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, 2009




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


For the
transition period from _______ to _______.




Commission
file number 000-30995




SEARCHLIGHT
MINERALS CORP.




(Exact
name of registrant as specified in its charter)




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




(702) 939-5247


(Registrant’s telephone number, including area
code)




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




Yes xNo o




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




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




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




Yes o   No x





As of May
6, 2009, the registrant had 106,461,259 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
                                              33Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk
                                              48Item
      4.  Controls and Procedures
                                              49PART
      II - OTHER INFORMATION
                                              49Item
      1.  Legal Proceedings
                                              49Item
      1A.  Risk Factors
                                              49Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
                                              50Item
      3.  Defaults Upon Senior Securities
                                              50Item
      4.  Submission of Matters to a Vote of Security
      Holders
                                              50Item
      5.  Other Information
                                              50Item
      6.  Exhibits
                                              51SIGNATURES
                                              52




2


PART
I – FINANCIAL INFORMATION




Item
1. Financial Statements




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


March
      31, 2009
                                    
                                    
                                    December
      31, 2008ASSETSCurrent
      assetsCash
                                    
                                    $
                                    4,731,935
                                    
                                    
                                    $
                                    7,055,591Prepaid
      expenses
                                    
                                    
                                    164,949
                                    
                                    
                                    
                                    251,414Total
      current assets
                                    
                                    
                                    4,896,884
                                    
                                    
                                    
                                    7,307,005Property
      and equipment, net
                                    
                                    
                                    13,801,292
                                    
                                    
                                    
                                    13,132,282Mineral
      properties
                                    
                                    
                                    16,947,419
                                    
                                    
                                    
                                    16,947,419Slag
      project
                                    
                                    
                                    120,766,877
                                    
                                    
                                    
                                    120,766,877Land
      - smelter site and slag pile
                                    
                                    
                                    5,916,150
                                    
                                    
                                    
                                    5,916,150Land
                                    
                                    
                                    3,300,000
                                    
                                    
                                    
                                    3,300,000Reclamation
      bond and deposits, net
                                    
                                    
                                    103,400
                                    
                                    
                                    
                                    109,900Total
      non-current assets
                                    
                                    
                                    160,835,138
                                    
                                    
                                    
                                    160,172,628Total
      assets
                                    
                                    $
                                    165,732,022
                                    
                                    
                                    $
                                    167,479,633LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable and accrued liabilities
                                    
                                    $
                                    841,763
                                    
                                    
                                    $
                                    1,093,778Accounts
      payable - related party
                                    
                                    
                                    57,057
                                    
                                    
                                    
                                    108,515VRIC
      payable, current portion - related party
                                    
                                    
                                    198,677
                                    
                                    
                                    
                                    194,756Capital
      lease payable, current portion
                                    
                                    
                                    24,294
                                    
                                    
                                    
                                    24,026Total
      current liabilities
                                    
                                    
                                    1,121,791
                                    
                                    
                                    
                                    1,421,075Long-term
      liabilitiesVRIC
      payable, net of current portion - related party
                                    
                                    
                                    1,907,610
                                    
                                    
                                    
                                    1,958,774Capital
      lease payable, net of current portion
                                    
                                    
                                    34,117
                                    
                                    
                                    
                                    40,291Deferred
      tax liability
                                    
                                    
                                    49,874,268
                                    
                                    
                                    
                                    50,455,361Total
      long-term liabilities
                                    
                                    
                                    51,815,995
                                    
                                    
                                    
                                    52,454,426Total
      liabilities
                                    
                                    
                                    52,937,786
                                    
                                    
                                    
                                    53,875,501Commitments
      and contingencies - Note 12
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Stockholders'
      equityCommon
      stock, $0.001 par value; 400,000,000 sharesauthorized,
      106,361,259 and 105,854,691 shares,respectively,
      issued and outstanding
                                    
                                    
                                    106,361
                                    
                                    
                                    
                                    105,854Additional
      paid-in capital
                                    
                                    
                                    127,024,412
                                    
                                    
                                    
                                    126,854,760Accumulated
      deficit during exploration stage
                                    
                                    
                                    (14,336,537
                                    )
                                    
                                    
                                    (13,356,482
                                    )Total
      stockholders' equity
                                    
                                    
                                    112,794,236
                                    
                                    
                                    
                                    113,604,132Total
      liabilities and stockholders' equity
                                    
                                    $
                                    165,732,022
                                    
                                    
                                    $
                                    167,479,633




See
Accompanying Notes to these Consolidated Financial Statements


3


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


For
      the period fromJanuary
      14, 2000(Date
      of Inception)For
      the three months ended
                                      
                                      
                                      ThroughMarch
      31, 2009
                                      
                                      
                                      March
      31, 2008
                                      
                                      
                                      March
      31, 2009Revenue
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Operating
      expensesMineral
      exploration and evaluation expenses
                                      
                                      
                                      312,334
                                      
                                      
                                      
                                      114,518
                                      
                                      
                                      
                                      5,351,018Mineral
      exploration and evaluationexpenses
      - related party
                                      
                                      
                                      90,000
                                      
                                      
                                      
                                      90,000
                                      
                                      
                                      
                                      1,305,000Administrative
      - Clarkdale site
                                      
                                      
                                      232,688
                                      
                                      
                                      
                                      235,140
                                      
                                      
                                      
                                      1,888,549General
      and administrative
                                      
                                      
                                      733,043
                                      
                                      
                                      
                                      591,851
                                      
                                      
                                      
                                      6,851,212General
      and administrative - related party
                                      
                                      
                                      22,202
                                      
                                      
                                      
                                      16,403
                                      
                                      
                                      
                                      137,956Depreciation
                                      
                                      
                                      181,959
                                      
                                      
                                      
                                      15,123
                                      
                                      
                                      
                                      289,038Total
      operating expenses
                                      
                                      
                                      1,572,226
                                      
                                      
                                      
                                      1,063,035
                                      
                                      
                                      
                                      15,822,773Loss
      from operations
                                      
                                      
                                      (1,572,226
                                      )
                                      
                                      
                                      (1,063,035
                                      )
                                      
                                      
                                      (15,822,773
                                      )Other
      income (expense):Rental
      revenue
                                      
                                      
                                      7,540
                                      
                                      
                                      
                                      9,300
                                      
                                      
                                      
                                      79,670Loss
      on equipment disposition
                                      
                                      
                                      (1,542
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (6,068
                                      )Interest
      expense
                                      
                                      
                                      (694
                                      )
                                      
                                      
                                      (950
                                      )
                                      
                                      
                                      (6,184
                                      )Interest
      and dividend income
                                      
                                      
                                      5,774
                                      
                                      
                                      
                                      98,360
                                      
                                      
                                      
                                      600,958Total
      other income (expense)
                                      
                                      
                                      11,078
                                      
                                      
                                      
                                      106,710
                                      
                                      
                                      
                                      668,376Loss
      before income taxes
                                      
                                      
                                      (1,561,148
                                      )
                                      
                                      
                                      (956,325
                                      )
                                      
                                      
                                      (15,154,397
                                      )Income
      tax benefit
                                      
                                      
                                      581,093
                                      
                                      
                                      
                                      363,629
                                      
                                      
                                      
                                      4,961,028Loss
      from continuing operations
                                      
                                      
                                      (980,055
                                      )
                                      
                                      
                                      (592,696
                                      )
                                      
                                      
                                      (10,193,369
                                      )Discontinued
      operations:Loss
      from discontinued operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,143,168
                                      )Net
      loss
                                      
                                      $
                                      (980,055
                                      )
                                      
                                      $
                                      (592,696
                                      )
                                      
                                      $
                                      (14,336,537
                                      )Loss
      per common share - basic and dilutedLoss
      from continuing operations
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.01
                                      )Net
      loss
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.01
                                      )Weighted
      average common shares outstanding -Basic
      and diluted
                                      
                                      
                                      106,268,024
                                      
                                      
                                      
                                      101,430,625







See
Accompanying Notes to these Consolidated Financial Statements


4


SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
 (UNAUDITED)


AccumulatedDeficit
      During
                                
                                
                                TotalCommon
      Stock
                                
                                
                                Additional
                                
                                
                                Exploration
                                
                                
                                Stockholders'Shares
                                
                                
                                Amount
                                
                                
                                Paid-in
      Capital
                                
                                
                                Stage
                                
                                
                                EquityBalance,
      December 31, 2008
                                
                                
                                105,854,691
                                
                                
                                $
                                105,854
                                
                                
                                $
                                126,854,760
                                
                                
                                $
                                (13,356,482
                                )
                                
                                $
                                113,604,132Issuance
      of common stockfor
      cash, $0.25 per shareexercise
      of nonemployee stock options
                                
                                
                                400,000
                                
                                
                                
                                400
                                
                                
                                
                                99,600
                                
                                
                                
                                -
                                
                                
                                
                                100,000Issuance
      of common stockfor
      cash, $0.25 per shareexercise
      of nonemployee stock options
                                
                                
                                100,000
                                
                                
                                
                                100
                                
                                
                                
                                24,900
                                
                                
                                
                                -
                                
                                
                                
                                25,000Amortization
      of stock optionsissued
      to director overvesting
      period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                19,149
                                
                                
                                
                                -
                                
                                
                                
                                19,149Issuance
      of common stockfor
      directors' compensation
                                
                                
                                6,568
                                
                                
                                
                                7
                                
                                
                                
                                17,993
                                
                                
                                
                                -
                                
                                
                                
                                18,000Issuance
      of stock optionsfor
      directors' compensation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                8,010
                                
                                
                                
                                -
                                
                                
                                
                                8,010Net
      loss March 31, 2009
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (980,055
                                )
                                
                                
                                (980,055
                                )Balance,
      March 31, 2009
                                
                                
                                106,361,259
                                
                                
                                $
                                106,361
                                
                                
                                $
                                127,024,412
                                
                                
                                $
                                (14,336,537
                                )
                                
                                $
                                112,794,236







See
Accompanying Notes to these Consolidated Financial Statements


5


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





Period
      fromJanuary
      14, 2000(Date
      of inception)For
      the three months ended
                                                      
                                                      
                                                      throughMarch
      31, 2009
                                                      
                                                      
                                                      March
      31, 2008
                                                      
                                                      
                                                      March
      31, 2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                                                      
                                                      
                                                      $
                                                      (980,055
                                                      )
                                                      
                                                      $
                                                      (592,696
                                                      )
                                                      
                                                      $
                                                      (14,336,537
                                                      )Deduct:
      Loss from discontinued operations
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (4,143,168
                                                      )Loss
      from continuing operations
                                                      
                                                      
                                                      
                                                      (980,055
                                                      )
                                                      
                                                      
                                                      (592,696
                                                      )
                                                      
                                                      
                                                      (10,193,369
                                                      )Adjustments
      to reconcile loss from operatingto
      net cash used in operating activities:Depreciation
                                                      
                                                      
                                                      
                                                      181,959
                                                      
                                                      
                                                      
                                                      15,123
                                                      
                                                      
                                                      
                                                      289,038Stock
      based expenses
                                                      
                                                      
                                                      
                                                      45,159
                                                      
                                                      
                                                      
                                                      18,859
                                                      
                                                      
                                                      
                                                      1,139,663Loss
      on disposition of fixed assets
                                                      
                                                      
                                                      
                                                      1,542
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      7,417Amortization
      of prepaid expense
                                                      
                                                      
                                                      
                                                      57,413
                                                      
                                                      
                                                      
                                                      43,222
                                                      
                                                      
                                                      
                                                      411,739Allowance
      for bond deposit recovery
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      180,500Changes
      in operating assets and liabilities:Other
      current assets
                                                      
                                                      
                                                      
                                                      29,052
                                                      
                                                      
                                                      
                                                      (24,062
                                                      )
                                                      
                                                      
                                                      (576,688
                                                      )Other
      assets
                                                      
                                                      
                                                      
                                                      600
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (289,800
                                                      )Accounts
      payable and accrued liabilities
                                                      
                                                      
                                                      
                                                      (303,473
                                                      )
                                                      
                                                      
                                                      (144,275
                                                      )
                                                      
                                                      
                                                      173,262Deferred
      income taxes
                                                      
                                                      
                                                      
                                                      (581,093
                                                      )
                                                      
                                                      
                                                      (363,629
                                                      )
                                                      
                                                      
                                                      (4,961,028
                                                      )Net
      cash used in operating activities
                                                      
                                                      
                                                      
                                                      (1,548,896
                                                      )
                                                      
                                                      
                                                      (1,047,458
                                                      )
                                                      
                                                      
                                                      (13,819,266
                                                      )Net
      cash used in operating activities from discontinued
    operations
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (2,931,324
                                                      )CASH
      FLOW FROM INVESTING ACTIVITIESCash
      paid on mineral property claims
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (87,134
                                                      )Cash
      paid for joint venture and merger option
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (890,000
                                                      )Cash
      paid to VRIC on closing date
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (9,900,000
                                                      )Cash
      paid for additional acquisition costs
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (130,105
                                                      )Capitalized
      interest
                                                      
                                                      
                                                      
                                                      (42,757
                                                      )
                                                      
                                                      
                                                      (46,378
                                                      )
                                                      
                                                      
                                                      (385,099
                                                      )Purchase
      of property and equipment
                                                      
                                                      
                                                      
                                                      (803,854
                                                      )
                                                      
                                                      
                                                      (1,393,584
                                                      )
                                                      
                                                      
                                                      (12,950,958
                                                      )Net
      cash used in investing activities
                                                      
                                                      
                                                      
                                                      (846,611
                                                      )
                                                      
                                                      
                                                      (1,439,962
                                                      )
                                                      
                                                      
                                                      (24,343,296
                                                      )Net
      cash used in investing activities from discontinued
    operations
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (452,618
                                                      )CASH
      FLOW FROM FINANCING ACTIVITIESProceeds
      from stock issuance
                                                      
                                                      
                                                      
                                                      125,000
                                                      
                                                      
                                                      
                                                      7,713,500
                                                      
                                                      
                                                      
                                                      43,664,501Stock
      issuance costs
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (677,570
                                                      )Principal
      payments on capital lease payable
                                                      
                                                      
                                                      
                                                      (5,906
                                                      )
                                                      
                                                      
                                                      (5,650
                                                      )
                                                      
                                                      
                                                      (57,827
                                                      )Principal
      payments on deferred purchase liability
                                                      
                                                      
                                                      
                                                      (47,243
                                                      )
                                                      
                                                      
                                                      (43,622
                                                      )
                                                      
                                                      
                                                      (394,901
                                                      )Proceeds
      from subscribed stock
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      360,000Net
      cash provided by financing activities
                                                      
                                                      
                                                      
                                                      71,851
                                                      
                                                      
                                                      
                                                      7,664,228
                                                      
                                                      
                                                      
                                                      42,894,203Net
      cash provided by financing activities from discontinued
      operations
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      3,384,236NET
      CHANGE IN CASH
                                                      
                                                      
                                                      
                                                      (2,323,656
                                                      )
                                                      
                                                      
                                                      5,176,808
                                                      
                                                      
                                                      
                                                      4,731,935CASH
      AT BEGINNING OF PERIOD
                                                      
                                                      
                                                      
                                                      7,055,591
                                                      
                                                      
                                                      
                                                      12,007,344
                                                      
                                                      
                                                      
                                                      -CASH
      AT END OF PERIOD
                                                      
                                                      
                                                      $
                                                      4,731,935
                                                      
                                                      
                                                      $
                                                      17,184,152
                                                      
                                                      
                                                      $
                                                      4,731,935  6
 SUPPLEMENTAL
      INFORMATIONInterest
      Paid, net of capitalized amounts
                                                        
                                                        
                                                        $
                                                        694
                                                        
                                                        
                                                        $
                                                        950
                                                        
                                                        
                                                        $
                                                        53,507Income
      Taxes Paid
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -Non-cash
      investing and financing activities:Capital
      equipment purchased throughaccounts
      payable and financing
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        84,727
                                                        
                                                        
                                                        $
                                                        444,690Assets
      acquired for common stock issued for the acquisition
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        66,879,375Assets
      acquired for common stock issued for mineral properties
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        7,588,000Assets
      acquired for liabilities incurred in the acquisition
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        2,628,188Net
      deferred tax liability assumed
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        53,584,304Merger
      option payment applied to the acquisition
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        200,000Reclassify
      joint venture option agreement to slag project
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        690,000Warrants
      issued in connection with joint venture optionagreement
      related to slag project
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        1,310,204Stock
      options for common stock issued in satisfaction of debt
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        1,200,000Capitalization
      of related party liability to equity
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        742,848Stock
      issued for conversion ofaccounts
      payable, 100,000 shares at $0.72
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        72,000







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-K for the year ended December 31, 2008 of
Searchlight Minerals Corp. (the “Company”).
 
 The
interim financial statements present the balance sheet, statements of
operations, stockholders’ equity, and cash flows of the Company. The financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States.
 
 These
financial statements have been prepared by the Company without audit, and
include all adjustments (which consist solely of normal recurring adjustments)
which, in the opinion of management, are necessary for a fair presentation of
financial position and results of operations. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the Company’s audited financial
statements and notes thereto for the year ended December 31, 2008.
 
 Description of
business – Searchlight Minerals Corp. is considered an exploration stage
company since its formation and the Company has not yet realized any revenues
from its planned operations.  The Company is primarily focused on the
exploration, acquisition and development of mining and mineral
properties.  Upon the location of commercially minable reserves, the
Company plans to prepare for mineral extraction and enter the development
stage.
  History - The Company
was incorporated on January 12, 1999 pursuant to the laws of the State of Nevada
under the name L.C.M. Equity, Inc.  From 1999 to 2005, the Company
operated primarily as a biotechnology research and development company with its
headquarters in Canada and an office in the UK.  On November 2, 2001,
the Company entered into an acquisition agreement with Regma Bio Technologies,
Ltd. pursuant to which Regma Bio Technologies, Ltd. entered into a reverse
merger with us with the surviving entity named “Regma Bio Technologies Limited”.
On 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.
   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 $14,336,537 from operations as of
March 31, 2009 and has not commenced its mining and mineral processing
operations, rather, still in the exploration stage, raising substantial doubt
about the Company’s ability to continue as a going concern.
 
 The
Company will seek additional sources of capital through the issuance of debt or
equity financing, but there can be no assurance the Company will be successful
in accomplishing its objectives.
 
 The
ability of the Company to continue as a going concern is dependent on additional
sources of capital and the success of the Company’s plan.  The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
 
 Principles of
consolidation – The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Clarkdale Minerals,
LLC (CML) and Clarkdale Metals Corp. (CMC).  Significant intercompany
accounts and transactions have been eliminated.
 
 Use of estimates -
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
 
 Mineral rights - The
Company capitalizes acquisition and option costs of mineral property
rights.  The amount capitalized represents fair value of the mineral
rights acquired.
 
 The
Company capitalizes acquisition and option costs of mineral rights as tangible
assets in accordance with Emerging Issues Task Force abstract 04-02 (“EITF
04-02”), “Whether Mineral Rights are Tangible or Intangible Assets and Related
Issues”.  Upon commencement of commercial production, the mineral
rights will be amortized using the unit-of-production method over the life of
the mineral rights.  If the Company does not continue with exploration
after the completion of the feasibility study, the mineral rights will be
expensed at that time. The Company evaluates the carrying value of capitalized
mining costs and related property and equipment costs, to determine if these
costs are in excess of their recoverable amount whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. The
periodic evaluation of carrying value of capitalized costs and any related
property and equipment costs are based upon expected future cash flows and/or
estimated salvage value in accordance with Statement of Financial Accounting
Standards (SFAS) No. 144, “Accounting for Impairment or Disposal of Long-Lived
Assets.”
 
 Capitalized interest
cost - The Company capitalizes interest cost related to acquisition,
development and construction of property and equipment which is designed as
integral parts of the manufacturing process of this project.  The
capitalized interest is recorded as part of the asset it relates to and will be
amortized over the asset’s useful life once production
commences.  Interest cost capitalized from imputed interest on
acquisition indebtedness was $42,757 and $46,378 for the three months ended
March 31, 2009 and 2008, respectively.
 
  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)
 
 Exploration costs –
Mineral exploration costs are expensed as incurred.
 
 Property and
equipment – Property and equipment is stated at cost less accumulated
depreciation. Depreciation is provided principally on the straight-line method
over the estimated useful lives of the assets, which are generally 3 to 39
years. The cost of repairs and maintenance is charged to expense as incurred.
Expenditures for property betterments and renewals are capitalized. Upon sale or
other disposition of a depreciable asset, cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in other income
(expense).
 
 The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful lives of property and
equipment or whether the remaining balance of property and equipment should be
evaluated for possible impairment. If events and circumstances warrant
evaluation, the Company uses an estimate of the related undiscounted cash flows
over the remaining life of the property and equipment in measuring their
recoverability.
  Impairment of long-lived
assets–The Company reviews and evaluates long-lived assets for impairment when
events or changes in circumstances indicate the related carrying amounts may not
be recoverable. The assets are subject to impairment consideration under SFAS
No. 144 if events or circumstances indicate that their carrying amount might not
be recoverable.  As of March 31, 2009 exploration on these properties
is progressing in accordance with the Company’s plan of operations and no events
or circumstances have happened to indicate the related carrying values of the
properties may not be recoverable. When the Company determines SFAS 144
impairment analysis should be done, the analysis will be performed using the
rules of EITF 04-03, “Mining Assets: Impairment and Business
Combinations.”
  Various
factors could impact our ability to achieve forecasted production schedules.
Additionally, commodity prices, capital expenditure requirements and reclamation
costs could differ from the assumptions the Company may use in cash flow models
used to assess impairment. The ability to achieve the estimated quantities of
recoverable minerals from exploration stage mineral interests involves further
risks in addition to those factors applicable to mineral interests where proven
and probable reserves have been identified, due to the lower level of confidence
that the identified mineralized material can ultimately be mined
economically.
 
 Material
changes to any of these factors or assumptions discussed above could result in
future impairment charges to operations.
 
 Reclassifications –
Certain amounts in the prior period financial statements have been reclassified
to conform to current period presentation.
  10
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
    1.
              DESCRIPTIONOF BUSINESS, HISTORY
      AND SUMMARY OF SIGNIFICANT POLICIES
  (continued)
 
 Asset retirement
obligation - The Company has adopted Statement of Financial Accounting
Standards No. 143 (“SFAS 143”), “Accounting for Asset Retirement Obligations”,
which requires that an asset retirement obligation (“ARO”) associated with the
retirement of a tangible long-lived asset be recognized as a liability in the
period in which it is incurred and becomes determinable, with an offsetting
increase in the carrying amount of the associated asset.  The cost of
the tangible asset, including the initially recognized ARO, is depleted, such
that the cost of the ARO is recognized over the useful life of the
asset.  The ARO is recorded at fair value, and accretion expense is
recognized over time as the discounted liability is accreted to its expected
settlement value.  The fair value of the ARO is measured using
expected future cash flow, discounted at the Company’s credit-adjusted risk-free
interest rate.  To date, no significant asset retirement obligation
exists due to the early stage of exploration.  Accordingly, no
liability has been recorded.
 
 Fair value of financial
instruments - The Company’s financial instruments consist of accounts
payable, accrued liabilities, capital lease payable and mineral property
purchase obligations. The carrying value of these financial instruments
approximates their fair value based on their liquidity or their short-term
nature.  The Company is not exposed to significant interest or credit
risk arising from these financial instruments.
 
 Revenue recognition -
Revenues are recognized during the period in which the revenues are earned.
Costs and expenses are recognized during the period in which they are
incurred.
  Research and
development - All research and development expenditures are expensed as
incurred.
  Earnings (loss) per
share - The Company follows Statement of Financial Accounting Standard
No. 128 (“SFAS 128”), “Earnings Per Share” and Statement of Financial Accounting
Standard No. 150 (“SFAS 150”), “Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity,” which establish
standards for the computation, presentation and disclosure requirements for
basic and diluted earnings per share for entities with publicly-held common
shares and potential common stock issuances. Basic earnings (loss) per share are
computed by dividing net income by the weighted average number of common shares
outstanding.  In computing diluted earnings per share, the weighted
average number of shares outstanding is adjusted to reflect the effect of
potentially dilutive securities, such as stock options and
warrants.  Common stock equivalent shares are excluded from the
computation if their effect is antidilutive. Weighted average of common stock
equivalents, which include stock options and warrants to purchase common stock,
on March 31, 2009 and 2008 that were not included in the computation of diluted
EPS because the effect would be antidilutive were, 22,165,458 and 24,430,625,
respectively.
 
 Expenses of offering
– The Company accounts for specific incremental costs directly to a proposed or
actual offering of securities as a direct charge against the gross proceeds of
the offering.
 
  11
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
   1.
              DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
  Income taxes - The
Company accounts for its income taxes in accordance with the Statement of
Financial Accounting No. 109 (“SFAS 109”), “Accounting for Income Taxes”, which
requires recognition of deferred tax assets and liabilities for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and tax credit carry-forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
 
 On July
13, 2006, the Financial Accounting Standards Board (“FASB”) issued Financial
Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes – An
Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an entity’s financial
statements in accordance with SFAS No. 109, and prescribes a recognition
threshold and measurement attributes for financial statement disclosure of tax
positions taken or expected to be taken on a tax return.  Under FIN
48, the impact of an uncertain income tax position on the income tax return must
be recognized at the largest amount that is more-likely-than-not to be sustained
upon audit by the relevant taxing authority. An uncertain income tax position
will not be recognized if it has less than 50% likelihood of being
sustained.  Additionally, FIN 48 provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition.  The Company adopted the provision of FIN
48 on January 1, 2007, which did not have any impact on the consolidated
financial statements.
 
 For
acquired properties that do not constitute a business as defined in Emerging
Issues Task Force Issue No. 98-03 (“EITF 98-03”), “Determining Whether a
Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business”,
deferred income tax liability is recorded on GAAP basis over income tax basis
using statutory federal and state rates. The resulting estimated future federal
and state income tax liability associated with the temporary difference between
the acquisition consideration and the tax basis is computed in accordance with
EITF 98-11 “Accounting for Acquired Temporary Differences in Certain Purchase
Transactions That Are Not Accounted for as Business Combinations” and SFAS 109,
and is reflected as an increase to the total purchase price which is then
applied to the underlying acquired assets in the absence of there being a
goodwill component associated with the acquisition transactions.
 
  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)
 
 Stock-based
compensation - On December 16, 2004, the FASB issued Statement of
Financial Accounting Standard No. 123R (“SFAS 123R”), “Share-Based
Payment”, which replaces Statement of Financial Accounting Standard No. 123
(“SFAS 123”), “Accounting for Stock-Based Compensation” and supersedes APB
Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the financial statements based on the grant
date fair value of the award. Under SFAS No. 123R, the Company must determine
the appropriate fair value model to be used for valuing share-based payments,
the amortization method for compensation cost and the transition method to be
used at date of adoption. The transition methods include prospective and
retroactive adoption option. Under the retroactive option, prior periods may be
restated either as of the beginning of the year of adoption or for all periods
presented. The prospective method requires that compensation expense be recorded
for all unvested stock options and restricted stock at the beginning of the
first quarter of adoption of SFAS No. 123R, while the retroactive methods would
record compensation expense for all unvested stock options and restricted stock
beginning with the first period restated. The Company adopted the requirements
of SFAS No. 123R for the fiscal year beginning after December 31,
2004.
  New accounting
pronouncements – In April 2009, FASB Staff Position (FSP) No. FAS 107-1
and APB 28-1 was issued to amend SFAS No. 107, “Disclosures about Fair Value of
Financial Instruments”, to require disclosures about fair value of financial
instruments for interim reporting period as well as in annual financial
statements. This FSP also amends APB Opinion No. 28, “Interim Financial
Reporting”, to require those disclosures in summarized financial information at
interim reporting periods. FSP No. 107-1 and APB 28-1 is effective for interim
reporting period ending after June 15, 2009. Adoption of this guidance is not
expected to have a material impact on the Company’s consolidated financial
statements.
  In April 2009, FSP No. FAS 157-4,
“Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly”, was issued to provide additional guidance for estimating the fair
value in accordance with SFAS No. 157, “Fair Value Measurements”, when the
volume and level of activity for the asset or liability have significantly
decreased. This FSP also provides guidance on identifying circumstances that
indicate a transaction is not orderly. FSP No. FAS 157-4 is effective for
interim and annual reporting periods ending after June 15, 2009, and shall be
applied prospectively. Adoption of this guidance is not expected to have a
material impact on the Company’s 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)
 
 In April
2009, FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies”. This FSP
amends the guidance in FASB Statement No. 141 to require that assets acquired
and liabilities assumed in a business combination that arise from contingencies
be recognized at fair value if fair value can be reasonably estimated. If fair
value of such asset or liability cannot be reasonably estimated, the asset or
liability would generally be recognized in accordance with FASB Statement No. 5,
“Accounting for Contingencies”, and FASB Interpretation (FIN) No. 14,
“Reasonable Estimation of the Amount of a Loss”. This FSP eliminates the
requirements to disclose an estimate of the range of outcomes of recognized
contingencies at the acquisition date. This FSP also requires that contingent
consideration arrangements of an acquiree assumed by the acquirer in a business
combination be treated as contingent consideration of the acquirer and should be
initially and subsequently measured at fair value in accordance with Statement
141R. This FSP is effective for assets or liabilities arising from contingencies
in business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. The adoption of this
statement had little or no effect on the Company’s consolidated financial
position, results of operations, and disclosures.
 
 In December 2008, the FASB issued FSP
No. FAS 132(R)-1, “Employers’ Disclosures about Post-Retirement
Benefit Plan Assets” (“FSP FAS 132(R)-1”), which amends FASB Statement
No. 132 “Employers’ Disclosures about Pensions and Other Post-Retirement
Benefits” (“FAS 132”), to provide guidance on an employer’s disclosures
about plan assets of a defined benefit pension or other post-retirement plan.
The objective of FSP FAS 132(R)-1 is to require more detailed disclosures
about employers’ plan assets, including employers’ investment strategies, major
categories of plan assets, concentrations of risk within plan assets, and
valuation techniques used to measure the fair value of plan assets. FSP
FAS 132(R)-1 is effective for the Company’s fiscal yearending after December 15,
2009. Upon initial
application, the provisions of this FSP are not required for earlier periods
that are presented for comparative purposes. The adoption of this statement had
little or no effect on the Company’s consolidated financial position, results of
operations, and disclosures.
  In November 2008, the EITF reached
consensus on Issue No. 08-6, “Equity Method Investment Accounting
Considerations” (“EITF 08-6”), which clarifies the accounting for certain
transactions and impairment considerations involving equity method investments.
The intent of EITF 08-6 is to provide guidance on (i) determining the
initial carrying value of an equity method investment, (ii) performing an
impairment assessment of an underlying indefinite-lived intangible asset of an
equity method investment, (iii) accounting for an equity method investee’s
issuance of shares, and (iv) accounting for a change in an investment from
the equity method to the cost method. EITF 08-6 is effective for the
Company’s fiscal year beginning January 1, 2009 and is to be applied prospectively.The adoption of this
statement had little or no effect on the Company’s consolidated financial
position, results of operations, and disclosures.
  In June 2008, the EITF reached consensus
on Issue No. 07-5, “Determining Whether an Instrument (or Embedded Feature)
Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5
clarifies the determination of whether an instrument (or an embedded feature) is
indexed to an entity’s own stock, which would qualify as a scope exception under
FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging
Activities” (“FAS 133”). EITF 07-5 is effective for the Company’s
fiscal years beginning January 1, 2009. Early adoption for an existing
instrument is not permitted. The adoption of this statement had little or no
effect on the Company’s consolidated financial position, results of operations,
and disclosures.
 
  14
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 In May 2008, the FASB issued FSP
No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB
14-1”). FSP APB 14-1 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 FAS 133.
Convertible debt instruments within the scope of FSP APB 14-1 are not addressed
by the existing APB 14. FSP APB 14-1 requires that the liability and equity
components of convertible debt instruments within the scope of FSP APB 14-1 be
separately accounted for in a manner that reflects the entity’s nonconvertible
debt borrowing rate. This requires 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 will be
reported as a debt discount and subsequently amortized to earnings over the
instrument’s expected life using the effective interest method. FSP APB 14-1 is
effective for the Company’s fiscal year beginning January 1, 2009 and will
be applied retrospectively to all periods presented.  The adoption of
this statement had little or no effect on the Company’s consolidated financial
position, results of operations, and disclosures.
  In April 2008, the FASB issued FSP
No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”
(“FSP 142-3”) which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under FASB Statement No. 142, “Goodwill and
Other Intangible Assets” (“FAS 142”). The intent of this FSP is to improve
the consistency between the useful life of a recognized intangible asset under
FAS 142 and the period of expected cash flows used to measure the fair
value of the asset under FASB Statement No. 141, “Business Combinations”
(“FAS 141”). FSP 142-3 is effective for the Company’s fiscal year
beginning January 1, 2009 and will be applied prospectively to intangible
assets acquired after the effective date. The adoption of this statement had
little or no effect on the Company’s consolidated financial position, results of
operations, and disclosures.
  The FASB
issued FASB Staff Position (FSP) FAS 157-3, “Determining the Fair Value of a
Financial Asset When the Market for that Asset Is Not Active”. The FSP clarifies
the application of FASB Statement No. 157, “Fair Value Measurements”, in a
market that is not active and provides an example to illustrate key
considerations in determining the fair value of a financial asset when the
market for that financial asset is not active. The FSP is effective October 10,
2008, and for prior periods for which financial statements have not been issued.
Revisions resulting from a change in the valuation technique or its application
should be accounted for as a change in accounting estimate following the
guidance in FASB Statement No. 154, “Accounting Changes and Error Corrections”.
However, the disclosure provisions in Statement 154 for a change in accounting
estimate are not required for revisions resulting from a change in valuation
techniques or its application. The
adoption of this statement had no material effect on the Company’s consolidated
financial position, results of operations, and disclosures.
 
  15
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
      (continued)
 
 On March
19, 2008, the FASB issued Statement of Financial Accounting Standard No. 161
(“SFAS 161”), “Disclosures about Derivative Instruments and Hedging
Activities.”  This statement is intended to improve financial
reporting about derivative instruments and hedging activities by requiring
enhanced disclosures. This statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008,
with early application encouraged. The adoption of this statement had
little or no effect on the Company’s consolidated financial position, results of
operations, and disclosures.
 
 In February 2008, the FASB staff issued
Staff Position No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS
157-2”).  FSP FAS 157-2 delayed the effective date of SFAS 157 for
nonfinancial assets and nonfinancial liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually).  The provisions of FSP FAS 157-2 are
effective for the Company’s fiscal year beginning January 1,
2009.  SFAS 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. The adoption of this statement had
little or no effect on the Company’s consolidated financial position, results of
operations, and disclosures.
 
 In December 2007, the FASB issued
Statement of Financial Accounting Standard No. 141(R) (“SFAS 141(R)”),
“Business Combinations,” which amends SFAS No. 141, and provides revised
guidance for recognizing and measuring identifiable assets and goodwill
acquired, liabilities assumed, and any noncontrolling interest in the acquiree.
It also provides disclosure requirements to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. SFAS 141(R) is effective for the Company’s fiscal year
beginning January 1, 2009 and is to be applied prospectively. The adoption
of this statement had little or no effect on the Company’s consolidated
financial position, results of operations, and disclosures.
 
 In December 2007, the FASB issued
      Statement of Financial Accounting Standard  No. 160 (“SFAS
      160”), “Noncontrolling Interests in Consolidated Financial Statements - an
      amendment of ARB No. 51” which establishes accounting and reporting
      standards pertaining to ownership interests in subsidiaries held by
      parties other than the parent, the amount of net income attributable to
      the parent and to the noncontrolling interest, changes in a parent’s
      ownership interest, and the valuation of any retained noncontrolling
      equity investment when a subsidiary is deconsolidated. SFAS 160 also
      establishes disclosure requirements that clearly identify and distinguish
      between the interests of the parent and the interests of the
      noncontrolling owners. SFAS 160 is effective for the Company’s fiscal
      year beginning January 1, 2009. The adoption of this statement had
      little or no effect on the Company’s consolidated financial position,
      results of operations, and
disclosures.
  16
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 2.
                PROPERTY AND
      EQUIPMENT
 
 Property
and equipment consisted of the following as of March 31, 2009 and December 31,
2008:
 
 March
      31,
                        2009
                      
                      
                      December
      31, 2008Furniture
      and fixtures
                      
                      $
                      36,740
                      
                      
                      $
                      35,813Lab
      equipment
                      
                      
                      216,012
                      
                      
                      
                      2,804Computers
      and equipment
                      
                      
                      51,866
                      
                      
                      
                      50,253Income
      property
                      
                      
                      309,750
                      
                      
                      
                      309,750Construction
      in progress
                      
                      
                      5,268,205
                      
                      
                      
                      12,289,996Capitalized
      interest
                      
                      
                      385,100
                      
                      
                      
                      342,343Vehicles
                      
                      
                      38,175
                      
                      
                      
                      38,175Demo
      module building
                      
                      
                      6,495,881
                      
                      
                      
                      --Site
      improvements
                      
                      
                      1,082,819
                      
                      
                      
                      --Site
      equipment
                      
                      
                      203,242
                      
                      
                      
                      168,94914,087,790
                      
                      
                      
                      13,238,083Less
      accumulated depreciation
                      
                      
                      286,498
                      
                      
                      
                      105,801$
                      13,801,292
                      
                      
                      $
                      13,132,282
 
 Depreciation
expense was $181,959 and $15,123 for the three months ended March 31, 2009 and
2008, respectively.
  17
  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 Transylvania
International, Inc. (TI) which provided the Company with 100% ownership of the
Clarkdale Slag Project in Clarkdale Arizona, through its wholly owned subsidiary
CML.  This acquisition superseded the joint venture option agreement
to acquire a 50% ownership interest as a joint venture partner pursuant to
Nanominerals Corp. (“NMC”) interest in a joint venture agreement (“JV
Agreement”) dated May 20, 2005 between NMC and Verde River Iron Company, LLC
(“VRIC”).
  The
Company believes the acquisition of the Clarkdale Slag Project was beneficial
because it provides for 100% ownership of the properties, thereby eliminating
the need to finance and further develop the projects in a joint venture
environment.
  This
merger was treated as a statutory merger for tax purposes whereby, CML was
surviving merger entity.
  The
Company applied EITF 98-03 with regard to the acquisition of the Clarkdale Slag
Project. The Company determined that the acquisition of the Clarkdale Slag
Project did not constitute an acquisition of a business, as that term is defined
in EITF 98-03, and the Company recorded the acquisition as a purchase of
assets.
  The $130
million purchase price was comprised of a combination of the cash paid, the
deferred tax liability assumed in connection with the acquisition, and the fair
value of our common shares issued, based on the closing market price of our
common stock, using the average of the high and low prices of our common stock
on the closing date of the acquisition. The Clarkdale Slag Project is without
known reserves and the project is exploratory in nature in accordance with
Industry Guides promulgated by the Commission, Guide 7 paragraph (a)(4)(i). As
required by EITF 04-03 paragraph 2 and EITF 98-11, the Company then allocated
the purchase price among the assets as follows (and also further described in
this Note 3 to the financial statements): $5,916,150 of the purchase price was
allocated to the slag pile site, $3,300,000 to the remaining land acquired, and
$309,750 to income property and improvements. The purchase price allocation to
the real properties were based on fair market values determined using an
independent real estate appraisal firm (Scott W. Lindsay, Arizona Certified
General Real Estate Appraiser No. 30292). The remaining $120,766,877 of the
purchase price was allocated to the Slag Project, which has been capitalized as
a tangible asset in accordance with EITF 04-02. Upon commencement of commercial
production, the material will be amortized using the unit-of-production method
over the life of the Slag Project.
  The
Company also formed a second wholly owned subsidiary CMC, for the purpose of
developing a processing plant at the Clarkdale Slag Project.
   18
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  3.
              CLARKDALE SLAG
      PROJECT (continued)
  Closing
of the TI acquisition occurred on February 15, 2007, (the “Closing Date”) and
was subject to, among other things, the following terms and
conditions:
 
 a)
              The
      Company paid $200,000 in cash to VRIC on the execution of the Letter
      Agreement;
 
 b)
              The
      Company paid $9,900,000 in cash to VRIC on the Closing
    Date;
 
 c)
              The
      Company issued 16,825,000 shares of its common stock, valued at $3.975 per
      share using the average of the high and low on the Closing Date, to the
      designates of VRIC pursuant to Section 4(2) and Regulation D of the
      Securities Act of 1933;
  In
addition to the cash and equity consideration paid and issued upon closing, the
acquisition agreement contains the following payment terms and
conditions:
  d)
              The
      Company agreed to continue to pay VRIC $30,000 per month until the earlier
      of: (i) the date that is 90 days after receipt of a bankable feasibility
      study by the Company (the “Project Funding Date”), or (ii) the tenth
      anniversary of the date of the execution of the letter
      agreement;
  The
acquisition agreement also contains additional contingent payment terms which
are based on the Project Funding Date as defined in the agreement.
  e)
              The Company hasagreed to pay VRIC $6,400,000 on
      the Project Funding Date;
  f)
              The
      Company has agreed to pay VRIC a minimum annual royalty of $500,000,
      commencing on the Project Funding Date (the “Advance Royalty”), and an
      additional royalty consisting of 2.5% of the “net smelter returns” on any
      and all proceeds of production from the Clarkdale Slag Project (the
      “Project Royalty”).  The Advance Royalty remains payable until
      the first to occur of: (1) the end of the first calendar year in which the
      Project Royalty equals or exceeds $500,000; or (2) February 15,
      2017.  In any calendar year in which the Advance Royalty remains
      payable, the combined Advance Royalty and Project Royalty will not exceed
      $500,000 in any calendar year; and,
  g)
              The
      Company has agreed to pay VRIC an additional amount of $3,500,000 from the
      net cash flow of the Clarkdale Slag
Project.
  The
Company has accounted for this as a contingent payment and upon meeting the
contingency requirements, the purchase price of the Clarkdale Slag Project will
be adjusted to reflect the additional consideration.
   19
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 3.
                CLARKDALE SLAG
      PROJECT (continued)
 The
following table reflects the recorded purchase consideration for the Slag
Project:
 
 Purchase
    price:Cash
    payments
                            
                            $
                            10,100,000Joint venture option acquired in
      2005 for cash
                            
                            
                            690,000Warrants issued for joint venture
      option
                            
                            
                            1,918,481Common stock
      issued
                            
                            
                            66,879,375Monthly payments, current
      portion
                            
                            
                            167,827Monthly payments, net of current
      portion
                            
                            
                            2,333,360Acquisition
      costs
                            
                            
                            127,000Total purchase
      price
                            
                            
                            82,216,043Net
      deferred income tax liability assumed - slag project
                            
                            
                            48,076,734$
                            130,292,777
 
 In
accordance with EITF 04-03 paragraph 2 and EITF 98-11 the purchase price of $130
million was allocated to the assets acquired and liabilities assumed, based on
their respective fair values at the date of acquisition. The purchase price
allocated to the real properties was based on fair market values determined
using an independent real estate appraisal firm (Scott W. Lindsay, Arizona
Certified General Real Estate Appraiser No. 30292) and the fair value of the
remaining assets acquired and liabilities assumed were based on management’s
best estimates taking into account all available information at the
time.
  The following table reflects the
      components of the Slag Project:
  Allocation of acquisition
      cost:Slag project (including net
      deferred tax liability assumed of $48,076,734)
                        
                        $
                        120,766,877Land - slag pile
      site
                        
                        
                        5,916,150Land
                        
                        
                        3,300,000Income property and
      improvements
                        
                        
                        309,750Total
                        
                        $
                        130,292,777
  20
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 4.
                  MINERAL PROPERTIES -
      MINING CLAIMS
 
 As of
March 31, 2009 mining claims consisted of 3,200 acres located near Searchlight,
Nevada. The 3,200 acre property is staked as twenty 160 acre claims, most of
which are also double-staked as 142 twenty acre claims. At March 31, 2009
mineral properties balance was $16,947,419.
 
 The
mining claims were acquired during 2005 with issuance of 1,400,000 shares of the
Company’s common stock and the provision that the Company, at its option, issue
an additional 1,400,000 shares each year in June for three remaining
years.  On June 25, 2008, the Company issued the remaining 1,400,000
shares and received the title to the mining claims in consideration of the
satisfaction of the option agreement.
 
 On August
26, 2005, the Company paid $180,500 to the Bureau of Land Management as a bond
for future reclamation work in Searchlight, Nevada. As of March 31, 2009, the
recovery of the reclamation bond is uncertain, therefore the Company has
established a full allowance against the reclamation bond with the offsetting
expense to project exploration costs.
 
 The
mining claims are capitalized as tangible assets in accordance with EITF
04-02.  Upon completion of a bankable feasibility study, the claims
will be amortized using the unit-of-production method over the life of the
claim.  If the Company does not continue with exploration after the
completion of the feasibility study, the claims will be expensed at that
time.
 
 The
Company reviews and evaluates long-lived assets for impairment when events or
changes in circumstances indicate the related carrying amount may not be
recoverable. The assets are subject to impairment consideration under SFAS No.
144 if events or circumstances indicate that their carrying amount might not be
recoverable. As of March 31, 2009 exploration on these properties is progressing
in accordance with the Company’s plan of operations and no events or
circumstances have happened to indicate the related carrying values of the
properties may not be recoverable. When the Company determines SFAS 144
impairment analysis should be done, the analysis will be performed using the
rules of EITF 04-03, “Mining Assets: Impairment and Business
Combinations.”
 5.
                    ACCOUNTS PAYABLE AND
      ACCRUED
LIABILITIES
 Accounts
payable and accrued liabilities at March 31, 2009 and December 31, 2008
consisted of the following:
  March
      31,
                      2009
                    
                    
                    December
      31, 2008Trade
      accounts payable
                    
                    $
                    801,106
                    
                    
                    $
                    1,080,115Accrued
      compensation and related taxes
                    
                    
                    24,090
                    
                    
                    
                    7,546Accrued
      property taxes
                    
                    
                    13,250
                    
                    
                    
                    --Other
                    
                    
                    3,317
                    
                    
                    
                    6,117$
                    841,763
                    
                    
                    $
                    1,093,778
  
   21
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 
  6.
              CAPITAL LEASE
      PAYABLE
  The
Company leases equipment under a capital lease. Capital lease payable consisted
of the following at March 31, 2009 and December 31, 2008,
 Lender
                          Collateral
                          
                          Monthly
                            Payment
                          
                          
                          Interest
                            Rate
                          
                          Maturity
                          
                          March
      31,
                            2009
                          
                          
                          December
      31, 2008Caterpillar
      Financial ServicesCorporation
                          Equipment
                          
                          $
                          2,200
                          
                          
                          
                          4.45
                          %
                          Jul-11
                          
                          $
                          58,411
                          
                          
                          $
                          64,31758,411
                          
                          
                          
                          64,317Capital
      lease payable, current portion
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (24,294
                          )
                          
                          
                          (24,026
                          )Capital
      lease payable, net of current portion
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          $
                          34,117
                          
                          
                          $
                          40,291
 The
following table represents future minimum lease payments on capital lease
payable for each of the twelve month periods ending March 31,
 
 2010
                          
                          $
                          26,4012011
                          
                          
                          26,4012012
                          
                          
                          8,8002013
                          
                          
                          --Thereafter
                          
                          
                          --Total
      future minimum lease payments
                          
                          $
                          61,602Imputed
      interest
                          
                          
                          (3,191
                          )Present
      value of future minimum lease payments
                          
                          $
                          58,411
 
 The
following assets acquired under the capital lease and the related amortization
were included in property, plant and equipment at March 31, 2009 and December
31, 2008,
 
 March
      31, 2009
                    
                    
                    December
      31, 2008Site
      Equipment
                    
                    $
                    116,239
                    
                    
                    $
                    116,239Accumulated
      amortization
                    
                    
                    (53,276
                    )
                    
                    
                    (46,011
                    )$
                    62,963
                    
                    
                    $
                    70,228
   22
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 7.
              CLARKDALE ACQUISITION
      PAYABLE
 
 Pursuant
to the Clarkdale acquisition agreement the Company agreed to pay VRIC $30,000
per month until the Project Funding Date.
 
 The
Company has recorded a liability for this commitment using imputed interest
based on its best estimate of future cash flows. The effective interest rate
used was 8.00%, resulting in an initial present value of $2,501,187 and imputed
interest of $1,128,813. The expected term used was 10 years which represents the
maximum term the VRIC liability is payable if the Company does not obtain
Project Funding.
 
 The
following table represents future principal payments on VRIC payable for each of
the twelve month periods ending March 31,
 
 2010
                    
                    $
                    198,6772011
                    
                    
                    215,1672012
                    
                    
                    233,0262013
                    
                    
                    252,3672014
                    
                    
                    273,313Thereafter
                    
                    
                    933,7372,106,287VRIC
      payable, current portion
                    
                    
                    198,677VRIC
      payable, net of current portion
                    
                    $
                    1,907,610
 
 The
acquisition agreement also contains payment terms which are based on Project
Funding Date as defined in the agreement. The terms of and conditions of these
payments are discussed in more detail in Note 3 and 12.
  23
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 8.
              STOCKHOLDERS’
      EQUITY
 
 During
the three months ended March 31, 2009 the Company’s stockholders’ equity
activity consisted of the following:
 
 a)
              On
      March 31, 2009, the Company awarded and issued 3,284 shares each to its
      two non officer directors pursuant to its directors’ compensation policy.
      The share award was priced at $2.74 per share and has been recorded as
      directors’ compensation expense of $18,000 and additional paid-in
      capital.
 
 b)
              On
      January 30, 2009, the Company issued 100,000 shares of common stock from
      the exercise of nonemployee stock options resulting in cash proceeds of
      $25,000. Options exercised were for 100,000 shares of common stock at
      $0.25 per share.  These stock options were subject to an
      expiration date of November 23,
2010.
 
 c)
              On
      January 12, 2009, the Company issued 400,000 shares of common stock from
      the exercise of nonemployee stock options resulting in cash proceeds of
      $100,000. Options exercised were for 400,000 shares of common stock at
      $0.25 per share.  These stock options were subject to an
      expiration date of February 16,
2009.
 
 9.
              STOCKOPTION PLAN AND
      WARRANTS
 
 On April
30, 2007, the Board of Directors adopted the 2007 Stock Option Plan (the “2007
Plan”) and determined to cease granting any further options under the Company’s
2006 Stock Option Plan. Under the terms of the 2007 Plan, options to purchase up
to 40,000,000 shares of common stock of the Company may be granted to eligible
Participants.  On May 8, 2007, the Board of Directors determined to
cease granting any further options under the Company’s 2003 Nonqualified Stock
Option Plan and amended the number of shares of the Company’s common stock
available for issuance under the 2007 Plan to a maximum of 4,000,000. On June
15, 2007, shareholders of the Company approved the 2007 Plan.
 
 The 2007
Plan provides that the option price for incentive stock options be the fair
market value of the stock at the date of the grant and the option price for
non-qualified stock options be no less than 85% of the fair market value of the
stock at the date of the grant.  The maximum term of an option shall
be established for that option by the Board of Directors or, if not so
established, shall be ten years from the grant date. Options granted under the
2007 Plan become exercisable and expire as determined by the Board of
Directors.
 
 During
the three months ended March 31, 2009, the Company granted stock options as
follows:
  a)
              On
      March 31, 2009, the Company granted nonqualified stock options under the
      2007 Plan for the purchase of 6,569 shares of common stock at $2.74 per
      share. The options were granted to an independent director for directors’
      compensation are fully vested and expire on March 31,
  2014.
   24
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 
 9.
              STOCKOPTION PLAN AND
      WARRANTS (continued)
 
 Expenses
for the three months ended March 31, 2009 and 2008 related to vesting and
granting of stock options were $27,159 and $859, respectively and are included
in general and administrative expense.
 
 Stock
      options–During the three months ended
      March 31, 2009 the Company granted stock options to a director totaling
      6,569, with a weighted average exercise price of $2.74 per share. As of
      March 31, 2009 stock options outstanding totaled 3,016,862 with a weighted
      average exercise price of $1.13 per
  share.
 
 The
following table summarizes the Company’s stock option activity for the three
months ended March 31, 2009:
  Number
      of
                          Shares
                        
                        
                        Weighted
      Average Exercise PriceBalance,
      December 31, 2008
                        
                        
                        3,560,293
                        
                        
                        $
                        1.02Options
      granted and assumed
                        
                        
                        6,569
                        
                        
                        
                        2.74Options
      expired
                        
                        
                        (50,000
                        )
                        
                        
                        2.40Options
      cancelled
                        
                        
                        --
                        
                        
                        
                        --Options
      exercised
                        
                        
                        (500,000
                        )
                        
                        
                        0.25Balance,
      March 31, 2009
                        
                        
                        3,016,862
                        
                        
                        $
                        1.13
 
 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:
 
 2009Dividend
      yield
                  --Expected
      volatility
                  72.67%Risk-free
      interest rate
                  1.67%Expected
      life (years)
                  5
 
 The
Company believes this model provides the best estimate of fair value due to its
ability to incorporate inputs that change over time, such as volatility and
interest rates, and to allow for actual exercise behavior of option holders.
 
 The
Company estimated expected volatility using the historical volatility levels of
the Company’s common stock.  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.
  25
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 9.
              STOCK OPTION PLAN AND
      WARRANTS (continued)
 
 The
following table summarizes the changes of the Company’s stock options subject to
vesting for the three months ended March 31, 2009:
 
 Number
      of
                            Shares
      Subject to Vesting
                          
                          
                          Weighted
      Average
                            Grant
      Date
                            Fair
      ValueUnvested,
      December 31, 2008
                          
                          
                          200,000
                          
                          
                          $
                          0.79Options
      granted
                          
                          
                          --
                          
                          
                          
                          --Options
      vested
                          
                          
                          --
                          
                          
                          
                          --Options
      cancelled
                          
                          
                          --
                          
                          
                          
                          --Unvested,
      March 31, 2009
                          
                          
                          200,000
                          
                          
                          $
                          0.79
 
 As of
March 31, 2009, there was $119,005 total unrecognized compensation cost related
to unvested stock options. This cost is expected to be recognized as follows:
2009 - $49,491, 2010 - $39,873, 2011 - $21,598, and 2012 - $8,043.
 
 The
following table summarizes information about options granted during the three
months ended March 31, 2009:
 Number
      of Options Granted
                    During
      2009
                  
                  Exercise
      Price
                    Equals,
      Exceeds
                    Or
                    Is
      Less than Mkt.
                    Price
      of Stock
                    On
      Grant Date
                  
                  Weighted
                    Average
                    Exercise
                    Price
                  
                  
                  Range
      of
                    Exercise
                    Price
                  
                  
                  Weighted
      Average Fair Value6,569
                  
                  Equals
                  
                  $
                  2.74
                  
                  
                  $
                  2.74
                  
                  
                  $
                  1.22--
                  
                  Exceeds
                  
                  $
                  --
                  
                  
                  $
                  --to--
                  
                  
                  $
                  ----
                  
                  Less
      Than
                  
                  $
                  --
                  
                  
                  $
                  --to--
                  
                  
                  $
                  --6,569
                  
                  Equals
                  
                  $
                  2.74
                  
                  
                  $
                  2.74
                  
                  
                  $
                  1.22
 
 Stock
options/warrants – During the three months ended March 31, 2009 the
Company did not grant any stock warrants.
 
 During
the three months ended March 31, 2009 the Company issued stock options for 6,569
shares of common stock to a director with an exercise price of $2.74 per
share.
 
 The
following table summarizes information about options/warrants granted during the
three months ended March 31, 2009:
  Number
      of
                        Shares
                      
                      
                      Weighted
      Average Exercise PriceBalance,
      December 31, 2008
                      
                      
                      22,602,680
                      
                      
                      $
                      1.11Options/warrants
      granted and assumed
                      
                      
                      6,569
                      
                      
                      
                      2.74Options/warrants
      expired
                      
                      
                      (50,000
                      )
                      
                      
                      2.40Options/warrants
      cancelled
                      
                      
                      --
                      
                      
                      
                      --Options/warrants
      exercised
                      
                      
                      (500,000
                      )
                      
                      
                      0.25Balance,
      March 31, 2009
                      
                      
                      22,059,249
                      
                      
                      $
                      1.12
  26
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 10.
              PROPERTY RENTAL
      AGREEMENTS AND LEASES
 
 The
      Company through its subsidiary CML has the following lease and rental
      agreements as lessor:
 
 Clarkdale Arizona
      Central Railroad – Lease
 
 CML
      has a month-to month rental agreement with Clarkdale Arizona Central
      Railroad. The rental payment is $1,700 per
  month.
 
 Commercial Building –
      Lease
 
 CML
      rents commercial building space to two tenants. The rental arrangements
      for both tenants stem from expired leases and are month-to-month. Rent
      under these agreements was on average $813 per
  month.
 
 Land Lease – Wastewater
Effluent
 
 CML
      assumed a lease as lessor on February 15, 2007 that was entered into by TI
      on August 25, 2004 with the Town of Clarkdale, AZ (Clarkdale). The Company
      provides approximately 60 acres of land to Clarkdale for disposal of Class
      B effluent. In return, the Company has first right to purchase up to
      46,000 gallons per day of the effluent for its use at fifty percent (50%)
      of the potable water rate. In addition, if Class A effluent becomes
      available, the Company may purchase that at seventy five percent (75%) of
      the potable water rate.
 
 The term
of the lease is 5 years with a one year extension available. At such time as
Clarkdale no longer uses the property for effluent disposal, and for a period of
twenty five (25) years measured from the date of the lease, the Company has a
continuing right to purchase Class B, and if available, Class A at then market
rates.
  27
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 11.
              INCOME
      TAXES
 
 The
Company is a Nevada corporation and is subject to federal and Arizona income
taxes.  Nevada does not impose a corporate income tax.
 
 The
income tax benefit consisted of the following at March 31, 2009 and
2008,
 
 March
      31,
                          2009
                        
                        
                        March
      31,
                          2008Income
      tax benefit based on statutory tax rate
                        
                        $
                        (606,916
                        )
                        
                        $
                        (363,406
                        )Non-deductible
      and other
                        
                        
                        1,002
                        
                        
                        
                        661Change
      in valuation allowance
                        
                        
                        24,821
                        
                        
                        
                        (884
                        )Income
      tax benefit
                        
                        $
                        (581,093
                        )
                        
                        $
                        (363,629
                        )
  Significant
components of the Company’s net deferred income tax assets and liabilities at
March 31, 2009 and December 31, 2008 were as follows:
 
 March
      31,
                          2009
                        
                        
                        December
      31,
                          2008Deferred
      income tax assets:Net
      operating loss carryforward
                        
                        $
                        5,283,062
                        
                        
                        $
                        4,742,104Option
      compensation
                        
                        
                        359,732
                        
                        
                        
                        349,412Reclamation
      bond
                        
                        
                        68,590
                        
                        
                        
                        68,590Property,
      plant & equipment
                        
                        
                        40,135
                        
                        
                        
                        --Gross
      deferred income tax asset
                        
                        
                        5,751,519
                        
                        
                        
                        5,160,106Valuation
      allowance
                        
                        
                        (428,322
                        )
                        
                        
                        (403,501
                        )5,323,197
                        
                        
                        
                        4,756,605Deferred
      income tax liabilities:Property,
      plant & equipment
                        
                        
                        --
                        
                        
                        
                        14,501Acquisition
      related liabilities
                        
                        
                        55,197,465
                        
                        
                        
                        55,197,465Net
      deferred income tax liability
                        
                        $
                        49,874,268
                        
                        
                        $
                        50,455,361
 
 A
valuation allowance for deferred tax related to option compensation and
reclamation bond was established for net deferred tax assets not allocated to
offset acquisition related deferred tax liabilities due to the uncertainty of
realizing these deferred tax assets based on conditions existing at March 31,
2009 and December 31, 2008.
 
 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.
 
  28
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 
 11.
              INCOME TAXES
      (continued)
 
 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.
 
 The
Company had cumulative net operating losses of approximately $13,902,796 and
$12,483,860 as of March 31, 2009 and December 31, 2008, respectively for federal
income tax purposes. The federal net operating loss carryforwards will be
expiring between 2025 and 2029.
 
 The
Company had cumulative net operating losses of approximately $6,387,568 and
$5,325,778 as of March 31, 2009 and December 31, 2008, respectively for state
income tax purposes. The state net operating loss carryforwards will be expiring
between 2013 and 2015.
 
 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.  The Company is no
longer subject to income tax examinations by US federal and state tax
authorities for years prior to 2005. 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.
  29
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 12.
                COMMITMENTS AND
      CONTINGENCIES
 Lease obligations –
The Company rents office space in Henderson, Nevada.  The lease terms
expired in November 2006 and the Company continues to rent the existing space
under month-to-month terms for $4,900 per month.
 
 Rental
expense, resulting from this operating lease agreement, approximated $14,700 for
each of the three months ended March 31, 2009 and 2008,
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.
 
  30
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 12.
                  COMMITMENTS AND
      CONTINGENCIES
(continued)
 Purchase consideration
Clarkdale Slag Project – In consideration of the acquisition of the
Clarkdale Slag Project from VRIC, the Company has agreed to certain additional
contingent payments. The acquisition agreement contains payment terms which are
based on Project Funding Date as defined in the agreement:
 
 a)
              The Company hasagreed to pay VRIC $6,400,000 on
      the Project Funding Date;
  b)
              The
      Company has agreed to pay VRIC a minimum annual royalty of $500,000,
      commencing on the Project Funding Date (the “Advance Royalty”), and an
      additional royalty consisting of 2.5% of the net smelter returns (“NSR”)
      on any and all proceeds of production from the Clarkdale Slag Project (the
      “Project Royalty”).  The Advance Royalty remains payable until
      the first to occur of: (1) the end of the first calendar year in which the
      Project Royalty equals or exceeds $500,000; or (2) February 15,
      2017.  In any calendar year in which the Advance Royalty remains
      payable, the combined Advance Royalty and Project Royalty will not exceed
      $500,000; and,
  c)
              The
      Company has agreed to pay VRIC an additional amount of $3,500,000 from the
      net cash flow of the Clarkdale Slag
Project.
  The
Advance Royalty shall continue for a period of ten (10) years from the Agreement
Date or until such time that the Project Royalty shall exceed $500,000 in any
calendar year, at which time the Advance Royalty requirement shall end
forever.
 
 Development agreement
– In January 2009, the Company submitted a development agreement to the Town of
Clarkdale for development of an Industrial Collector Road.  The
purpose of the road is to provide the Company with the capability to enhance the
flow of industrial traffic to and from the Clarkdale Slag
Project.  The construction of the road is a required infrastructure
improvement under the terms of the Company’s conditional use permit with the
Town of Clarkdale.  The Town of Clarkdale approved the development
agreement on January 9, 2009.
  The
development agreement provides that its effective date will be the later of (i)
30 days from the approving resolution of the agreement by the Clarkdale Town
Council; or (ii) the date on which the Town of Clarkdale obtains a connection
dedication from separate property owners who have land that will be utilized in
construction of the road; or (iii) the date on which the Town of Clarkdale
receives the proper effluent permit.  The Town of Clarkdale has
approved the development agreement, and the remaining two contingencies with
respect to the effectiveness of the development agreement are beyond the
Company’s control.
  Under the
development agreement, the Company is obligated to complete the development of
the road within two years after the effective date of the
agreement.  If the Company does not complete the road within the two
year period, the Company may lose the conditional use permit from the Town of
Clarkdale.  Further, as a condition of the Company’s developing any of
the Company’s property that is adjacent to the Clarkdale Slag Project, the
Company will be required to construct additional enhancements to the road. The
Company will have ten years from the start of construction on the road in which
to complete the additional enhancements.  However, the Company does
not currently have any defined plans for the development of the adjacent
property.
  31
  SEARCHLIGHT
MINERALS CORP.
 (AN
EXPLORATION STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 12.
                  COMMITMENTS AND
      CONTINGENCIES(continued)
 The
Company estimates that the initial cost of construction of the road will be
approximately $3,500,000 and that the cost of the additional enhancements will
be approximately $1,200,000.  The Company will be required to fund the
costs of this construction.  Based on the uncertainty of the timing of
these contingencies, the Company has not included these costs in current
operating plans or budgets.  However, the Company will require
additional project financing or other financing in order to fund the
construction of the road and the additional enhancements.  There are
no assurances that the Company will be able to obtain additional financing in an
amount sufficient to meet the Company’s needs or on terms that are acceptable to
the Company.  The failure to complete the road and the additional
enhancements in a timely manner under the development agreement would have a
material adverse effect on the Clarkdale Slag Project and
operations.
  13.
              CONCENTRATION OF
      CREDIT RISK
 
 The
Company maintains its cash accounts in two financial institutions. Cash accounts
at these financial institutions are insured by the Federal Deposit Insurance
Corporation (FDIC) for up to $250,000 per financial institution. To date, the
Company has not experienced a material loss or lack of access to its cash
accounts; however no assurance can be provided that access to the Company’s cash
accounts will not be impacted by adverse conditions in the financial markets. At
March 31, 2009, the Company had deposits in excess of FDIC insured limits in the
amount of $4,273,191. Subsequent to quarter end, the Company placed substantial
portion of its cash balances in a checking account fully guaranteed by the FDIC
for the entire amount in the account.
  14.
              CONCENTRATION OF
      ACTIVITY
 
 For the
three months ended March 31, 2009, the Company purchased services from two major
vendors, Baker & Hostetler LLP and Cimetta Engineering, which exceeded more
than 10% of total purchases and amounted to approximately $257,519 and $296,754,
respectively.
 15.
                RELATED PARTY
      TRANSACTIONS
 During
the three months ended March 31, 2009, 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, 2009, the Company incurred total fees and
reimbursement of expenses to NMC of $90,000 and $31,782, respectively. At March
31, 2009, the Company had an outstanding balance due to NMC of
$34,855.
 
 During
the three months ended March 31, 2009, 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 to CMOW of $22,202 for the three months ended March
31, 2009.  At March 31, 2009, the Company had an outstanding balance
due to CMOW of $22,202.
  32
  Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations




Certain
statements in this Quarterly Report on Form 10-Q, or the Report, are
“forward-looking statements.”  These forward-looking statements
include, but are not limited to, statements about the plans, objectives,
expectations and intentions of Searchlight Minerals Corp., a Nevada corporation
(referred to in this Report as “we,” “us,” “our” or “registrant”) and other
statements contained in this Report that are not historical
facts.  Forward-looking statements in this Report or hereafter
included in other publicly available documents filed with the Securities and
Exchange Commission, or the Commission, reports to our stockholders and other
publicly available statements issued or released by us involve known and unknown
risks, uncertainties and other factors which could cause our actual results,
performance (financial or operating) or achievements to differ from the future
results, performance (financial or operating) or achievements expressed or
implied by such forward-looking statements.  Such future results are
based upon management’s best estimates based upon current conditions and the
most recent results of operations.  When used in this Report, the
words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate”
and similar expressions are generally intended to identify forward-looking
statements, because these forward-looking statements involve risks and
uncertainties.  There are important factors that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements, including our plans, objectives, expectations and
intentions and other factors that are discussed under the section entitled “Risk
Factors,” in this Report and in our Annual Report on Form 10-K for the year
ended December 31, 2008.




The following discussion and analysis
summarizes our plan of operation for the next twelve months, our results of
operations for the three month period ended March 31, 2009 and changes in our
financial condition from our year ended December 31, 2008.  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-K for the year ended December 31, 2008.




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, which is a reclamation project to recover precious and base
metals from the reprocessing of slag produced from the smelting of copper ore
mined at the United Verde Copper Mine in Jerome, Arizona; and (ii) the
Searchlight Gold Project, which involves exploration for precious metals on
mining claims near Searchlight, Nevada.




Clarkdale Slag
Project




Since our acquisition of 100% of the
Clarkdale Slag Project in 2007, we have devoted considerable effort designing
and engineering our first production module, which included finalizing the
production flow sheet, sourcing and purchasing equipment as well as refurbishing
the module building and constructing the electrowinning building.  The
module and electrowinning buildings house the first production module, which has
been designed to allow for the grinding, leaching, filtering and extraction of
precious and base metals from the slag material and is expected to process
between 100 and 250 tons of slag material per day.   During 2008,
we completed the refurbishing and construction of the module and electrowinning
buildings, respectively, and we installed all the necessary equipment in the two
buildings for the operation of the first production module.  Also in
2008, we expended approximately $1,000,000 to immediately address Phase II long
lead-time items such as grading 121 acres of land, drilling a well and preparing
the architecture and engineering drawings for the proposed full-scale production
facility. In the first two quarters of 2009, we have been executing our plan of
operation on the Clarkdale Slag Project, which includes the start-up and
operation of the first production module, in an effort to achieve consistent
levels of gold and silver extraction that would support the economic feasibility
of a commercial production facility.




33









Figure 1. Production Module
Outline




On June 17, 2008, we received a
Certificate of Occupancy for the laboratory facilities located within the module
building, allowing our chemists to conduct immediate, on-site analyses of
leaching results to further optimize the metals extraction
process.  On August 8, 2008, we received a Certificate of Occupancy
for the module building, allowing us to operate the grinding, leaching,
filtering and resin extraction equipment within the module
building.  On December 30, 2008, we received a Certificate of
Occupancy for the electrowinning building, allowing us to operate the copper and
zinc electrowinning equipment within the electrowinning
building.




We have completed the construction of
the production module for the Clarkdale Slag Project and are now actively
engaged in the testing and start-up phase of the project.  Since the
start of 2009, the primary emphasis has been placed on the crushing and grinding
circuits as well as the leaching and extraction of precious metals (gold and
silver).  To date, our internal laboratory testing has reflected
consistent levels of extractable precious metals in pregnant leach solutions
from the Clarkdale slag material.  We believe that we can improve
extraction rates further by optimizing the grind, the chemical characteristics
of the leach solutions and the amount of residence time required for maximum
grind and leach efficiency.  We have engaged Mountain States R&D
International, Inc., an independent engineering firm, to analyze, in accordance
with chain-of-custody standards, the internal operating results of the gold
circuit, which we believe comprises the majority of the potential value of the
entire Clarkdale Slag Project.


34


We incurred delays during the
construction of our production module, including delays in receiving large
pieces of equipment from manufacturers, engineering related delays due to the
complexity of installing the production module equipment in a World War I era
module building and the decision to construct a separate building to house the
electrowinning equipment after it was determined that the electrowinning
equipment would not adequately fit in the module
building.  Consequently, the construction timeline for completing the
production module was extended by approximately twelve months from what we
originally anticipated and there was an approximately55% increasein costs from what we had originally
projected.




We anticipate that the operation of 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 establishes economic viability, we expect to commence
construction of a full-scale production facility where we intend to install
subsequent modules in parallel where we expect that each subsequent module would
be comparable in technology and scale  to the initial production
module.  The number of subsequent modules required to attain
full-production of 2,000 tons per day will be determined once the initial
production module capacity is determined.  The cost of developing our
initial production module was approximately $12,000,000.  We do not
believe that the construction of subsequent modules will cost as much because:
(i) of the knowledge we have developed in the construction of the initial
production module, and (ii) any additional modules will be new construction,
rather than rehabilitation of an older building.  However, the scope
and size of our full-scale production facility, including the number of
additional modules, the timing and cost of additional modules and the economies
of scale of a production facility, will depend upon a number of factors,
including the results of a feasibility study and the availability of
funding.  A more thorough economic analysis of the full-scale
production facility, including specific capital and operating costs, funding
schedules and funding sources, is expected to occur during the feasibility
evaluation of the initial production module.  We anticipate the first
stage of the feasibility evaluation of the production module to begin during the
second quarter of 2009.




We have budgeted $2,400,000 for our work
program on the Clarkdale Slag Project over the next twelve months, which
includes the operation of the production module and performing the feasibility
study. A decision on allocating approximately $6,000,000 of additional funds for
the Phase II expansion will be made once the first production module is
operational and its results are analyzed.




We expect that there will be significant
financing requirements in order to finance the construction of a full-scale
production facility, and cannot assure you that such funding will be available
at all or on terms that are reasonably acceptable to us.  If the
results from our feasibility study and the results from the operation of the
production module do not support a basis for us to proceed with the construction
of our proposed, full-scale production facility or we cannot obtain funding at
all or on terms that are reasonably acceptable to us, we will have to scale back
or abandon our proposed operations on the Clarkdale Slag Project.  If
management determines, based on any factors, including the foregoing, that
capitalized costs associated with any of our mineral interests are not likely to
be recovered, we would incur a significant impairment of our investment in such
property interests on our financial statements.




Searchlight Gold
Project




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


35


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




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




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




The
Searchlight Gold Project involves exploration for precious metals on mining
claims near Searchlight, Nevada.  We have been engaged in an
exploration program on our Searchlight Gold Project since 2005.  The
prior owners of the interests in the Searchlight Gold Project had previously
obtained a BLM approved Plan of Operations, which included permission to drill
eighteen holes on the 3,200 acre project area and to mine a 36 acre pit on our
RR304 claim.  Our ability to drill or mine the 36 acre pit on the
Searchlight Gold Project has been suspended by the BLM, at this time, as the
result of an order for “Immediate Suspension of All Activities” notice issued by
the BLM to K. Ian Matheson, one of the prior Searchlight Claim owners, who also
was one of our former officers and directors (but remains as a current principal
stockholder), and certain of his affiliates (who also were prior Searchlight
Claim owners and are currently among our stockholders) covering all projects
tied to Mr. Matheson, including the Searchlight Gold Project Plan of Operations,
our planned drilling operations and our ability to fulfill our plan of operation
with respect to the Searchlight Gold Project.




36


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




In
September 2008, we decided that we would only continue to pursue the permits to
drill on the project area and forgo the 36-acre pit until a later date since we
believed that by keeping the pit area in the Plan of Operations, it might delay
the BLM’s approval process for the Plan of Operations.  Further, by
reducing the scope of the permit, we decided that we could submit the
application in the form of a Notice of Intent, a shorter and less complex
application form than a Plan of Operations.  Consequently, on
September 24, 2008, we withdrew the Plan of Operations and submitted a Notice of
Intent with the BLM, pursuant to which we sought permission to drill eighteen
500-foot drill holes on the Searchlight project area.




On
October 10, 2008, we received a comment letter from the BLM regarding the Notice
of Intent, which included a request to clarify the exact depth of each drill
hole, whether the drill holes will be cased to prevent internal caving, the
length of time each drill hole will remain open, a revised reclamation cost
estimation and a minor revision to one of the maps.  On October 22,
2008, we responded to these comments and submitted an amended Notice of Intent
with the BLM.  On December 15, 2008, we received a letter from the BLM
advising us that the BLM had closed our Notice of Intent from consideration and
that a new Plan of Operations would be required based on two issues relating to
the Desert Tortoise (Gopherus asassizii), a Federally listed Threatened Species:
(i) the proximity of the project area to a nearby Area of Critical Environmental
concern (ACEC); and (ii) the future likelihood of tortoises being present on the
land within the project area which is involved in the application.




On
January 13, 2009, we filed a Notice of Appeal of the BLM’s decision regarding
the closing of our Notice of Intent, and, thereafter, submitted a statement of
reasons relating to the appeal, which supports our case that we should be
allowed to obtain our desired drilling permits through a Notice of Intent, as
opposed to a Plan of Operations, even considering the Searchlight Project’s
proximity to the ACEC.




On March
23, 2009, we submitted a new Plan of Operations to the BLM, taking into account
the Desert Tortoise issue.  In the new Plan of Operations, we have
requested permission to drill eighteen drill holes on the project
area.  On April 16, 2009, we received a comment letter from the BLM
regarding our Plan of Operations, which included a request to clarify the
storage of petroleum based products for the drill rig, a list of materials to be
stored onsite with regard to the “Preventative Maintenance,” a seed mix cost
estimate, the location and amount of land required to stockpile the topsoil used
to salvage the cacti and yucca at each drill site, and the coordinates of each
drill location.  We intend to submit out answers the BLM’s questions
in May 2009.




There is
no regulatory time frame for the BLM to review our Plan of
Operation.  We understand that the average time frame for approval of
a plan of operation by the Las Vegas, Nevada branch office of the BLM since
January 1, 2000 has been approximately four years and five
months.  Although we understand that the average time frame of the
application process by the Las Vegas branch office of the BLM relating to an
environmental assessment in connection with a plan of operations is
approximately eleven months, the “threatened species” issue raised by the BLM
requires the BLM to consult with the U.S. Fish and Wildlife Service of the
Department of Interior, and the BLM has no control over the length of this
consultation process in order to develop any necessary environmental mitigation
measures.  Further, although we are still following through with our
appeal regarding the closing of our Notice of Intent, we determined that, due to
the standard lengthy time required to have a Plan of Operations approved by the
BLM and should we be unsuccessful with our appeal, it would be prudent to begin
the approval process immediately by filing a new Plan of
Operations.


37


Whether
we obtain an approved Notice of Intent or Plan of Operations, our work on the
project site will be limited to the scope within the Notice of Intent or Plan of
Operations.  However, the Plan of Operations approval process will
delay the start of our drilling program for an undetermined period of
time.  To perform any additional drilling or mining on the project, we
would be required to submit a new application to the BLM for approval prior to
the commencement of any such additional activities.  We do not believe
these added requirements will have a material adverse impact on
our  plan of operations for the Searchlight Gold
Project.  There is no assurance of the timeline for approval by the
BLM or that the BLM will grant approval.  Our drilling and mining
program on this project is dependent on obtaining the necessary approval from
the BLM.  Therefore, if approval is not obtained, we may have to scale
back or abandon exploration efforts on the project.  If management
determines, based on any factors including the foregoing, that capitalized costs
associated with any of our mineral interests are not likely to be recovered, we
would incur a significant impairment of our investment in such property
interests on our financial statements.




We have
budgeted $200,000 to our twelve month work program for the Searchlight Gold
Project.  Our work program is focused on continuing the testing
program with Arrakis, including metallurgical tests, bulk sampling, milling,
leaching and extraction tests to optimize recovery of precious metals from
samples taken from the project and exploring in more detail the potential
capital and operating costs of implementing methods, such as autoclave
leaching.  We will also focus on our work with the BLM, our
consultants and our attorneys to help us obtain approval of the Plan of
Operations, containing the necessary permits to execute on our desired drilling
program.  The drilling and pre-feasibility program, which we
anticipate will include an eighteen-hole drill program, chain-of-custody
sampling and assaying of drill hole material, pilot plant tests and a
pre-feasibility report, is expected to commence shortly after receiving the
BLM’s approval of the Plan of Operations.




Anticipated Cash
Requirements




Over the
next twelve months, our management anticipates that the minimum cash
requirements for funding our proposed exploration and development program and
our continued operations will be approximately $5,300,000.  At April
30, 2009, we had cash reserves in the amount of approximately
$4,000,000.  This amount is substantially less than the total
expenditures that we have budgeted for the next 12 months by approximately
$1,300,000.  We estimate that our current financial resources are
sufficient to allow us to meet the anticipated costs of our exploration and
development programs for the remaining three quarters of our 2009 fiscal
year.  However, if actual costs are greater than we have anticipated,
we will require additional financing in order to fund our exploration and
development plans for 2009.  We do not currently have any financing
arrangements in place, and 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.




Our plan also includes anticipated
expenditures of approximately $6,000,000 on Phase II of our Clarkdale Slag
Project, subject to funding availability. We will require additional funding to
fulfill our entire anticipated plan of operations.  In addition, the
actual costs of completing those activities may be greater than
anticipated.


38


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




BUDGETAdministrative
      Expenses
                
                $
                1,400,000Legal
      and Accounting Expenses
                
                $
                800,000Consulting
      Services
                
                $
                500,000SUBTOTAL
                
                $
                2,700,000Clarkdale Slag
      ProjectProduction
      Module Operation
                
                $
                1,900,000Feasibility
      Study
                
                $
                500,000SUBTOTAL
                
                $
                2,400,000Searchlight Gold
      ProjectMetallurgical
      Testing and Pre-Feasibility Program
                
                $
                100,000Permitting
                
                $
                100,000SUBTOTAL
                
                $
                200,000TOTAL
                
                $
                5,300,000




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.




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




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




Capitalized
interest cost - We capitalize interest cost related to acquisition,
development and construction of property and equipment which is designed as
integral parts of the manufacturing process of this project.  The
capitalized interest is recorded as part of the asset it relates to and will be
amortized over the asset’s useful life once production commences.




Exploration
costs– Mineral exploration
costs are expensed as incurred.




39


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




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




Impairment of
long-lived assets–We review and evaluate long-lived assets for impairment when events or
changes in circumstances indicate the related carrying amounts may not be
recoverable. The assets are subject to impairment consideration under SFAS No.
144 if events or circumstances indicate that their carrying amount might not be
recoverable.  As of March 31, 2009 exploration on these properties is
progressing in accordance with our plan of operations and no events or
circumstances have happened to indicate the related carrying values of the
properties may not be recoverable. When we determine SFAS 144 impairment
analysis should be done, the analysis will be performed using the rules of EITF
04-03, “Mining Assets: Impairment and Business Combinations.”




Results of
Operations




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




Three Months Ended March
      31,2009
              
              
              2008
              
              
              Percent
                Increase/
                (Decrease)Revenue
              
              $
              -
              
              
              $
              -
              
              
              
              n/aOperating
      Expenses
              
              
              (1,572,226
              )
              
              
              (1,063,035
              )
              
              
              47.9
              %Rental
    Revenue
              
              
              7,540
              
              
              
              9,300
              
              
              
              (18.9
              )
      %Interest and Dividend
      Income
              
              
              5,774
              
              
              
              98,360
              
              
              
              (94.1
              )
      %Interest
      expense
              
              
              (694
              )
              
              
              (950
              )
              
              
              (26.9
              )
      %Loss on equipment
      disposition
              
              
              (1,542
              )
              
              
              -
              
              
              
              n/aIncome tax
      benefit
              
              
              581,093
              
              
              
              363,629
              
              
              
              59.8
              %Net Loss
              
              $
              (980,055
              )
              
              $
              (592,696
              )
              
              
              65.4
              %




Revenue




We are
currently in the exploration stage of our business, and have not earned any
revenues from our planned mineral operations to date.  We did not
generate any revenues from inception in 2000 through the quarter ended March 31,
2009.  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.




40


Operating Expenses




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




Three Months Ended March
      31,2009
              
              
              2008
              
              
              Percent
                Increase/
                (Decrease)Mineral exploration and evaluation
      expenses
              
              $
              312,334
              
              
              $
              114,518
              
              
              
              172.7
              %Mineral exploration and evaluation
      expenses – related party
              
              
              90,000
              
              
              
              90,000
              
              
              
              0.0
              %Administrative – Clarkdale
      site
              
              
              232,688
              
              
              
              235,140
              
              
              
              (1.0
              )%General and
      administrative
              
              
              733,043
              
              
              
              591,851
              
              
              
              23.9
              %General and administrative
      –
                related
    party
              
              
              22,202
              
              
              
              16,403
              
              
              
              35.6
              %Depreciation
              
              
              181,959
              
              
              
              15,123
              
              
              
              1103.2
              %Total Operating
      Expenses
              
              $
              1,572,226
              
              
              $
              1,063,035
              
              
              
              47.9
              %




Operating expenses increased by 47.9% to
$1,572,226 during the three month period ended March 31, 2009 from $1,063,035
during the three month period ended March 31, 2008.  Operating expense
increased during the three month period ended March 31, 2009 compared to the
corresponding period in 2008 primarily as a result of increases in general and
administrative expenses, site administrative expenses for increased staffing
during construction, increase in depreciation expense, and mineral exploration
and evaluation expenses.




General and administrative expenses
increased by 23.9% to $733,043 during the three month period ended March 31,
2009 from $591,851 during the three month period ended March 31,
2008.  General and administrative expenses increased primarily as a
result of (i) increased professional and administrative expenses associated with
the preparation of our 2008 annual report on Form 10-K, the preparation of our
registration statement on Form S-1, and legal and accounting fees; (ii)
increased expenses related to the administration of the Clarkdale Slag Project
site during construction, which are expected to continue as construction
progresses; and (iii) increased director compensation due to expansion of our
board of directors. We anticipate operating expenses to continue to increase if
we grow our business operations.




Included in general and administrative
expenses for the three month period ended March 31, 2009 and 2008 were
compensation expenses related to the option vesting and option grants of $27,159
and $859, respectively.




On April 30, 2007, we adopted our 2007
Stock Option Plan (the “2007 Plan”). Under the terms of the 2007 Plan, as
amended May 8, 2007, options to purchase up to 4,000,000 shares of common stock
may be granted to our employees, officers, directors, and eligible consultants
under such plan. On June 15, 2007, our stockholders approved the 2007 Plan. As
of March 31, 2009, 321,162 options have been granted under the 2007 Plan with an
exercise price ranging from $1.45 to $2.74 per share.




In addition, we incurred $22,202 and
$16,403 during the three month periods ended March 31, 2009 and 2008,
respectively, for general and administrative expenses for accounting support
services to Cupit, Milligan, Ogden & Williams, CPAs, an affiliate of Melvin
L. Williams, our Chief Financial Officer.  These expenses increased
during the three month period ended March 31, 2009 as compared to 2008 as a
result of the preparation of our registration statement on Form S-1 and the
completion of the first time filing of the Arizona Business Personal Property
Statement. These accounting support services included bookkeeping input for
Clarkdale facility, assistance in preparing working papers for quarterly and
annual reporting, and preparation of federal and state tax filings. These
expenses do not include any fees for Mr. Williams’ time in directly supervising
the support staff. Mr. Williams’ compensation has been provided in the form of
salary.




41


Mineral exploration and evaluation
expenses increased to $312,334 during the three month period ended March 31,
2009 from $114,518 during the three month period ended March 31,
2008.  Mineral exploration and evaluation expenses increased primarily
as a result of increased testing activity subsequent to receiving of Certificate
of Occupancy for the demonstration module building.




Included in mineral exploration and
evaluation expenses were the amounts of $90,000 and $90,000 paid during the
three month period ended March 31, 2009 and 2008, 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,
including providing us with the use of its laboratory, instrumentation, milling
equipment and research facilities with respect to our Searchlight Gold Project
and Clarkdale Slag Project and financing related activities, including providing
assistance to us when potential financiers performed technical due diligence on
our projects and made technical presentation to potential investors in
connection with the exploration and development of our mineral projects, and
reimbursement of expenses provided by Nanominerals in connection with the
exploration and development of our mineral projects.




Depreciation expense increased to
$181,959 during the three month period ended March 31, 2009 from $15,123 during
the three month period ended March 31, 2008.  Depreciation expense
increased primarilybecause
a substantial portion of property and equipment that was previously reported as
construction in progress was placed in service during the three month period
ended March 31, 2009.




For the three month period ended March
31, 2009, we purchased services from two major vendors, Baker & Hostetler
LLP, our legal counsel, and Cimetta Engineering, which exceeded more than 10% of
total purchases and amounted to approximately $257,519 and $296,754,
respectively.For the three month period 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.




Other Income and
Expenses




Total other income decreased to $11,078
during the three month period ended March 31, 2009 from $106,710 during the
three month period ended March 31, 2008.  The decrease in total other
income primarily resulted from a decrease in interest and dividend income. The
decrease in interest and dividend income earned was attributable to lower
interest rates and lower cash reserves earning interest.




During the three month period ended
March 31, 2009, we received incidental rental revenue of $7,540 compared to
$9,300 for the same period in 2008 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 an average rate of $813 per month. The lease arrangements are on a
month to month basis with no formal agreements.




Income Tax Benefit




Income tax benefit increased to $581,093
for the three months period ended March 31, 2009 from $363,629 during the three
month period ended March 31, 2008.  The increase in income tax benefit
primarily resulted from the increase in exploration stage losses during the
three month period ended March 31, 2009 from the three month period ended March
31, 2008.




42


Net Loss




The aforementioned factors resulted in a
net loss of $980,055, or $0.01 per common share, for the three month period
ended March 31, 2009, as compared to a net loss of $592,696, or $0.01 per common
share, for the three month period ended March 31, 2008.




As of March 31, 2009 and December 31,
2008, we had cumulative net operating loss carryforwards of approximately
$13,902,796 and $12,483,860, respectively for federal income
taxes.  The federal net operating loss carryforwards expire between
2025 and 2029.




We had cumulative state net
operating losses of approximately $6,387,568 and $5,325,778 as of March 31, 2009
and December 31, 2008, respectively for state income tax
purposes.  The state net operating loss carryforwards expire between
2013 and 2015.




Liquidity and Capital
Resources




Historically, we have financed our
operations primarily through the sale of common stock and other convertible
equity securities. During 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 per
      unit.  Each unit sold consisted of one share of our common stock
      and one-half of one share common stock 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 the January 18,
      2008 expiration date.




These agreements do not include
contractual penalty provisions for failure to comply with these registration
rights provisions.  Further, we are not a party to any other
agreements which require us to pay liquidated damages in the future for failure
to register securities for sale.




Working
Capital




The following is a summary of our
working capital at March 31, 2009 and December 31, 2008:




At March 31,
                  2009
                
                
                At December 31,
      2008
                
                
                Percent
                  Increase/(Decrease)Current
    Assets
                
                $
                4,896,884
                
                
                $
                7,307,005
                
                
                
                (33.0
                )
      %Current
      Liabilities
                
                
                (1,121,791
                )
                
                
                (1,421,075
                )
                
                
                (21.1
                )
      %Working
    Capital
                
                $
                3,775,093
                
                
                $
                5,885,930
                
                
                
                (35.9
                )
      %


43




As of March 31, 2009, we had an
accumulated deficit of $14,336,537. As of March 31, 2009, we had working capital
of $3,775,093, compared to working capital of $5,885,930 as of December 31,
2008. The decrease in our working capital was primarily attributable to our net
loss and capital expenditures partially offset by the sales of our common stock
in 2009. Cash was $4,731,935 as of March 31, 2009, as compared to $7,055,591 as
of December 31, 2008.  Property and equipment increased to $13,801,292
as of March 31, 2009 from $13,132,282 as of December 31, 2008.  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 $49,874,268 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
sources and uses of cash for the periods set forth below:




Three Months Ended March
      31,2009
                
                
                2008
                
                
                Percent
                  Increase/(Decrease)Cash Flows Used in
      Operating
                  Activities
                
                $
                (1,548,896
                )
                
                $
                (1,047,458
                )
                
                
                47.9
                %Cash Flows Used in
      Investing
                  Activities
                
                
                (846,611
                )
                
                
                (1,439,962
                )
                
                
                (41.3
                )
      %Cash Flows Provided by
      Financing
                  Activities
                
                
                71,851
                
                
                
                7,664,228
                
                
                
                (99.1
                )
      %Net Change in Cash During
      Period
                
                $
                (2,323,656
                )
                
                $
                5,176,808
                
                
                
                (144.9
                )
      %




Net
cash used in operating activities.Net cash used in operating activities
increased to $1,548,896 during the three month period ended March 31, 2009 from
$1,047,458 during the three month period ended March 31, 2008.  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 $581,093.




Net
cash used in investing activities.We used $846,611 in investing
activities during the three month period ended March 31, 2009, as compared to
$1,439,962 during the three month period ended March 31, 2008.  The
decrease in the three month period ended March 31, 2009 was primarily a result
of decrease in purchases of property and equipment relating to the Clarkdale
Slag Project which decreased primarily as a result of increased testing activity
subsequent to receiving of Certificate of Occupancy for the demonstration module
building.




Net
cash provided by financing activities.Net cash provided by financing
activities was $71,851 for the three month period ended March 31, 2009 compared
to $7,664,228 for the three month period ended March 31, 2008.  Net
cash provided by financing activities during the three month period ended March
31, 2009 primarily resulted from the receipt of $125,000 from the exercise of
stock options. Net cash provided by financing activities during the three month
period 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.




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:




44




·
            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 $5,300,000.  As of
April 30, 2009, we had cash reserves in the amount of approximately
$4,000,000.




This
amount is substantially less than the total expenditures that we have budgeted
for the next 12 months by approximately $1,300,000.  We estimate that
our current financial resources are sufficient to allow us to meet the
anticipated costs of our exploration and development programs for the remaining
three quarters of our 2009 fiscal year.  However, if actual costs are
greater than we have anticipated, we will require additional financing in order
to fund our exploration and development plans for 2009.  We do not
currently have any financing arrangements in place, and 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.




Our current twelve month plan also
includes anticipated expenditure of approximately $6,000,000 on Phase II of our
Clarkdale Slag Project.  We will require additional funding to fulfill
our entire anticipated plan of operations.  In addition, the actual
costs of completing those activities may be greater than
anticipated.




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




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




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




45


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




Off-Balance Sheet
Arrangements




None.




Recent Accounting
Pronouncements




In April
2009, FASB Staff Position (FSP) No. FAS 107-1 and APB 28-1 was issued to amend
SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” to
require disclosures about fair value of financial instruments for interim
reporting period as well as in annual financial statements. This FSP also amends
APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures
in summarized financial information at interim reporting periods. FSP No. 107-1
and APB 28-1 is effective for interim reporting period ending after June 15,
2009. Adoption of this guidance is not expected to have a material impact on our
consolidated financial statements.




In April 2009, FSP No. FAS 157-4,
“Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly,” was issued to provide additional guidance for estimating the fair
value in accordance with SFAS No. 157, “Fair Value Measurements,” when the
volume and level of activity for the asset or liability have significantly
decreased. This FSP also provides guidance on identifying circumstances that
indicate a transaction is not orderly. FSP No. FAS 157-4 is effective for
interim and annual reporting periods ending after June 15, 2009, and shall be
applied prospectively. Adoption of this guidance is not expected to have a
material impact on our consolidated financial statements.




In April
2009, FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies.” This FSP
amends the guidance in FASB Statement No. 141 to require that assets acquired
and liabilities assumed in a business combination that arise from contingencies
be recognized at fair value if fair value can be reasonable estimated. If fair
value of such asset or liability cannot be reasonably estimated, the asset or
liability would generally be recognized in accordance with FASB Statement No. 5,
“Accounting for Contingencies,” and FASB Interpretation (FIN) No. 14,
“Reasonable Estimation of the Amount of a Loss.” This FSP eliminates the
requirements to disclose an estimate of the range of outcomes of recognized
contingencies at the acquisition date. This FSP also requires that contingent
consideration arrangements of an acquiree assumed by the acquirer in a business
combination be treated as contingent consideration of the acquirer and should be
initially and subsequently measured at fair value in accordance with Statement
141R. This FSP is effective for assets or liabilities arising from contingencies
in business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. The adoption of this
statement had little or no effect on our consolidated financial position,
results of operations, and disclosures.




In December 2008, the FASB issued FSP
No. FAS 132(R)-1, “Employers’ Disclosures about Post-Retirement
Benefit Plan Assets” (“FSP FAS 132(R)-1”), which amends FASB Statement
No. 132 “Employers’ Disclosures about Pensions and Other Post-Retirement
Benefits” (“FAS 132”), to provide guidance on an employer’s disclosures
about plan assets of a defined benefit pension or other post-retirement plan.
The objective of FSP FAS 132(R)-1 is to require more detailed disclosures
about employers’ plan assets, including employers’ investment strategies, major
categories of plan assets, concentrations of risk within plan assets, and
valuation techniques used to measure the fair value of plan assets. FSP
FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009.
Upon initial application, the provisions of this FSP are not required for
earlier periods that are presented for comparative purposes. The adoption of
this statement had little or no effect on our consolidated financial position,
results of operations, and disclosures.




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In November 2008, the EITF reached
consensus on Issue No. 08-6, “Equity Method Investment Accounting
Considerations” (“EITF 08-6”), which clarifies the accounting for certain
transactions and impairment considerations involving equity method investments.
The intent of EITF 08-6 is to provide guidance on (i) determining the
initial carrying value of an equity method investment, (ii) performing an
impairment assessment of an underlying indefinite-lived intangible asset of an
equity method investment, (iii) accounting for an equity method investee’s
issuance of shares, and (iv) accounting for a change in an investment from
the equity method to the cost method. EITF 08-6 is effective for fiscal
years beginning January 1, 2009 and is to be applied prospectively. The
adoption of this statement had little or no effect on our consolidated financial
position, results of operations, and disclosures.




In June 2008, the EITF reached consensus
on Issue No. 07-5, “Determining Whether an Instrument (or Embedded Feature)
Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5
clarifies the determination of whether an instrument (or an embedded feature) is
indexed to an entity’s own stock, which would qualify as a scope exception under
FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging
Activities” (“FAS 133”). EITF 07-5 is effective for fiscal years
beginning January 1, 2009. Early adoption for an existing instrument is not
permitted. The adoption of this statement had little or no effect on our
consolidated financial position, results of operations, and
disclosures.




In May 2008, the FASB issued FSP
No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB
14-1”). FSP APB 14-1 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 FAS 133.
Convertible debt instruments within the scope of FSP APB 14-1 are not addressed
by the existing APB 14. FSP APB 14-1 requires that the liability and equity
components of convertible debt instruments within the scope of FSP APB 14-1 be
separately accounted for in a manner that reflects the entity’s nonconvertible
debt borrowing rate. This requires 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 will be
reported as a debt discount and subsequently amortized to earnings over the
instrument’s expected life using the effective interest method. FSP APB 14-1 is
effective for fiscal years beginning January 1, 2009 and will be applied
retrospectively to all periods presented.  The adoption of this
statement had little or no effect on our consolidated financial position,
results of operations, and disclosures.




In April 2008, the FASB issued FSP
No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”
(“FSP 142-3”) which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under FASB Statement No. 142, “Goodwill and
Other Intangible Assets” (“FAS 142”). The intent of this FSP is to improve
the consistency between the useful life of a recognized intangible asset under
FAS 142 and the period of expected cash flows used to measure the fair
value of the asset under FASB Statement No. 141, “Business Combinations”
(“FAS 141”). FSP 142-3 is effective for fiscal years beginning
January 1, 2009 and will be applied prospectively to intangible assets
acquired after the effective date. The adoption of this statement had little or
no effect on our consolidated financial position, results of operations, and
disclosures.




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




47





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 adoption of
this statement had little or no effect on our consolidated financial position,
results of operations, and disclosures.




In February 2008, the FASB staff issued
Staff Position No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS
157-2”).  FSP FAS 157-2 delayed the effective date of SFAS 157 for
nonfinancial assets and nonfinancial liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually).  The provisions of FSP FAS 157-2 are
effective for fiscal years beginning January 1, 2009.  SFAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. The adoption of this statement had little or no effect on
our consolidated financial position, results of operations, and
disclosures.




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. The adoption
of this statement had little or no effect on our consolidated financial
position, results of operations, and disclosures.




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.  The adoption of this statement had
little or no effect on our consolidated financial position, results of
operations, and disclosures.




Item
3.  Quantitative and Qualitative Disclosures About Market
Risk




We had unrestricted cash totaling
$4,731,935 at March 31, 2009 and $7,055,591 at December 31, 2008.  Our
cash is invested primarily in money market funds and are not materially affected
by fluctuations in interest rates.  The unrestricted cash is held for
working capital purposes.  We do not enter into investments for
trading or speculative purposes.  Due to the short-term nature of
these investments, we believe that we do not have any material exposure to
changes in the fair value of our investment portfolio as a result of changes in
interest rates.  Declines in interest rates, however, would reduce
future investment income.




48


Item
4.  Controls and Procedures




Controls and
Procedures




As of March 31, 2009, we carried out an
evaluation, under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our “disclosure controls and
procedures,” as such term is defined under Exchange Act Rules 13a-15(e) and
15d-15(e).




Based on this evaluation, our chief
executive officer and chief financial officer concluded that, as of March 31,
2009, such disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in the reports we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and accumulated
and communicated to our management, including our chief executive officer and
chief financial officer, as appropriate to allow timely decisions regarding
required disclosure.




In designing and evaluating the
disclosure controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives and in reaching
a reasonable level of assurance our management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.




Changes in Internal Control Over
Financial Reporting




There were no changes in our internal
controls over financial reporting during the quarter ended March 31, 2009 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.




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-K for the year ended December 31, 2008, 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.




49


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




On
January 12, 2009, we issued 400,000 shares of common stock upon the exercise of
stock options at an exercise price of $0.25 per share. These securities were
issued pursuant to Section 4(2) of the Securities Act.




On
January 30, 2009, we issued 100,000 shares of common stock upon the exercise of
stock options at an exercise price of $0.25 per share.  These
securities were issued pursuant to Section 4(2) of the Securities
Act.




On March
31, 2009, we issued 6,568 shares of our common stock and options to purchase up
to 6,569 shares of common stock to our non-management
directors.  These shares and options were issued pursuant to the
director compensation policy for our non-management directors based on a price
of $2.74 per share with respect to the 6,568 shares, and an exercise price of
$2.74 per share with respect to the 6,569 stock options, each being the closing
price of our common stock on March 31, 2009, the last trading day of the first
quarter of 2009.  These securities were issued pursuant to Section
4(2) of the Securities Act.




Item
3.  Defaults Upon Senior Securities




None.




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




No matters were submitted to our
stockholders, through the solicitation of proxies or otherwise, during the
quarter ended March 31, 2009.




Item
5.  Other Information




Not applicable.




50


Item
6.  Exhibits




EXHIBIT TABLE




The
following is a complete list of exhibits filed as part of the Quarterly 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





51





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 8, 2009
            By:
            /s/ Ian R.
      McNeilIan
      R. McNeilPresident
      andChief Executive
      Officer
              (Principal Executive
      Officer)Date:
      May 8, 2009
            By:
            /s/Melvin L. WilliamsMelvin L.
      WilliamsChief
      Financial Officer
              (Principal Accounting
      Officer)


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