UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549




**Form
      10-Q**




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


For
      the
      quarterly period ended March 31, 2008




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


For
      the
      transition period from _______ to _______.




Commission
      file number 000- 53187




**SEARCHLIGHT
      MINERALS CORP.**




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




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




**(702)
      939-5247**


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




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.




Yes
x No o




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




Large
                  accelerated filero
              Accelerated
                  filerxNon-accelerated
                  filero
              Smaller
                  reporting companyo


(Do
      not
      check if a smaller reporting company)




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




Yes
o  No
x





As
      of May
      9, 2008, the registrant had 104,216,641 outstanding shares of common
      stock.







TABLE
      OF
      CONTENTS




PART
                  I - FINANCIAL INFORMATION
              3Item
                  1. Financial Statements
              3Item
                  2. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operations
              30Item
                  3. Quantitative and Qualitative Disclosures About Market
                  Risk
              45Item
                  4. Controls and Procedures
              45PART
                  II - OTHER INFORMATION
              45Item
                  1. Legal Proceedings
              45Item
                  1A. Risk Factors
              46Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              46Item
                  3. Defaults Upon Senior Securities
              46Item
                  4. Submission of Matters to a Vote of Security Holders
              46Item
                  5. Other Information
              46Item
                  6. Exhibits
              47SIGNATURES
              48




2




**PART
      I - FINANCIAL INFORMATION**




**Item
      1. Financial Statements**




SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
        BALANCE SHEETS
 (UNAUDITED)
 
 March 31, 2008
              
              December 31, 2007(restated)ASSETSCurrent
                  assetsCash
              
              $
              17,184,152
              
              $
              12,007,344Prepaid
                  expenses
              
              
              173,628
              
              
              192,789Total
                  current assets
              
              
              17,357,780
              
              
              12,200,133Property
                  and equipment, net
              
              
              6,574,027
              
              
              5,064,460Mineral
                  properties
              
              
              12,702,258
              
              
              12,702,258Slag
                  project
              
              
              120,766,877
              
              
              120,766,877Land
                  - smelter site and slag pile
              
              
              5,916,150
              
              
              5,916,150Land
              
              
              3,300,000
              
              
              3,300,000Reclamation
                  bond and deposit
              
              
              183,000
              
              
              183,000Total
                  non-current assets
              
              
              149,442,312
              
              
              147,932,745Total
                  assets
              
              $
              166,800,092
              
              $
              160,132,878LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilitiesAccounts
                  payable
              
              $
              774,954
              
              $
              849,910Accounts
                  payable - related party
              
              
              57,382
              
              
              41,974VRIC
                  payable, current portion
              
              
              183,451
              
              
              179,830Capital
                  lease payable, current portion
              
              
              23,239
              
              
              22,983Total
                  current liabilities
              
              
              1,039,026
              
              
              1,094,697Long-term
                  liabilitiesVRIC
                  payable, net of current portion
              
              
              2,106,287
              
              
              2,153,530Capital
                  lease payable, net of current portion
              
              
              58,411
              
              
              64,317Deferred
                  tax liability
              
              
              50,256,029
              
              
              50,619,658Total
                  long-term liabilities
              
              
              52,420,727
              
              
              52,837,505Total
                  liabilities
              
              
              53,459,753
              
              
              53,932,202Stockholders'
                  equityCommon
                  stock, $0.001 par value; 400,000,000 shares authorized, 104,116,641
                  and
                  96,865,391 shares, respectively, issued and outstanding
              
              
              104,117
              
              
              96,865Additional
                  paid-in capital
              
              
              123,996,014
              
              
              116,223,907Common
                  stock subscribed
              
              
              61,000
              
              
              108,000Accumulated
                  deficit during exploration stage
              
              
              (10,820,792
              )
              
              (10,228,096
              )Total
                  stockholders' equity
              
              
              113,340,339
              
              
              106,200,676Total
                  liabilities and stockholders' equity
              
              $
              166,800,092
              
              $
              160,132,878
 
 See
        Accompanying Notes to these Consolidated Financial Statements
 
 3
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
        STATEMENTS OF OPERATIONS
 (UNAUDITED)
  For the period from
                January 14, 2000
                (Date of Inception)For the three months ended
              
              ThroughMarch 31, 2008
              
              March 31, 2007
              
              March 31, 2008(restated)
              
              (restated)Revenue
                  - rents
              
              $
              9,300
              
              $
              7,620
              
              $
              45,710Operating
                  expensesMineral
                  exploration and evaluation expenses
              
              
              114,518
              
              
              295,308
              
              
              4,176,228Mineral
                  exploration and evaluation expenses - related party
              
              
              90,000
              
              
              90,000
              
              
              945,000Administrative
                  - Clarkdale site
              
              
              235,140
              
              
              -
              
              
              748,899General
                  and administrative
              
              
              591,851
              
              
              333,450
              
              
              4,078,992General
                  and administrative - related party
              
              
              16,403
              
              
              -
              
              
              41,664Depreciation
              
              
              15,123
              
              
              2,789
              
              
              60,133Interest
                  expense
              
              
              950
              
              
              -
              
              
              3,012Total
                  operating expenses
              
              
              1,063,985
              
              
              721,547
              
              
              10,053,928Loss
                  from operations
              
              
              (1,054,685
              )
              
              (713,927
              )
              
              (10,008,218
              )Other
                  income (expense):Loss
                  on equipment disposition
              
              
              -
              
              
              -
              
              
              (4,526
              )Interest
                  and dividend income
              
              
              98,360
              
              
              33,898
              
              
              489,723Total
                  other income (expense)
              
              
              98,360
              
              
              33,898
              
              
              485,197Loss
                  before income taxes
              
              
              (956,325
              )
              
              (680,029
              )
              
              (9,523,021
              )Income
                  tax benefit
              
              
              363,629
              
              
              270,094
              
              
              2,966,105Loss
                  from continuing operations
              
              
              (592,696
              )
              
              (409,935
              )
              
              (6,556,916
              )Discontinued
                  operations:Loss
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              (4,263,876
              )Net
                  loss
              
              $
              (592,696
              )
              $
              (409,935
              )
              $
              (10,820,792
              )Loss
                  per common share - basic and dilutedLoss
                  from continuing operations
              
              $
              (0.01
              )
              $
              (0.01
              )Loss
                  from discontinued operations
              
              
              -
              
              
              -Net
                  loss
              
              $
              (0.01
              )
              $
              (0.01
              )Weighted
                  average common shares outstanding -Basic
                  and diluted
              
              
              101,430,625
              
              
              77,717,438
 See
          Accompanying Notes to these Consolidated Financial Statements
  4
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
        STATEMENT OF STOCKHOLDERS' EQUITY
 (UNAUDITED)
  Common
              
              Accumulated
                Deficit During
              
              TotalCommon
                  Stock
              
              Additional
              
              Stock
              
              Exploration
              
              Stockholders'Shares
              
              Amount
              
              Paid-in Capital
              
              Subscribed
              
              Stage
              
              EquityBalance,
                  December 31, 2007 (restated)
              
              
              96,865,391
              
              $
              96,865
              
              $
              116,223,907
              
              $
              108,000
              
              $
              (10,228,096
              )
              $
              106,200,676Issuance
                  of common stock for cash, $0.65 per share from exercise of
                  warrants
              
              
              3,890,000
              
              
              3,890
              
              
              2,524,610
              
              
              (65,000
              )
              
              -
              
              
              2,463,500Issuance
                  of common stock for cash Reg. S - Private Placement, $1.60 per
                  share
              
              
              1,637,500
              
              
              1,638
              
              
              2,618,362
              
              
              -
              
              
              -
              
              
              2,620,000Issuance
                  of common stock for cash Reg. D - Private Placement, $1.60 per
                  share
              
              
              1,643,750
              
              
              1,644
              
              
              2,628,356
              
              
              -
              
              
              -
              
              
              2,630,000Issuance
                  of common stock as commission in connection with foreign
                  offering
              
              
              80,000
              
              
              80
              
              
              (80
              )
              
              -
              
              
              -
              
              
              -Amortization
                  of stock options issued to officer over vesting period
              
              
              -
              
              
              -
              
              
              859
              
              
              -
              
              
              -
              
              
              859Common
                  stock subscribed for directors' compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              18,000
              
              
              -
              
              
              18,000Net
                  loss March 31, 2008
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (592,696
              )
              
              (592,696
              )Balance,
                  March 31, 2008
              
              
              104,116,641
              
              $
              104,117
              
              $
              123,996,014
              
              $
              61,000
              
              $
              (10,820,792
              )
              $
              113,340,339
  See
        Accompanying Notes to these Consolidated Financial Statements
  5
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
        STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 
 Period from
                January 14, 2000
                (Date of inception)For the three months ended
              
              ThroughMarch 31, 2008
              
              March 31, 2007
              
              March 31, 2008(restated)
              
              (restated)CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (592,696
              )
              $
              (409,935
              )
              $
              (10,820,792
              )Deduct:
                  Loss from discontinued operations
              
              
              -
              
              
              -
              
              
              4,263,876Loss
                  from continuing operations
              
              
              (592,696
              )
              
              (409,935
              )
              
              (6,556,916
              )Adjustments
                  to reconcile loss from operating to net cash used in operating
                  activities:Depreciation
              
              
              15,123
              
              
              2,789
              
              
              60,133Stock
                  based expenses
              
              
              18,859
              
              
              129,293
              
              
              977,021Loss
                  on disposition of fixed assets
              
              
              -
              
              
              -
              
              
              5,875Amortization
                  of prepaid expense
              
              
              43,222
              
              
              -
              
              
              213,635Changes
                  in operating assets and liabilities:Other
                  current assets
              
              
              (24,062
              )
              
              -
              
              
              (387,264
              )Other
                  assets
              
              
              -
              
              
              (13
              )
              
              (183,000
              )Accounts
                  payable and accrued liabilities
              
              
              (144,275
              )
              
              (242,713
              )
              
              22,051Deferred
                  income taxes
              
              
              (363,629
              )
              
              (270,094
              )
              
              (2,966,105
              )Net
                  cash used in operating activities
              
              
              (1,047,458
              )
              
              (790,673
              )
              
              (8,814,571
              )Net
                  cash used in operating activities from discontinued
                  operations
              
              
              -
              
              
              -
              
              
              (3,052,032
              )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
              
              
              -
              
              
              (82,158
              )
              
              (130,105
              )Capitalized
                  interest
              
              
              (46,378
              )
              
              (17,942
              )
              
              (208,551
              )Purchase
                  of property and equipment
              
              
              (1,393,584
              )
              
              (5,746
              )
              
              (5,590,966
              )Net
                  cash used in investing activities
              
              
              (1,439,962
              )
              
              (10,005,846
              )
              
              (16,806,756
              )Net
                  cash used in investing activities from discontinued
                  operations
              
              
              -
              
              
              -
              
              
              (452,618
              )CASH
                  FLOW FROM FINANCING ACTIVITIESProceeds
                  from stock issuance
              
              
              7,713,500
              
              
              21,453,817
              
              
              43,489,501Stock
                  issuance costs
              
              
              -
              
              
              (611,230
              )
              
              (677,570
              )Principal
                  payments on capital lease payable
              
              
              (5,650
              )
              
              -
              
              
              (34,589
              )Principal
                  payments on deferred purchase liability
              
              
              (43,622
              )
              
              (42,058
              )
              
              (211,449
              )Proceeds
                  from subscribed stock
              
              
              -
              
              
              -
              
              
              360,000Net
                  cash provided by financing activities
              
              
              7,664,228
              
              
              20,800,529
              
              
              42,925,893Net
                  cash provided by financing activities from discontinued
                  operations
              
              
              -
              
              
              -
              
              
              3,384,236NET
                  CHANGE IN CASH
              
              
              5,176,808
              
              
              10,004,010
              
              
              17,184,152CASH
                  AT BEGINNING OF PERIOD
              
              
              12,007,344
              
              
              3,684,248
              
              
              -CASH
                  AT END OF PERIOD
              
              $
              17,184,152
              
              $
              13,688,258
              
              $
              17,184,152
 See
          Accompanying Notes to these Consolidated Financial
          Statements
  6
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
        STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Period from
                January 14, 2000
                (Date of inception)For the three months ended
              
              ThroughMarch 31, 2008
              
              March 31, 2007
              
              March 31, 2008(restated)
              
              (restated)CONSOLIDATED STATEMENTS
                  OF CASH FLOWS (continued)SUPPLEMENTAL
                  INFORMATIONInterest
                  Paid, net of capitalized amounts
              
              $
              950
              
              $
              -
              
              $
              53,763Income
                  Taxes Paid
              
              $
              -
              
              $
              -
              
              $
              -Non-cash
                  investing and financing activities:Capital
                  equipment purchased through financing
              
              $
              84,727
              
              $
              -
              
              $
              529,418Assets
                  acquired for common stock issued for the acquisition
              
              $
              -
              
              $
              66,879,375
              
              $
              66,879,375Assets
                  acquired for common stock issued for mineral properties
              
              $
              -
              
              $
              -
              
              $
              8,038,000Assets
                  acquired for liabilities incurred in the acquisition
              
              $
              -
              
              $
              2,501,187
              
              $
              2,501,187Net
                  deferred tax liability assumed
              
              $
              -
              
              $
              48,076,734
              
              $
              53,222,134Merger
                  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 option agreement related
                  to slag
                  project
              
              $
              -
              
              $
              -
              
              $
              1,310,204Stock
                  options for common stock issued in satisfaction of debt
              
              $
              -
              
              $
              -
              
              $
              1,200,000Capitalization
                  of related party liability to equity
              
              $
              -
              
              $
              -
              
              $
              742,848Stock
                  issued for conversion of accounts payable, 100,000 shares at
                  $0.72
              
              $
              -
              
              $
              -
              
              $
              72,000Stock
                  issued for compensation 50,000 shares at $2.06
              
              $
              -
              
              $
              -
              
              $
              103,000
  See
        Accompanying Notes to these Consolidated Financial Statements
  7
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  1.
              DESCRIPTION
                  OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
                  POLICIES
 
 Basis
        of presentation - The
        accompanying unaudited financial statements have been prepared in accordance
        with Securities and Exchange Commission requirements for interim financial
        statements. Therefore, they do not include all of the information and footnotes
        required by accounting principles generally accepted in the United States
        for
        complete financial statements. The financial statements should be read in
        conjunction with the Form 10-KSB for the year ended December 31, 2007 of
        Searchlight Minerals Corp. (the “Company).
 
 The
        interim financial statements present the balance sheet, statements of operations
        and cash flows of the Company. The financial statements have been prepared
        in
        accordance with accounting principles generally accepted in the United States.
 
 These
        financial statements have been prepared by the Company without audit, and
        include all adjustments (which consist solely of normal recurring adjustments,
        except as described in Note 15) which, in the opinion of management, are
        necessary for a fair presentation of financial position and results of
        operations. Certain information and footnote disclosures normally included
        in
        financial statements prepared in accordance with generally accepted accounting
        principles have been condensed or omitted, although the Company believes
        that
        the disclosures are adequate to make the information presented not misleading.
        It is suggested that these financial statements be read in conjunction with
        the
        Company’s audited financial statements and the notes thereto for the year ended
        December 31, 2007.
 
 Description
        of business -
        Searchlight Minerals Corp. is an exploration stage company and the Company
        has
        not yet realized any revenues from its planned operations. The Company is
        primarily focused on the exploration, acquisition and development of mining
        and
        mineral properties. Upon the 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 November 26,
        2003, the Company changed its name from “Regma Bio Technologies Limited” to
“Phage Genomics, Inc.”
  In
        February, 2005, the Company announced its reorganization from a biotechnology
        research and development company to a company focused on the development
        and
        acquisition of mineral properties. In connection with its reorganization
        the
        Company entered into mineral option agreements to acquire an interest in
        the
        Searchlight Claims. The Company has consequently been considered an exploration
        stage enterprise. Also in connection with its corporate restructuring, its
        board
        of directors approved a change in its name from “Phage Genomics, Inc.” (Phage)
        to "Searchlight Minerals Corp.” effective June 23, 2005 .
  Principles
        of consolidation - The
        consolidated financial statements include the accounts of the Company and
        its
        wholly-owned subsidiaries, Clarkdale Minerals, LLC (CML) and Clarkdale Metals,
        Corp. (CMC). Significant intercompany accounts and transactions have been
        eliminated.
  8
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  1.
              DESCRIPTION
                  OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Going
        concern - The
        Company incurred cumulative net losses of $10,820,792 as of March 31, 2008
        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.
 
 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. Upon
        completion of a bankable feasibility study, the claims will be amortized
        using
        the unit-of-production method over the life of the claim. If the Company
        does
        not continue with exploration after the completion of the feasibility study,
        the
        claims will be expensed at that time.
 
 Capitalized
        interest cost - The
        Company capitalizes interest cost related to acquisition, development and
        construction of property and equipment which is designed as integral parts
        of
        the manufacturing process of this project. The capitalized interest is recorded
        as part of the asset it relates to and is amortized over the asset’s useful life
        once production commences. Interest cost capitalized was $43,622 and $42,058
        for
        the periods ended March 31, 2008 and 2007, respectively.
 
 Slag
        project acquisition - (See Note 3 and 10)
 
 Slag
        project has been restated for deferred future income tax liability assumed
        as
        part of the merger transaction with Transylvania International, Inc. (TI)
        and
        acquisition accounting for certain payment terms relative to the acquisition
        agreement. The restatement resulted from post-acquisition continuing analysis
        of
        the project deliverables, which recasts a portion of the consideration elements
        as contingent. The preliminary reported slag project acquisition cost has
        been
        reduced by $9,749,491 to $130,292,777. Related deferred tax liability was
        reduced by $4,121,755 to $48,076,734.
 
 The
        resulting estimated future federal and state income tax liability associated
        with the temporary difference between the acquisition consideration of
        $82,216,043 and the tax basis of $1,856,575 as computed in accordance with
        EITF
        98-11 and SFAS 109, resulted in an increase to the total purchase price of
        $48,076,734 which was applied to the slag project asset in the absence of
        there
        being a goodwill component associated with the transaction in accordance
        with
        EITF 98-11 and SFAS 109.
 
 Exploration
        costs -
        Mineral exploration costs are expensed as incurred.
 
 Expenses
        of offering - The
        Company accounts for specific incremental costs directly to a proposed or
        actual
        offering of securities as a direct charge against the gross proceeds of the
        offering.
  9
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION
                  OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Fixed
        assets - Fixed
        assets are 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 life of fixed assets or
        whether the remaining balance of fixed assets 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
        fixed assets in measuring their recoverability.
  Impairment
        of long-lived assets - It is
        the Company’s policy to capitalize mineral rights and mineral properties
        acquired as tangible assets in accordance with EITF 04-02. The Company has
        two
        mineral properties that are in exploration stage and has considered the Value
        Beyond Proven and Probable (VPBB) in accordance with EITF 04-03 “Mining Assets:
        Impairment and Business Combinations” in evaluating the carrying value of these
        mineral assets. The fair value of a mining asset generally includes both
        VBPP
        and an estimate of the future market price of the minerals. The Company has
        continued to follow its plan of exploration for each of the properties since
        the
        dates of their acquisition.
  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. For evaluation of possible impairment, the Company considers
        EITF
        04-03 . The assets are also 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 March 31, 2008 exploration progress on these properties is on target with
        our
        exploration and evaluation plan and no events or circumstances have happened
        to
        indicate the related carrying values of the properties may not be
        recoverable.
 
 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.
 
 Discontinued
        operations - On
        February 10, 2005, the Company announced that it was reorganizing itself
        and
        changing its focus from biotech 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. The consolidated unaudited statement of operations
        for the period from January 14, 2000 (date of inception) through March 31,
        2008
        contains net losses prior to January 1, 2005 of $4,263,876 from discontinued
        operations.
  10
 
 SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION
                  OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Asset
        retirement obligation - The
        Company has adopted Statement of Financial Accounting Standards No. 143 (“SFAS
        143”), “Accounting for Asset Retirement Obligations”, which requires that an
        asset retirement obligation (“ARO”) associated with the retirement of a tangible
        long-lived asset be recognized as a liability in the period in which it is
        incurred and becomes determinable, with an offsetting increase in the carrying
        amount of the associated asset. The cost of the tangible asset, including
        the
        initially recognized ARO, is depleted, such that the cost of the ARO is
        recognized over the useful life of the asset. The ARO is recorded at fair
        value,
        and accretion expense is recognized over time as the discounted liability
        is
        accreted to its expected settlement value. The fair value of the ARO is measured
        using expected future cash flow, discounted at the Company’s credit-adjusted
        risk-free interest rate. To date, no significant asset retirement obligation
        exists due to the early stage of exploration. Accordingly, no liability has
        been
        recorded.
 
 Fair
        value of financial instruments -
        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 during the period have been charged
        to
        operations.
  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 March
        31,
        2008 and December 31, 2007 that were not included in the computation of diluted
        EPS because the effect would be antidilutive were 24,430,625 and 25,352,207,
        respectively.
 
 Income
        taxes - The
        Company accounts for its income taxes in accordance with Statement of Financial
        Accounting Standards No. 109, 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.
  11
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION
                  OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 On
        July
        13, 2006, the 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 EITF
        98-3,
        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 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 SFAS 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. SFAS
        No.
        123R was to be effective for interim or annual reporting periods beginning
        on or
        after June 15, 2005, but in April 2005 the SEC issued a rule that will permit
        most registrants to implement SFAS No. 123R at the beginning of their next
        fiscal year, instead of the next reporting period as required by SFAS No.
        123R.
        The pro forma disclosures previously permitted under SFAS No. 123 no longer
        will
        be an alternative to financial statement recognition. Under SFAS No. 123R,
        the
        Company must determine the appropriate fair value model to be used for valuing
        share-based payments, the amortization method for compensation cost and the
        transition method to be used at date of adoption. The transition methods
        include
        prospective and retroactive adoption option. Under the retroactive option,
        prior
        periods may be restated either as of the beginning of the year of adoption
        or
        for all periods presented. The prospective method requires that compensation
        expense be recorded for all unvested stock options and restricted stock at
        the
        beginning of the first quarter of adoption of SFAS No. 123R, while the
        retroactive methods would record compensation expense for all unvested stock
        options and restricted stock beginning with the first period restated. The
        Company adopted the requirements of SFAS No. 123R for the fiscal year beginning
        after December 31, 2004.
 
 New
        accounting pronouncements - On
        March 19, 2008 the FASB issued SFAS No. 161, “Disclosures About Derivative
        Instruments and Hedging Activities.” This statement is intended to improve
        financial reporting about derivative instruments and hedging activities by
        requiring enhanced disclosures. This statement is effective for financial
        statements issued for fiscal years and interim periods beginning after November
        15, 2008, with early application encouraged. The Company is currently evaluating
        the impact that SFAS 161 will have on the consolidated financial
        statements.
  12
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION
                  OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 In
        December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,”
which amends SFAS No. 141, and provides revised guidance for recognizing
        and measuring identifiable assets and goodwill acquired, liabilities assumed,
        and any noncontrolling interest in the acquiree. It also provides disclosure
        requirements to enable users of the financial statements to evaluate the
        nature
        and financial effects of the business combination. SFAS No. 141(R) is
        effective for the Company’s fiscal year beginning January 1, 2009 and is to
        be applied prospectively. The Company is currently evaluating the potential
        impact of adopting this statement on the Company’s consolidated financial
        position, results of operations or cash flows.
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
        in Consolidated Financial Statements- an amendment of ARB No. 51” which
        establishes accounting and reporting standards pertaining to ownership interests
        in subsidiaries held by parties other than the parent, the amount of net
        income
        attributable to the parent and to the noncontrolling interest, changes in
        a
        parent’s ownership interest, and the valuation of any retained noncontrolling
        equity investment when a subsidiary is deconsolidated. SFAS No. 160
        also establishes disclosure requirements that clearly identify and distinguish
        between the interests of the parent and the interests of the noncontrolling
        owners. SFAS No. 160 is effective for the Company’s fiscal year
        beginning January 1, 2009. The Company is currently evaluating the
        potential impact of adopting this statement on the Company’s consolidated
        financial position, results of operations or cash flows.
 
 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. The Company is currently evaluating the impact that Proposed
        FSP may have on the consolidated financial statements of the
        Company.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
        for Financial Assets and Financial Liabilities — Including an amendment of
        FASB Statement No. 115” (“SFAS 159”), which permits entities to choose
        to measure many financial instruments and certain other items at fair value
        that
        are not currently required to be measured at fair value. The objective is
        to
        improve financial reporting by providing entities with the opportunity to
        mitigate volatility in reported earnings caused by measuring related assets
        and
        liabilities differently without having to apply complex hedge accounting
        provisions. SFAS 159 also establishes presentation and disclosure
        requirements designed to facilitate comparisons between entities that choose
        different measurement attributes for similar types of assets and liabilities.
        SFAS 159 does not affect any existing accounting literature that requires
        certain assets and liabilities to be carried at fair value, nor eliminate
        disclosure requirements included in other accounting standards, including
        requirements for disclosures about fair value measurements included in
        SFAS 157, “Fair Value Measurements,” and SFAS 107, “Disclosures about
        Fair Value of Financial Instruments.” SFAS 159 is effective for our fiscal
        year beginning after November 15, 2007. We are currently assessing the
        impact that the adoption of SFAS 159 will have on our consolidated
        financial statements.
  13
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION
                  OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Correction
        of an error
 
 Searchlight
        Mining Claims - (See Notes 4 and 15) - The Company restated the Searchlight
        Mining Claims as of December 31, 2007. The March 31, 2008 restatement of
        the Searchlight
        Claims mineral properties reflects the revised deferred future income tax
        liability assumed as part of the subsequent contingent issuance of securities,
        the value of which has been added to the acquisition costs of the underlying
        mineral properties. Pursuant
        to EITF 98-11, “Accounting for Acquired Temporary Differences in Certain
        Purchase Transactions That Are Not Accounted for as Business Combinations”, the
        Company values the shares issued to obtain mineral properties at their market
        price at the date of the issue.
 
 Clarkdale
        Slag Project - (See Notes 3, 6 and 15) - During the second quarter of 2008,
        the
        Company determined that acquisition accounting methods used in prior periods
        to
        record the purchase accounting for the Slag Project were not appropriate
        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 a decrease
        in
        recorded purchase consideration of $7,546,217, offset by 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 decreased by $4,121,755.
        The adjustment also included capitalization of imputed interest of $162,173
        to
        property and equipment as of December 31, 2007. The original terms of the
        underlying purchase agreement were unchanged and this adjustment had no effect
        on the agreement.
 
 2.
                  PROPERTY
                      AND EQUIPMENT
 
 Property
        and equipment consisted of the following as of March 31, 2008 and December
        31,
        2007:
 
 March 31,
                2008
              
              December 31,
                2007Furniture
                  and fixtures
              
              $
              34,694
              
              $
              34,694Lab
                  equipment
              
              
              2,804
              
              
              2,804Computers
                  and equipment
              
              
              34,260
              
              
              32,594Income
                  property
              
              
              309,750
              
              
              309,750Construction
                  in progress
              
              
              5,856,060
              
              
              4,408,796Capitalized
                  interest
              
              
              208,550
              
              
              162,173Vehicles
              
              
              38,175
              
              
              38,175Site
                  equipment
              
              
              148,586
              
              
              119,2036,632,879
              
              
              5,108,189Less
                  accumulated depreciation
              
              
              58,852
              
              
              43,729$
              6,574,027
              
              $
              5,064,460
 
 Depreciation
        expense was $15,123 and $2,789 for the three months ended March 31, 2008
        and
        2007, respectively.
  14
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 3.
              CLARKDALE
                  SLAG PROJECT
  On
        February 15, 2007, the Company completed a merger with TI which provided
        the
        Company with 100% ownership of the Clarkdale Slag Project in Clarkdale Arizona,
        through its wholly owned subsidiary CML. This acquisition superseded the
        joint
        venture option agreement to acquire a 50% ownership interest as a joint venture
        partner pursuant to Nanominerals Corp. (“NMC”) interest in a joint venture
        agreement (“JV Agreement”) dated May 20, 2005 between NMC and Verde River Iron
        Company, LLC (“VRIC”).
  The
        following table reflects the recorded purchase consideration for the Slag
        Project:
 
 As Reported
              
              Adjustments
              
              As RestatedPurchase
                  price:Cash
                  payments
              
              $
              10,100,000
              
              $
              -
              
              $
              10,100,000Joint
                  venture option acquired in 2005 for cash
              
              
              690,000
              
              
              -
              
              
              690,000Warrants
                  issued for joint venture option
              
              
              -
              
              
              1,918,481
              
              
              1,918,481Common
                  stock issued
              
              
              66,879,375
              
              
              -
              
              
              66,879,375Monthly
                  payments, current portion
              
              
              395,001
              
              
              (227,174
              )
              
              167,827Monthly
                  payments, net of current portion
              
              
              3,252,403
              
              
              (919,043
              )
              
              2,333,360Due
                  to VRIC
              
              
              6,400,000
              
              
              (6,400,000
              )
              
              -Acquisition
                  costs
              
              
              127,000
              
              
              -
              
              
              127,000Total
                  purchase price
              
              
              87,843,779
              
              
              (5,627,736
              )
              
              82,216,043Net
                  deferred income tax liability assumed - slag project
              
              
              52,198,489
              
              
              (4,121,755
              )
              
              48,076,734$
              140,042,268
              
              $
              (9,749,491
              )
              $
              130,292,777
 
 In
        accordance with EITF 98-11 the purchase price of $130 million was allocated
        to
        the assets acquired and liabilities assumed, based on their respective fair
        values at the date of acquisition. The purchase price allocated to the real
        properties was based on fair market values determined using an independent
        real
        estate appraisal firm and the fair value of the remaining assets acquired
        and
        liabilities assumed were based on management’s best estimates taking into
        account all available information at the time.
  The
        following table reflects the components of the Slag Project :
  Allocation
                  of acquisition cost:
              
              As Reported
              
              Adjustments
              
              As RestatedSlag
                  project (including net deferred tax liability assumed of
                  $48,076,734)
              
              $
              130,516,368
              
              $
              (9,749,491
              )
              $
              120,766,877Land
                  - slag pile site
              
              
              5,916,150
              
              
              -
              
              
              5,916,150Land
              
              
              3,300,000
              
              
              -
              
              
              3,300,000Income
                  property and improvements
              
              
              309,750
              
              
              -
              
              
              309,750Net
                  assets acquired
              
              $
              140,042,268
              
              $
              (9,749,491
              )
              $
              130,292,777
  15
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  3.
              CLARKDALE
                  SLAG PROJECT (continued)
  In
        addition to the cash and equity consideration paid and issued upon closing,
        the
        acquisition agreement contains the following payment terms and
        conditions:
  a)
              The
                  Company agreed to pay VRIC $30,000 per month until the earlier
                  of: (i) the
                  date that is 90 days after receipt of a bankable feasibility study
                  by the
                  Company (the “Project Funding Date”), or (ii) the tenth anniversary of the
                  date of the execution of the letter agreement. The company accounted
                  for
                  the monthly payment stream using an imputed interest rate of 8%,
                  and
                  recorded a discounted net present value of
                  $2,501,187;
  The
        acquisition agreement also contains payment terms which are based on Project
        Funding Date as defined in the agreement.
  b)
              The
                  Company has agreed to pay VRIC $6,400,000 on the Project Funding
                  Date;
  c)
              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,
  d)
              The
                  Company has agreed to pay VRIC an additional amount of $3,500,000
                  from the
                  net cash flow of the Clarkdale Slag Project.
  In
        accordance with SFAS 141 and Staff Views of the SEC, the Company has accounted
        for the payments based on the Project Funding Date and the payments based
        on
        future cash flow as contingent consideration. Upon meeting the contingency
        requirements, the purchase price of the Clarkdale Slag Project with be adjusted
        accordingly at that time.
  The
        Company believes the acquisition of the Clarkdale Slag Project was beneficial
        because it provides for 100% ownership of the properties and fosters greater
        opportunity to finance and further develop the project.
  This
        merger was treated as a statutory merger for tax purposes whereby, CML was
        the
        surviving merger entity.
  16
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 4.
              MINERAL
                  PROPERTIES - MINING CLAIMS
 
 As
        of
        March 31, 2008, mining claims totaling $12,702,258 consist of twenty mining
        claims located near Searchlight, Nevada. 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 hold 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 Emerging
        Issues Task Force abstract 04-02. Upon completion of a bankable feasibility
        study, the claims will be amortized using the unit-of-production method over
        the
        life of the claim. If the Company does not continue with exploration after
        the
        completion of the feasibility study, the claims will be expensed at that
        time.
 
 The
        following table summarizes the impact of the restatement on the historical
        balances of mineral properties reported for periods ended as noted:
 
 As Previously
                Reported
              
              Adjustments
              
              As RestatedCash
                  and shares issuance to obtain mineralproperties,
                  July 7, 2005
              
              $
              577,134
              
              $
              —
              
              $
              577,134Net
                  deferred income tax liability assumed
              
              
              145,090
              
              
              97,218
              
              
              242,308Mineral
                  properties balance, December 31, 2005
              
              
              722,224
              
              
              97,218
              
              
              819,442Share
                  issuance to obtain mineral properties, July 27, 2006
              
              
              3,080,000
              
              
              —
              
              
              3,080,000Net
                  deferred income tax liability assumed
              
              
              446,472
              
              
              1,085,376
              
              
              1,531,848Mineral
                  properties balance, December 31, 2006
              
              
              4,248,696
              
              
              1,182,594
              
              
              5,431,290Share
                  issuance to obtain mineral properties, June 29, 2007
              
              
              4,508,000
              
              
              —
              
              
              4,508,000Net
                  deferred income tax liability assumed
              
              
              2,762,968
              
              
              —
              
              
              2,762,968Total
                  mineral properties balance, December 31, 2007
              
              $
              11,519,664
              
              $
              1,182,594
              
              $
              12,702,258
  17
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  5.
              CAPITAL
                  LEASE PAYABLE
  The
        Company leases equipment under capital lease. Capital lease payable consisted
        of
        the following at March 31, 2008 and December 31, 2007,
 
 Lender
              
              Collateral
              
              Monthly
                Payment
              
              Interest
                Rate
              
              Maturity
              
              March 31,
                2008
              
              December 31,
                2007Caterpillar
                    Financial Services Corporation
              
              
              Equipment
              
              $
              2,200
              
              
              4.45
              %
              
              Jul-11
              
              $
              81,650
              
              $
              87,30081,650
              
              
              87,300Capital
                  lease payable, current portion
              
              
              
              
              
              
              
              
              
              
              (23,239
              )
              
              (22,983
              )Capital
                  lease payable, net of current portion
              
              
              
              
              
              
              
              
              
              $
              58,411
              
              $
              64,317
 
 The
        following table represents future minimum lease payments on capital lease
        payable for each of the twelve month periods ending March 31,
 
 2009
              
              $26,4012010
              
              
              26,4012011
              
              
              26,4012012
              
              
              8,800Thereafter
              
              
              —Total
                  future minimum lease payments
              $
              88,003Imputed
                  interest
              
              (6,353
              )Present
                  value of future minimum lease payments
              $
              81,650
 
 The
        following assets acquired under capital lease and related amortization were
        included in property, plant and equipment at March 31, 2008 and December
        31,
        2007,
 
 March 31,
                2008
              
              December 31,
                2007Site
                  Equipment
              
              $
              116,239
              
              $
              116,239Accumulated
                  amortization
              
              
              (19,373
              )
              
              (16,952
              )$
              96,866
              
              $
              99,287
  18
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 6.
              CLARKDALE
                  ACQUISITION PAYABLE
 
 Pursuant
        to the Clarkdale acquisition agreement the Company agreed to pay VRIC $30,000
        per month until the Project Funding Date.
 
 The
        Company has recorded a liability for this commitment using imputed interest
        based on its best estimate of future cash flows. The effective interest rate
        used was 8.00%, resulting in an initial present value of $2,501,187 and imputed
        interest of $1,128,813.
 
 The
        following table represents future principal payments on VRIC payable for
        the
        years ending March 31,
 
 2009
              
              $183,4512010
              
              198,6772011
              
              215,1672012
              
              233,0262013
              
              252,367Thereafter
              
              1,207,050$2,289,738VRIC
                  payable, current portion
              
              (183,451
              )VRIC
                  payable, net of current portion
              $
              2,106,287
  The
        acquisition agreement also contains payment terms which are based on Project
        Funding Date as defined in the agreement.
  a)
              The
                  Company has agreed to pay VRIC $6,400,000 on the Project Funding
                  Date;
  b)
              The
                  Company has agreed to pay VRIC a minimum annual royalty of $500,000,
                  commencing on the Project Funding Date (the “Advance Royalty”), and an
                  additional royalty consisting of 2.5% of the “net smelter returns” on any
                  and all proceeds of production from the Clarkdale Slag Project
                  (the
                  “Project Royalty”). The Advance Royalty remains payable until the first to
                  occur of: (1) the end of the first calendar year in which the Project
                  Royalty equals or exceeds $500,000; or (2) February 15, 2017. In
                  any
                  calendar year in which the Advance Royalty remains payable, the
                  combined
                  Advance Royalty and Project Royalty will not exceed $500,000 in
                  any
                  calendar year; and,
  c)
              The
                  Company has agreed to pay VRIC an additional amount of $3,500,000
                  from the
                  net cash flow of the Clarkdale Slag Project.
  The
        Advance Royalty shall continue for a period of ten (10) years from the Agreement
        Date or until such time that the NSR Royalty shall exceed $500,000 in any
        calendar year, at which time the Advance Royalty requirement shall end forever.
  19
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 7.
              STOCKHOLDERS’
                  EQUITY
 
 During
        the three months ended March 31, 2008, the Company’s stockholders’ equity
        activity consisted of the following:
 
 a)
              On
                  March 31, 2008, the Company awarded 2,670 shares each to its two
                  non
                  officer directors pursuant to its directors’ compensation policy. The
                  share award was priced at $3.37 and has been recorded as directors’
                  compensation expense of $18,000 and common stock subscribed as
                  of March
                  31, 2008.
 
 b)
              On
                  February 7, 2008, the Company completed a private placement offering
                  for
                  gross proceeds of $2,620,000 to non-US persons in reliance of Regulation
                  S
                  promulgated under the Securities Act of 1933. A total of 1,637,500
                  units
                  were issued at a price of $1.60. Each unit sold consisted of one
                  share of
                  the Company’s common stock and one-half of one share purchase warrants.
                  Each whole share purchase warrant entitles the holder to purchase
                  one
                  additional share of the Company’s common stock at a price of $2.40 per
                  share for a period of two years from the date of issuance. A total
                  of
                  80,000 shares of the Company’s common stock were issued by the Company as
                  commission to agents in connection with the
                  offering.
 
 c)
              On
                  February 7, 2008, the Company completed a private placement offering
                  for
                  gross proceeds of $2,630,000 to US accredited investors pursuant
                  to Rule
                  506 of Regulation D promulgated under the Securities Act of 1933.
                  A total
                  of 1,643,750 units were issued at a price of $1.60. Each unit sold
                  consisted of one share of the Company’s common stock and one-half of one
                  share purchase warrants. Each whole share purchase warrant entitles
                  the
                  holder to purchase one additional share of the Company’s common stock at a
                  price of $2.40 per share for a period of two years from the date
                  of
                  issuance. There was no commission paid or payable to agents in
                  connection
                  with this offering.
 
 d)
              On
                  January 30, 2008, the Company received gross proceeds of $2,528,500
                  by
                  issuing an aggregate of 3,890,000 shares of its common stock on
                  the
                  exercise of warrants issued by the Company in January, 2006. Each
                  warrant
                  entitled the holder to purchase one share of the Company’s common stock at
                  a price of $0.65 per share on or before January 18, 2008. The warrant
                  holders delivered their notices of exercise, and paid the exercise
                  price
                  of $0.65 per share, prior to January 18, 2008 expiration date.
                  A total of
                  3,690,000 shares were issued to US accredited investors as defined
                  in Rule
                  501 of Regulation D promulgated under the Securities Act of 1933.
                  An
                  additional 200,000 shares were issued to one non-US person as defined
                  in
                  Regulation S of the Securities Act.
 
 Warrants
        associated with the 2008 equity issuances do not constitute a registration
        rights payment arrangement.
  20
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 8.
              OPTION
                  PLAN
 
 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.
 
 The
        2007
        Plan provides that the option price for incentive stock options be the fair
        market value of the stock at the date of the grant and the option price for
        non-qualified stock options be no less than 85% of the fair market value
        of the
        stock at the date of the grant. The maximum term of an option shall be
        established for that option by the Board of Directors or, if not so established,
        shall be ten years from the grant date. Options granted under the 2007 Plan
        become exercisable and expire as determined by the Board of Directors.
 
 During
        the three months ended March 31, 2008, the Company did not grant any stock
        options awards, stock awards or any other equity incentive plan
        awards.
  Expenses
        for the three months ended March 31, 2008 and 2007 related to vesting and
        granting of stock options were $859 and $129,293, respectively and are included
        in general and administrative expense.
 
 Stock
        options –
        During the three months ended March 31, 2008, the Company did not grant stock
        options. As of March 31, 2008 stock options outstanding totaled 3,652,946
        with a
        weighted average strike price of $0.93 per share.
 
 The
        following table summarizes the Company’s stock option activity for the three
        months ended March 31, 2008:
 
 Number of
                Shares
              
              Weighted
                Average
                Exercise PriceBalance, December
                  31, 2007
              
              
              3,652,946
              
              $
              0.93Options
                  granted and assumed
              
              
              —
              
              
              —Options
                  expired
              
              
              —
              
              
              —Options
                  cancelled
              
              
              —
              
              
              —Options
                  exercised
              
              
              —
              
              
              —Balance,
                  March 31, 2008
              
              
              3,652,946
              
              $
              0.93
 
 The
        Company estimates the fair value of these options granted by using the Binomial
        Lattice option pricing-model with the following assumptions used for
        grants:
 
 2008
              
              2007Dividend
                  yield
              
              
              —
              
              
              —Expected
                  volatility
              
              
              —
              
              
              76.6
              %Risk-free
                  interest rate
              
              
              —
              
              
              2.88%
                  to 4.68
              %Expected
                  life (years)
              
              
              —
              
              
              2
                  to 5
  21
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 8.
              OPTION
                  PLAN(continued)
 
 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 .
 
 Accordingly,
        the Company valued the services under SFAS No. 123R relating to non-statutory
        stock options upon grant in 2007 for $859 as of March 31, 2008. Based on
        recent
        historical stock activity the equal probability option pricing model was
        applied.
 
 The
        Company estimates expected volatility using 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
        following table summarizes the changes of Company’s stock options subject to
        vesting for the three months ended March 31, 2008:
  Number of
                Shares
              
              Weighted Average
                Grant Date
                Fair ValueUnvested, December
                  31, 2007
              
              
              50,000
              
              $
              0.21Options
                  granted
              
              
              —
              
              
              —Options
                  vested
              
              
              —
              
              
              —Options
                  cancelled
              
              
              —
              
              
              —Unvested,
                  March 31, 2008
              
              
              50,000
              
              $
              0.21
 
 As
        of
        March 31, 2008, there was no material unrecognized compensation cost related
        to
        unvested share-based compensation arrangements granted.
 
 Stock
        options/warrants –
        During the three months ended March 31, 2008 the Company granted stock warrants
        related to common stock issued through a private placement totaling 1,640,625
        with a strike price of $2.40 per share.
 
 The
        value
        of the warrants was allocated against additional paid in capital as part
        of the
        overall offering cost of the private placement.
 
 The
        value
        of the warrants issued in 2005 in connection with the Clarkdale Slag Project
        option were restated (See Note 1) were computed using the binomial lattice
        method were allocated to the acquisition cost of the project and were computed
        based on the following assumptions:
 
 Dividend
                  yield
              
              
              —Expected
                  volatility
              
              
              79
              %Risk-free
                  interest rate
              
              
              3.91
              %Expected
                  life (years)
              
              
              10
  22
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 8.
              OPTION
                  PLAN(continued)
 
 The
        following table summarizes information about options/warrants granted during
        the
        three months ended March 31, 2008:
 
 Number of
                Shares
              
              Weighted
                Average
                Exercise PriceBalance,
                  December 31, 2007
              
              
              24,944,704
              
              $
              1.26Options/warrants
                  granted and assumed
              
              
              1,640,625
              
              
              2.40Options/warrants
                  expired
              
              
              —
              
              
              —Options/warrants
                  cancelled
              
              
              —
              
              
              —Options/warrants
                  exercised
              
              
              (3,890,000
              )
              
              (0.65
              )Balance,
                  March 31, 2008
              
              
              22,695,329
              
              $
              1.45
 
 9.
              PROPERTY
                  RENTAL AGREEMENTS AND LEASES
 
 The
        Company through its subsidiary CML has the following lease and rental agreements
        as lessor:
 
 Clarkdale
        Arizona Central Railroad – Lease
 
 CML
        has a
        month-to month rental agreement with Clarkdale Arizona Central Railroad.
        The
        rental payment is $1,700 per month.
 
 Commercial
        Building – Lease
  CML
        rents
        commercial building space to two tenants. The rental arrangements for both
        tenants stem from expired leases and are month-to-month. Rent under these
        agreements totaled $1,260 per month.
 
 Land
        Lease – Wastewater Effluent
 
 CML
        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.
  23
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 10.
              INCOME
                  TAXES
 
 The
        Company is a Nevada corporation and is subject to federal and Arizona income
        taxes. Nevada does not impose a corporate income tax.
 
 The
        income tax benefit consisted of the following at March 31, 2008 and December
        31,
        2007,
 
 March 31,
                2008
              
              December 31,
                2007Income
                  tax benefit per financial statements
              
              $
              (363,406
              )
              $
              (1,254,833
              )Non-deductible
                  and other
              
              
              661
              
              
              4,807Change
                  in valuation allowance
              
              
              (884
              )
              
              119,193Rate
                  change
              
              
              -
              
              
              50,458Income
                  tax benefit
              
              $
              (363,629
              )
              $
              (1,080,375
              )
 
 Significant
        components of the Company’s net deferred income tax assets and liabilities at
        March 31, 2008 and December 31, 2007 were as follows:
 
 March 31,
                2008
              
              December 31,
                2007**Deferred income
                  tax assets:**Net
                  operating loss carryforward
              
              $
              3,328,275
              
              $
              2,964,646Option
                  compensation
              
              
              325,288
              
              
              324,962Gross
                  deferred income tax asset
              
              
              3,653,563
              
              
              3,289,608Valuation
                  allowance
              
              
              (322,314
              )
              
              (323,198
              )3,331,249
              
              
              2,966,410**Deferred
                  income tax liabilities:**Property,
                  plant & equipment
              
              
              2,974
              
              
              1,764Acquisition
                  related liabilities
              
              
              53,584,304
              
              
              53,584,304Net
                  deferred income tax liability
              
              $
              50,256,029
              
              $
              50,619,658
 
 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 March 31, 2008 and December
        31, 2007.
  24
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 10.
              INCOME
                  TAXES(continued)
 
 Deferred
        income tax liability was recorded on GAAP basis over income tax basis using
        statutory federal and state rates with the corresponding increase in the
        purchase price allocation to the assets acquired.
 
 The
        resulting estimated future federal and state income tax liability associated
        with the temporary difference between the acquisition consideration and the
        tax
        basis as computed in accordance with EITF 98-11 and SFAS 109, is reflected
        as an
        increase to the total purchase price which has been applied to the underlying
        mineral and slag project assets in the absence of there being a goodwill
        component associated with the acquisition transactions in accordance with
        EITF
        98-11 and SFAS 109.
 
 The
        Company had cumulative net operating losses of approximately $8,758,617 and
        $7,801,699 as of March 31, 2008 and December 31, 2007, respectively for federal
        income tax purposes. The Company had cumulative state net operating losses
        of
        approximately $2,369,943 and $1,795,792 as of March 31, 2008 and December
        31,
        2007, respectively. The net operating loss carryforwards will be expiring
        between 2025 and 2029.
 
 As
        of
        January 1, 2007, the Company did not have any unrecognized tax benefits.
        The
        adoption of FIN 48 did not result in any cumulative effect adjustment to
        the
        January 1, 2007 balance of the Company’s accumulated deficit. Upon adoption of
        FIN 48, the Company did not accrue for interest and penalties as there were
        no
        unrecognized tax benefits. If interest and penalties were to be assessed,
        we
        would charge interest to interest expense, and penalties to general and
        administrative expense. It is not anticipated that unrecognized tax benefits
        would significantly increase or decrease within 12 months of the reporting
        date.
 
 The
        Company and its subsidiary file income tax returns in the United States.
        These
        tax returns are subject to examination by taxation authorities provided the
        years remain open under the relevant statues of limitations, which may result
        in
        the payment of income taxes and/or decrease its net operating losses available
        for carryforwards. While the Company believes its tax filings do not include
        uncertain tax positions, the results of potential examinations or the effect
        of
        changes in tax law cannot be ascertained at this time. The Company currently
        has
        no tax years under examination.
  25
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 11.
              COMMITMENTS
                  AND CONTINGENCIES
 
 Lease
        obligations –
The
        Company rents office space in Henderson, Nevada. The lease terms expired
        in
        November 2006 and the company continues to rent the existing space under
        month-to-month terms for $4,900 per month.
 
 Rental
        expense, resulting from this operating lease agreement, approximated $14,700
        and
        $12,000 for the three months ended March 31, 2008 and 2007,
        respectively.
 
 Employment
        contracts –
Ian
        R.
        McNeil, President and Chief Executive Officer. The Company has an employment
        agreement with Mr. McNeil effective since January 1, 2006. Under the terms
        of
        the agreement, as updated February 16, 2007, Mr. McNeil is paid a salary
        of
        $190,000. Mr. McNeil is also eligible for discretionary bonus to be determined
        based on factors considered relevant by the Company’s board of directors, and
        may be granted, subject to the approval of the board of directors, incentive
        stock options to purchase shares of the Company’s common stock in such amounts
        and at such times as the board of directors, in its absolute discretion,
        may
        from time to time determine. The term of the agreement is for an indefinite
        period, unless otherwise terminated pursuant to the terms of the agreement.
        In
        the event that the agreement is terminated by the Company other than for
        cause,
        the Company will provide Mr. McNeil with six months written notice or payment
        equal to six months of his monthly remuneration.
 
 Carl
        S.
        Ager, Treasurer and Secretary. The Company has an employment agreement with
        Mr.
        Ager effective since January 1, 2006. Under the terms of the agreement, as
        updated February 16, 2007, Mr. Ager is paid a salary of $160,000. Mr. Ager
        is
        also eligible for discretionary bonus to be determined based on factors
        considered relevant by the Company’s board of directors, and may be granted,
        subject to the approval of the board of directors, incentive stock options
        to
        purchase shares of the Company’s common stock in such amounts and at such times
        as the board of directors, in its absolute discretion, may from time to time
        determine. The term of the agreement is for an indefinite period, unless
        otherwise terminated pursuant to the terms of the agreement. In the event
        that
        the agreement is terminated by the Company other than for cause, the Company
        will provide Mr. Ager with six months written notice or payment equal to
        six
        months of his monthly remuneration.
 
 Melvin
        L.
        Williams, Chief Financial Officer. The Company has an employment agreement
        with
        Mr. Williams effective since January 1, 2006. Under the terms of the agreement,
        as updated February 16, 2007, Mr. Williams is paid a salary of $130,000,
        based
        on 600-800 hours worked. Mr. Williams is also eligible for discretionary
        bonus
        to be determined based on factors considered relevant by the Company’s board of
        directors, and may be granted, subject to the approval of the board of
        directors, incentive stock options to purchase shares of the Company’s common
        stock in such amounts and at such times as the board of directors, in its
        absolute discretion, may from time to time determine. The term of the agreement
        is for an indefinite period, unless otherwise terminated pursuant to the
        terms
        of the agreement. In the event that the agreement is terminated by the Company
        other than for cause, the Company will provide Mr. Williams with thirty days
        written notice or payment equal to three months of his monthly
        remuneration.
 
 Clarkdale
        slag project purchase agreement –
In
        consideration of the acquisition of the Clarkdale Slag Project from VRIC,
        the
        Company has agreed to certain additional payments. The terms of and conditions
        of these payments are discussed in more detail in Note 3 and 6.
  26
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 12.
              CONCENTRATION
                  OF CREDIT RISK
 
 Financial
        instruments that potentially subject the Company to concentration of credit
        risk
        consist of cash investments. The Company places its temporary cash investments
        in United States Treasury instruments and with two financial institutions.
        Cash
        accounts at these financial institutions are insured by the Federal Deposit
        Insurance Corporation for up to $100,000 per financial institution.
 
 13.
              CONCENTRATION
                  OF ACTIVITY
 
 For
        the
        three months ended March 31, 2008, the Company purchased services from one
        major
        vendor, Talson Corporation, which exceeded more than 10% of total purchases
        and
        amounted to approximately $319,374.
 
 14.
                RELATED
                    PARTY TRANSACTIONS
 
 During
        the three months ended March 31, 2008, the Company utilized the services
        of NMC
        to provide technical assistance and financing related activities. These services
        related primarily to the Clarkdale Slag Project and Searchlight Claims project.
 
 In
        addition to the above services, NMC provided dedicated use of its laboratory,
        instrumentation, milling equipment and research facilities. NMC provided
        invoices for these fees plus expenses.
 
 For
        the
        three months ended March 31, 2008, the Company incurred total fees and
        reimbursement of expenses to NMC of $90,000 and $23,393, respectively at
        March
        31, 2008, the Company had an outstanding balance due to NMC of
        $38,735.
 
 During
        the three months ended March 31, 2008, the Company utilized Cupit,
        Milligan, Ogden & Williams, CPAs (CMOW) to provide accounting support
        services. The Chief Financial Officer of the Company is affiliated with CMOW.
 
 The
        Company incurred total fees and reimbursement of expenses to CMOW of $16,313
        and
        $90, respectively, for the three months ended March 31, 2008. At March 31,
        2008,
        the Company had an outstanding balance due to CMOW of $18,647.
  27
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 15.
              RESTATEMENT
                  OF PRIOR FINANCIAL STATEMENTS
 
 Searchlight
        Mining Claims – (See Note 4) – The Company restated the Searchlight Mining
        Claims as of December 31, 2007. The March 31, 2008 restatement of the Searchlight
        Claims mineral properties reflects the revised deferred future income tax
        liability assumed as part of the subsequent contingent issuance of securities,
        the value of which has been added to the acquisition costs of the underlying
        mineral properties. Pursuant
        to EITF 98-11, “Accounting for Acquired Temporary Differences in Certain
        Purchase Transactions That Are Not Accounted for as Business Combinations”, the
        Company values the shares issued to obtain mineral properties at their market
        price at the date of the issue.
 
 Clarkdale
        Slag Project – (See Notes 3, 6) – During the second quarter of 2008, the Company
        determined that acquisition accounting methods used in prior periods to record
        the purchase accounting for the Slag Project were not appropriate 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 a decrease
        in
        recorded purchase consideration of $7,546,217, offset by 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 decreased by
        $4,121,755.
 
 The
        original terms of the underlying purchase agreement were unchanged and this
        adjustment had no effect on the agreement.
 
 The
        following table summarizes consolidated balance sheet of the Company as of
        December 31, 2007 and reconciles the reported amounts to the restated
        amounts:
 
 Summarized
                  Consolidated Balance Sheet -
              
              As ReportedDecember 31, 2007
              
              December 31, 2007
              
              Adjustments
              
              
              
              As RestatedProperty
                  and equipment, net
              
              $
              4,902,287
              
              $
              162,173
              
              
              a
              
              $
              5,064,460Mineral
                  properties
              
              
              11,519,664
              
              
              1,182,594
              
              
              b
              
              
              12,702,258Slag
                  project
              
              
              130,516,368
              
              
              (9,749,491
              )
              
              c
              
              
              120,766,877Total
                  assets
              
              
              168,537,602
              
              
              (8,404,724
              )
              
              
              
              
              160,132,878VRIC
                  payable, current portion
              
              
              106,303
              
              
              73,527
              
              
              c
              
              
              179,830Due
                  to VRIC
              
              
              6,400,000
              
              
              (6,400,000
              )
              
              c
              
              
              -VRIC
                  payable, net of current portion
              
              
              3,211,101
              
              
              (1,057,571
              )
              
              c
              
              
              2,153,530Deferred
                  tax liability
              
              
              53,875,079
              
              
              (3,255,421
              )
              
              d
              
              
              50,619,658Total
                  liabilities
              
              
              64,571,667
              
              
              (10,639,465
              )
              
              
              
              
              53,932,202Additional
                  paid-in capital
              
              
              114,913,703
              
              
              1,310,204
              
              
              c
              
              
              116,223,907Accumulated
                  deficit during exploration stage
              
              
              (11,152,633
              )
              
              924,537
              
              
              e
              
              
              (10,228,096
              )Total
                  stockholders' equity
              
              
              103,965,935
              
              
              2,234,741
              
              
              
              
              
              106,200,676Total
                  liabilities and stockholders' equity
              
              $
              168,537,602
              
              $
              (8,404,724
              )
              
              
              
              $
              160,132,878
  28
  SEARCHLIGHT
        MINERALS CORP.
 (AN
        EXPLORATION STAGE ENTERPRISE)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 15. RESTATEMENT
        OF PRIOR FINANCIAL STATEMENTS (continued)
 
 The
        following table summarizes consolidated statements of operations for the
        three
        months ended March 31, 2007 and for the period from January 14, 2000 (Date
        of
        Inception) through December 31, 2007, and reconciles the reported amounts
        to the
        restated amounts:
 
 Summarized
                  Consolidated Statement of Operations -For
                  the three months ended March 31, 2007
              
              As Reported
              
              Adjustments
              
              
              
              As RestatedMineral
                  exploration and evaluation expenses
              
              $
              385,308
              
              $
              (90,000
              )
              
              f
              
              $
              295,308Mineral
                  exploration and evaluationexpenses
                  - related party
              
              
              -
              
              
              90,000
              
              
              f
              
              
              90,000Total
                  operating expenses
              
              
              721,547
              
              
              -
              
              
              
              
              
              721,547Loss
                  from operations
              
              
              (713,927
              )
              
              -
              
              
              
              
              
              (713,927
              )Income
                  tax benefit
              
              
              -
              
              
              270,094
              
              
              e
              
              
              270,094Net
                  loss
              
              $
              (680,029
              )
              $
              270,094
              
              
              e
              
              $
              (409,935
              )Loss
                  per common share
              
              $
              (0.01
              )
              
              
              
              
              
              
              $
              (0.01
              )
  Summarized
                  Consolidated Statement of Operations -For
                  the period from January 14, 2000 (Date of Inception)Through
                  December 31, 2007
              
              
              As
                  Reported
              
              
              Adjustments
              
              
              
              
              
              As
                  RestatedTotal
                  operating expenses
              
              $
              8,989,944
              
              $
              -
              
              
              
              
              $
              8,989,944Loss
                  from operations
              
              
              (8,953,534
              )
              
              -
              
              
              
              
              
              (8,953,534
              )Loss
                  from operations before income tax
              
              
              (8,566,697
              )
              
              -
              
              
              
              
              
              (8,566,697
              )Income
                  tax benefit
              
              
              1,677,940
              
              
              924,536
              
              
              e
              
              
              2,602,476Net
                  loss
              
              $
              (11,152,632
              )
              $
              924,536
              
              
              e
              
              $
              (10,228,096
              )
 
 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
                  for computation of deferred tax liability assumed in mineral property
                  acquisition.
 c.
              Restate
                  for revision of the acquisition accounting related to payment terms
                  and
                  conditions contained in the agreement and the resultant deferred
                  tax
                  liability assumed in acquisition
 d.
              Restate
                  for deferred tax computation related to acquisition
                  accounting.
 e.
              Restate
                  for deferred income tax benefit related to mineral properties
                  acquisition.
 f.
              Reclassify
                  related party mineral exploration and evaluation
                  expense.
  29




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




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




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




**Executive
      Overview**




We
      are an
      exploration stage company engaged in the acquisition and exploration of mineral
      properties and slag reprocessing projects. Our business is presently focused
      on
      our two mineral projects: (i) the Clarkdale Slag Project, located in Clarkdale,
      Arizona, pursuant to which we seek to recover precious and base metals from
      the
      reprocessing of slag material produced from the smelting of copper ores from
      former mines in the Jerome, Arizona area; and (ii) the Searchlight Gold Project,
      which involves exploration for precious metals on mining claims near
      Searchlight, Nevada.




**Clarkdale
      Slag Project**




In
      2007,
      we obtained full ownership of the Clarkdale Slag Project through a merger with
      the previous owners of the project, Transylvania International, Inc. Since
      this
      acquisition, we have devoted considerable effort designing and engineering
      our
      first production module, which included finalizing the production flow sheet,
      sourcing and purchasing equipment as well as the refurbishing the “module
      building” and beginning construction of the “electrowinning building.” The
      module and electrowinning buildings will be used to house the first production
      module, which continues to be in the development stage and has been
      designed to allow the grinding, leaching, filtering and extraction of
      metals from the slag material within our module and electrowinning buildings
      (see Figure 1 below).




30







**Figure
      1. Production Module Outline**




We
      have
      budgeted $10,950,000 for our work program on the Clarkdale Slag Project over
      the
      next twelve months. In the first quarter of 2008, we began to execute on our
      2008 plan of operation on the Clarkdale Slag Project which includes the
      completion and operation of the first production module that is expected to
      process between 100 and 250 tons per day of slag material.




The
      refurbishing of the module building is nearing completion and we expect to
      obtain the Certificate of Occupancy from the town of Clarkdale soon thereafter.
      The Certificate of Occupancy will allow us to begin operating the equipment
      within the module building, including the grinding, leaching, filtering and
      resin extraction circuits. The electrowinning building, which will house the
      copper and zinc electrowinning circuits, is currently under construction and
      expected to be completed in the third quarter of 2008. We have ordered or
      received much of the equipment necessary for the assembly of the production
      module and any outstanding equipment is expected to be delivered by early in
      the
      third quarter of 2008.




We
      have
      faced challenges during the development of our production module, such as delays
      in receiving large pieces of equipment from the manufacturers, which has
      consequently pushed out the completion timeline of the module from what was
      originally anticipated. We remain encouraged, however, by the progress we have
      made in the development of the first production module and remain committed
      to
      its completion and operation, which we anticipate to begin in the third quarter
      of 2008.




31




We
      anticipate that our production module will allow us to determine the economics
      of the project and serve as the basis for the final feasibility of the project.
      If the feasibility of the project proves economically viable, we expect to
      commence construction of a full-scale production facility where we intend to
      install subsequent modules in parallel which would be comparable in technology,
      scale and cost to the initial production module.




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




Also
      in
      our plan of operation on the Clarkdale Slag Project over the next twelve months,
      we intend to continue initial preparations on the Phase II expansion of the
      full-scale production facility. In the first quarter of 2008, we allocated
      approximately $1,000,000 to be used for this effort immediately to address
      long
      lead-time items such as grading 12 acres of land, drilling a well and
      preparing the architecture and engineering drawings for the proposed full-scale
      production facility. A decision on allocating additional funds for the Phase
      II
      expansion will be made once the first production module is operational and
      its
      results are analyzed.




**Searchlight
      Gold Project**




Since
      2005, we have maintained an ongoing exploration program on our Searchlight
      Gold
      Project. Since this time, we contracted with Arrakis, Inc. (“Arrakis”), an
      unaffiliated mining and environmental firm, to perform a number of metallurgical
      tests on surface and bulk samples taken from the project site under strict
      chain-of-custody. In 2007, results from these tests validated the presence
      of
      gold on the project site, and identified reliable and consistent metallurgical
      protocols for the analysis and extraction of gold, such as “microwave digestion”
and “autoclave” leaching. However, autoclave methods typically carry high
      capital and operating costs on large scale projects.




We
      were
      encouraged by these results and in the first quarter of 2008, we approved a
      continuation of the metallurgical work program with Arrakis for approximately
      $50,000 per month. The goal of this work program is to attempt to further
      improve upon the extraction grades of gold from samples taken from the project
      and explore in more detail the potential capital and operating costs of
      implementing methods, such as autoclave leaching.




In
      2007,
      our ability to carry out a drilling program on the project was halted by the
      suspension of the Searchlight claim owners’ Plan of Operations due to a dispute
      between the United States Bureau of Land Management (“BLM”) and one of our
      current principal stockholders and former officers and directors, K. Ian
      Matheson, on a project unrelated to ours. We have taken steps to obtain a new
      drilling permit by acquiring the title to the claims from the previous owners,
      communicating with the BLM to address the issues, and engaging an independent
      consultant, Enviroscientists, Inc., to prepare a new Plan of Operations which
      we
      intend to submit to the BLM by the end of the second quarter of
      2008.




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




32




There
      is
      no assurance of the timeline if we submit the Plan of Operations for approval
      to
      the BLM, or if the BLM will grant approval. Our drilling and mining program
      on
      the project is dependent on obtaining the necessary approval from the BLM.
      Therefore, if approval is not obtained, we may have to scale back or abandon
      exploration efforts on the project. There is also no assurance that the
      Searchlight Gold Project will be economically viable.




**Anticipated
      Cash Requirements**




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




**EXPENSE**
            
            **COST**Administrative
                Expenses
            
            $
            2,000,000Legal
                and Accounting Expenses
            
            $
            1,000,000Consulting
                Services
            
            $
            2,000,000**SUBTOTAL**
            
            **$**
            **5,000,000****Clarkdale
                Slag Project**Building
                Rehabilitation
            
            $
            750,000Production
                Module Assembly
            
            $
            2,500,000Production
                Module Operation
            
            $
            1,200,000Feasibility
                Study
            
            $
            500,000Phase
                II - Preparation for expansion to 2,000 tons per day
            
            $
            6,000,000**SUBTOTAL**
            
            **$**
            **10,950,000****Searchlight
                Gold Project**Metallurgical
                Testing Program
            
            $
            600,000Drilling
                and Pre-Feasibility Program
            
            $
            400,000**SUBTOTAL**
            
            **$**
            **1,000,000****TOTAL**
            
            **$**
            **16,950,000**




**Critical
      Accounting Policies**




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




33




***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. Upon completion
      of a
      bankable feasibility study, the claims will be amortized using the
      unit-of-production method over the life of the claim. If we do not continue
      with
      exploration after the completion of the feasibility study, the claims will
      be
      expensed at that time.




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




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




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




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




**Restatement**




**Overview**




During
      the second quarter of 2008, we identified certain errors in our previously
      issued financial statements related to our purchase accounting treatment of
      the
      acquisition of the Clarkdale Slag Project and the resultant computation of
      future deferred income tax liability assumed. We have restated certain items
      on
      our consolidated 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 International, Inc. based on the acquisition
                agreement and the recomputation of the value of the 12,000,000 warrants
                issued to Nanominerals Corp. in connection with the assignment of
                the
                option for the Clarkdale Slag Project. The amount recorded for the
                Clarkdale Slag Project was also affected by the recomputation of
                the
                deferred future federal and state income tax liability in connection
                with
                our acquisition of the Clarkdale Slag
                Project.




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




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




34






·
            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.




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




**Clarkdale
      Slag Project**




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




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




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




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




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




In
      accordance with Statement of Financial Accounting Standards No. 141 (As Amended)
      (SFAS 141) and interpretation by Staff of the Commission, 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.




***Warrants
      issued in connection with option assignmen*** t.
      During
      the second quarter of 2008, we also determined that 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.





35


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




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




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




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




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




In
      accordance with Emerging Issues Task Force Issue 98-11 (EITF 98-11), the
      purchase price of $130 million was allocated to the assets acquired and
      liabilities assumed, based on their respective fair values at the date of
      acquisition. The purchase price allocated to the real properties was based
      on
      fair market values determined using an independent real estate appraisal firm
      and the fair value of the remaining assets acquired and liabilities assumed
      were
      based on management’s best estimates taking into account all available
      information at the time.




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




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




36




**Searchlight
      Gold Project Claims**




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





As Originally
              Reported
            
            Adjustments
            
            As RestatedCash
                and shares issuance to obtain mineralproperties,
                July 7, 2005
            
            $
            577,134
            
            $
            --
            
            $
            577,134Net
                deferred income tax liability assumed
            
            
            145,090
            
            
            97,218
            
            
            242,308Mineral
                properties balance, December 31, 2005
            
            
            722,224
            
            
            97,218
            
            
            819,442Share
                issuance to obtain mineral properties, July 27, 2006
            
            
            3,080,000
            
            
            --
            
            
            3,080,000Net
                deferred income tax liability assumed
            
            
            446,472
            
            
            1,085,376
            
            
            1,531,848Mineral
                properties balance, December 31, 2006
            
            
            4,248,696
            
            
            1,182,594
            
            
            5,431,290Share
                issuance to obtain mineral properties, June 29, 2007
            
            
            4,508,000
            
            
            --
            
            
            4,508,000Net
                deferred income tax liability assumed
            
            
            2,762,968
            
            
            --
            
            
            2,762,968Total
                mineral properties balance, March 31, 2008
            
            $
            11,519,664
            
            $
            1,182,594
            
            $
            12,702,258




**Restatement
      of Consolidated Balance Sheet and Statement of Operations**




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





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




37




The
      following table summarizes overall restatements to the consolidated statements
      of operations for the three months ended March 31, 2007 and for the period
      from
      January 14, 2000 (date of inception) through December 31, 2007, and reconciles
      the previously reported amounts to the restated amounts:




Summarized
                Consolidated Statement of Operations -For
                the three months ended March 31, 2007
            
            As Reported
            
            Adjustments
            
            As RestatedMineral
                exploration and evaluation expenses(6)
            
            $
            385,308
            
            $
            (90,000
            )
            $
            295,308Mineral
                  exploration and evaluationexpenses
                  - related party(6)
            
            
            -
            
            
            90,000
            
            
            90,000Total
                operating expenses
            
            
            721,547
            
            
            -
            
            
            721,547Loss
                from operations
            
            
            (713,927
            )
            
            -
            
            
            (713,927
            )Income
                tax benefit(5)
            
            
            -
            
            
            270,094
            
            
            270,094Net
                loss
            
            $
            (680,029
            )
            $
            270,094
            
            $
            (409,935
            )Loss
                per common share
            
            $
            (0.01
            )
            
            -
            
            $
            (0.01
            )




Summarized
                Consolidated Statement of Operations -For
                the period from January 14, 2000 (date of inception)Through
                  December 31, 2007
            
            As Reported
            
            Adjustments
            
            As RestatedTotal
                operating expenses
            
            $
            8,989,944
            
            $
            -
            
            $
            8,989,944Loss
                from operations
            
            
            (8,953,534
            )
            
            -
            
            
            (8,953,534
            )Loss
                from operations before income tax
            
            
            (8,566,697
            )
            
            -
            
            
            (8,566,697
            )Income
                tax benefit(5)
            
            
            1,677,940
            
            
            924,536
            
            
            2,602,476Net
                loss
            
            $
            (11,152,632
            )
            $
            924,536
            
            $
            (10,228,096
            )







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




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


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


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


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


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


(6)  Reclassified
      related party mineral exploration and evaluation expense.


38


**Results
      of Operations**




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




Quarter Ended March 31,2008
            
            2007
              (restated)
            
            Percent
              Increase/(Decrease)Revenue
            
            $
            9,300
            
            $
            7,620
            
            
            22.0
            %Operating
                Expenses
            
            
            (1,063,985
            )
            
            (721,547
            )
            
            47.5
            %Other
                Income
            
            
            98,360
            
            
            33,898
            
            
            190
            %Income
                tax benefit
            
            
            363,629
            
            
            270,094
            
            
            34.6
            %Net
                Loss
            
            $
            (592,696
            )
            $
            (409,935
            )
            
            44.6
            %




***Revenue***




During
      the quarter ended March 31, 2008, we received revenues of $9,300 from leases
      and
      rentals of our commercial buildings and certain facilities acquired in
      connection with our acquisition of Transylvania. The property leases consist
      of:
      (i) a rental agreement with Clarkdale Arizona Central Railroad for the use
      of
      certain facilities at a rate of $1,700 per month; and (ii) a lease of a
      commercial building space to two tenants at a rate of $1,260 per month. The
      lease arrangements are on a month to month basis with no formal
      agreements.




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, and of
      which there are no assurances.




***Operating
      Expenses***




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




Quarter Ended March 31,2008
            
            2007
              (restated)
            
            Percent
              Increase/(Decrease)Mineral
                exploration and evaluation expenses
            
            $
            114,518
            
            $
            295,308
            
            
            (61.2)
            %Mineral
                exploration and evaluationexpenses -
                related party
            
            
            90,000
            
            
            90,000
            
            
            0.0
            %Administrative
                - Clarkdale site
            
            
            235,140
            
            
            -
            
            
            n/aGeneral
                and administrative
            
            
            591,851
            
            
            333,450
            
            
            77.5
            %General
                and administrative - related party
            
            
            16,403
            
            
            -
            
            
            n/aDepreciation
            
            
            15,123
            
            
            2,789
            
            
            442
            %Interest
                expense
            
            
            950
            
            
            -
            
            
            n/aTotal
                Operating Expenses
            
            $
            1,063,985
            
            $
            721,547
            
            
            47.5
            %




39




Operating
      expenses increased to $1,063,985 in the quarter ended March 31, 2008 from
      $721,547 in the quarter ended March 31, 2007. Operating expense increased in
      the
      quarter ended March 31, 2008 primarily as a result of increases in general
      and
      administrative expenses and Clarkdale site administrative expenses, offset
      by
      decreases in mineral exploration and evaluation expenses.




General
      and administrative expenses increased to $591,851 in the quarter ended March
      31,
      2008 from $333,450 in the quarter ended March 31, 2007. General and
      administrative expenses increased primarily as a result of (i) increased
      professional and administrative expenses associated with the completion of
      our
      equity financings, the preparation of our 2007 annual report on Form 10-KSB,
      legal and accounting fees; (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.




Included
      in general and administrative expenses for the three months ended March 31,
      2008
      and 2007 were compensation expenses related to the option vesting and option
      grants of $859 and $129,293, respectively. On April 30, 2007, we adopted our
      2007 Stock Option Plan (the “2007 Plan”). Under the terms of the 2007 Plan, as
      amended May 8, 2007, options to purchase up to 4,000,000 shares of common stock
      may be granted to our employees, officers, directors, and eligible consultants
      under such plan.




As
      of
      March 31, 2008, 107,246 options have been granted under the 2007 Plan with
      an
      exercise price ranging from $1.75 to $3.45 per share. The options are fully
      vested and expire in various proportions on June 15, 2009 and December 14,
      2007.
      During the year ended December 31, 2007, we issued options to acquire 75,700
      shares of common stock under our 2006 Stock Option Plan 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.




In
      addition, we incurred $16,403 in the quarter ended March 31, 2008 for general
      and administrative expenses for accounting support services to Cupit, Milligan,
      Ogden & Williams, CPAs, an affiliate of Melvin L. Williams, our Chief
      Financial Officer. We did not incur such expenses to such firm in the quarter
      ended March 31, 2007.




Mineral
      exploration and evaluation expenses decreased to $114,518 in the quarter ended
      March 31, 2008 from $295,308 in the quarter ended March 31, 2007. Mineral
      exploration and evaluation expenses decreased primarily as a result of our
      focus
      on our construction efforts for the Clarkdale Slag Project.




Included
      in mineral exploration and evaluation expenses were the amounts of $90,000
      and
      $90,000 paid in the quarters ended March 31, 2008 and 2007, respectively, to
      Nanominerals Corp. (one of our principal stockholders and an affiliate of Ian
      R.
      McNeil, our Chief Executive Officer and President and a director, and Carl
      S.
      Ager, our Vice President, Secretary and Treasurer and a director) for technical
      assistance and financing related activities provided by Nanominerals in
      connection with the exploration and development of our mineral
      projects.




Further
      we paid $235,140 for administrative expenses relating to the Clarkdale Slag
      Project in the quarter ended March 31, 2008. We did not pay such expenses in
      the
      quarter ended March 31, 2007.




For
      the
      quarter ended March 31, 2008, we purchased services from one major vendor,
      Talson Corporation, which exceeded more than 10% of total purchases and amounted
      to approximately $319,374. For
      the
      quarter ended March 31, 2007, we purchased services from two major vendors
      Dr.
      Hewlett and Nanominerals that exceeded more than 10% of total purchases and
      amounted to approximately $110,000 and $90,000, respectively.




40




***Other
      Income and Expenses***




Total
      other income increased to $98,360 in the quarter ended March 31, 2008 from
      $33,898 in the quarter ended March 31, 2007. The increase in total other income
      primarily resulted from an increase in interest and dividend income.




***Income
      Tax Benefit***




Income
      tax benefit increased to $363,629 in the quarter ended March 31, 2008 from
      $270,094 in the quarter ended March 31, 2007. The increase in income tax benefit
      primarily resulted from the increase in net operating losses in the quarter
      ended March 31, 2008 from the quarter ended March 31, 2007.




***Net
      Loss***




The
      aforementioned factors resulted in a net loss of $592,696, or $0.01 per common
      share, for the quarter ended March 31, 2008, as compared to a net loss of
      $409,935, or $0.01 per common share, for the quarter ended March 31, 2007.




As
      of
      March 31, 2008 and 2007, we had cumulative net operating loss carryforwards
      of
      approximately $8,758,617 and $3,546,810, respectively for federal income taxes.
      As of March 31, 2008 we had cumulative net operating losses of approximately
      $2,369,943 and no material loss carryforwards as of March 31, 2007 for state
      income tax purposes. The net operating loss carryforwards expire between 2025
      and 2028.




**Liquidity
      and Capital Resources**




Historically,
      we have financed our operations primarily through the sale of common stock
      and
      other convertible equity securities. In 2007 and the first quarter of 2008,
      we
      conducted the following private placements of our securities:




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




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




41




**Working
      Capital**




The
      following is a summary of our working capital at March 31, 2008:




At March 31, 2008
            
            At December 31,
              2007
              (restated)
            
            Percent
              Increase/(Decrease)Current Assets
            
            $
            17,357,780
            
            $
            12,200,133
            
            
            42.3
            %Current
                Liabilities
            
            
            (1,039,026
            )
            
            (1,094,697
            )
            
            (5.1)
            %Working
                Capital
            
            $
            16,318,754
            
            $
            11,105,436
            
            
            46.9
            %




As
      of
      March 31, 2008, we had an accumulated deficit of $10,820,792. As of March 31,
      2008, we had working capital of $16,318,754, compared to working capital of
      $11,105,436 as of March 31, 2007. The increase in our working capital was
      primarily attributable to the completion of our private placements in 2008
      partially offset by our net loss. Cash and cash equivalents were $17,184,152
      as
      of March 31, 2008, as compared to $12,007,344 as of December 31, 2007. Property
      and equipment increased to $6,574,027 as of March 31, 2008 from $5,064,460
      as of
      December 31, 2007. The increase primarily resulted from site improvements and
      equipment acquisitions at the Clarkdale Slag Project.




Included
      in long term liabilities in the accompanying consolidated financials statements
      is a balance of $50,256,029 for deferred tax liability relating to the Clarkdale
      Slag Project and Searchlight Gold Project. A deferred income tax liability
      was
      recorded on the excess of fair market value for the asset acquired over income
      tax basis at a combined statutory federal and state rate of 38% with the
      corresponding increase in the purchase price allocation of the assets
      acquired.




**Cash
      Flows**




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




Quarter
                Ended March 31,2008
            
            2007
              (restated)
            
            Percent
              Increase/(Decrease)Cash Flows used
                in OperatingActivities
            
            $
            (1,047,458
            )
            $
            (790,673
            )
            
            32.5
            %Cash
                Flows used in InvestingActivities
            
            
            (1,439,962
            )
            
            (10,005,846
            )
            
            (85.6)
            %Cash
                Flows provided by FinancingActivities
            
            
            7,664,228
            
            
            20,800,529
            
            
            (63.2)
            %Net
                Increase in Cash During Period
            
            $
            5,176,808
            
            $
            10,004,010
            
            
            (48.3)
            %




Net
      cash
      used in operating activities increased to $1,047,458 in the quarter ended March
      31, 2008 from $790,673 in the quarter ended March 31, 2007. The increase in
      cash
      used in operating activities was primarily due to operating losses from our
      exploration activity and general and administrative expenses, offset by non-cash
      elements which were primarily related to change in deferred tax liability of
      $363,629 and change in accounts payable and accrued liabilities of
      $144,275.




We
      used
      $1,439,962 in investing activities in the quarter ended March 31, 2008, as
      compared to $10,005,846 in the quarter ended March 31, 2007. The decrease in
      the
      quarter ended March 31, 2008 was primarily a result of the payment to Verde
      River Iron Company (“VRIC”), an affiliate of a member of our board of directors,
      Harry B. Crockett, of $9,900,000 in connection with the acquisition of VRIC’s
      wholly owned subsidiary, Transylvania, in the quarter ended March 31, 2007,
      offset by property and equipment purchases of $1,393,584 relating to the
      Clarkdale Slag Project in the quarter ended March 31, 2008.


42


Net
      cash
      provided by financing activities was $7,664,228 for the quarter ended March
      31,
      2008 compared to $20,800,529 for the quarter ended March 31, 2007. Net cash
      provided by financing activities in the quarter ended March 31, 2008 primarily
      resulted from the receipt of $5,250,000 from the proceeds of private placements
      of our securities and $2,528,500 from the exercise of warrants, offset by
      $43,622 of cash paid to VRIC based on our $30,000 monthly obligation to VRIC
      under the terms of the Transylvania reorganization agreement. Net cash provided
      by financing activities in the quarter ended March 31, 2007 primarily resulted
      from the receipt of $21,453,817 from the gross proceeds of private placements
      of
      our securities.




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




·
            our
                ability to locate a profitable mineral
                property;




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




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




·
            our
                ability to generate revenues.




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




Our
      plan
      of operation calls for significant expenses in connection with the development
      of the Clarkdale Slag Project and the exploration of the Searchlight Gold
      Project. Over the next twelve months, our management anticipates that the
      minimum cash requirements for funding our proposed exploration and development
      program and our continued operations will be approximately $16,950,000. As
      at
      March 31, 2008, we had cash reserves in the amount of $17,184,152. Our cash
      position now exceeds our anticipated 12 month budget of $16,950,000. Although
      this amount is sufficient to meet our anticipated costs for our development
      and
      exploration activities during the next twelve months, the actual costs of
      completing those activities may be greater than anticipated. If the actual
      costs
      are significantly greater than anticipated, if we proceed with our development
      and exploration activities beyond what we currently have planned, or if we
      experience unforeseen delays during our activities over the next twelve months,
      we will need to obtain additional financing. There are no assurances that we
      will be able to obtain additional financing in an amount sufficient to meet
      our
      needs or on terms that are acceptable to us.




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


43


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




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




**Off-Balance
      Sheet Arrangements**




None.




**Recent
      Accounting Pronouncements**




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




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




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




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




44


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




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




N ot
      applicable.




**Item
      4. Controls and Procedures**




**Controls
      and Procedures**




We
      maintain a system of controls and procedures designed to ensure that information
      required to be disclosed by us in reports that we file or submit under the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported, within time periods specified in the Commission’s rules and forms
      and to ensure that information required to be disclosed by us in the reports
      that we file or submit under the Securities Exchange Act of 1934, as amended,
      is
      accumulated and communicated to our management, including our Chief Executive
      Officer and Principal Financial Officer, as appropriate to allow timely
      decisions regarding required disclosure. As of March 31, 2008, under the
      supervision and with the participation of our Chief Executive Officer and
      Principal Financial Officer, management has evaluated the effectiveness of
      the
      design and operation of our disclosure controls and procedures. Based on that
      evaluation, the Chief Executive Officer and Principal Financial Officer
      concluded that our disclosure controls and procedures were
      effective.




**Changes
      in Internal Control Over Financial Reporting**




There
      were no changes in our internal controls over financial reporting during the
      quarter ended March 31, 2008 that materially affected, or are reasonably likely
      to materially affect, our internal controls over financial
      reporting.




**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings**




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




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


45


**Item
      1A. Risk Factors**




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




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




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




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




**Item
      3. Defaults Upon Senior Securities**




None.




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




No
      matters were submitted to our stockholders, through the solicitation of proxies
      or otherwise, during the first quarter of the year ended March 31,
      2008.




**Item
      5. Other Information**




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





On
      May 5,
      2008, after consulting with Brown Armstrong Paulden McCown Starbuck Thornburgh
      & Keeter Accountancy Corporation, our independent accountants, our
      management and our audit committee, concluded that our audited financial
      statements for the year ended December 31, 2007, and our unaudited interim
      financial statements for the periods ended March 31, 2007 should not be relied
      upon. Based upon our continued review of comments received from the Commission
      with respect to their review of our amended Registration Statement on Form
      SB-2/A, our management and our audit committee have concluded restatements
      should be made to our consolidated balance sheets and statements of
      operations.




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




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


46


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




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




**EXHIBIT
      TABLE**




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





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


47





**SIGNATURES**




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




**SEARCHLIGHT
                MINERALS CORP.**
              a
                Nevada corporationDate:
                May 12, 2008
            By:
            /s/
                Ian R.
                McNeilIan
                R. McNeilPresidentandChief
                Executive Officer
              (Principal
                Executive Officer)Date:
                May 12, 2008
            By:
            /s/Melvin L. WilliamsMelvin
                L. WilliamsChief
                Financial Officer
              (Principal
                Accounting Officer)


48