UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




Amendment
No. 1


TO


Form
10-QSB


ON


Form
10-Q/A




x
            Quarterly
      report pursuant Section 13 or 15(d) of the Securities Exchange Act of
      1934
              For the quarterly period ended September 30,
      2007




 ̈
            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            ̈




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  ̈                                                                    Accelerated
filer x





Non-accelerated
filer  ̈                                                                      Smaller
reporting company  ̈


(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            ̈      No           x




As of
July 6, 2009, the registrant had 106,468,637 outstanding shares of common
stock.







Explanatory
Note




On
November 8, 2007, the management of Searchlight Minerals
Corp.  (“Searchlight”, the “Company”, or as used in the context of
“we”, “us” or “our”) concluded that our audited financial statements for the
years ended December 31, 2006 and 2005, and our unaudited interim financial
statements for the periods ended March 31, 2005 through June 30, 2007 needed to
be restated and should not be relied upon.
  On May
5, 2008, our management concluded that our audited financial statements for the
year ended December 31, 2007, and our unaudited interim financial statements for
the period ended September 30, 2007 needed to be restated and should not be
relied upon.
  This
Amendment No. 1 (the “Form 10-Q/A”) to our Quarterly Report on Form 10-QSB for
the three months ended September 30, 2007 (the “2007 Third Quarter 10-QSB”) is
being filed with the Securities and Exchange Commission (the “SEC”) to restate
our consolidated financial statements as of September 30, 2007 and for the three
and nine months ended September 30, 2007 and 2006, and the period from January
14, 2000 (date of inception) through September 30, 2007.  In addition,
we are concurrently filing Reports on Form 10-K/A to amend and restate our
financial statements for the annual periods in fiscal years 2005 through 2006
and our consolidated financial statements for the annual periods in fiscal year
2007 and Reports on Form 10-Q/A to amend and restate our financial statements
for the quarterly periods ended March 31, 2005 through September 30, 2005, March
31, 2006 through September 30, 2006, and our consolidated financial statements
for the quarterly periods ended March 31, 2007 through September 30,
2007.
  We
have restated certain items on our balance sheets and statements of
operations.  On our 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
revision of acquisition costs related to issuance of warrants, consideration of
certain terms with respect to future payments that should have been recorded as
contingent consideration and related deferred future income tax liability in
connection with our acquisition of Transylvania International,
Inc.  (“Transylvania”).  Our statements of operations have
been restated to reclassify net losses prior to January 1, 2005 as losses from
discontinued operations.  Our statement of operations for the year
ended December 31, 2006 has been restated to reclassify foreign currency
translation adjustments to general and administrative
expense.  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.
    ·
              increasing the mineral property
      by $450,000 for the shares issued and by $242,308 for the deferred future
      income tax liability assumed for a total increase of $692,308 for the
      periods ended September 30, 2005, December 31, 2005, March 31, 2006 and
      June 30, 2006.
 
 ·
              cumulative increase to the
      mineral asset by $3,530,000 for the shares issued and by $1,774,156 for
      the deferred future income tax liability assumed for a total increase of
      $5,304,156 for the periods ended September 30, 2006, December 31, 2006 and
      March 31, 2007.
 
 ·
              cumulative increase to the
      mineral asset by $8,038,000 for the shares issued and by $4,537,124 for
      the deferred future income tax liability assumed for a total increase of
      $12,575,124 for the period ended June 30,
  2007.
  1
  ·
              increasing the mineral asset by
      $450,000 for the shares issued on July 7, 2005 and by $242,308 for the
      related deferred tax liability assumed and by $385,846 for the
      recomputation of deferred tax liability as a result of the Clarkdale Slag
      Project restatement for a total increase of $1,078,154 for the period
      ended September 30,
2007.
  ·
              increasing the mineral asset by
      $1,182,594 for the recomputation of the deferred tax liability as a result
      of the Clarkdale Slag Project restatement for the period ended December
      31, 2007.
  Joint
Venture Agreement - During the second quarter of 2008, we also determined that
the accounting treatment for the 12,000,000 warrants issued to Nanominerals
Corp.  (“Nanominerals”) and its designates in connection with the
assignment of the option for the Clarkdale Slag Project approved on June 1, 2005
was not appropriate.  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.  Nanominerals is one of our principal stockholders, and is
an affiliate of two members of our executive management and board of directors,
Ian R. McNeil and Carl S. Ager.
  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)
              9.6
  This
restatement had the effect of increasing the joint venture and merger option
agreements by $1,918,481 on our balance sheets for the periods ended September
30, 2005, December 31, 2005, March 31, 2006, June 30, 2006, September 30, 2006
and December 31, 2006.
  Clarkdale
Slag Project – On February 15, 2007, we entered into an agreement and plan of
merger with Transylvania. Pursuant to the agreement Transylvania merged with and
into our wholly owned subsidiary, Clarkdale Minerals LLC. This agreement
superseded the original Clarkdale Slag Project option assignment. 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 Transylvania, 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 based on the acquisition agreement and the
      recomputation of the value of the 12,000,000 warrants issued to
      Nanominerals Corp., and its designates 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.
  ·
              our
      consolidated statement of operations for each of the periods ended March
      31, 2007, June 30, 2007, September 30, 2007 and 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.
  2
  ·
              our
      consolidated statement of operations for the three months ended March 31,
      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.
  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.  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 establishes 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 restatement had the following
impact on our balance sheets for the periods ended March 31, 2007 through
December 31, 2007:
 
 ·
              increasing the acquisition cost
      of the Slag Project by $1,918,481 for the warrants issued in connection
      with the option assignment and by $14,925,422 for the deferred tax
      liability assumed and decreasing the acquisition cost by $7,546,217 for
      the contingent payment terms for a total increase of $9,297,686 for the
      periods ended March 31, 2007 and June 30,
  2007.
 
 ·
              increasing the acquisition cost
      of the Slag Project by $1,918,481 for the warrants issued in connection
      with the option assignment and by $10,801,018 for the deferred tax
      liability assumed and decreasing the acquisition cost by $7,546,217 for
      the contingent payment terms for a total increase of $5,173,282 for the
      period ended September 30,
2007.
 
 ·
              increasing the acquisition cost
      of the Slag Project by $1,918,481 for the warrants issued in connection
      with the option assignment and decreasing the acquisition cost by
      $4,121,755 for the deferred tax liability assumed and by $7,546,217 for
      the contingent payment terms for a total decrease of $9,749,491 for the
      period ended December 31,
2007.
  The
original terms of the underlying purchase agreement were unchanged and this
adjustment had no effect on the acquisition agreement.
  Discontinued
Operations - The statements of operations from the date of inception through the
periods ended March 31, 2005, June 30, 2005, September 30, 2005, December 31,
2005, March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006
and the consolidated statements of operations from the date of inception through
the periods ended March 31, 2007, June 30, 2007, September 30, 2007, December
31, 2007 have been restated to reclassify net losses prior to January 1, 2005 as
discontinued operations.  On February 10, 2005, we announced that we
were changing our business from biotechnology to becoming a mineral exploration
company, dedicated to the discovery and exploration of gold and other precious
metal deposits.  Activity between January 1 and February 10, 2005
consisted of minor general and administrative expenses and as a result was not
included in loss from discontinued operations.
  3
  Foreign
Currency Translation Reclassification - The statement of operations for the year
ended December 31, 2006, has been restated to reclassify foreign currency
translation adjustment as general and administrative expense.  Foreign
currency translation adjustment was related to translation of accounts payable
assumed as part of our change of business in 2005.  This restatement
had the impact of increasing net loss and eliminating other comprehensive loss
for the year ended December 31, 2006 by $11,769.  Related to the same
issue, the balance sheet at December 31, 2006 has been restated to reclassify
accumulated other comprehensive loss as accumulated deficit during exploration
stage.  These restatements had the impact of eliminating accumulated
other comprehensive loss and increasing accumulated deficit during exploration
stage at December 31, 2006 by $121,606.
  The
restatements had no impact on our cash or cash flows.
  A
description of the restatements made to our financial statements is provided at
Note 16 to the consolidated financial statements included with this
report.
  This
Form 10-Q/A sets forth the 2007 Third Quarter Form 10-QSB in its
entirety.  This Form 10-Q/A includes items that have been changed as a
result of the restatement and the items that are unchanged from the 2007 Third
Quarter Form 10-QSB.
  Other
than the amending of the disclosures relating to the restatement and responding
to the staff’s comments, no other modifications or updates have been made to the
2007 Third Quarter 10-QSB.  Information not affected by items
described above remains unchanged and reflects the disclosures made at the time
of, and as of the dates described in, the 2007 Third Quarter
10-QSB.  This Form 10-Q/A does not describe events occurring after the
2007 Third Quarter 10-QSB (including with respect to exhibits), or modify or
update disclosures (including forward-looking statements) which may have been
affected by events or changes in facts occurring after the date of the 2007
Third Quarter 10-QSB.  Accordingly, this Form 10-Q/A should be read in
its historical context and in conjunction with our filings made with the SEC
subsequent to the filing of the 2007 Third Quarter 10-QSB, as information in
such filings may update or supersede certain information contained in this Form
10-Q/A.
  Item 6
of Part II of this Form 10-Q/A has been amended to contain the currently-dated
certifications from our principal executive officer and principal financial
officer, as required by Section 302 and 906 of the Sarbanes-Oxley Act of
2002.
 4




PART
I - FINANCIAL INFORMATION




ITEM 1.
            FINANCIAL
      STATEMENTS.


SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
BALANCE SHEETS
 (UNAUDITED)
(RESTATED)
 
 September
      30, 2007
                                                    
                                                    
                                                    December
      31, 2006(restated)ASSETSCurrent
      assetsCash
                                                    
                                                    $
                                                    8,833,969
                                                    
                                                    
                                                    $
                                                    3,684,248Prepaid
      expenses
                                                    
                                                    
                                                    305,428
                                                    
                                                    
                                                    
                                                    106,235Total
      current assets
                                                    
                                                    
                                                    9,139,397
                                                    
                                                    
                                                    
                                                    3,790,483Property
      and equipment, net
                                                    
                                                    
                                                    3,561,313
                                                    
                                                    
                                                    
                                                    30,187Mineral
      properties
                                                    
                                                    
                                                    12,702,258
                                                    
                                                    
                                                    
                                                    5,431,290Slag
      project
                                                    
                                                    
                                                    120,766,877
                                                    
                                                    
                                                    
                                                    -Land
      - smelter site and slag pile
                                                    
                                                    
                                                    5,916,150
                                                    
                                                    
                                                    
                                                    -Land
                                                    
                                                    
                                                    3,300,000
                                                    
                                                    
                                                    
                                                    -Reclamation
      bond and deposits
                                                    
                                                    
                                                    183,000
                                                    
                                                    
                                                    
                                                    183,040Joint
      venture and merger option agreements
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    2,808,481Total
      non-current assets
                                                    
                                                    
                                                    146,429,598
                                                    
                                                    
                                                    
                                                    8,452,998Total
      assets
                                                    
                                                    $
                                                    155,568,995
                                                    
                                                    
                                                    $
                                                    12,243,481LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                                    
                                                    $
                                                    797,179
                                                    
                                                    
                                                    $
                                                    888,651Accounts
      payable - related party
                                                    
                                                    
                                                    43,017
                                                    
                                                    
                                                    
                                                    311,863Capital
      lease payable, current portion
                                                    
                                                    
                                                    22,729
                                                    
                                                    
                                                    
                                                    -Loan
      payable - related party
                                                    
                                                    
                                                    382,792
                                                    
                                                    
                                                    
                                                    382,792VRIC
      payable, current portion - related party
                                                    
                                                    
                                                    176,281
                                                    
                                                    
                                                    
                                                    -Total
      current liabilities
                                                    
                                                    
                                                    1,421,998
                                                    
                                                    
                                                    
                                                    1,583,306Long-term
      liabilitiesVRIC
      payable, net of current portion - related party
                                                    
                                                    
                                                    2,199,840
                                                    
                                                    
                                                    
                                                    -Capital
      lease payable, net of current portion
                                                    
                                                    
                                                    70,160
                                                    
                                                    
                                                    
                                                    -Deferred
      tax liability
                                                    
                                                    
                                                    50,889,750
                                                    
                                                    
                                                    
                                                    860,331Total
      long-term liabilities
                                                    
                                                    
                                                    53,159,750
                                                    
                                                    
                                                    
                                                    860,331Total
      liabilities
                                                    
                                                    
                                                    54,581,748
                                                    
                                                    
                                                    
                                                    2,443,637Stockholders'
      equityCommon
      stock, $0.001 par value; 400,000,000 sharesauthorized,
      91,377,827 and 67,231,000 shares,respectively,
      issued and outstanding
                                                    
                                                    
                                                    93,178
                                                    
                                                    
                                                    
                                                    67,231Additional
      paid-in capital
                                                    
                                                    
                                                    110,277,875
                                                    
                                                    
                                                    
                                                    17,738,891Common
      stock subscribed
                                                    
                                                    
                                                    43,000
                                                    
                                                    
                                                    
                                                    -Accumulated
      deficit during exploration stage
                                                    
                                                    
                                                    (9,426,806
                                                    )
                                                    
                                                    
                                                    (8,006,278
                                                    )Total
      stockholders' equity
                                                    
                                                    
                                                    100,987,247
                                                    
                                                    
                                                    
                                                    9,799,844Total
      liabilities and stockholders' equity
                                                    
                                                    $
                                                    155,568,995
                                                    
                                                    
                                                    $
                                                    12,243,481
 
 See
Accompanying Notes to these Consolidated Financial Statements
  5
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (UNAUDITED)
(RESTATED)
 
 For
      the period fromJanuary
      14, 2000(Date
      of Inception)For
      the three months ended
                                
                                
                                For
      the nine months ended
                                
                                
                                ThroughSeptember
      30, 2007
                                
                                
                                September
      30, 2006
                                
                                
                                September
      30, 2007
                                
                                
                                September
      30, 2006
                                
                                
                                September
      30, 2007(restated)
                                
                                
                                
                                
                                
                                (restated)
                                
                                
                                
                                
                                
                                (restated)Revenue
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -Operating
      expensesMineral
      exploration and evaluation expenses
                                
                                
                                199,961
                                
                                
                                
                                518,476
                                
                                
                                
                                810,539
                                
                                
                                
                                1,293,864
                                
                                
                                
                                3,722,494Mineral
      exploration and evaluationexpenses
      - related party
                                
                                
                                90,000
                                
                                
                                
                                123,750
                                
                                
                                
                                270,000
                                
                                
                                
                                371,250
                                
                                
                                
                                765,000General
      and administrative
                                
                                
                                471,209
                                
                                
                                
                                231,304
                                
                                
                                
                                1,374,668
                                
                                
                                
                                897,925
                                
                                
                                
                                3,418,310General
      and administrative - related party
                                
                                
                                23,017
                                
                                
                                
                                -
                                
                                
                                
                                23,017
                                
                                
                                
                                -
                                
                                
                                
                                23,017Depreciation
                                
                                
                                11,710
                                
                                
                                
                                1,651
                                
                                
                                
                                25,952
                                
                                
                                
                                4,617
                                
                                
                                
                                33,211Total
      operating expenses
                                
                                
                                795,897
                                
                                
                                
                                875,181
                                
                                
                                
                                2,504,176
                                
                                
                                
                                2,567,656
                                
                                
                                
                                7,962,032Loss
      from operations
                                
                                
                                (795,897
                                )
                                
                                
                                (875,181
                                )
                                
                                
                                (2,504,176
                                )
                                
                                
                                (2,567,656
                                )
                                
                                
                                (7,962,032
                                )Other
      income (expense)Rental
      revenue
                                
                                
                                8,515
                                
                                
                                
                                -
                                
                                
                                
                                28,095
                                
                                
                                
                                -
                                
                                
                                
                                28,095Loss
      on equipment disposition
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (4,398
                                )
                                
                                
                                (4,388
                                )Interest
      and dividend income
                                
                                
                                94,580
                                
                                
                                
                                24,106
                                
                                
                                
                                246,320
                                
                                
                                
                                24,106
                                
                                
                                
                                323,352Interest
      expense, net
                                
                                
                                (1,049
                                )
                                
                                
                                -
                                
                                
                                
                                (1,049
                                )
                                
                                
                                -
                                
                                
                                
                                (1,049
                                )Total
      other income (expense)
                                
                                
                                102,046
                                
                                
                                
                                24,106
                                
                                
                                
                                273,366
                                
                                
                                
                                19,708
                                
                                
                                
                                346,010Loss
      before income taxes
                                
                                
                                (693,851
                                )
                                
                                
                                (851,075
                                )
                                
                                
                                (2,230,810
                                )
                                
                                
                                (2,547,948
                                )
                                
                                
                                (7,616,022
                                )Income
      tax benefit
                                
                                
                                270,094
                                
                                
                                
                                280,614
                                
                                
                                
                                810,282
                                
                                
                                
                                841,842
                                
                                
                                
                                2,332,384Loss
      from continuing operations
                                
                                
                                (423,757
                                )
                                
                                
                                (570,461
                                )
                                
                                
                                (1,420,528
                                )
                                
                                
                                (1,706,106
                                )
                                
                                
                                (5,283,638
                                )Discontinued
      operations:Loss
      from discontinued operations
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (4,143,168
                                )Net
      loss
                                
                                $
                                (423,757
                                )
                                
                                $
                                (570,461
                                )
                                
                                $
                                (1,420,528
                                )
                                
                                $
                                (1,706,106
                                )
                                
                                $
                                (9,426,806
                                )Loss
      per common share - basic and dilutedNet
      loss
                                
                                $
                                (0.01
                                )
                                
                                $
                                (0.01
                                )
                                
                                $
                                (0.02
                                )
                                
                                $
                                (0.03
                                )Weighted
      average common shares
                                  outstanding -Basic
      and diluted
                                
                                
                                93,003,914
                                
                                
                                
                                66,820,130
                                
                                
                                
                                84,427,516
                                
                                
                                
                                60,338,392
 
 See
Accompanying Notes to these Consolidated Financial Statements
  6
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
 (UNAUDITED)
(RESTATED)
 
 AccumulatedCommon
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Deficit
      During
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          TotalCommon
      Stock
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Additional
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Stock
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Exploration
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Stockholders'Shares
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Amount
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Paid-in
      Capital
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Subscribed
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Stage
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          EquityBalance,
      January 14, 2000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          -Issuance
      of common stock(recapitalized)
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          50,000,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          50,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (25,000
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (24,999
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1Net
      loss
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (231,969
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (231,969
                                                                                                                                                                                          )Balance,
      December 31, 2000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          50,000,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          50,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (25,000
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (256,968
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (231,968
                                                                                                                                                                                          )Issuance
      of common stock inreverse
      merger
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          10,300,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          10,300
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (5,150
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (5,150
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -Net
      loss
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (767,798
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (767,798
                                                                                                                                                                                          )Balance,
      December 31, 2001
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          60,300,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          60,300
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (30,150
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,029,916
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (999,766
                                                                                                                                                                                          )Capital
      contribution
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,037,126
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,037,126Beneficial
      conversion featureassociated
      with debt
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          300,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          300,000Net
      loss
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,249,644
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,249,644
                                                                                                                                                                                          )Balance,
      December 31, 2002
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          60,300,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          60,300
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,306,976
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (2,279,560
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (912,284
                                                                                                                                                                                          )Debt
      exchanged for common stock
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          48,000,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          48,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,152,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,200,000Deferred
      compensation
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          12,583
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -Amortization
      of deferredcompensation
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          10,387Net
      loss
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,283,872
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,283,872
                                                                                                                                                                                          )Balance,
      December 31, 2003
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          108,300,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          108,300
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          2,471,559
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (3,563,432
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (985,769
                                                                                                                                                                                          )Amortization
      of deferredcompensation
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          2,196Net
      loss
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (700,444
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (700,444
                                                                                                                                                                                          )Balance,
      December 31, 2004
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          108,300,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          108,300
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          2,471,559
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (4,263,876
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,684,017
                                                                                                                                                                                          )Issuance
      of stock options for1,000,000
      shares of common stockto
      two officers
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          133,062
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          133,062Issuance
      of stock options for500,000
      shares of common stockin
      satisfaction of debt
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          300,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          300,000Return
      and cancellation of70,000,000
      shares of commonstock
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (70,000,000
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (70,000
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          70,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -Issuance
      of 12,000,000 warrantsin
      consideration of joint ventureoption
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,310,204
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,310,204Issuance
      of common stockfor
      20 mining claims
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,400,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,400
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          488,600
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          490,000Issuance
      of common stockin
      satisfaction of debt, $0.625 per share
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          200,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          200
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          124,800
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          125,000Issuance
      of common stock for cash,Reg.
      S - Private Placement,$0.25
      per share, net of$205,250
      commissions
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          6,390,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          6,390
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,369,070
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,375,460Issuance
      of common stock for cash,Reg.
      S - Private Placement,$0.25
      per share, net of$135,000
      commission
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          5,400,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          5,400
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,194,947
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,200,347Issuance
      of common stock for cash,Reg.
      D 506 - Private Placement,$0.25
      per share
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          460,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          460
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          114,540
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          115,000Issuance
      of stock options for1,500,000
      shares of common stockto
      three officers
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          266,720
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          266,720Common
      stock subscribed
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          270,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          270,000Net
      loss
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,201,424
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,201,424
                                                                                                                                                                                          )Balance,
      December 31, 2005
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          52,150,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          52,150
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          7,843,502
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          270,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (5,465,300
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          2,700,352
   
 AccumulatedCommon
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Deficit
      During
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          TotalCommon
      Stock
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Additional
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Stock
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Exploration
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Stockholders'Shares
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Amount
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Paid-in
      Capital
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Subscribed
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Stage
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          Equity
 Issuance
      of common stock for cash,Reg.
      D - Private Placement,$0.45
      per share, net of$87,750
      commission
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          3,900,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          3,900
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,663,350
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (270,000
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,397,250Issuance
      of common stockrelated
      to exercise of warrants
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,225,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,225
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,225
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -Issuance
      of stock options for120,000
      shares of common stockto
      two officers
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          20,864
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          20,864Issuance
      of stock options for500,000
      shares of common stockto
      two directors
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          122,420
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          122,420Issuance
      of stock options for100,000
      shares of common stockto
      two directors
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          24,484
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          24,484Issuance
      of common stock for cashReg.
      S - Private Placement,$0.625
      per sharefrom
      exercise of warrants
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          6,125,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          6,125
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          3,822,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          3,828,125Issuance
      of common stock for cashReg.
      S - Private Placement,$0.375
      per sharefrom
      exercise of warrants
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,768,500
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,768
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          661,420
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          663,188Issuance
      of common stock for cashReg.
      S - Private Placement,$0.625
      per sharefrom
      exercise of warrants
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          612,500
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          613
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          382,200
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          382,813Issuance
      of stock options for100,000
      shares of common stockto
      officer for recruitmentamortized
      over vesting period.
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,309
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,309Issuance
      of common stock toofficer
      for recruitment
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          50,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          50
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          102,950
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          103,000Issuance
      of stock options for50,000
      shares of common stockto
      employee for recruitmentamortized
      over vesting period.
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,309
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,309Issuance
      of common stockfor
      mining claims
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,400,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,400
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          3,078,600
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          3,080,000Amortization
      of stock options issuedto
      employee and officer overvesting
      period
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          15,708
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          15,708Net
      loss December 31, 2006
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (2,540,978
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (2,540,978
                                                                                                                                                                                          )Balance,
      December 31, 2006
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          67,231,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          67,231
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          17,738,891
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (8,006,278
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          9,799,844Issuance
      of common stockin
      connection with the acquisition tofive
      investors, $3.975 per share
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          16,825,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          16,825
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          66,862,550
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          66,879,375Issuance
      of stock options for82,946
      shares of common stockto
      three officers and two employees
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          132,634
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          132,634Issuance
      of common stock for cashReg.
      D - Private Placement,$3.00
      per share, net of $381,990commission
      and $79,513 issuance costs
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          4,520,666
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          4,521
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          13,095,978
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          13,100,499Issuance
      of common stock for cashReg.
      S - Private Placement,$3.00
      per share, net of $111,100commission
      and $8,842 issuance costs
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          575,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          575
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,604,483
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,605,058Issuance
      of common stock for cashReg.
      S - Private Placement,$3.00
      per share, net of $525,386commission
      and $85,513 issuance costs
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          2,226,161
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          2,226
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          6,065,358
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          6,067,584Amortization
      of stock options issuedto
      employees and officers overvesting
      period
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          11,781
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          11,781Issuance
      of common stockfor
      mining claims
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,400,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          1,400
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          4,506,600
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          4,508,000Issuance
      of common stockrelated
      to exercise of warrants
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          400,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          400
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          259,600
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          260,000Common
      stock subscribed forexercise
      of warrants
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          25,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          25,000Common
      stock subscribed fordirectors'
      compensation
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          18,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          18,000Net
      loss September 30, 2007 (restated)
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          -
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,420,528
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          (1,420,528
                                                                                                                                                                                          )Balance,
      September 30, 2007 (restated)
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          93,177,827
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          93,178
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          110,277,875
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          43,000
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          (9,426,806
                                                                                                                                                                                          )
                                                                                                                                                                                          
                                                                                                                                                                                          $
                                                                                                                                                                                          100,987,247
 
 See
Accompanying Notes to these Consolidated Financial Statements
  7
 
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
(RESTATED)
 
 Period
      fromJanuary
      14, 2000(Date
      of inception)For
      the nine months ended
                                      
                                      
                                      throughSeptember
      30, 2007
                                      
                                      
                                      September
      30, 2006
                                      
                                      
                                      September
      30, 2007(restated)
                                      
                                      
                                      
                                      
                                      
                                      (restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                                      
                                      $
                                      (1,420,528
                                      )
                                      
                                      $
                                      (1,706,106
                                      )
                                      
                                      $
                                      (9,426,806
                                      )Deduct:
      Loss from discontinued operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,143,168
                                      )Loss
      from continuing operations
                                      
                                      
                                      (1,420,528
                                      )
                                      
                                      
                                      (1,706,106
                                      )
                                      
                                      
                                      (5,283,638
                                      )Adjustments
      to reconcile loss from continuing operationsto
      net cash used in operating activities:Depreciation
                                      
                                      
                                      25,946
                                      
                                      
                                      
                                      4,617
                                      
                                      
                                      
                                      33,205Stock
      based expenses
                                      
                                      
                                      162,415
                                      
                                      
                                      
                                      281,240
                                      
                                      
                                      
                                      851,291Loss
      on disposition of fixed assets
                                      
                                      
                                      -
                                      
                                      
                                      
                                      4,398
                                      
                                      
                                      
                                      5,737Amortization
      of prepaid expense
                                      
                                      
                                      26,453
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      26,453Changes
      in operating assets and liabilities:Other
      current assets
                                      
                                      
                                      (225,606
                                      )
                                      
                                      
                                      (20,212
                                      )
                                      
                                      
                                      (331,841
                                      )Other
      assets
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (183,040
                                      )Accounts
      payable and accrued liabilities
                                      
                                      
                                      (360,319
                                      )
                                      
                                      
                                      28,369
                                      
                                      
                                      
                                      83,033Deferred
      income taxes
                                      
                                      
                                      (810,282
                                      )
                                      
                                      
                                      (841,842
                                      )
                                      
                                      
                                      (2,332,384
                                      )Net
      cash used in operating activities
                                      
                                      
                                      (2,601,921
                                      )
                                      
                                      
                                      (2,249,536
                                      )
                                      
                                      
                                      (7,131,184
                                      )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
                                      
                                      
                                      (114,934
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (114,934
                                      )Purchase
      of property and equipment
                                      
                                      
                                      (3,016,149
                                      )
                                      
                                      
                                      (25,291
                                      )
                                      
                                      
                                      (3,057,982
                                      )Net
      cash used in investing activities
                                      
                                      
                                      (13,161,188
                                      )
                                      
                                      
                                      (25,291
                                      )
                                      
                                      
                                      (14,180,155
                                      )Net
      cash used in investing activities from discontinued
      operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (452,618
                                      )CASH
      FLOW FROM FINANCING ACTIVITIESProceeds
      from stock issuance
                                      
                                      
                                      21,713,817
                                      
                                      
                                      
                                      6,271,376
                                      
                                      
                                      
                                      30,676,000Stock
      issuance costs
                                      
                                      
                                      (677,570
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (677,570
                                      )Principal
      payments on capital  lease payable
                                      
                                      
                                      (23,351
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (23,351
                                      )Principal
      payments on deferred purchase liability
                                      
                                      
                                      (125,066
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (125,066
                                      )Proceeds/payments
      on loan payable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (15,000
                                      )
                                      
                                      
                                      -Proceeds
      from subscribed stock
                                      
                                      
                                      25,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      295,000Net
      cash provided by financing activities
                                      
                                      
                                      20,912,830
                                      
                                      
                                      
                                      6,256,376
                                      
                                      
                                      
                                      30,145,013Net
      cash provided by financing activities from discontinued
      operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3,384,237NET
      CHANGE IN CASH
                                      
                                      
                                      5,149,721
                                      
                                      
                                      
                                      3,981,549
                                      
                                      
                                      
                                      8,833,969CASH
      AT BEGINNING OF PERIOD
                                      
                                      
                                      3,684,248
                                      
                                      
                                      
                                      705,856
                                      
                                      
                                      
                                      -CASH
      AT END OF PERIOD
                                      
                                      $
                                      8,833,969
                                      
                                      
                                      $
                                      4,687,405
                                      
                                      
                                      $
                                      8,833,969SUPPLEMENTAL
      INFORMATIONInterest
      Paid, net of capitalized amounts
                                      
                                      $
                                      1,049
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      51,800Income
      Taxes Paid
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Non-cash
      investing and financing activities:Stock
      and options for common stock issued in satisfaction of
      debt
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      1,500,000Assets
      acquired for common stock issued for the acquisition
                                      
                                      $
                                      66,879,375
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      66,879,375Assets
      acquired for common stock issued for mineral
properties
                                      
                                      $
                                      4,508,000
                                      
                                      
                                      $
                                      3,080,000
                                      
                                      
                                      $
                                      8,078,000Assets
      acquired for liabilities incurred in the acquisition
                                      
                                      $
                                      2,501,187
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      2,501,187Net
      deferred tax liability assumed
                                      
                                      $
                                      50,839,702
                                      
                                      
                                      $
                                      1,614,147
                                      
                                      
                                      $
                                      53,584,304Merger
      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
      issued for conversion ofaccounts payable, 200,000 shares at $0.625
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      125,000
 
 See
Accompanying Notes to these Consolidated Financial Statements
  8
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 
 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, 2006 of
Searchlight Minerals Corp. (the "Company").
 
 The
interim financial statements present the balance sheets, statements of
operations, stockholders’ equity, 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 16) 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 notes thereto for the year ended
December 31, 2006.
 
 Description of
business – Searchlight Minerals Corp. is considered an exploration stage
company since its formation 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 location 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 February 2, 2004, 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. Also in connection with its corporate restructuring, its
board of directors approved a change in its name from “Phage Genomics, Inc.” to
"Searchlight Minerals Corp.” effective June 23, 2005.
  9
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 Going concern - The
Company incurred cumulative net losses of $9,426,806 from operations as of
September 30, 2007 and has not commenced its mining and mineral processing
operations, rather, 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.
 
 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.
 
 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.
 
 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 commencement of commercial production, 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 Standard (SFAS) No. 144, “Accounting for Impairment of 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.  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 $114,934 and
$0 for the nine months ended September 30, 2007 and 2006,
respectively.
 
 Exploration costs –
Mineral exploration costs are expensed as incurred.
  10
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 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, “Accounting for
Impairment or Disposal of Long-lived Assets”, if events or circumstances
indicate that their carrying amount might not be recoverable. As of September
30, 2007 exploration is progressing in accordance with the Company’s plan of
operations and no events or circumstances have happened to indicate the related
carrying values of the properties may not be recoverable. When the Company
determines that a SFAS 144 impairment analysis should be done, the analysis will
be performed using the guidance 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.
 
 Asset retirement
obligation - The Company has adopted Statement of Financial Accounting
Standard 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.
  11
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
  Fair value of financial
instruments - Financial Accounting Standards Statement No. 107,
“Disclosure About Fair Value of Financial Instruments”, requires the Company to
disclose, when reasonably attainable, the fair market values of its assets and
liabilities which are deemed to be financial instruments. The carrying amounts
and estimated fair values of the Company’s financial instruments approximate
their fair value.
 
 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 SFAS No. 128, “Earnings Per Share” and SFAS
No. 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, 2007 and 2006 that were not included in the computation of
diluted EPS because the effect would be antidilutive were 25,434,718 and
24,847,626, respectively.
 
 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.
 
 Income taxes - The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standard 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.
  12
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 On
July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued
interpretation 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 “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 in accordance with EITF
98-11 and SFAS 109.
 
 Stock-based
compensation - On December 16, 2004, the FASB issued Financial
Accounting Standard No. 123R, “Share-Based Payment”, which replaces SFAS
No. 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 has adopted the
requirements of SFAS No. 123R for the fiscal year beginning after December 31,
2004.
  13
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 New accounting
pronouncements – 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.  FSP No. APB 14-a
is effective for the Company’s fiscal year beginning January 1, 2009 and early
adoption is not permitted. The Company is currently evaluating the impact that
Proposed FSP may have on the financial position, results of operations or cash
flows of the Company.
 
 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 fiscal year
beginning after November 15, 2007. The Company is currently assessing the
impact that the adoption of SFAS 159 will have on the Company’s
consolidated financial statements.
 
 In
September 2006, the FASB issued Statement No. 158 “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans (“SFAS 158”).
SFAS 158 requires companies to recognize the over funded or under funded
status of a defined benefit postretirement plan as an asset or liability in its
statement of financial position and to recognize changes in that funded status
in the year in which the changes occur through comprehensive income.
SFAS 158 requires companies to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The Company adopted SFAS 158 effective for the fiscal year
ending December 31, 2006.  Adoption of this statement had no
impact on the Company’s financial position or results of
operations.
 
 In
September 2006, the FASB issued statement No. 157, “Fair Value
Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a
framework for measuring fair value in accordance with accounting principles
generally accepted in the United States, and expands disclosures about fair
value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007, with earlier application encouraged. Any amounts
recognized upon adoption as a cumulative effect adjustment will be recorded to
the opening balance of retained earnings in the year of
adoption.
  14
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 The
Company has not yet determined the impact of this Statement on its
financial position and results of operations.
 
 In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108 (SAB 108).  SAB 108 considers the effects of prior
year misstatements when quantifying misstatements in the current year financial
statements.  It is effective for fiscal years ending after November
15, 2006.  The adoption of this guidance had no material effect on the
Company’s consolidated financial position, results of operations, and
disclosures.
 
 In
August 2006, the SEC published amendments to the disclosure requirements for
executive and director compensation, related party transactions, director
independence and other corporate governance matters, security ownership of
officers and directors.  The rules affect disclosure in proxy
statements, annual reports and registration statements.  These
amendments are effective for filings for fiscal years ending on or after
December 15, 2006.  The effect of these amendments has been
incorporated into the Company’s financial reporting.
 
 In
March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
Assets: (“SFAS 156”), which requires all separately recognized servicing assets
and servicing liabilities to be initially measured at fair
value.  SFAS 156 permits, but does not require, the subsequent
measurement of servicing assets and servicing liabilities at fair
value.  Adoption is required as of the beginning of the first fiscal
year that begins after September, 15, 2006.  The adoption of SFAS 156
had no material effect on the Company’s consolidated financial position, results
of operations or disclosures.
 
 In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments, an amendment of FASB Statements No. 133 and 140” (“SFAS
155”).  SFAS 155 clarifies certain issues relating to embedded
derivatives and beneficial interests in securitized financial
assets.  The provisions of SFAS 155 are effective for all financial
instruments acquired or issued after fiscal years beginning after September 15,
2006.  The adoption of this statement had no material impact on the
Company’s consolidated financial position, results of operations, and
disclosures.
  15
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  1.
                DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 Correction of an
error
 
 Searchlight
Mining Claims – (See Note 4) – The Company restated the Searchlight Mining
Claims as of September 30, 2007. The restatement of the Searchlight Claims
mineral properties reflects the revised deferred future income tax liability
assumed as part of the subsequent contingent issuances of securities, the value
of which has been added to the acquisition costs of the underlying mineral
properties. Pursuant to EITF 98-11, the Company values the shares issued to
obtain mineral properties at their market price at the date of the
issue.
 
 Clarkdale
Slag Project – (See Note 3) – The Company restated the Clarkdale Slag Project as
of September 30, 2007. The Company has determined that the acquisition should be
accounted for using the accounting treatment defined in EITF 98-03 and EITF
98-11, together with applicable sections of SFAS 141 which are not covered in
EITF 98-03 and EITF 98-11.  The Company’s initial and continuing
estimates of probability with respect to certain contingent payment terms were
in error.  The company determined that certain terms with respect to
future payments should have been recorded as contingent consideration and not
recorded as purchase consideration with a corresponding liability. In accordance
with SFAS 141, contingent consideration should only be recorded as a liability
if it is determinable beyond a reasonable doubt. In assessing the future
payments related to the acquisition, the Company determined that treatment of
the terms as beyond a reasonable doubt was not appropriate. As a result, the
amounts previously recorded as a liability have now been disclosed as contingent
consideration.
 
 The
Company determined that the acquisition accounting method used in prior periods
with respect to warrants issued in connection with the assignment of the
original Slag Project option was not appropriate and has restated the purchase
accounting to reflect the recomputation of the value of the 12,000,000 warrants
issued as consideration for the option to acquire a mineral interest in the Slag
Project.
  16
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 2.
              PROPERTY AND
      EQUIPMENT
 
 Property
and equipment consisted of the following as of September 30, 2007 and December
31, 2006:
 
 September
      30,
                              2007
                            
                            
                            December
      31,
                              2006Furniture
      and fixtures
                            
                            $
                            34,094
                            
                            
                            $
                            15,600Lab
      equipment
                            
                            
                            2,804
                            
                            
                            
                            2,804Computers
      and equipment
                            
                            
                            31,268
                            
                            
                            
                            17,788Income
      property
                            
                            
                            309,750
                            
                            
                            
                            —Capitalized
      interest
                            
                            
                            114,934
                            
                            
                            
                            —Construction
      in progress
                            
                            
                            2,943,039
                            
                            
                            
                            —Vehicles
                            
                            
                            38,175
                            
                            
                            
                            —Site
      equipment
                            
                            
                            119,203
                            
                            
                            
                            —3,593,267
                            
                            
                            
                            36,192Less
      accumulated depreciation
                            
                            
                            31,954
                            
                            
                            
                            6,005$
                            3,561,313
                            
                            
                            $
                            30,187
 
 Depreciation
expense was $25,952 and $4,617 for the nine months ended September 30, 2007 and
2006, respectively.
  3.    CLARKDALE SLAG PROJECT – AS
RESTATED (See Note 16)
  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”). Subsequent to the acquisition, Mr. Harry Crockett joined the
Company’s board of directors. VRIC is an affiliate of Mr.
Crockett.
  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 project in a joint venture
environment.
  This
merger was treated as a statutory merger for tax purposes whereby, CML was the
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.
  17
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 3.   CLARKDALE SLAG PROJECT – AS
RESTATED (See Note 16) (continued)
  The
$130 million purchase price was comprised of a combination of the cash paid, the
deferred tax liability assumed in connection with the acquisition, and the fair
value of our common shares issued, based on the closing market price of our
common stock, using the average of the high and low prices of our common stock
on the closing date of the acquisition. The Clarkdale Slag Project is without
known reserves and the project is exploratory in nature in accordance with
Industry Guides promulgated by the Commission, Guide 7 paragraph (a)(4)(i). As
required by EITF 04-03 paragraph 2 and EITF 98-11, the Company then allocated
the purchase price among the assets as follows (and also further described in
this Note 3 to the financial statements): $5,916,150 of the purchase price was
allocated to the slag pile site, $3,300,000 to the remaining land acquired, and
$309,750 to income property and improvements. The purchase price allocation to
the real properties were based on fair market values determined using an
independent real estate appraisal firm (Scott W. Lindsay, Arizona Certified
General Real Estate Appraiser No. 30292). The remaining $120,766,877 of the
purchase price was allocated to the Slag Project, which has been capitalized as
a tangible asset in accordance with EITF 04-02. Upon commencement of commercial
production, the material will be amortized using the unit-of-production method
over the life of the Slag Project.
  The
Company also formed a second wholly owned subsidiary CMC, for the purpose of
developing a processing plant at the Clarkdale Slag Project.
 
 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 on the closing 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 continue 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;
  18
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 3.   CLARKDALE SLAG PROJECT – AS
RESTATED (See Note 16) (continued)
 
 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.
  The
Company has accounted for this as a contingent payment and upon meeting the
contingency requirements, the purchase price of the Clarkdale Slag Project will
be adjusted to reflect the additional consideration.
  The
following table reflects the recorded purchase consideration for the Slag
Project:
  As
      Reported
                                            
                                            
                                            Restatement
                                              Adjustments
                                            
                                            
                                            
                                            
                                            
                                            As
      RestatedPurchase
      price:Cash
      payments
                                            
                                            $
                                            10,100,000
                                            
                                            
                                            $
                                            —
                                            
                                            
                                            
                                            
                                            
                                            $
                                            10,100,000Joint
      venture option acquired in 2005 for cash
                                            
                                            
                                            690,000
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            
                                            
                                            
                                            690,000Warrants
      issued in 2005 for joint venture option
                                            
                                            
                                            —
                                            
                                            
                                            
                                            1,918,481
                                            
                                            
                                            a
                                            
                                            
                                            
                                            1,918,481Common
      stock issued
                                            
                                            
                                            66,879,375
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            66,879,375Monthly
      payments, current portion
                                            
                                            
                                            395,001
                                            
                                            
                                            
                                            (227,174
                                            )
                                            
                                            b
                                            
                                            
                                            
                                            167,827Monthly
      payments, net of current portion
                                            
                                            
                                            3,252,403
                                            
                                            
                                            
                                            (919,043
                                            )
                                            
                                            b
                                            
                                            
                                            
                                            2,333,360Due
      to VRIC
                                            
                                            
                                            6,400,000
                                            
                                            
                                            
                                            (6,400,000
                                            )
                                            
                                            b
                                            
                                            
                                            
                                            —Acquisition
      costs
                                            
                                            
                                            127,000
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            127,000Total
      purchase price
                                            
                                            
                                            87,843,779
                                            
                                            
                                            
                                            (5,627,736
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            82,216,043Net
      deferred income tax liability assumed - slag project
                                            
                                            
                                            37,275,716
                                            
                                            
                                            
                                            10,801,018
                                            
                                            
                                            c
                                            
                                            
                                            
                                            48,076,734$
                                            125,119,495
                                            
                                            
                                            $
                                            5,173,282
                                            
                                            
                                            d
                                            
                                            
                                            $
                                            130,292,777
 
 19
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 3.
                CLARKDALE SLAG PROJECT
      – AS RESTATED (See Note 16)
  (continued)
 
 The
      restatement adjustments are as
follows:
 
 a.
              Restate
      valuation of warrants issued using the Binomial Lattice option
      pricing-model, as explained in Note 9, in connection with the Clarkdale
      Slag Project option of $1,918,481 (comprising of related deferred tax
      liability assumed of $608,277 and an increase to stockholders’ equity of
      $1,310,204) which was computed based on the private placement stock price
      at the time the warrants were
issued.
 b.
              Restate
      for revision of the acquisition related to contingent payment terms and
      conditions contained in the agreement and the resultant deferred tax
      liability assumed in
acquisition.
 c.
              Recomputation
      of deferred tax liability assumed in mineral property acquisition for
      effect of restated acquisition costs discussed in items a and b
      above.
 d.
              Overall
      restatement impact on the Clarkdale Slag
  Project.
 
 The following table reflects the
components of the Slag Project:
 
 Allocation
      of acquisition cost:
                    
                    As
      Reported
                    
                    
                    Restatement
                      Adjustments
                    
                    
                    As
      RestatedSlag
      project (including net deferred tax liability assumed of
      $48,076,734)
                    
                    $
                    115,593,595
                    
                    
                    $
                    5,173,282
                    d
                    
                    $
                    120,766,877Land
      - slag pile site
                    
                    
                    5,916,150
                    
                    
                    
                    —
                    
                    
                    
                    5,916,150Land
                    
                    
                    3,300,000
                    
                    
                    
                    —
                    
                    
                    
                    3,300,000Income
      property and improvements
                    
                    
                    309,750
                    
                    
                    
                    —
                    
                    
                    
                    309,750Total
                    
                    $
                    125,119,495
                    
                    
                    $
                    5,173,282
                    
                    
                    $
                    130,292,777
 
 For
the three months ended March 31, 2007, TI operations were limited to minor
rental activity revenue of approximately $10,000 and rental expenses and
property holding costs of approximately $8,000 for net pre tax income of
approximately $2,000.
  20
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 4.
                MINERAL PROPERTIES -
      MINING CLAIMS – AS RESTATED (See Note
  16)
 
 As of
September 30, 2007, mining claims consisted of 3,200 acres located near
Searchlight, Nevada. The 3,200 acre property is staked as twenty 160 acre
claims. At September 30, 2007 mineral properties balance was
$12,702,258.
 
 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.  If at any time before each subsequent issuance of shares, the
Company does not choose to continue the transaction, it is under no obligation
to issue further shares and would no longer have the right to acquire the mining
claims.
 
 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.
 
 The
mining claims are capitalized as tangible assets in accordance with EITF
04-02.  Upon commencement of commercial production, 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
Company reviews and evaluates long-lived assets for impairment when events or
changes in circumstances indicate the related carrying amount 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, 2007, exploration on these properties is
progressing in accordance with the Company’s plan of operations and no events or
circumstances have happened to indicate the related carrying values of the
properties may not be recoverable. When the Company determines that a 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.”
 
 The
following table summarizes the impact of the restatement on the historical
balances of mineral properties reported for periods ended as noted:
 
 As
      Reported
                                  
                                  
                                  Adjustments
                                  
                                  
                                  
                                  As
      RestatedCash
      and shares issuance to obtain mineralproperties,
      July 7, 2005
                                  
                                  $
                                  127,134
                                  
                                  
                                  $
                                  450,000
                                  
                                  a
                                  
                                  $
                                  577,134Net
      deferred income tax liability assumed
                                  
                                  
                                  —
                                  
                                  
                                  242,308
                                  
                                  b
                                  
                                  
                                  242,308Mineral
      properties balance, December 31, 2005
                                  
                                  
                                  127,134
                                  
                                  
                                  
                                  692,308
                                  
                                  
                                  
                                  
                                  819,442Share
      issuance to obtain mineral properties, July 27, 2006
                                  
                                  
                                  3,080,000
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  
                                  3,080,000Net
      deferred income tax liability assumed
                                  
                                  
                                  1,586,667
                                  
                                  
                                  
                                  (54,819
                                  )
                                  b
                                  
                                  
                                  1,531,848Mineral
      properties balance, December 31, 2006
                                  
                                  
                                  4,793,801
                                  
                                  
                                  
                                  637,489
                                  
                                  
                                  
                                  
                                  5,431,290Share
      issuance to obtain mineral properties, June 29, 2007
                                  
                                  
                                  4,508,000
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  
                                  4,508,000Net
      deferred income tax liability assumed
                                  
                                  
                                  2,322,303
                                  
                                  
                                  
                                  440,665
                                  
                                  b
                                  
                                  
                                  2,762,968Mineral
      properties balance, September 30, 2007
                                  
                                  $
                                  11,624,104
                                  
                                  
                                  $
                                  1,078,154
                                  
                                  
                                  
                                  $
                                  12,702,258
  21
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 4.
              MINERAL PROPERTIES -
      MINING CLAIMS – AS RESTATED (See Note 16)
      (continued)
 
 The restatement adjustments are as
follows:
 
 a.
              Restate
      issuance of 1,400,000 shares to obtain mineral properties on July 7, 2005
      at the market value of $0.35 per share on the date of
      issuance.
 b.
              Restate
      for the resulting estimated future income tax liability associated with
      the temporary difference between tax basis and acquisition value, which
      was applied to the mineral asset in the absence of there being a goodwill
      component associated with the
transaction.
 
 5.
              LOAN PAYABLE – FORMER
      OFFICERS AND DIRECTORS
  As of
September 30, 2007 and December 31, 2006, loans payable to related parties
totaling $382,792 consists of borrowings from former officers and directors of
the Company. These individuals have not had any involvement in management of the
Company since February 2005.  The balance of the loan is non-interest
bearing, unsecured and without any fixed repayment terms.
  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,
 
 2008
                          
                          $
                          176,2812009
                          
                          
                          190,9122010
                          
                          
                          206,7582011
                          
                          
                          223,9192012
                          
                          
                          242,504Thereafter
                          
                          
                          1,335,7472,376,121VRIC
      payable, current portion
                          
                          
                          176,281VRIC
      payable, net of current portion
                          
                          $
                          2,199,840
 
 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 12.
  22
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  7.
              CAPITAL LEASE
      PAYABLE
  The
Company leases equipment under a capital lease. Capital lease payable consisted
of the following at September 30, and December 31,
 
 Lender
                          
                          Collateral
                          
                          Monthly
                            Payment
                          
                          
                          Interest
                            Rate
                          
                          Maturity
                          
                          2007
                          
                          
                          2006Caterpillar
      Financial ServicesCorporation
                          
                          Equipment
                          
                          $
                          2,200
                          
                          
                          
                          4.45
                          %
                          Jul-11
                          
                          $
                          92,889
                          
                          
                          $
                          —92,889
                          
                          
                          
                          —Capital
      lease payable, current portion
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (22,729
                          )
                          
                          
                          —Capital
      lease payable, net of current portion
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          $
                          70,160
                          
                          
                          $
                          —
 
 The
following table represents future minimum lease payments on capital lease
payable for the nine months ending September 30,
 
 2008
                      
                      $
                      26,4012009
                      
                      
                      26,4012010
                      
                      
                      26,4012011
                      
                      
                      22,001Thereafter
                      
                      
                      —Total
      future minimum lease payments
                      
                      $
                      101,204Imputed
      interest
                      
                      
                      (8,315
                      )Present
      value of future minimum lease payments
                      
                      $
                      92,889
 
 The
following assets acquired under the capital lease and the related amortization
were included in property, plant and equipment at September 30, and December
31,
 
 2007
                      
                      
                      2006Site
      Equipment
                      
                      $
                      116,239
                      
                      
                      $
                      —Accumulated
      amortization
                      
                      
                      (11,301
                      )
                      
                      
                      —$
                      104,938
                      
                      
                      $
                      —
  23
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 8.
              STOCKHOLDER’S
      EQUITY
 
 During
the nine months ended September 30, 2007, the Company’s stockholders’ activities
consisted of the following:
 
 a)
              On
      September 30, 2007, the Company awarded 3,157 shares each to its two non
      officer directors pursuant to its directors’ compensation policy. The
      share award was priced at the nearest closing date to quarter end of $2.85
      and has been recorded as directors’ compensation expense of $18,000 and
      common stock subscribed as of September 30,
  2007.
 
 b)
              On
      August 16, 2007, the Company received $25,000 for exercise of options to
      purchase 100,000 shares at $0.25. As of September 30, 2007, the
      transaction is recorded as common stock subscribed pending execution of
      documents and issuance of
shares.
 
 c)
              On
      August 9, 2007, the Company issued 400,000 shares of common stock from the
      exercise of warrants resulting in cash proceeds of $260,000. Warrants
      exercised were for 400,000 shares at $0.65 per share. Each of the warrants
      was set to expire on January 18,
2008.
 
 d)
              On
      June 29, 2007, the Company issued 1,400,000 shares to the owners of the
      Searchlight Claims. The issuance is the third of four required share
      payments to complete the acquisition of the mining claims totaling
      5,600,000 shares.
 
 e)
              On
      March 22, 2007 the Company closed a private placement offering for gross
      proceeds of $6,678,483 (the "March Offering"). The securities sold
      pursuant to the March Offering were issued to non-US investors in
      accordance with the terms of Regulation S of the Securities Act of 1933.
      In connection with the March Offering, the Company entered into an Agency
      Agreement with D&D Securities Company (“D&D") dated March 21, 2007
      (the "Agency Agreement"). The securities were sold to subscribers on a
      best efforts agency basis. Pursuant to the terms of the Agency Agreement,
      the Company sold an aggregate of 2,226,161 units for gross proceeds of
      $6,678,483, with each unit consisting of one share of its common stock and
      one half of one share purchase warrant with each whole warrant entitling
      the subscriber to purchase one additional share for a period of two years
      from the closing date at an exercise price of US$4.50 per Share. The
      warrants are callable by Searchlight if its common stock trades above
      $6.50 per share for 20 consecutive trading days. Also under the terms of
      the March Offering the Company agreed to use its best efforts to file with
      the Securities and Exchange Commission a registration statement on Form
      SB-2, or on such other form as is available, registering the offered
      securities within four months and one day after the closing of the March
      Offering.  An aggregate commission and corporate finance fee
      totaling $525,386 was paid by the company to the Agent in connection with
      the March Offering and the Agent also received warrants to purchase 75,175
      shares of its common stock.
  24
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  8.
              STOCKHOLDER’S
      EQUITY (continued)
 
 f)
              On
      February 23, 2007, the Company closed a private placement offering and
      issued 4,520,666 units for aggregate gross proceeds of $13,562,002 to
      accredited investors resident in the United States pursuant to Regulation
      D of the Securities Act (the “US Offering”).  Each unit
      consisted of one share of its common stock and one half of one share
      purchase warrant with each whole warrant entitling the subscriber to
      purchase one additional share for a period of two years from the closing
      date at an exercise price of $4.50 per share.  The warrants are
      callable by us if its common stock trades above $6.50 per share for 20
      consecutive trading days.  Pursuant to the terms of the US
      Offering, the Company agreed to use its best efforts to file a
      registration statement declared effective by the SEC within four months of
      the closing date of the US Offering.  The Company agreed not to
      exercise its call rights until the registration statement registering the
      securities underlying the units sold has been declared effective by the
      SEC.  The Company further agreed to keep the registration
      statement effective pursuant to Rule 415 of the Securities Act for a
      period of eighteen months following the date the registration statement is
      declared effective by the SEC.  A portion of the US Offering was
      sold on a best efforts agency basis.  Commissions paid to agents
      in connection with the US Offering totalled $381,990 and the agents also
      received warrants to purchase 90,870 shares of its common stock at a price
      of $4.50 per share, exercisable for a period of two years from the closing
      date.
 
 g)
              Also
      on February 23, 2007, the Company closed a private placement offering and
      issued 575,000 units for aggregate gross proceeds of $1,725,000 to non-US
      investors pursuant to Regulation S of the Securities Act (the “February
      Offering”).  Each unit consisted of one share of its common
      stock and one half of one share purchase warrant with each whole warrant
      entitling the subscriber to purchase one additional share for a period of
      two years from the closing date at an exercise price of $4.50 per
      share.  The warrants are callable by us if its common stock
      trades above $6.50 per share for 20 consecutive trading
      days.  Pursuant to the terms of the Non-US Offering, the Company
      agreed to use its best efforts to file a registration statement declared
      effective by the SEC within four months of the closing date of the
      February Offering.  The Company agreed not to exercise its call
      rights until the registration statement registering the securities
      underlying the units sold has been declared effective by the
      SEC.  The Company further agreed to keep the registration
      statement effective pursuant to Rule 415 of the Securities Act for a
      period of eighteen months following the date the registration statement is
      declared effective by the SEC.  Commissions paid to agents in
      connection with the February Offering totalled $111,100 and the agents
      also received warrants to purchase 12,300 shares of its common stock at a
      price of $4.50 per share, exercisable for a period of two years from the
      closing date.
 
 h)
              On
      February 15, 2007, the Company approved the issuance of 16,825,000 shares
      of its common stock to five investors in connection with the Agreement and
      Plan of Merger dated February 15, 2007.  The issuance was
      completed pursuant to Section 4(2) and Regulation D of the Securities Act
      on the basis that each investor was a sophisticated investor and was in a
      position of access to relevant material information regarding its
      operations.  Each investor delivered appropriate investment
      representations satisfactory to us with respect to this transaction and
      consented to the imposition of restrictive legends upon the certificates
      evidencing such share certificates.
 
 Warrants
associated with the 2007 equity issuances do not constitute a registration
payment arrangement.
  25
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.
              STOCK OPTION 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. Options granted under the 2007 Plan become
exercisable and expire as determined by the Board of Directors.
 
 During
the nine months ended September 30, 2007, the Company granted stock options as
follows:
  a)
              On
      June 15, 2007, the Company granted incentive stock options under the 2007
      Plan for the purchase of 7,246 shares of common stock at $3.45 per share.
      The options were granted to an employee, are fully vested and expire on
      June 15, 2009.
  b)
              On
      February 16, 2007, the Company granted nonqualified stock options under
      the 2006 Plan for the purchase of 75,700 shares of common stock at $4.04
      per share. The options were granted to three officers and one employee,
      are fully vested and expire on February 16,
  2012.
  Compensation
expense for the nine months ended September 30, 2007 and for the three months
ended September 30, 2007 related to granting of stock options was $144,415 and
$1,312, respectively.
 
 Stock options –
      During the nine months ended September 30, 2007 and the year ended
      December 31, 2006, the Company granted stock options to employees and
      directors totaling 82,946 and 870,000, respectively, with a weighted
      average strike price of $3.99 and $2.25 per share,
      respectively.  Certain stock options were exercisable upon grant
      and expire five years after the grant date.  As of September 30,
      2007 stock options outstanding totaled 3,952,946 with a weighted average
      strike price of $0.84 per
share.
 
 The
following table summarizes the Company’s stock option activity for the nine
months ended September 30, 2007:
 
 Number
      of
                        Shares
                      
                      
                      Weighted
                        Average
                        Exercise
      PriceBalance,
      December 31, 2006
                      
                      
                      3,870,000
                      
                      
                      $
                      0.77Options
      granted and assumed
                      
                      
                      82,946
                      
                      
                      
                      3.99Options
      expired
                      
                      
                      —
                      
                      
                      
                      —Options
      cancelled
                      
                      
                      —
                      
                      
                      
                      —Options
      exercised
                      
                      
                      —
                      
                      
                      
                      —Balance,
      September 30, 2007
                      
                      
                      3,952,946
                      
                      
                      $
                      0.84
  26
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 9.
              STOCK OPTION PLAN AND
      WARRANTS (continued)
 
 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:
 
 2007Dividend
      yield
                        
                        —Expected
      volatility
                        
                        76.6%Risk-free
      interest rate
                        
                        4.56%
      to 4.68%Expected
      life (years)
                        
                        2
      to 4.25
 
 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.
  The
expected life of employee stock options represents the weighted-average period
the stock options are expected to remain outstanding and is a derived output of
the Binomial Lattice model. The expected life of employee stock options is
impacted by all of the underlying assumptions and calibration of the Company’s
model. The Binomial Lattice model estimates the probability of exercise as a
function of these two variables based on the entire history of exercises and
cancellations on all past option grants made by the Company.
 
 Accordingly,
the Company valued the services under SFAS No. 123R relating to non-statutory
stock options upon grant in 2007 for $144,415 as of September 30, 2007. Based on
recent historical stock activity the equal probability option pricing model was
applied.
 
 The
following table summarizes information about options granted during the nine
months ended September 30, 2007:
 
 Number
      of Options
                        Granted
                        During
      2007
                      
                      Exercise
      Price
                        Equals,
      Exceeds
                        Or
                        Is
      Less than Mkt.
                        Price
      of Stock
                        On
      Grant Date
                      
                      Weighted
                        Average
                        Exercise
                        Price
                      
                      
                      Range
      of
                        Exercise
                        Price
                      
                      
                      Weighted
                        Average
      Fair
                        Value82,946
                      
                      Equals
                      
                      $
                      3.99
                      
                      
                      $3.45
      to $4.04
                      
                      
                      $
                      0.40—
                      
                      Exceeds
                      
                      $
                      —
                      
                      
                      $—to $—
                      
                      
                      $
                      ——
                      
                      Less
      Than
                      
                      $
                      —
                      
                      
                      $ — to
      $ —
                      
                      
                      $
                      —82,946
                      
                      Equals
                      
                      $
                      3.99
                      
                      
                      $3.45
      to $4.04
                      
                      
                      $
                      0.40
 
 Stock
options/warrants – During the nine months ended September 30, 2007 the
Company granted stock warrants related to common stock issued through a private
placement totaling 3,660,913 with a strike price of $4.50 per share and stock
warrants totaling 178,345 were issued to underwriters of the private placement
with a strike price of $4.50 per share.
  27
 SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  9.
                STOCK OPTION PLAN AND
      WARRANTS
(continued)
 
 The value
of the warrants was allocated against additional paid in capital as part of the
overall offering cost of the private placement.
 
 During
the nine months ended September 30, 2007 the Company issued stock options for
82,946 shares of common stock to three officers and two employees with strike
price of $3.45 to $4.04 per share.
 
 The
following table summarizes information about options/warrants granted during the
nine months ended September 30, 2007:
 
 Number
      of
                          Shares
                        
                        
                        Weighted
                          Average
                          Exercise
      PriceBalance,
      December 31, 2006
                        
                        
                        20,160,000
                        
                        
                        $
                        0.51Options/warrants
      granted and assumed
                        
                        
                        3,922,204
                        
                        
                        $
                        4.49Options/warrants
      expired
                        
                        
                        —
                        
                        
                        
                        —Options/warrants
      cancelled
                        
                        
                        —
                        
                        
                        
                        —Options/warrants
      exercised
                        
                        
                        (400,000
                        )
                        
                        $
                        0.65Balance,
      September 30, 2007
                        
                        
                        23,682,204
                        
                        
                        $
                        1.17
 
 10.
                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
      entered into a lease 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.
  28
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
  11.
                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 was $810,282 and $841,842 for the nine months ended September
30, 2007 and 2006, respectively.
 
 Significant
components of the Company’s net deferred income tax assets at September 30, 2007
and December 31, 2006 were as follows:
 
 September
      30,
                              2007
                            
                            
                            December
      31,
                              2006Deferred
      income tax assetsNet
      operating loss carryforward
                            
                            $
                            2,782,051
                            
                            
                            $
                            1,667,592Option
      compensation
                            
                            
                            284,351
                            
                            
                            
                            205,057Gross
      deferred income tax asset
                            
                            
                            3,066,402
                            
                            
                            
                            1,872,649Valuation
      allowance
                            
                            
                            (282,865
                            )
                            
                            
                            (204,005
                            )2,783,537
                            
                            
                            
                            1,668,644Deferred
      income tax liabilitiesProperty,
      plant & equipment
                            
                            
                            1,486
                            
                            
                            
                            1,052Acquisition
      related liabilities
                            
                            
                            53,671,801
                            
                            
                            
                            2,527,923Net
      deferred income tax liability
                            
                            $
                            50,889,750
                            
                            
                            $
                            860,331
 
 A
valuation allowance for deferred tax related to option compensation 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, 2007 and
December 31, 2006.
 
 Deferred
income tax liability was recorded on GAAP basis over income tax basis using
statutory federal rates with the corresponding increase in the purchase price
allocation to the assets acquired.
 
 The
resulting estimated future federal 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
properties in the absence of there being a goodwill component associated with
the acquisition transactions.
 
 The
Company had cumulative net operating losses of approximately $6,821,800 and
$4,764,549 as of September 30, 2007 and December 31, 2006, respectively for
federal income tax purposes.  The net operating loss carryforwards
will be expiring between 2025 and 2027.  The Company had no material
loss carryforwards for state income tax purposes.
  29
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 11.
              INCOME TAXES
      (continued)
 
 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 statutes of
limitations, which may result in the payment of income taxes and/or decrease its
net operating losses available for carryforwards.  The Company is no
longer subject to income tax examinations by US federal and state tax
authorities for years prior to 2004. 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.
 
 12.
                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 $4,000 per month.  Subsequent to
September 30, 2007, on October 1, 2007, rent amount increased to $4,900 per
month for additional office space.
 
 Rental
expense, resulting from this operating lease agreement, approximated $32,151 for
the nine months ended September 30, 2007 and $12,000 for three months ended
September 30, 2007.
 
 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 a
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 a 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.
  30
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 12.
                COMMITMENTS AND
      CONTINGENCIES
(continued)
 
 Melvin
L. Williams, Chief Financial Officer.  The Company has an employment
agreement with Mr. Williams effective since June 14, 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 a 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.
 
 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 the 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, 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.
  13.
                CONCENTRATION OF
      CREDIT RISK
 
 Financial
instruments that potential subject the Company to concentration of credit risk
consist of cash investments.  The Company places its temporary cash
investments with one financial institution.  Cash accounts at the
financial institution are insured by the Federal Deposit Insurance Corporation
for up to $100,000 per financial institution.
 
 14.
                CONCENTRATION OF
      ACTIVITY
 
 For the
nine months ended September 30, 2007, the Company purchased services from one
major vendor, Talson Corporation, that exceeded more than 10% of total purchases
and amounted to approximately $1,496,233.
  31
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 15.
              RELATED PARTY
      TRANSACTIONS
 
 During
the nine months ended September 30, 2007 and 2006, 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. Mr. McNeil and Mr. Ager are affiliated
with NMC.
 
 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, 2007, the Company incurred total fees and
reimbursement of expenses to NMC of $270,000 and $63,926, respectively at
September 30, 2007, the Company had an outstanding balance due to NMC of
$20,000.
 
 For the
three months ended September 30, 2007, the Company incurred total fees and
reimbursement of expenses to NMC of $90,000 and $12,880,
respectively.
 
 During
the nine months ended September 30, 2007, the Company utilized Cupit, Milligan,
Ogden & Williams, CPAs (CMOW) to provide accounting support
services.  Mr. Williams is affiliated with CMOW.
 
 The
Company incurred total fees and reimbursement of expenses to CMOW of $21,873 and
$1,144, respectively, for the three and nine months ended September 30, 2007. At
September 30, 2007, the Company had an outstanding balance due to CMOW of
$23,017.
 
 16.
              RESTATEMENT
 
 Searchlight Mining
Claims - Mineral properties have been restated to reflect payments made
by issuance of 1,400,000 shares at $0.35 on July 7, 2005, 1,400,000 shares at
$2.20 on July 27, 2006 and 1,400,000 shares at $3.22 on June 29, 2007 at the
market values on the dates of issuance.  This restatement had the
impact of increasing the mineral properties and additional paid-in capital,
mineral properties also increased for deferred income tax liability assumed.
Changes in amounts are reflected in tabular format as noted
below.
 
 Clarkdale Slag
Project – The Company determined the that acquisition accounting methods
used in prior periods to record the purchase accounting for the Slag Project
were not appropriate with respect to contingent consideration and has restated
the purchase accounting to reflect the acquisition terms with respect to future
payments related to the acquisition and with respect to warrants issued in
connection with the assignment of the original Slag Project
option.
 
 The
      adjustments include revision of the acquisition accounting related to
      payment terms and conditions contained in the agreement which resulted in
      an increase in recorded purchase consideration of $5,173,282, including an
      increase of the recorded purchase consideration related to warrants issued
      in connection with the option assignment on the project of $1,918,481
      which was computed based on stock price at the time the warrants were
      issued. The related deferred tax liability assumed for the acquisition of
      the project increased by
$10,801,018.
  32
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 16.
              RESTATEMENT
      (continued)
 
 The
following table summarizes the consolidated balance sheet of the Company as of
September 30, 2007 and reconciles the reported amounts to the restated
amounts:
 
 Summarized
      Consolidated Balance Sheet -September
      30, 2007
                                                
                                                As
      Reported
                                                
                                                
                                                Adjustments
                                                
                                                
                                                
                                                
                                                
                                                As
      RestatedProperty
      and equipment, net
                                                
                                                $
                                                3,446,379
                                                
                                                
                                                $
                                                114,934
                                                
                                                
                                                a
                                                
                                                
                                                $
                                                3,561,313Mineral
      properties
                                                
                                                
                                                11,624,104
                                                
                                                
                                                
                                                1,078,154
                                                
                                                
                                                b
                                                
                                                
                                                
                                                12,702,258Slag
      project
                                                
                                                
                                                115,593,595
                                                
                                                
                                                
                                                5,173,282
                                                
                                                
                                                c
                                                
                                                
                                                
                                                120,766,877Total
      assets
                                                
                                                
                                                149,202,625
                                                
                                                
                                                
                                                6,366,252
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                155,568,995VRIC
      payable, current portion – related party
                                                
                                                
                                                590,000
                                                
                                                
                                                
                                                (413,719
                                                )
                                                
                                                c
                                                
                                                
                                                
                                                176,281Due
      to VRIC
                                                
                                                
                                                6,400,000
                                                
                                                
                                                
                                                (6,400,000
                                                )
                                                
                                                c
                                                
                                                
                                                
                                                —VRIC
      payable, net of current portion –related party
                                                
                                                
                                                2,817,404
                                                
                                                
                                                
                                                (617,564
                                                )
                                                
                                                c
                                                
                                                
                                                
                                                2,199,840Deferred
      tax liability
                                                
                                                
                                                41,184,686
                                                
                                                
                                                
                                                9,705,064
                                                
                                                
                                                d
                                                
                                                
                                                
                                                50,889,750Total
      liabilities
                                                
                                                
                                                44,072,250
                                                
                                                
                                                
                                                10,509,498
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                54,581,748Additional
      paid-in capital
                                                
                                                
                                                108,517,671
                                                
                                                
                                                
                                                1,760,204
                                                
                                                
                                                b,c
                                                
                                                
                                                
                                                110,277,875Accumulated
      deficit during exploration stage
                                                
                                                
                                                (11,759,190
                                                )
                                                
                                                
                                                2,332,384
                                                
                                                
                                                e
                                                
                                                
                                                
                                                (9,426,806
                                                )Total
      stockholders' equity
                                                
                                                
                                                96,894,659
                                                
                                                
                                                
                                                4,092,678
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                100,987,247Total
      liabilities and stockholders' equity
                                                
                                                $
                                                149,202,625
                                                
                                                
                                                
                                                6,366,252
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                155,568,995
  The
following tables summarize the consolidated statements of operations for the
three months ended September 30, 2007 and reconcile 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
                                          )
                                          
                                          f
                                          
                                          
                                          $
                                          795,897Loss
      from operations
                                          
                                          
                                          (788,431
                                          )
                                          
                                          
                                          (7,466
                                          )
                                          
                                          g
                                          
                                          
                                          
                                          (795,897
                                          )Total
      other income (expense)
                                          
                                          
                                          94,580
                                          
                                          
                                          
                                          7,466
                                          
                                          
                                          g
                                          
                                          
                                          
                                          102,046Income
      tax benefit
                                          
                                          
                                          —
                                          
                                          
                                          
                                          270,094
                                          
                                          
                                          e
                                          
                                          
                                          
                                          270,094Net
      loss
                                          
                                          $
                                          (693,851
                                          )
                                          
                                          $
                                          270,094
                                          
                                          
                                          e
                                          
                                          
                                          $
                                          (423,757
                                          )
  The
following tables summarize the consolidated statements of operations for the
nine months ended September 30, 2007, and reconcile the reported amounts to the
restated amounts:
 
 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
                                          )
                                          
                                          f
                                          
                                          
                                          $
                                          2,504,176Loss
      from operations
                                          
                                          
                                          (2,477,130
                                          )
                                          
                                          
                                          (27,046
                                          )
                                          
                                          g
                                          
                                          
                                          
                                          (2,504,176
                                          )Total
      other income (expense)
                                          
                                          
                                          246,320
                                          
                                          
                                          
                                          27,046
                                          
                                          
                                          g
                                          
                                          
                                          
                                          273,366Income
      tax benefit
                                          
                                          
                                          —
                                          
                                          
                                          
                                          810,282
                                          
                                          
                                          e
                                          
                                          
                                          
                                          810,282Net
      loss
                                          
                                          $
                                          (2,230,810
                                          )
                                          
                                          $
                                          810,282
                                          
                                          
                                          e
                                          
                                          
                                          $
                                          (1,420,528
                                          )
  33
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(RESTATED)
 16.
              RESTATEMENT
      (continued)
 
 The
following table summarizes the consolidated statements of operations for the
period from January 14, 2000 (Date of Inception) through September 30, 2007, and
reconciles the reported amounts to the restated amounts:
 
 Summarized
      Consolidated Statement of Operations -For
      the period from January 14, 2000 (Date of Inception)Through
      September 30, 2007
                                                
                                                As
      Reported
                                                
                                                
                                                Adjustments
                                                
                                                
                                                
                                                
                                                
                                                As
      RestatedGeneral
      and administrative
                                                
                                                $
                                                3,297,602
                                                
                                                
                                                $
                                                120,708
                                                
                                                
                                                h
                                                
                                                
                                                $
                                                3,418,310Total
      operating expenses
                                                
                                                
                                                7,842,373
                                                
                                                
                                                
                                                119,659
                                                
                                                
                                                f,h
                                                
                                                
                                                
                                                7,962,032Loss
      from operations
                                                
                                                
                                                (7,814,278
                                                )
                                                
                                                
                                                (147,754
                                                )
                                                
                                                g,h
                                                
                                                
                                                
                                                (7,962,032
                                                )Total
      other income (expense)
                                                
                                                
                                                318,964
                                                
                                                
                                                
                                                27,046
                                                
                                                
                                                g
                                                
                                                
                                                
                                                346,010Loss
      before income taxes
                                                
                                                
                                                (7,495,314
                                                )
                                                
                                                
                                                (120,708
                                                )
                                                
                                                h
                                                
                                                
                                                
                                                (7,616,022
                                                )Income
      tax benefit
                                                
                                                
                                                —
                                                
                                                
                                                
                                                2,332,384
                                                
                                                
                                                e
                                                
                                                
                                                
                                                2,332,384Loss
      from continuing operations
                                                
                                                
                                                (7,495,314
                                                )
                                                
                                                
                                                2,211,676
                                                
                                                
                                                e,h
                                                
                                                
                                                
                                                (5,283,638
                                                )Loss
      from discontinued operations
                                                
                                                
                                                (4,263,876
                                                )
                                                
                                                
                                                120,708
                                                
                                                
                                                h
                                                
                                                
                                                
                                                (4,143,168
                                                )Net
      loss
                                                
                                                $
                                                (11,759,190
                                                )
                                                
                                                $
                                                2,332,384
                                                
                                                
                                                e
                                                
                                                
                                                $
                                                (9,426,806
                                                )
 
 The
restatements had no impact on the Company’s cash or cash flows.
 
 The
restatement adjustments are as follows:
 
 a.
              Restate
      for capitalization of interest related to deferred purchase
      liability.
 b.
              Restate
      issuance of 1,400,000 shares to obtain mineral properties on July 7, 2005
      at the market value of $0.35 per share.  The resulting estimated
      future income tax liability associated with the temporary differences
      between the tax basis and acquisition value was applied to the mineral
      asset in the absence of there being a goodwill component associated with
      the transaction.
 c.
              Restate
      for revision of the acquisition accounting related to contingent payment
      terms and conditions contained in the agreement and the resultant deferred
      tax liability assumed in
acquisition.
 d.
              Restate
      for computation of deferred tax liability assumed in mineral property
      acquisition.
 e.
              Restate
      for deferred income tax benefit related to mineral property
      acquisitions.
 f.
              Reclassify
      interest expense from operating expenses to other income
      (expense).
 g.
              Reclassify
      rental revenue and interest expense from operations to other income
      (expense).
 h.
              Reclassify
      foreign currency translation adjustment for the period ended March 31,
      2006 from general and administrative expense as discontinued
      operations.




34





ITEM 2.
            MANAGEMENT’S DISCUSSION AND
      ANALYSIS OR PLAN OF
OPERATION.




FORWARD
LOOKING STATEMENTS




The
information in this discussion contains forward-looking
statements.  These forward-looking statements involve risks and
uncertainties, including statements regarding our capital needs, business
strategy and expectations.  Any statements contained herein that are
not statements of historical facts may be deemed to be forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the
negative of such terms or other comparable terminology. These statements reflect
the current views of management with respect to future events and are subject to
risks, uncertainties and other factors that may cause our actual results,
performance or achievements, or industry results, to be materially different
from those described in the forward-looking statements.  Such risks
and uncertainties include those set forth under the caption “Management’s
Discussion and Analysis or Plan of Operation” and elsewhere in this Quarterly
Report.  In evaluating these statements, you should consider various
factors, including the risks discussed below, and, from time to time, in other
reports we file with the United States Securities and Exchange Commission (the
“SEC”).




As
used in this Quarterly Report on Form 10-Q/A, the terms “we,” “us,” “our,”
“Searchlight” and the “Company” mean Searchlight Minerals Corp. and its
subsidiaries unless otherwise indicated. All dollar amounts in this Quarterly
Report are in U.S. dollars unless otherwise stated.




INTRODUCTION




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; and (ii) the Searchlight Gold Project, located near
Searchlight, Nevada.  The Clarkdale Slag Project is a precious and
base metal recovery project where we are seeking to reprocess slag material
produced from the smelting of copper ores from former mines located around
Jerome, Arizona.  The Searchlight Gold Project is a 3,200 acre placer
gold project.




During
the quarter ended September 30, 2007, we continued to make progress on our
development of the Clarkdale Slag Project.  During the quarter, our
building construction and site preparation for the project site continued to
advance and we completed the purchase of much of the processing equipment for
our first production module for the project.  See “Plan of Operation –
Clarkdale Slag Project,” below.  Also during the quarter ended
September 30, 2007, we received metallurgical testing results on
chain-of-custody samples collected from the Searchlight Gold
Project.  A discussion of these results is provided below under
“Recent Corporate Developments.”




Restatements




We
have restated certain items on our consolidated balance sheets and statements of
operations.  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 revision of acquisition costs related to issuance of
warrants, consideration of certain terms with respect to future payments that
should have been recorded as contingent consideration and related deferred
future income tax liability in connection with our acquisition of
Transylvania.




The
Company restated the Searchlight Mining Claims as of September 30, 2007. The
restatement of the Searchlight Claims mineral properties reflects the
revised deferred future income tax liability assumed as part of the subsequent
contingent issuances of securities, the value of which has been added to the
acquisition costs of the underlying mineral properties. Pursuant to EITF 98-11,
the Company values the shares issued to obtain mineral properties at their
market price at the date of the issue .


35




Further,
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 balances 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 based on the acquisition agreement and the
      recomputation of the value of the 12,000,000 warrants issued to
      Nanominerals and its designates 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.




·
            our
      consolidated statement of operations for the period from inception to
      September 30, 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.




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.  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
increased by $5,173,282 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 tothe $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 establishes 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.




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.


36




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)
                            
                            
                            9.6




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




RECENT
CORPORATE DEVELOPMENTS




The
following significant corporate developments have occurred since June 30, 2007,
the date of our last Quarterly Report:




1.  On
July 27, 2007, we appointed Harry Crockett to serve on our compensation
committee.  As a result of Mr. Crockett’s appointment, our
compensation committee now consists of Robert D. McDougal and Mr.
Crockett.  Mr. Crockett has served on our Board of Directors since
February 16, 2007.




2.  On
August 20, 2007, we reported the results of additional metallurgical testing
conducted by our independent mining consultants, Arrakis, Inc. ("Arrakis"), on
chain-of-custody samples collected from the Searchlight Gold
Project.  We had engaged Arrakis to perform this additional testing
following the tests completed by them in early 2007, the results of which were
reported by us on January 29, 2007.. The test results received in January, 2007
had indicated that autoclave processing would be a reliable and consistent
method of extraction.  To test other processing/extraction methods,
Arrakis obtained additional chain-of-custody samples from the Searchlight Gold
Project and conducted tests using various metallurgical methods, including
mineral and organic acid leaching combined with appropriate oxidizers, cyanide
leaching, and autoclave leaching using chloride based lixiviant. Gravity
concentration was also examined to upgrade the feed prior to
leaching.  Based on the results of these additional tests, Arrakis
concluded that autoclave processing, while more capital intensive than the
alternative methods tested, produced the most reliable and consistent results on
the materials extracted from the Searchlight Gold Project, and was likely the
most suitable to commercial sized production scales.  Readers are
cautioned that we have not yet established any proven or probable mineral
reserves on the Searchlight Gold Project, and there are no assurances that we
will be able to do so in the future.  We are still in the process of
conducting our exploration program for the Searchlight Gold Project as well as
continuing bench and pilot testing to optimize gold recovery into solution and
extraction of the gold from the pregnant solution.




3.  On
October 4, 2007, we engaged DCM Structured Finance Limited (“DCMSF”) of London,
England, to advise and assist us on various corporate finance matters, including
advising and assisting us with respect to seeking and obtaining financing for
our Clarkdale Slag Project.




DCMSF is
an affiliate of DCM Securities Limited, a company based in London, England, that
specializes in providing corporate finance advice. DCMSF’s Metals & Mining
Advisory Team consists of professionals who have been involved in the metals and
mining sector for decades. Its team of professionals has extensive experience in
debt structuring, equity valuation and financial modeling along with a strong
technical understanding of the industry.  DCMSF has advised and
assisted a number of mining companies on arranging and structuring various
financing alternatives. DCM Securities Limited is authorized and regulated by
the Financial Services Authority.




In
consideration for their services, we have agreed to pay DCMSF the following
commissions on any financing received by us from a source introduced or referred
to us by DCMSF (a “Referred Financing”):


37




(a)
              an
      advisory success fee equal to one percent (1.0%) of the total principal
      amount of any Referred Financing;
and




(b)
              one
      half of one percent (0.5%) of one stock purchase warrant for each $1.00 of
      the total principal amount of any Referred Financing. Each one full stock
      purchase warrant issued to DCMSF under the terms of their engagement will
      entitle DCMSF to purchase one share of our common stock. The exercise
      price will be equal to the closing price of our common stock on the date
      the engagement letter was executed by both DCMSF and the Company. The
      closing price of our common stock as quoted on the OTC Bulletin Board on
      October 4, 2007 was $2.87.




We have
also agreed to reimburse DCMSF for any properly documented, reasonable costs and
expenses incurred by it in connection with performing its duties under the
engagement.  Unless otherwise agreed to in writing, the engagement
will terminate upon the earlier of our obtaining full financing for the
Clarkdale Slag Project and the date that is nine (9) months from the date of
DCMSF’s engagement.




4.  On
November 13, 2007, we issued 6,134 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 a price
of $2.85 per share, being the closing price of our common stock on September 28,
2007, the last trading day of our previous fiscal quarter.  Director’s
compensation expense and common stock subscribed for were recorded in the amount
of $18,000 as of that date.  The shares were issued under Section 4(2)
of the Securities Act.




PLAN
OF OPERATION




The
following discussion and analysis summarizes our plan of operation for the next
twelve months, our results of operations for the nine months ended September 30,
2007 and changes in our financial condition from our year ended December 31,
2006.  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, 2006.




Clarkdale
Slag Project




During
our second fiscal quarter ended June 30, 2007, we completed a materials study on
the main slag pile located on the Clarkdale Slag Project site.  The
results of this study were reported in our Quarterly Report on Form 10-QSB filed
with the SEC on August 16, 2007 and in our amended Registration Statement on
Form SB-2/A filed with the SEC on June 15, 2007.




Our plan
of operation for the Clarkdale Slag Project currently involves the
following:




(a)
              Construction
      and rehabilitation of buildings on the project site that are expected to
      serve as the production and operations facilities for the
      project;(b)
              Continue
      small scale pilot testing and site work to assist with the optimization of
      the metallurgical flow sheet and processing protocols for our first
      production module; and(c)
              Installation
      of our first production
module.




We expect
to complete the majority of each of the above during the fourth quarter of
2007.  The initial production module being installed by us will
consist of a full scale production and processing circuit expected to process
between 100-250 tons per day (tpd) of slag material.  Our plans for
the final processing facility are expected to include a number of additional
production modules that will work simultaneously during full scale
operations.  The first production module being constructed by us will
be used to optimize and test the economic feasibility of the Clarkdale Slag
Project, which is expected to occur during the first fiscal quarter of
2008.  This first full scale production module is expected to serve as
a final feasibility study for the Clarkdale Slag Project.  If the
operation of this first production module proves that the Clarkdale Slag Project
is economically feasible, we will seek to begin financing the construction of
additional production modules for the project and our full scale processing
facility.


38




Until
such time as we have established economic feasibility of the Clarkdale Slag
Project through our feasibility studies and the operation of our first full
circuit production module for the slag pile, there is no assurance that we will
proceed to the construction of our proposed processing facility.  If
the results from our feasibility studies and the production results from our
first production module are not sufficiently positive to justify our proceeding
with the construction of our processing facility we will have to scale back or
abandon our plans for the Clarkdale Slag Project.




Searchlight
Gold Project




In early
2007, we received the results of metallurgical and analytical tests conducted by
Arrakis on chain of custody surface samples and bulk samples (6 tons) taken from
the Searchlight Gold Project.  The results of these tests were
reported by us in our Annual Report on Form 10-KSB filed with the SEC on April
17, 2007, our Quarterly Reports on Form 10-QSB filed with the SEC on May 17,
2007 and August 16, 2007, and our amended Registration Statement on Form SB-2/A
filed with the SEC on June 15, 2007.




These
results had indicated that autoclave processing would be the most reliable and
consistent method of extracting gold from the sample materials
tested.  To test other processing/extraction methods, Arrakis obtained
additional chain-of-custody samples from the Searchlight Gold Project and
conducted tests using various metallurgical methods, including mineral and
organic acid leaching combined with appropriate oxidizers, cyanide leaching, and
autoclave leaching using chloride based lixiviants.  Gravity
concentration was also examined to upgrade the feed prior to
leaching.  Based on the results of these additional tests, Arrakis
concluded that autoclave processing, while more capital intensive than the
alternative methods tested, produced the most reliable and consistent results on
the materials extracted from the Searchlight Gold Project, and was likely the
most suitable to commercial sized production scales.




Our plan
of operation for the Searchlight Gold Project currently involves the
following:




(a)
              Continue
      metallurgical testing on small and bulk samples taken from the Searchlight
      Gold Project area; and(b)
              Conduct
      drilling and pre-feasibility program for the Searchlight Gold
      Project.




Current
metallurgical testing for the Searchlight Gold Project will focus on optimizing
the recovery of gold during the metallurgical process.  During the
fourth fiscal quarter of 2007, we intend to continue conducting microwave
digestion and autoclave testing on samples taken from the project area, which is
expected to provide additional metallurgical data regarding the analytical
protocols to be used on the project.  In conjunction with this
testing, we will also continue to work on optimizing the recovery of gold from
solution as this is expected to be a key component in determining the
effectiveness of the overall metallurgical recovery process to be used for the
Searchlight Gold Project.




During
the fourth fiscal quarter of 2007, we also hope to finalize our plans with
respect to the drilling and pre-feasibility program that we intend to conduct
for the Searchlight Gold Project.  This program is expected to include
an 18 hole drilling program, chain-of-custody sampling and assaying of drill
hole materials, pilot plant tests and the commissioning of an independent
pre-feasibility report.  We have been corresponding with the Bureau of
Land Management (the ”BLM”) regarding the transfer of an approved plan of
operations for the drilling program.  The plan of operations is
currently registered in the name of a vendor of the Searchlight
Claims.  The BLM has indicated to us that they have some concerns
about approving the transfer of the plan of operation because of an outstanding
debt owed to the BLM by one of our former directors.  We are currently
working with the former director to resolve these issues with the BLM as quickly
as possible.  Additional planned metallurgical testing is expected to
proceed as scheduled; however, if we are unable to obtain a transfer of the plan
of operations, our proposed drilling program for the Searchlight Gold Project
could be delayed.




Readers
are cautioned that we have not yet established any proven or probable mineral
reserves on the Searchlight Gold Project, and there are no assurances that we
will be able to do so in the future as we are still in the process of conducting
our exploration program for the Searchlight Gold Project.


39




Anticipated
Cash Requirements




Our
estimated expenses for the next twelve months are as follows:




EXPENSE
                            
                            COSTAdministrative
      Expenses
                            
                            $
                            2,000,000Legal
      and Accounting Expenses
                            
                            $
                            600,000Consulting
      Services
                            
                            $
                            1,000,000Clarkdale Slag
      Project·  
      Pilot Testing/Site Work
                            
                            $
                            300,000·  
      First Module of Production
                            
                            $
                            3,500,000·  
      Commence Construction of Full-Scale Processing Facility
                            
                            $
                            15,000,000$
                            18,800,000Searchlight Gold
      Project·  
      Metallurgical Testing Program
                            
                            $
                            400,000·  
      Commence Drilling and Feasibility Program
                            
                            $
                            300,000$
                            700,000TOTAL
                            
                            $
                            23,100,000




We
recorded a net loss of $1,420,528 for the nine months ended September 30, 2007
and have an accumulated deficit of $9,426,806 since inception.  As at
September 30, 2007, we had cash reserves in the amount of
$8,833,969.  This is less than the $23,100,000 that our management
anticipates spending on our exploration and development programs and the
anticipated costs associated with our continuing
operations.  Accordingly, we expect that we will need to obtain
additional financing in the near future.  See “Future Financings,”
below.




RESULTS
OF OPERATIONS




Restatements




We
have restated certain items on our consolidated balance sheets and statements of
operations.  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 and state income
tax liability in connection with our acquisition of Transylvania International,
Inc. (“TI”).  A description of the restatements made to our financial
statements is provided at Note 16 to the consolidated financial statements for
the period ended September 30, 2007 included with this Quarterly Report on Form
10-Q/A.


40




Third
Quarter and Nine Months Summary




Third Quarter Ended September 30
                
                
                Nine Months Ended September 30Percentage
                
                
                
                
                
                
                
                
                PercentageIncrease /
                
                
                
                
                
                
                
                
                Increase /2007
                
                
                2006
                
                
                (Decrease)
                
                
                2007
                
                
                2006
                
                
                (Decrease)(restated)
                
                
                
                
                
                
                
                
                (restated)Revenue
                
                $
                -
                
                
                
                -
                
                
                
                n/a
                
                
                $
                -
                
                
                
                -
                
                
                
                n/aOperating
                
                
                (795,897
                )
                
                
                (875,181
                )
                
                
                (9.1
                )%
                
                
                (2,504,176
                )
                
                
                (2,567,656
                )
                
                
                (2.5
                )%ExpensesOther
      Income (expense)
                
                
                102,046
                
                
                
                24,106
                
                
                
                323.3
                %
                
                
                273,366
                
                
                
                19,708
                
                
                
                1287.1
                %Income
      Tax Benefit
                
                
                270,094
                
                
                
                280,614
                
                
                
                (3.7
                )%
                
                
                810,282
                
                
                
                841,842
                
                
                
                (3.7
                )%Net
      Loss
                
                $
                (423,757
                )
                
                $
                (570,461
                )
                
                
                (25.7
                )%
                
                $
                (1,420,528
                )
                
                $
                (1,706,106
                )
                
                
                (16.7
                )%




Revenue




We are
currently in the exploration stage of our business, 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, of which
there are no assurances.




Operating
Expenses




Our
operating expenses for the quarters and six months ended September 30, 2007 and
2006 are outlined in the table below:




Third Quarter Ended September 30
                              
                              
                              Nine Months Ended September 30Percentage
                              
                              
                              
                              
                              
                              
                              
                              
                              PercentageIncrease /
                              
                              
                              
                              
                              
                              
                              
                              
                              Increase /2007
                              
                              
                              2006
                              
                              
                              (Decrease)
                              
                              
                              2007
                              
                              
                              2006
                              
                              
                              (Decrease)(restated)
                              
                              
                              
                              
                              
                              
                              
                              
                              (restated)Mineralexploration andevaluation
                              
                              $
                              199,961
                              
                              
                              $
                              518,476
                              
                              
                              
                              (61.4
                              )%
                              
                              $
                              810,539
                              
                              
                              $
                              1,293,864
                              
                              
                              
                              (37.4
                              )%Mineral exploration and

                                  evaluation – related
      party
                              
                              
                              90,000
                              
                              
                              
                              123,750
                              
                              
                              
                              (27.3
                              )%
                              
                              
                              270,000
                              
                              
                              
                              371,250
                              
                              
                              
                              (27.3
                              )%General and
      administrative
                              
                              
                              471,209
                              
                              
                              
                              231,304
                              
                              
                              
                              103.7
                              %
                              
                              
                              1,374,668
                              
                              
                              
                              897,925
                              
                              
                              
                              53.1
                              %General and administrative

                                  – related
      party
                              
                              
                              23,017
                              
                              
                              
                              -
                              
                              
                              
                              n/a
                              
                              
                              
                              23,017
                              
                              
                              
                              -
                              
                              
                              
                              n/aDepreciation
                              
                              
                              11,710
                              
                              
                              
                              1,651
                              
                              
                              
                              609.3
                              %
                              
                              
                              25,952
                              
                              
                              
                              4,617
                              
                              
                              
                              462.1
                              %Total Operating
      Expenses
                              
                              $
                              795,897
                              
                              
                              $
                              875,181
                              
                              
                              
                              (9.1
                              )%
                              
                              $
                              2,504,176
                              
                              
                              $
                              2,567,656
                              
                              
                              
                              (2.5
                              )%




Our
operating expenses for the nine months ended September 30, 2007 decreased
slightly compared to the comparative period in 2006.  Our general and
administrative expenses increased as a result of (i) increased professional and
administrative expenses associated with holding our 2007 annual meeting of
stockholders, the acquisition of Transylvania International, Inc., the
completion of our equity financings and the preparation of our Registration
Statement on Form SB-2; (ii) increased management fees related to the
administration of the Clarkdale Slag Project site; and (iii) increased
compensation paid to our executive officers and our directors.


41




Mineral
exploration costs decreased as a result of our focus on our construction efforts
for the Clarkdale Slag Project during the fiscal quarters ended June 30, 2007
and September 30, 2007.




Amounts
paid to related parties for mineral exploration and evaluation expenses during
the period were paid to Nanominerals Corp. (“Nano”) for technical assistance and
financing related activities provided by Nano in connection with the exploration
and development of our mineral projects. Ian R. McNeil, our Chief Executive
Officer and President, and Carl S. Ager, our Secretary and Treasurer, are each
17% shareholders of Nano.  Nano is also one of our significant
shareholders.  Amounts paid to related parties for general and
administrative expenses were paid to Cupit, Milligan, Ogden & Williams, CPAs
(“CMOW”) for accounting support services. Melvin L. Williams, our Chief
Financial Officer, is affiliated with CMOW.




Equity
Compensation




Included
in general and administrative expenses for the three and nine month periods
ended September 30, 2007 are compensation expenses related to the granting of
stock options of $1,312 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 that may be granted to our employees, officers,
directors, and eligible consultants.  As at September 30, 2007, 7,246
options have been granted under the 2007 Plan with an exercise price of $3.45
per share. The options are fully vested and expire on June 15,
2009.  During the nine months ended September 30, 2007, we issued
under our 2006 Stock Option Plan options to acquire 75,700 shares of common
stock to three of our executive officers and an employee with an exercise price
of $4.04 per share.  The options are fully vested and expire on
February 16, 2012.




Liquidity
and Financial Condition




Working
Capital


PercentageAt September 30,
2007
                        
                        
                        At December 31,
    2006
                        
                        
                        Increase
      / (Decrease)(restated)Current
      Assets
                        
                        $
                        9,139,397
                        
                        
                        $
                        3,790,483
                        
                        
                        
                        141.1
                        %Current
      Liabilities
                        
                        
                        (1,421,998
                        )
                        
                        
                        (1,583,306
                        )
                        
                        
                        (10.2
                        )%Working
      Capital
                        
                        $
                        7,717,399
                        
                        
                        $
                        2,207,177
                        
                        
                        
                        249.7
                        %




Cash Flows


Nine
      Months Ended
                                    
                                    
                                    Nine
      Months EndedSeptember 30, 2007
                                    
                                    
                                    September 30, 2006(restated)Cash
      Flows used in Operating Activities
                                    
                                    $
                                    (2,601,921
                                    )
                                    
                                    $
                                    (2,249,536
                                    )Cash
      Flows used in Investing Activities
                                    
                                    
                                    (13,161,188
                                    )
                                    
                                    
                                    (25,291
                                    )Cash
      Flows provided by Financing Activities
                                    
                                    
                                    20,912,830
                                    
                                    
                                    
                                    6,256,376Net
      Increase in Cash During Period
                                    
                                    $
                                    5,149,721
                                    
                                    
                                    $
                                    3,981,549




Working Capital. The
increase  in our working capital surplus from $2,207,177 as at
December 31, 2006 to $7,717,399 as at September 30, 2007 was primarily due to
proceeds from private placement of our securities in the amount of $21,713,817
during the nine months period ended September 30, 2007.




Property and Equipment.Property and equipment increased by $3,531,126 during the nine months
period ended September 30, 2007.  The increase was primarily due to
site improvement and equipment purchases at the Clarkdale Slag Project
site.


42




Income Tax Liability.
Included in long term liabilities in the accompanying restated consolidated
financials statements is a balance of $50,889,750 for deferred tax liability
relating to the Clarkdale Slag Project and the 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.  As of September 30,
2007 and December 31, 2006, we had net operating loss carryforwards of
approximately $6,821,800 and $4,764,549, respectively for federal income
taxes.  The net operating loss carryforwards expire between 2025 and
2027.




Future
Financings




We
recorded a net loss of $1,420,528 for the nine months ended September 30, 2007
and have an accumulated deficit of $9,426,806 since inception. As at September
30, 2007 we had cash reserves in the amount of $8,833,969.  This is
less than the $23,100,000 that our management anticipates spending on our
exploration and development programs and the anticipated costs associated with
our continuing operations.  Accordingly, we expect that we will need
to obtain additional financing in the near future.




On
October 4, 2007, we engaged DCM Structured Finance Limited (“DCMSF”) of London,
England, to advise and assist us on various corporate finance matters, including
advising and assisting us with respect to seeking and obtaining financing for
the Clarkdale Slag Project.  However, we do not, at this time, have
any financing arrangements in place.




Obtaining
additional financing is subject to a number of factors, including the market
prices for our mineral property and gold.  These factors may make the
timing, amount, terms or conditions of additional financing unavailable to
us.  Since our inception, we have used our common stock to raise money
for our operations and for our property acquisitions.  We have not
attained profitable operations and are dependent upon obtaining financing to
pursue our plan of operation.  For these reasons, our independent
auditors believe there exists a substantial doubt about our ability to continue
as a going concern.




OFF-BALANCE
SHEET ARRANGEMENTS




None.




CRITICAL
ACCOUNTING POLICIES




We have
identified certain accounting policies, described below, that are the most
important to the portrayal of our current financial condition and results of
operations.




Use
of Estimates




In
preparing the consolidated financial statements in conformity with accounting
principles generally accepted in the United States, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities at the date of the
financial statements and revenues and expenses during the reported
period.  Actual results could differ from these
estimates.




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 commencement of commercial production, 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 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.”


43




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 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,
we use 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




We
review and evaluate 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, 2007 exploration is
progressing in accordance with our plan of operations and no events or
circumstances have happened to indicate the related carrying values of the
properties may not be recoverable.  When we determine that a 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 we 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.




Exploration
Costs




Mineral
exploration costs are expensed as incurred.




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.




RISKS
AND UNCERTAINTIES




Actual
capital costs, operating costs, production and economic returns may differ
significantly from our estimates and there are no assurances that any future
development activities will result in profitable mining operations.




We are an
exploration stage company and are still in the process of exploring and
developing our mineral projects.  We do not have any historical
mineral operations upon which to base our estimates of costs. Decisions about
the development of our mineral properties will ultimately be based upon
feasibility studies. Feasibility studies derive cost estimates based primarily
upon:


44




·
            anticipated
      tonnage, grades and metallurgical characteristics of the ore to be mined
      and processed;




·
            anticipated
      recovery rates of gold and other metals from the
  ore;




·
            cash
      operating costs of comparable facilities and equipment;
  and




·
            anticipated
      weather/climate conditions.




Capital
and operating costs, production and economic returns, and other estimates
contained in our final feasibility studies, may differ significantly from our
current estimates.  There is no assurance that our actual capital and
operating costs will not exceed our current estimates.  In addition,
delays to construction schedules may negatively impact the net present value and
internal rates of return for our mineral properties.  There are no
assurances that actual recoveries of base and precious metals or other minerals
processed from our mineral projects will be economically feasible or that actual
costs will match our pre-feasibility estimates.




Feasibility
estimates typically underestimate future capital and operating
costs.  We are still developing our metallurgy analysis and flow
sheets for the Clarkdale Slag Project.  If the results from our
feasibility studies on the Clarkdale Slag Project and the production results
from the operation of our first production module are not sufficiently positive
for us to proceed with the construction of our proposed processing facility we
will have to scale back or abandon our proposed operations on the Clarkdale Slag
Project.




We
lack an operating history and have losses which we expect to continue into the
future. As a result, we may have to suspend or cease exploration activities and
if we do not obtain additional financing, our business will fail.




We were
incorporated on January 12, 1999 and since that time were engaged in the
business of biotechnology research and development.  In February,
2005, we changed our business to mineral exploration.  We have a
limited history upon which an evaluation of our future success or failure can be
made.  Our ability to achieve and maintain profitability and positive
cash flow is 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.




Our
plan of operation calls for significant expenses in connection with the
exploration of the Searchlight Gold Project and drilling and sampling activities
on the Clarkdale Slag Project which will require us to obtain additional
financing.  We recorded a net loss of $1,420,528 for the nine months
ended September 30, 2007 and have an accumulated deficit of $9,426,806 as at
September 30, 2007.  As at September 30, 2007, we had cash reserves
totaling $8,833,969.  Over the next twelve months, our management
anticipates that the minimum cash requirements for funding our proposed
exploration program and our continued operations will be
$23,100,000.  Accordingly we do not have sufficient funds to meet our
planned expenditures over the next twelve months and will need to obtain further
financing to fund our operations.




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.  Since our inception, we have used our common stock
to raise money for our operations and for our property
acquisitions.  We have not attained profitable operations and are
dependent upon obtaining financing to pursue our plan of
operation.  For these reasons, our independent auditors believe there
exists a substantial doubt about our ability to continue as a going
concern.


45




If
the results from our feasibility studies and the production results from the
operation of our first production module are not sufficiently positive for us to
proceed with the construction of our processing facility we will have to scale
back or abandon our proposed operations on the Clarkdale Slag
Project.




During
the fourth fiscal quarter of 2007, we intend to continue small scale pilot
testing and site work for the Clarkdale Slag Project and complete the
installation of our first production module for the project.  Our
first production module for the Clarkdale Slag Project will consist of a full
scale production and processing cycle.  This first production module
is expected to become operational during the first fiscal quarter of 2008 and be
used as a final test of the economic feasibility of the Clarkdale Slag
Project.  If the operation of this first production module proves that
the Clarkdale Slag Project is economically feasible, we will seek to begin
financing the construction of additional production modules and our full scale
processing facility.




However,
if the results of our pre-feasibility studies on the Clarkdale Slag Project and
the production results from the operation of first production module are not
positive, we will have to scale back or abandon our proposed operations on the
Clarkdale Slag Project.  There is no assurance that actual recoveries
of base and precious metals or other minerals re-processed from the slag pile
will be economically feasible.  If metal recoveries are less than
projected, then our metal sales will be less than anticipated and may not equal
or exceed the cost of mining and recovery in which case our operating results
and financial condition will be adversely affected.




If
we are unable to achieve projected mineral recoveries from our test mining
activities at the Clarkdale Slag Project and Searchlight Gold Project, then our
financial condition will be adversely affected.




As we
have not established any reserves on either our Clarkdale Slag Project or
Searchlight Gold Project to date, there is no assurance that actual recoveries
of minerals from material mined during test mining activities will equal or
exceed our exploration costs on our mineral properties.  To date we
have completed only a limited amount of drilling and sampling on Clarkdale Slag
Project site and the process testing of results has been limited to small pilot
plants and bench scale testing.  There is no assurance that if the
Company moves to production scale from pilot plant scale that the Company’s
production results will match pre-feasibility estimates.  If mineral
recoveries are less than projected, then our sales of minerals will be less than
anticipated and may not equal or exceed the cost of exploration and recovery in
which case our operating results and financial condition will be adversely
affected.




Because
our management does not have formal training specific to the technicalities of
mineral exploration, there is a higher risk our business will fail.




Our
executive officers and directors do not have any formal training as geologists
or in the technical aspects of management of a mineral exploration
company.  With no direct training or experience in these areas, our
management may not be fully aware of the specific requirements related to
working within this industry.  Our management's decisions and choices
may not take into account standard engineering or managerial approaches mineral
exploration companies commonly use.  Consequently, our operations,
earnings, and ultimate financial success could suffer irreparable harm due to
management's lack of experience in this industry.




Because
of the unique difficulties and uncertainties inherent in mineral exploration
ventures, we face a high risk of business failure.




Investors
should be aware of the difficulties normally encountered by new mineral
exploration companies and the high rate of failure of such
enterprises.  The likelihood of success must be considered in light of
the problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake.  These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates.  The expenditures to be
made by us in the exploration of the mineral claim may not result in the
discovery of mineral deposits.  If funding is not available, we may be
forced to abandon our operations.


46




Because
we anticipate our operating expenses will increase prior to our earning
revenues, we may never achieve profitability.




Prior to
completion of our exploration stage, we anticipate that we will incur increased
operating expenses without realizing any revenues.  We therefore
expect to incur significant losses into the foreseeable future. We recognize
that if we are unable to generate significant revenues from the exploration of
the Searchlight Gold Project or the Clarkdale Slag Project, we will not be able
to earn profits or continue operations.  There is no history upon
which to base any assumption as to the likelihood that we will prove successful,
and we can provide no assurance that we will generate any revenues or ever
achieve profitability.  If we are unsuccessful in addressing these
risks, our business will most likely fail.




If
the price of base and precious metals declines, our financial condition and
ability to obtain future financings will be impaired.




The price
of base and precious metals is affected by numerous factors, all of which are
beyond our control. Factors that tend to cause the price of base and precious
metals to decrease include the following:




(a)
              Sales
      or leasing of base and precious metals by governments and central
      banks;(b)
              A
      low rate of inflation and a strong US dollar;(c)
              Speculative
      trading;(d)
              Decreased
      demand for base and precious metals in industrial, jewelry and investment
      uses;(e)
              High
      supply of base and precious metals from production, disinvestment, scrap
      and hedging;(f)
              Sales
      by base and precious metals producers and foreign transactions and other
      hedging transactions; and(g)
              Devaluing
      local currencies (relative to base and precious metals price in US
      dollars) leading to lower production costs and higher production in
      certain major base and precious metals producing
  regions.




Our
business is dependent on the price of base and precious metals.  We
have not undertaken hedging transactions in order to protect us from a decline
in the price of base and precious metals.  A decline in the price of
base and precious metals may also decrease our ability to obtain future
financings to fund our planned exploration programs.




Because
of the inherent dangers involved in mineral exploration, there is a risk that we
may incur liability or damages as we conduct our business.




The
search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution and other
hazards against which we cannot insure or against which we may elect not to
insure.  At the present time we have no coverage to insure against
these hazards. The payment of such liabilities may have a material adverse
effect on our financial position.




If
we are unable to re-process minerals from our Clarkdale Slag Project
economically, then our financial condition and our revenues will be adversely
affected.




Until
such time as we have established economic feasibility of the Clarkdale Slag
Project through our feasibility studies and the operation of our one unit module
of production from the slag pile, there is no assurance that we will proceed to
the construction of a proposed processing facility.  If the results
from our pre-feasibility studies and the production results from the operation
of our one unit module are not sufficiently positive for us to proceed with the
construction of our proposed processing facility we will have to scale back or
abandon our proposed operations on the Clarkdale Slag Project.  There
is no assurance that actual recoveries of base and precious metals or other
minerals re-processed from the slag pile will be economically
feasible.  If metal recoveries are less than projected, then our metal
sales will be less than anticipated and may not equal or exceed the cost of
mining and recovery in which case our operating results and financial conditions
will be adversely affected.


47




As
we undertake exploration of the Searchlight Gold Project, we will be subject to
compliance with government regulation that may increase the anticipated cost of
our exploration program.




There are
several governmental regulations that materially restrict mineral
exploration.  We will be subject to the laws of the State of Nevada
and applicable federal laws as we carry out our exploration program on the
Searchlight Gold Project.  We are required to obtain work permits,
post bonds and perform remediation work for any physical disturbance to the land
in order to comply with these laws.  While our planned exploration
program budgets for regulatory compliance, there is a risk that new regulations
could increase our costs of doing business and prevent us from carrying out our
exploration program.




If
we become subject to increased environmental laws and regulation, our operating
expenses may increase.




Our
exploration operations are regulated by both US Federal and Nevada and Arizona
state environmental laws that relate to the protection of air and water quality,
hazardous waste management and mine reclamation.  These regulations
will impose operating costs on us.  If the regulatory environment for
our operations changes in a manner that increases the costs of compliance and
reclamation, then our operating expenses may increase.  This would
result adversely affect our financial condition and operating
results.




We
have no known mineral reserves and if we cannot find any, we will have to cease
operations.




We have
no mineral reserves. Mineral exploration is highly speculative. It involves many
risks and is often non-productive.  Even if we are able to find
mineral reserves on our property our production capability is subject to further
risks including:




·
            Costs
      of bringing the property into production including exploration work,
      preparation of production feasibility studies, and construction of
      production facilities;




·
            Availability
      and costs of financing;




·
            Ongoing
      costs of production; and




·
            Environmental
      compliance regulations and
restraints.




The
marketability of any minerals acquired or discovered may be affected by numerous
factors which are beyond our control and which cannot be accurately predicted,
such as market fluctuations, the lack of milling facilities and processing
equipment near the Searchlight Gold Project, the success of our drilling and
sampling activities on the Clarkdale Slag Project and such other factors as
government regulations, including regulations relating to allowable production,
exporting of minerals, and environmental protection.  If we do not
find a mineral reserve or if we cannot explore the mineral reserve, either
because we do not have the money to do it or because it will not be economically
feasible to do it, we will have to cease operations.




As
we undertake exploration of our mineral claims, we will be subject to compliance
with government regulation that may increase the anticipated cost of our
exploration program.




There are
several governmental regulations that materially restrict mineral
exploration.  We are required to obtain work permits, post bonds and
perform remediation work for any physical disturbance to the land in order to
comply with these laws.  If we enter the production phase, the cost of
complying with permit and regulatory environment laws will be greater because
the impact on the project area is greater.  Permits and regulations
will control all aspects of the production program if the project continues to
that stage.


48




Examples
of regulatory requirements include:




(a)
              Water
      discharge will have to meet drinking water standards;(b)
              Dust
      generation will have to be minimal or otherwise
    re-mediated;(c)
              Dumping
      of material on the surface will have to be re-contoured and re-vegetated
      with natural vegetation;(d)
              An
      assessment of all material to be left on the surface will need to be
      environmentally benign;(e)
              Ground
      water will have to be monitored for any potential
      contaminants;(f)
              The
      socio-economic impact of the project will have to be evaluated and if
      deemed negative, will have to be re-mediated; and(g)
              There
      will have to be an impact report of the work on the local fauna and flora
      including a study of potentially endangered
  species.




There is
a risk that new regulations could increase our costs of doing business and
prevent us from carrying out our exploration program.  We will also
have to sustain the cost of reclamation and environmental remediation for all
exploration work undertaken.  Both reclamation and environmental
remediation refer to putting disturbed ground back as close to its original
state as possible.  Other potential pollution or damage must be
cleaned-up and renewed along standard guidelines outlined in the usual
permits.  Reclamation is the process of bringing the land back to its
natural state after completion of exploration activities. Environmental
remediation refers to the physical activity of taking steps to remediate, or
remedy, any environmental damage caused.  The amount of these costs is
not known at this time as we do not know the extent of the exploration program
that will be undertaken beyond completion of the recommended work
program.  If remediation costs exceed our cash reserves we may be
unable to complete our exploration program and have to abandon our
operations.




We
may conduct further offerings in the future in which case investors’
shareholdings will be diluted.




Since our
inception we have relied on sales of our common stock to fund our
operations.  We may conduct further equity offerings in the future to
finance our current projects or to finance subsequent projects that we decide to
undertake.  If common stock is issued in return for additional funds,
the price per share could be lower than that paid by our current
stockholders.  We anticipate continuing to rely on sales of our common
stock in order to fund our business operations.  If we issue
additional stock, investors’ percentage interest in us will be
lower.  This condition is often referred to as "dilution". The result
of this could reduce the value of investors’ stock.




Because
our stock is a penny stock, stockholders will be more limited in their ability
to sell their stock.




Our
common stock is considered to be a “penny stock” since it does not qualify for
one of the exemptions from the definition of “penny stock” under Section 3a51-1
of the Securities Exchange Act of 1934 (the “Exchange Act”).  Our
common stock is a “penny stock” because it meets one or more of the following
conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is
not traded on a “recognized” national exchange; (iii) it is not quoted on the
Nasdaq Stock Market, or even if so, has a price less than $5.00 per share; or
(iv) is issued by a company that has been in business less than three years with
net tangible assets less than $5 million.


49




The
principal result or effect of being designated a “penny stock” is that
securities broker-dealers participating in sales of our common stock will be
subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9
promulgated under the Exchange Act.  For example, Rule 15g-2 requires
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document at least two business days before
effecting any transaction in a penny stock for the investor's
account.  Moreover, Rule 15g-9 requires broker-dealers in penny stocks
to approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor.  This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment
objectives.  Compliance with these requirements may make it more
difficult and time consuming for holders of our common stock to resell their
shares to third parties or to otherwise dispose of them in the market or
otherwise.




ITEM 3.
            CONTROLS
      AND PROCEDURES.




NOTE: This Item 3. Controls and
Procedures has been updated to reflect the restatement of our 2005, 2006 and
2007 financial statements, as discussed above in the Introductory Explanatory
Note and in Item 2 under the section heading
“Restatements.”
 
 Evaluation
of Disclosure Controls and Procedures
 
  
  
  
 Based on the reevaluation, our
management has concluded that management’s failure to consult an outside expert
regarding the initial accounting for certain complex
transactions  represented material weaknesses in our disclosure
controls and procedures as of September 30, 2007.  Such complex
transactions included:
 
 ·
              capital asset acquisitions;
      and
  ·
              accounting for income
      taxes.
  The
internal control deficiencies associated with capital asset acquisitions related
to the acquisition accounting method used to record the share issuances made to
acquire the Searchlight Claims, the issuance of warrants in connection with the
assignment of the option for the Clarkdale Slag Project, and the 2007
acquisition of Transylvania, and the internal control deficiencies associated
with accounting for income taxes related to the purchase accounting treatment of
the share issuances made to acquire the Searchlight Claims, the issuance of
warrants in connection with the assignment of the option for the Clarkdale Slag
Project, the acquisition of the Clarkdale Slag Project, and the resultant
computation of future deferred income tax liability assumed.
 
   50
 
  
  
 ·
              completed
      a review and updated risk assessment of all of our financial controls and
      procedures;
  ·
              provided
      additional training of financial
staff;
  ·
              purchased
      additional research materials and
services;
  ·
              shortened
      the financial closing process to allow more time for a thorough
      review;
  ·
              reviewed
      and instituted controls for each weakness;
  and
  ·
              adopted
      a policy to consult outside experts on complex accounting
      issues.


51




PART
II - OTHER INFORMATION




ITEM 1.
            LEGAL
      PROCEEDINGS.




None.




ITEM 2.
            UNREGISTERED SALES OF EQUITY
      SECURITIES AND USE OF
PROCEEDS.




On
August 9, 2007, we issued 400,000 shares of common stock from the exercise of
warrants, at an exercise price of $0.65 per share, resulting in cash proceeds of
$260,000.  These securities were issued pursuant to Section 4(2) of
the Securities Act.




On
September 30, 2007, we issued 6,314 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 a price
of $2.85 per share, being the closing price of our common stock on September 28,
2007, the last trading day of the third quarter of 2007.  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.




None.




ITEM 5.
            OTHER
      INFORMATION.




Not
applicable.





ITEM 6.
            EXHIBITS.




The
following exhibits are either provided with this Quarterly Report on Form 10-Q/A
or are incorporated herein by reference:




ExhibitNumber
                        
                        Description of
    Exhibits31.1
                        
                        Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2
                        
                        Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1
                        
                        Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.




52




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.Date:
                      July 6, 2009
                      
                      By:
                      /s/ Ian R. McNeilIAN R.
      McNEILPresident
      and Chief Executive Officer(Principal
      Executive Officer )Date:
                      July 6, 2009
                      
                      By:
                      /s/ Melvin L.
      WilliamsMELVIN L.
      WILLIAMSChief
      Financial Officer(Principal
      Financial Officer
)




53