            11,519,664
            
            
            1,182,594
            
            
            12,702,258Slag
                project(3)
            
            
            130,516,368
            
            
            (9,749,491
            )
            
            120,766,877Total
                assets
            
            
            168,537,602
            
            
            (8,404,724
            )
            
            160,132,878VRIC
                payable, current portion(3)
            
            
            106,303
            
            
            73,527
            
            
            179,830Due
                to VRIC(3)
            
            
            6,400,000
            
            
            (6,400,000
            )
            
            -VRIC
                payable, net of current portion(3)
            
            
            3,211,101
            
            
            (1,057,571
            )
            
            2,153,530Deferred
                tax liability(4)
            
            
            53,875,079
            
            
            (3,255,421
            )
            
            50,619,658Total
                liabilities
            
            
            64,571,667
            
            
            (10,639,465
            )
            
            53,932,202Additional
                paid-in capital(3)
            
            
            114,913,703
            
            
            1,310,204
            
            
            116,223,907Accumulated
                deficit during exploration stage(5)
            
            
            (11,152,633
            )
            
            924,537
            
            
            (10,228,096
            )Total
                stockholders’ equity
            
            
            103,965,935
            
            
            2,234,741
            
            
            106,200,676Total
                liabilities and stockholders’ equity
            
            $
            168,537,602
            
            $
            (8,404,724
            )
            $
            160,132,878





**Restatement
      of Consolidated Statement of Operations September 30, 2007**





The
      following table summarizes consolidated statements of operations for the three
      and nine months ended September 30, 2007 and reconciles the reported amounts
      to
      the restated amounts:





Summarized
                Consolidated Statement of Operations -For
                the three months ended September 30, 2007
            
            As
                Reported
            
            Adjustments
            
            As
                RestatedTotal
                operating expenses(5)
            
            $
            796,946
            
            $
            (1,049
            )
            $
            795,897Loss
                from operations(6)
            
            
            (788,431
            )
            
            (7,466
            )
            
            (795,897
            )Total
                other income (expense)(6)
            
            
            94,580
            
            
            7,466
            
            
            102,046Income
                tax benefit(7)
            
            
            -
            
            
            270,094
            
            
            270,094Net
                loss(7)
            
            $
            (693,851
            )
            $
            270,094
            
            $
            (423,757
            )Loss
                per common share
            
            $
            (0.01
            )
            
            
            
            $
            (0.005
            )Summarized
                Consolidated Statement of Operations -For
                the nine months ended September 30, 2007
            
            As
                Reported
            
            Adjustments
            
            As
                RestatedTotal
                operating expenses(5)
            
            $
            2,505,225
            
            $
            (1,049
            )
            $
            2,504,176Loss
                from operations(6)
            
            
            (2,477,130
            )
            
            (27,046
            )
            
            (2,504,176
            )Total
                other income (expense)(6)
            
            
            246,320
            
            
            27,046
            
            
            273,366Income
                tax benefit(7)
            
            
            -
            
            
            810,282
            
            
            810,282Net
                loss(7)
            
            $
            (2,230,810
            )
            $
            810,282
            
            $
            (1,420,528
            )Loss
                per common share
            
            $
            (0.03
            )
            
            
            
            $
            (0.02
            )




43





Notes
      to
      the restatement adjustments set forth in the tables above are, as
      follows:




(1)
            Restated
                for capitalization of interest related to deferred purchase
                liability.


(2)
            Restated
                for computation of deferred tax liability assumed in mineral property
                acquisition.


(3)
            Restated
                for revision of the acquisition accounting related to payment terms
                and
                conditions contained in the acquisition agreement and the resulting
                deferred tax liability assumed in the
                acquisition.


(4)
            Restated
                for deferred tax computation related to acquisition
                accounting.


(5)
            Reclassify
                interest expense from operating expenses to other income
                (expense).


(6)
            Reclassify
                interest expense and rental revenue from operations to other income
                (expense).


(7)
            Restated
                for deferred tax benefit related to mineral property
                acquisition.





**Results
      of Operations**




The
      following table illustrates a summary of our results of operations for the
      periods listed below:


Three Months Ended September 30,
              
              Nine Months Ended September 30,2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)
              
              2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)Revenue
              
              $
              -
              
              $
              -
              
              
              n/a
              
              $
              -
              
              $
              -
              
              
              n/aOperatingExpenses
              
              
              (1,415,440
              )
              
              (795,897
              )
              
              77.8
              %
              
              (3,890,962
              )
              
              (2,504,176
              )
              
              55.4
              %Other
                  Income
              
              
              55,277
              
              
              102,046
              
              
              (45.8)
              %
              
              209,320
              
              
              273,366
              
              
              (23.4)
              %Income
                  tax benefit
              
              
              449,263
              
              
              270,094
              
              
              66.3
              %
              
              1,318,167
              
              
              810,282
              
              
              62.7
              %Net
                  Loss
              
              $
              (910,900
              )
              $
              (423,757
              )
              
              115.0
              %
              $
              (2,363,475
              )
              $
              (1,420,528
              )
              
              66.4
              %




***Revenue***




We
      are
      currently in the exploration stage of our business, and have not earned any
      revenues from our planned mineral operations to date. We do not anticipate
      earning revenues from our planned mineral operations until such time as we
      enter
      into commercial production of the Clarkdale Slag Project, the Searchlight Gold
      Project or other mineral properties we may acquire from time to time, and of
      which there are no assurances.




44





***Operating
      Expenses***




The
      major
      components of our operating expenses are outlined in the table
      below:


Three Months Ended September 30,
              
              Nine Months Ended September 30,2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)
              
              2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)Mineral
                  exploration and evaluation expenses
              
              $
              392,323
              
              $
              199,961
              
              
              96.2
              %
              $
              841,231
              
              $
              810,539
              
              
              3.8
              %Mineral
                  exploration and evaluation expenses – related party
              
              
              90,000
              
              
              90,000
              
              
              0.0
              %
              
              270,000
              
              
              270,000
              
              
              0.0
              %Administrative –
                  Clarkdale site
              
              
              310,822
              
              
              -
              
              
              n/a
              
              
              818,730
              
              
              -
              
              
              n/aGeneral
                  and administrative
              
              
              573,302
              
              
              471,209
              
              
              21.7
              %
              
              1,854,331
              
              
              1,374,668
              
              
              34.9
              %General
                  and administrative –related
                  party
              
              
              33,335
              
              
              23,017
              
              
              44.8
              %
              
              60,460
              
              
              23,017
              
              
              162.7
              %Depreciation
              
              
              15,658
              
              
              11,710
              
              
              33.7
              %
              
              46,210
              
              
              25,952
              
              
              78.1
              %Total
                  Operating Expenses
              
              $
              1,415,440
              
              $
              795,897
              
              
              77.8
              %
              $
              3,890,962
              
              $
              2,504,176
              
              
              55.4
              %




***Nine
      month periods ended September 30, 2008 and 2007.*** Operating expenses increased to $3,890,962 during the nine month period ended
      September 30, 2008 from $2,504,176 during the nine month period ended September
      30, 2007. Operating expense increased during the nine month period ended
      September 30, 2008 compared to the corresponding period in 2007 primarily as
      a
      result of increases in general and administrative expenses and Clarkdale site
      administrative expenses.




General
      and administrative expenses increased to $1,854,331 during the nine month period
      ended September 30, 2008 from $1,374,668 during the nine month period ended
      September 30, 2007. General and administrative expenses increased primarily
      as a
      result of (i) increased professional and administrative expenses associated
      with
      the completion of our equity financings, the preparation of our 2007 annual
      report on Form 10-KSB, the preparation of our registration statement on Form
      S-1, and legal and accounting fees; (ii) increased expenses related to the
      administration of the Clarkdale Slag Project site; and (iii) increased
      compensation paid to our executive officers and our directors.




Included
      in general and administrative expenses for the nine month period ended September
      30, 2008 and 2007 were compensation expenses related to the option vesting
      and
      option grants of $859 and $144,415, respectively.




On
      April
      30, 2007, we adopted our 2007 Stock Option Plan (the “2007 Plan”). Under the
      terms of the 2007 Plan, as amended May 8, 2007, options to purchase up to
      4,000,000 shares of common stock may be granted to our employees, officers,
      directors, and eligible consultants under such plan. On June 15, 2007, our
      stockholders approved the 2007 Plan.




45





In
      addition, we incurred $60,460 and $23,017 during the nine month periods ended
      September 30, 2008 and 2007, respectively, for general and administrative
      expenses for accounting support services to Cupit, Milligan, Ogden &
Williams, CPAs, an affiliate of Melvin L. Williams, our Chief Financial Officer.
      These expenses increased during the nine month period ended September 30, 2008
      as compared to 2007 because we did not incur such expenses to the firm prior
      to
      the third quarter of 2007.




Mineral
      exploration and evaluation expenses increased to $841,231 during the nine month
      period ended September 30, 2008 from $810,539 during the nine month period
      ended
      September 30, 2007. Mineral exploration and evaluation expenses increased
      primarily as a result of establishment of a full allowance against the
      reclamation bond offset by our focus on our construction efforts for the
      Clarkdale Slag Project.




Included
      in mineral exploration and evaluation expenses were the amounts of $270,000
      and
      $270,000 paid during the nine month periods ended September 30, 2008 and 2007,
      respectively, to Nanominerals Corp. (one of our principal stockholders and
      an
      affiliate of Ian R. McNeil, our Chief Executive Officer and President and a
      director, and Carl S. Ager, our Vice President, Secretary and Treasurer and
      a
      director) for technical assistance and financing related activities provided
      by
      Nanominerals in connection with the exploration and development of our mineral
      projects.




Further,
      we paid $818,730 for administrative expenses relating to the Clarkdale Slag
      Project during the nine month period ended September 30, 2008. Such expenses
      for
      the nine month period ended September 30, 2007 were $345,793 and were included
      in general and administrative expense. The increase in these expenses was
      attributable to increased activity at the Clarkdale Slag Project Site which
      commenced during the second quarter of 2007.




For
      the
      nine month period ended September 30, 2008, we purchased services from two
      major
      vendors, Talson Corporation and Cimetta Engineering, which exceeded more than
      10% of total purchases and amounted to approximately $1,650,126 and $1,013,258,
      respectively. For the nine month period ended September 30, 2007, we purchased
      services from one major vendor, Talson Corporation, that exceeded more than
      10%
      of total purchases and amounted to approximately $1,496,000.




***Three
      month periods ended September 30, 2008 and 2007*** .
      Operating expenses increased to $1,415,440 during the three month period ended
      September 30, 2008 from $795,897 during the three month period ended September
      30, 2007. Operating expense increased during the three month period ended
      September 30, 2008 compared to the corresponding period in 2007 primarily as
      a
      result of increases in mineral exploration and evaluation expenses and Clarkdale
      site administrative expenses.




General
      and administrative expenses increased to $573,302 during the three month period
      ended September 30, 2008 from $471,209 during the three month period ended
      September 30, 2007. General and administrative expenses increased primarily
      as a
      result of increased legal and accounting fees related to preparation of our
      registration statement on Form S-1.




In
      addition, we incurred $33,335 and $23,017 during the three month periods ended
      September 30, 2008 and 2007, respectively, for general and administrative
      expenses for accounting support services to Cupit, Milligan, Ogden &
Williams, CPAs, an affiliate of Melvin L. Williams, our Chief Financial Officer.
      These expenses increased primarily as a result of increased accounting expenses
      related to preparation of our registration statement on Form S-1.




Mineral
      exploration and evaluation expenses increased to $392,323 during the three
      month
      period ended September 30, 2008 from $199,961 during the three month period
      ended September 30, 2007. Mineral exploration and evaluation expenses increased
      primarily as a result of establishment of a full allowance against the
      reclamation bond and increased activity at the Clarkdale site and increased
      focus on Searchlight Gold Project as compared to the corresponding period of
      2007.




46




Included
      in mineral exploration and evaluation expenses were the amounts of $90,000
      and
      $90,000 paid during the three month periods ended September 30, 2008 and 2007,
      respectively, to Nanominerals Corp. (one of our principal stockholders and
      an
      affiliate of Ian R. McNeil, our Chief Executive Officer and President and a
      director, and Carl S. Ager, our Vice President, Secretary and Treasurer and
      a
      director) for technical assistance and financing related activities provided
      by
      Nanominerals in connection with the exploration and development of our mineral
      projects.




Further,
      we paid $310,822 for administrative expenses relating to the Clarkdale Slag
      Project during the three month period ended September 30, 2008. Such expenses
      for the three month period ended September 30, 2007 were $163,223 and were
      included in general and administrative expense. The increase in these expenses
      is attributable to increased activity at the Clarkdale Slag Project
      Site.




***Other
      Income and Expenses***




***Nine
      month periods ended September 30, 2008 and 2007.*** Total
      other income decreased to $209,320 during the nine month period ended September
      30, 2008 from $273,366 during the nine month period ended September 30, 2007.
      The decrease in total other income primarily resulted from a decrease in
      interest and dividend income. The decrease in interest and dividend income
      earned was attributable to lower interest rates during the nine month period
      ended September 30, 2008 as compared to the same period in 2007.




***Three
      month periods ended September 30, 2008 and 2007*** .
      Total
      other income decreased to $55,277 during the three month period ended September
      30, 2008 from $102,046 during the three month period ended September 30, 2007.
      The decrease in total other income primarily resulted from a decrease in
      interest and dividend income. The decrease in interest and dividend income
      earned was attributable to lower interest rates during the three month period
      ended September 30, 2008 as compared to the same period in 2007.




***Income
      Tax Benefit***




***Nine
      month periods ended September 30, 2008 and 2007.*** Income
      tax benefit increased to $1,318,167 for the nine month period ended September
      30, 2008 from $810,282 during the nine month period ended September 30, 2007.
      The increase in income tax benefit primarily resulted from the increase in
      exploration stage losses during the nine month period ended September 30, 2008
      from the nine month period ended September 30, 2007.




***Three
      month periods ended September 30, 2008 and 2007*** .
      Income
      tax benefit increased to $449,263 for the three month period ended September
      30,
      2008 from $270,094 during the three month period ended September 30, 2007.
      The
      increase in income tax benefit primarily resulted from the increase in
      exploration stage losses during the three month period ended September 30,
      2008
      from the three month period ended September 30, 2007.




***Net
      Loss***




***Nine
      month periods ended September 30, 2008 and 2007.*** The
      aforementioned factors resulted in a net loss of $2,363,475, or $0.02 per common
      share, for the nine month period ended September 30, 2008, as compared to a
      net
      loss of $1,420,528, or $0.02 per common share, for the nine month period ended
      September 30, 2007.




***Three
      month periods ended September 30, 2008 and 2007*** .
      The
      aforementioned factors resulted in a net loss of $910,900, or $0.01 per common
      share, for the three month period ended September 30, 2008, as compared to
      a net
      loss of $423,757, or $0.005 per common share, for the three month period ended
      September 30, 2007.





47




As
      of
      September 30, 2008 and December 31, 2007, we had cumulative net operating loss
      carryforwards of approximately $11,270,561 and $7,801,699, respectively for
      federal income taxes. As of September 30, 2008 and December 31, 2007, we had
      cumulative net operating losses of approximately $3,883,008 and $1,795,792,
      respectively for state income tax purposes. The net operating loss carryforwards
      expire between 2025 and 2028.




**Liquidity
      and Capital Resources**




Historically,
      we have financed our operations primarily through the sale of common stock
      and
      other convertible equity securities. During the nine months ended September
      30,
      2008, we conducted the following private placements of our
      securities:




·
            On
                February 7, 2008, we completed two concurrent private placement offerings
                for gross proceeds of $5,250,000 to non-US persons and to US accredited
                investors. A total of 3,281,250 units were issued at a price of $1.60.
                Each unit sold consisted of one share of our common stock and one-half
                of
                one share purchase warrants. Each whole share purchase warrant entitles
                the holder to purchase one additional share of our common stock at
                a price
                of $2.40 per share for a period of two years from the date of issuance.
                A
                total of 80,000 shares of our common stock were issued as commission
                to
                agents in connection with these
                offerings.




·
            On
                January 30, 2008, we received gross proceeds of $2,528,500 and issued
                an
                aggregate of 3,890,000 shares of our common stock on the exercise
                of
                warrants we issued in January, 2006. Each warrant entitled the holder
                to
                purchase one share of our common stock at a price of $0.65 per share
                on or
                before January 18, 2008. The warrant holders delivered their notices
                of
                exercise, and paid the exercise price of $0.65 per share, prior to
                January
                18, 2008 expiration date.




**Working
      Capital**




The
      following is a summary of our working capital at September 30,
      2008:




At September 30,
              2008
            
            At December 31,
              2007
              (restated)
            
            Percent
              Increase/(Decrease)Current
                Assets
            
            $
            10,063,574
            
            $
            12,200,133
            
            
            (17.5)
            %Current
                Liabilities
            
            
            (1,180,693
            )
            
            (1,094,697
            )
            
            7.9
            %Working
                Capital
            
            $
            8,882,881
            
            $
            11,105,436
            
            
            (20.0)
            %




As
      of
      September 30, 2008, we had an accumulated deficit of $12,591,571. As of
      September 30, 2008, we had working capital of $8,882,881, compared to working
      capital of $11,105,436 as of December 31, 2007. The decrease in our working
      capital was primarily attributable to our net loss and capital expenditures
      partially offset by the completion of our private placements in 2008. Cash
      and
      cash equivalents were $9,809,302 as of September 30, 2008, as compared to
      $12,007,344 as of December 31, 2007. Property and equipment increased to
      $11,377,569 as of September 30, 2008 from $5,064,460 as of December 31, 2007.
      The increase primarily resulted from site improvements and equipment
      acquisitions at the Clarkdale Slag Project.




Included
      in long term liabilities in the accompanying consolidated financials statements
      is a balance of $50,914,652 for deferred tax liability relating to the Clarkdale
      Slag Project and Searchlight Gold Project. A deferred income tax liability
      was
      recorded on the excess of fair market value for the asset acquired over income
      tax basis at a combined statutory federal and state rate of 38% with the
      corresponding increase in the purchase price allocation of the assets
      acquired.




48




**Cash
      Flows**




The
      following is a summary of our uses of cash for the periods set forth
      below:




Nine
                Months Ended September 30,2008
            
            2007
              (restated)
            
            Percent
              Increase/(Decrease)Cash
                Flows Used in OperatingActivities
            
            $
            (3,792,830
            )
            $
            (2,764,336
            )
            
            37.2
            %Cash
                Flows Used in InvestingActivities
            
            
            (6,018,052
            )
            
            (13,161,188
            )
            
            (54.3)
            %Cash
                Flows Provided by FinancingActivities
            
            
            7,612,840
            
            
            20,912,830
            
            
            (63.6)
            %Net
                Change in Cash During Period
            
            $
            (2,198,042
            )
            $
            4,987,306
            
            
            (144.1)
            %




Net
      cash
      used in operating activities increased to $3,792,830 during the nine month
      period ended September 30, 2008 from $2,764,336 during the nine month period
      ended September 30, 2007. The increase in cash used in operating activities
      was
      primarily due to operating losses from our exploration activity and general
      and
      administrative expenses, offset by non-cash elements which were primarily
      related to change in deferred tax liability of $1,318,167 and change in accounts
      payable and accrued liabilities of $279,889.




We
      used
      $6,018,052 in investing activities during the nine month period ended September
      30, 2008, as compared to $13,161,188 during the nine month period ended
      September 30, 2007. The decrease in the nine month period ended September 30,
      2008 was primarily a result of the payment to Verde River Iron Company (“VRIC”),
      an affiliate of a member of our board of directors, Harry B. Crockett, of
      $9,900,000 in connection with the acquisition of VRIC’s wholly owned subsidiary,
      Transylvania, during the nine month period ended September 30, 2007, offset
      by
      property and equipment purchases of $5,881,572 relating to the Clarkdale Slag
      Project during the nine month period ended September 30, 2008.




Net
      cash
      provided by financing activities was $7,612,840 for the nine month period ended
      September 30, 2008 compared to $20,912,830 for the nine month period ended
      September 30, 2007. Net cash provided by financing activities during the nine
      month period ended September 30, 2008 primarily resulted from the receipt of
      $5,250,000 from the proceeds of private placements of our securities and
      $2,528,500 from the exercise of warrants, offset by $133,520 of cash paid to
      VRIC based on our $30,000 monthly obligation to VRIC under the terms of the
      Transylvania reorganization agreement. Net cash provided by financing activities
      during the nine month period ended September 30, 2007 primarily resulted from
      the receipt of $21,713,817 from the gross proceeds of private placements of
      our
      securities.




We
      have
      not attained profitable operations and are dependent upon obtaining financing
      to
      pursue our plan of operation. Our ability to achieve and maintain profitability
      and positive cash flow will be dependent upon, among other things:




·  our
      ability to locate a profitable mineral property;




·  positive
      results from our feasibility studies on the Searchlight Gold Project and the
      Clarkdale Slag Project;




·  positive
      results from the operation of our initial test module on the Clarkdale Slag
      Project; and




·  our
      ability to generate revenues.




49




We
      may
      not generate sufficient revenues from our proposed business plan in the future
      to achieve profitable operations. If we are not able to achieve profitable
      operations at some point in the future, we eventually may have insufficient
      working capital to maintain our operations as we presently intend to conduct
      them or to fund our expansion plans. In addition, our losses may increase in
      the
      future as we expand our business plan. These losses, among other things, have
      had and will continue to have an adverse effect on our working capital, total
      assets and stockholders’ equity. If we are unable to achieve profitability, the
      market value of our common stock will decline and there would be a material
      adverse effect on our financial condition.




Our
      plan
      of operation calls for significant expenses in connection with the development
      of the Clarkdale Slag Project and the exploration of the Searchlight Gold
      Project. Over the next twelve months, our management anticipates that the
      minimum cash requirements for funding our proposed exploration and development
      program and our continued operations will be approximately $9,200,000. As of
      September 30, 2008, we had cash reserves in the amount of $9,809,302. Our cash
      position at September 30, 2008 exceeds our anticipated minimum 12 month budget
      of $9,200,000 by approximately $609,302.




Our
      current twelve month budget also includes anticipated expenditure of $6,000,000
      on Phase II of our Clarkdale Slag Project. Although our current cash position
      is
      sufficient to meet our minimum anticipated costs for our development and
      exploration activities during the next twelve months, we will require additional
      funding to fulfill our entire anticipated plan of operations. In addition,
      the
      actual costs of completing those activities may be greater than anticipated.




If
      the
      actual costs are significantly greater than anticipated, if we proceed with
      our
      development and exploration activities beyond what we currently have planned,
      or
      if we experience unforeseen delays during our activities over the next twelve
      months, we will need to obtain additional financing. There are no assurances
      that we will be able to obtain additional financing in an amount sufficient
      to
      meet our needs or on terms that are acceptable to us.




Obtaining
      additional financing is subject to a number of factors, including the market
      prices for the mineral property and base and precious metals. These factors
      may
      make the timing, amount, terms or conditions of additional financing unavailable
      to us. If adequate funds are not available or if they are not available on
      acceptable terms, our ability to fund our business plan could be significantly
      limited and we may be required to suspend our business operations. We cannot
      assure you that additional financing will be available on terms favorable to
      us,
      or at all. The failure to obtain such a financing would have a material, adverse
      effect on our business, results of operations and financial
      condition.




If
      additional funds are raised through the issuance of equity or convertible debt
      securities, the percentage ownership of current stockholders will be reduced
      and
      these securities may have rights and preferences superior to that of current
      stockholders. If we raise capital through debt financing, we may be forced
      to
      accept restrictions affecting our liquidity, including restrictions on our
      ability to incur additional indebtedness or pay dividends.




For
      these
      reasons, our financial statements filed herewith include a statement that these
      factors raise substantial doubt about our ability to continue as a going
      concern. Our ability to continue as a going concern will be dependent on our
      raising of additional capital and the success of our business plan.




**Off-Balance
      Sheet Arrangements**




None.




50




**Recent
      Accounting Pronouncements**




The
      FASB
      issued FASB Staff Position (FSP) FAS 157-3, “Determining the Fair Value of a
      Financial Asset When the Market for that Asses Is Not Active”. The FSP clarifies
      the application of FASB Statement No. 157, “Fair Value Measurements”, in a
      market that is not active and provides an example to illustrate key
      considerations in determining the fair value of a financial asset when the
      market for that financial asset is not active. The FSP is effective October
      10,
      2008, and for prior periods for which financial statements have not been issued.
      Revisions resulting from a change in the valuation technique or its application
      should be accounted for as a change in accounting estimate following the
      guidance in FASB Statement No. 154, “Accounting Changes and Error Corrections”.
      However, the disclosure provisions in Statement 154 for a change in accounting
      estimate are not required for revisions resulting from a change in valuation
      techniques or its application. We have determined that the adoption of this
      statement will have little or no effect on our consolidated financial position,
      results of operations, and disclosures.




In
      May
      2008, the FASB issued SFAS No. 162, “Hierarchy of Generally Accepted Accounting
      Principles”. This statement is intended to improve financial reporting by
      identifying a consistent framework, or hierarchy, for selecting accounting
      principles to be used in preparing financial statements of nongovernmental
      entities that are presented in conformity with GAAP. This statement will be
      effective 60 days following the U.S. Securities and Exchange Commission’s
      approval of the Public Company Accounting Oversight Board amendment to AU
      Section 411, “The Meaning of Present Fairly in Conformity with Generally
      Accepted Accounting Principles.” We are currently evaluating the potential
      impact, if any, of the adoption of SFAS 162 on our consolidated financial
      statements.




On
      March
      19, 2008 the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments
      and Hedging Activities.” This statement is intended to improve financial
      reporting about derivative instruments and hedging activities by requiring
      enhanced disclosures. This statement is effective for financial statements
      issued for fiscal years and interim periods beginning after November 15, 2008,
      with early application encouraged. We are currently evaluating the impact that
      SFAS 161 will have on the consolidated financial statements.




In
      December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,” which
      amends SFAS No. 141, and provides revised guidance for recognizing and measuring
      identifiable assets and goodwill acquired, liabilities assumed, and any
      noncontrolling interest in the acquiree. It also provides disclosure
      requirements to enable users of the financial statements to evaluate the nature
      and financial effects of the business combination. SFAS No. 141(R) is effective
      for our fiscal year beginning January 1, 2009 and is to be applied
      prospectively. We are currently evaluating the potential impact of adopting
      this
      statement on our consolidated financial position, results of operations or
      cash
      flows.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of ARB No. 51” which
      establishes accounting and reporting standards pertaining to ownership interests
      in subsidiaries held by parties other than the parent, the amount of net income
      attributable to the parent and to the noncontrolling interest, changes in a
      parent’s ownership interest, and the valuation of any retained noncontrolling
      equity investment when a subsidiary is deconsolidated. SFAS No. 160 also
      establishes disclosure requirements that clearly identify and distinguish
      between the interests of the parent and the interests of the noncontrolling
      owners. SFAS No. 160 is effective for our fiscal year beginning January 1,
      2009.
      We are currently evaluating the potential impact of adopting this statement
      on
      our consolidated financial position, results of operations or cash
      flows.




In
      September 2007, the FASB published Proposed FSP No. APB 14-a, “Accounting for
      Convertible Debt Instruments That May Be Settled in Cash upon Conversion.” The
      proposed FSP applies to convertible debt instruments that, by their stated
      terms, may be settled in cash (or other assets) upon conversion, including
      partial cash settlement, unless the embedded conversion option is required
      to be
      separately accounted for as a derivative under SFAS 133. Convertible debt
      instruments within the scope of the proposed FSP are not addressed by the
      existing APB 14. The proposed FSP would require that the liability and equity
      components of convertible debt instruments within the scope of the proposed
      FSP
      shall be separately accounted for in a manner that reflects the entity’s
      nonconvertible debt borrowing rate. This will require an allocation of the
      convertible debt proceeds between the liability component and the embedded
      conversion option (i.e., the equity component). The difference between the
      principal amount of the debt and the amount of the proceeds allocated to the
      liability component would be reported as a debt discount and subsequently
      amortized to earnings over the instrument’s expected life using the effective
      interest method. We are currently evaluating the impact that Proposed FSP may
      have on our financial position, results of operations and cash
      flows.




51




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an amendment of FASB
      Statement No. 115” (“SFAS 159”), which permits entities to choose to measure
      many financial instruments and certain other items at fair value that are not
      currently required to be measured at fair value. The objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. SFAS 159 also establishes presentation and disclosure requirements
      designed to facilitate comparisons between entities that choose different
      measurement attributes for similar types of assets and liabilities. SFAS 159
      does not affect any existing accounting literature that requires certain assets
      and liabilities to be carried at fair value, nor eliminate disclosure
      requirements included in other accounting standards, including requirements
      for
      disclosures about fair value measurements included in SFAS 157, “Fair Value
      Measurements,” and SFAS 107, “Disclosures about Fair Value of Financial
      Instruments.” SFAS 159 is effective for our fiscal year beginning after November
      15, 2007. We have determined that the adoption of this statement will have
      little or no effect on our consolidated financial position, results of
      operations, and disclosures.




**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**




N ot
      applicable.




**Item
      4. Controls and Procedures**




**Controls
      and Procedures**




We
      maintain a system of controls and procedures designed to ensure that information
      required to be disclosed by us in reports that we file or submit under the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported, within time periods specified in the Commission’s rules and forms
      and to ensure that information required to be disclosed by us in the reports
      that we file or submit under the Securities Exchange Act of 1934, as amended,
      is
      accumulated and communicated to our management, including our Chief Executive
      Officer and Principal Financial Officer, as appropriate to allow timely
      decisions regarding required disclosure. As of September 30, 2008, under the
      supervision and with the participation of our Chief Executive Officer and
      Principal Financial Officer, management has evaluated the effectiveness of
      the
      design and operation of our disclosure controls and procedures. Based on that
      evaluation, the Chief Executive Officer and Principal Financial Officer
      concluded that our disclosure controls and procedures were
      effective.




**Changes
      in Internal Control Over Financial Reporting**




There
      were no changes in our internal controls over financial reporting during the
      quarter ended September 30, 2008 that materially affected, or are reasonably
      likely to materially affect, our internal controls over financial
      reporting.




**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings**




From
      time
      to time, we are a party to claims and legal proceedings arising in the ordinary
      course of business. Our management evaluates our exposure to these claims and
      proceedings individually and in the aggregate and provides for potential losses
      on such litigation if the amount of the loss is determinable and the loss is
      probable.




52




We
      believe that there are no material litigation matters at the current time.
      Although the results of such litigation matters and claims cannot be predicted
      with certainty, we believe that the final outcome of such claims and proceedings
      will not have a material adverse impact on our financial position, liquidity,
      or
      results of operations.




**Item
      1A. Risk Factors**




In
      addition to the other information set forth in this Report, you should carefully
      consider the factors discussed in the section entitled “Risk Factors” in our
      Annual Report on Form 10-KSB for the year ended December 31, 2007, which to
      our
      knowledge have not materially changed. Those risks, which could materially
      affect our business, financial condition or future results, are not the only
      risks we face. Additional risks and uncertainties not currently known to us
      or
      that we currently deem to be immaterial also may materially adversely affect
      our
      business, financial condition and/or operating results.




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




On
      August
      26, 2008, we issued 100,000 shares of common stock upon the exercise of stock
      options at an exercise price of $0.25 per share. These securities were issued
      pursuant to Section 4(2) of the Securities Act.




On
      September 30, 2008, we issued 18,936 shares of our common stock to our
      non-management directors. These shares were issued pursuant to the director
      compensation policy for our non-management directors based on: (i) a price
      of
      $2.08 per share with respect to 8,652 shares, being the closing price of our
      common stock on June 30, 2008, being the last trading day of the second quarter
      of 2008, and (ii) a price of $1.75 per share with respect to 10,284 shares,
      being the closing price of our common stock on September 30, 2008, being the
      last trading day of the third quarter of 2008. These securities were issued
      pursuant to Section 4(2) of the Securities Act.




**Item
      3. Defaults Upon Senior Securities**




None.




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




No
      matters were submitted to our stockholders, through the solicitation of proxies
      or otherwise, during the quarter ended September 30, 2008.




**Item
      5. Other Information**




**Non-Reliance
      on Previously Issued Financial Statements**





On
      May 5,
      2008, after consulting with Brown Armstrong Paulden McCown Starbuck Thornburgh
      & Keeter Accountancy Corporation, our independent accountants, our
      management and our audit committee, concluded that our audited financial
      statements for the year ended December 31, 2007, and our unaudited interim
      financial statements for the periods ended September 30, 2007 should not be
      relied upon. Based upon our continued review of comments received from the
      Commission with respect to their review of our amended Registration Statement
      on
      Form S-1/A, our management and our audit committee have concluded restatements
      should be made to our consolidated balance sheets and statements of
      operations.




53




Detailed
      information outlining the impact of the restatement to our previously issued
      financial statements is discussed in this Report under the heading “Management’s
      Discussion and Analysis of Financial Condition and Results of Operations -
      Restatement.”




We
      also
      restated certain items on our consolidated balance sheets and statements of
      operations included in our Annual Report on Form 10-KSB for the year ended
      December 31, 2007. On our consolidated balance sheets: (i) mineral properties
      have been restated to include the market value of certain shares issued by
      us
      under the terms of our option agreements for the mineral claims making up the
      Searchlight Gold Project; and (ii) the Clarkdale Slag Project has been restated
      to include deferred future income tax liability in connection with our
      acquisition of Transylvania International, Inc. Our statement of operations
      for
      the period from inception to December 31, 2006 has been restated to reclassify
      net losses prior to January 1, 2005 as losses from discontinued operations.
      Our
      statements of operations for the year ended December 31, 2006 have been restated
      to reclassify foreign currency translation adjustments as general and
      administrative expenses. Related to this issue, our balance sheet for the period
      ended December 31, 2006 has been restated to reclassify accumulated other
      comprehensive loss as accumulated deficit during the exploration
      stage.




A
      more
      complete discussion of that restatement is set forth in our Annual Report on
      Form 10-KSB for the year ended December 31, 2007 under
      the
      heading “Management’s Discussion and Analysis of Financial Condition and Results
      of Operations - Restatement.”




54


**Item
      6. Exhibits** ****




**EXHIBIT
                TABLE**
              
              The
                following is a complete list of exhibits filed as part of the Annual
                Report on Form 10-Q, some of which are incorporated herein by reference
                from the reports, registration statements and other filings of the
                issuer
                with the Securities and Exchange Commission, as referenced
                below:




Reference
              Number
            
            Item31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232
            
            Certifications
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002





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**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




**SEARCHLIGHT
                MINERALS CORP.**
              a
                Nevada corporationDate:
                November 10, 2008
            By:
            /s/
                Ian R.
                McNeilIan
                R. McNeilPresident
                and Chief Executive Officer
              (Principal
                Executive Officer)Date:
                November 10, 2008
            By:
            /s/
                Melvin L.
                WilliamsMelvin
                L. WilliamsChief
                Financial Officer
              (Principal
                Accounting Officer)





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