---

**UNITED STATES****SECURITIES AND EXCHANGE COMMISSION**
  Washington, DC 20549

FORM 10-QSB

[X]Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended June 30, 2007

[   ]Transition Report under Section 13 or
15(d) of the Exchange Act

For the transition period from ________ to ________

COMMISSION FILE NUMBER **000-30995**

SEARCHLIGHT MINERALS CORP.(Exact name of small business issuer as specified in its
charter)

|NEVADA                                                               | 98-0232244                       
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS Employer Identification No.)

#120 - 2441 West Horizon Ridge Parkway Henderson, NV
89052(Address of principal executive offices)

(702) 939-5247(Issuers telephone number)

N/A(Former name, former address and former
fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. Yes[X]No [   ]

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

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date: As of August
14, 2007, the Issuer had 93,177,827 shares of common stock outstanding.

Transitional Small Business Disclosure Format (Check one): Yes
[   ]   No [X]

---

PART I - FINANCIAL INFORMATION

ITEM
1.              
 FINANCIAL STATEMENTS.

The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B, and, therefore, do not include all information and
footnotes necessary for a complete presentation of financial position, results
of operations, cash flows, and stockholders equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the six months ended June 30, 2007 are
not necessarily indicative of the results that can be expected for the year
ending December 31, 2007.

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

2

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

|                                                    |   | June
      30, 2007 |   |   | December 31, 2006 |  
|--------------------------------------------------- | - | ------------------- | - | - | ----------------- | -
|                                                    |   |                     |   |   |                   |  
|ASSETS                                              |  
|                                                    |   |                     |   |   |                   |  
|Current assets                                      |   |                     |   |   |                   |  
|Cash                                                | $ | 11,665,903          |   | $ | 3,684,248         |  
|Prepaid expenses                                    |   | 216,250             |   |   | 106,235           |  
|                                                    |   |                     |   |   |                   |  
|Total current assets                                |   | 11,882,153          |   |   | 3,790,483         |  
|                                                    |   |                     |   |   |                   |  
|Property and equipment, net                         |   | 1,432,486           |   |   | 30,187            |  
|Mineral properties                                  |   | 127,134             |   |   | 127,134           |  
|Slag project                                        |   | 111,469,191         |   |   | -                 |  
|Land - smelter site and slag pile                   |   | 5,916,150           |   |   | -                 |  
|Land                                                |   | 3,300,000           |   |   | -                 |  
|Deposits                                            |   | 183,040             |   |   | 183,040           |  
|Joint venture option agreement                      |   | -                   |   |   | 690,000           |  
|Merger option                                       |   | -                   |   |   | 200,000           |  
|                                                    |   |                     |   |   |                   |  
|Total non-current assets                            |   | 122,428,001         |   |   | 1,230,361         |  
|                                                    |   |                     |   |   |                   |  
|Total assets                                        | $ | 134,310,154         |   | $ | 5,020,844         |  
|                                                    |   |                     |   |   |                   |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                |  
|                                                    |   |                     |   |   |                   |  
|Current liabilities                                 |   |                     |   |   |                   |  
|Accounts payable                                    | $ | 871,155             |   | $ | 888,651           |  
|Accounts payable - related party                    |   | 20,053              |   |   | 311,863           |  
|Loan payable - related party                        |   | 382,792             |   |   | 382,792           |  
|VRIC payable, current portion                       |   | 680,000             |   |   | -                 |  
|Due to VRIC                                         |   | 6,400,000           |   |   | -                 |  
|Capital lease payable, current portion              |   | 20,302              |   |   | -                 |  
|                                                    |   |                     |   |   |                   |  
|Total current liabilities                           |   | 8,374,302           |   |   | 1,583,306         |  
|                                                    |   |                     |   |   |                   |  
|Long-term liabilities                               |   |                     |   |   |                   |  
|VRIC payable, net of current portion                |   | 2,817,404           |   |   | -                 |  
|Capital lease payable, net of current portion       |   | 75,937              |   |   |                   |  
|Deferred tax liability Clarkdale
      slag project |   | 33,151,312          |   |   | -                 |  
|                                                    |   |                     |   |   |                   |  
|Total long-term
      liabilities                   |   | 36,044,653          |   |   | -                 |  
|                                                    |   |                     |   |   |                   |  
|Total liabilities                                   |   | 44,418,955          |   |   | 1,583,306         |  
|                                                    |   |                     |   |   |                   |  
|Stockholders' equity                                |   |                     |   |   |                   |  
|Common stock, $0.001 par value; 400,000,000 shares  |   |                     |   |   |                   |  
|authorized, 92,777,827
      and 67,231,000 shares, |   |                     |   |   |                   |  
|respectively, issued and outstanding                |   | 92,778              |   |   | 67,231            |  
|Additional paid-in capital                          |   | 100,668,760         |   |   | 12,898,687        |  
|Common stock subscribed                             |   | 195,000             |   |   | -                 |  
|Accumulated other comprehensive
      loss          |   | (121,606            | ) |   | (121,606          | )
|Accumulated deficit during exploration stage        |   | (10,943,733         | ) |   | (9,406,774        | )
|                                                    |   |                     |   |   |                   |  
|Total stockholders' equity                          |   | 89,891,199          |   |   | 3,437,538         |  
|                                                    |   |                     |   |   |                   |  
|Total liabilities and stockholders' equity          | $ | 134,310,154         |   | $ | 5,020,844         |  

See Accompanying Notes to these Consolidated Financial Statements
  
  F-1

---

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
      
      
      For
        the six months ended
      
      
      ThroughJune
        30, 2007
      
      
      June
        30, 2006
      
      
      June
        30, 2007
      
      
      June
        30, 2006
      
      
      June 30, 2007Revenue - rents
      $
      11,960
      
      $
      -
      
      $
      19,580
      
      $
      -
      
      $
      19,580Operating expensesResearch and development
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,900,095Mineral exploration and evaluation
        expenses
      
      163,676
      
      
      620,796
      
      
      458,984
      
      
      1,022,888
      
      
      3,370,939Mineral exploration and evaluationexpenses - related party
      
      90,000
      
      
      -
      
      
      180,000
      
      
      -
      
      
      675,000General and administrative
      
      721,558
      
      
      441,518
      
      
      1,055,008
      
      
      654,852
      
      
      4,720,005Depreciation
      
      11,453
      
      
      2,173
      
      
      14,243
      
      
      2,966
      
      
      256,676Impairment loss on intangible assets
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      173,234Impairment loss on property and equipment
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      86,683Interest expense, net
      
      44
      
      
      -
      
      
      44
      
      
      -
      
      
      300,044Total operating expenses
      
      986,731
      
      
      1,064,487
      
      
      1,708,279
      
      
      1,680,706
      
      
      11,482,676Loss from operations
      
      (974,771
      )
      
      (1,064,487
      )
      
      (1,688,699
      )
      
      (1,680,706
      )
      
      (11,463,096
      )Other income (expense):Other income
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      282,142Loss on equipment disposition
      
      -
      
      
      (4,398
      )
      
      -
      
      
      (4,398
      )
      
      (4,388
      )Interest and dividend income
      
      117,842
      
      
      -
      
      
      151,740
      
      
      -
      
      
      228,772Total other income (expense)
      
      117,842
      
      
      (4,398
      )
      
      151,740
      
      
      (4,398
      )
      
      506,526Loss from operations before provision for
        income taxes
      
      (856,929
      )
      
      (1,068,885
      )
      
      (1,536,959
      )
      
      (1,685,104
      )
      
      (10,956,570
      )Income tax benefit
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      12,837Net loss
      
      (856,929
      )
      
      (1,068,885
      )
      
      (1,536,959
      )
      
      (1,685,104
      )
      
      (10,943,733
      )Other Comprehensive LossForeign currency translation adjustment
      
      -
      
      
      -
      
      
      -
      
      
      (11,769
      )
      
      (121,606
      )Comprehensive Loss
      
      (856,929
      )
      
      (1,068,885
      )
      
      (1,536,959
      )
      
      (1,696,873
      )
      
      (11,065,339
      )Loss per common share - basic and dilutedNet loss
      $
      (0.01
      )
      $
      (0.02
      )
      $
      (0.02
      )
      $
      (0.03
      )Weighted average common shares outstanding
        -Basic and diluted
      
      91,393,212
      
      
      58,120,099
      
      
      84,593,103
      
      
      57,007,481


See Accompanying Notes to these Consolidated Financial Statements
  
  F-2

---

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

|                                      |  |                    |  |   |            |  |   |                 |   |   | Accumulated   |   |   |             |  |   | Accumulated    |   |   |            |  
|------------------------------------- |  | ------------------ |  | - | ---------- |  | - | --------------- | - | - | ------------- | - | - | ----------- |  | - | -------------- | - | - | ---------- | -
|                                      |  |                    |  |   |            |  |   |                 |   |   | Other         |   |   | Common      |  |   | Deficit During |   |   | Total      |  
|                                      |  | Common
      Stock |  |   | Additional |  |   | Comprehensive   |   |   | Stock         |   |   | Exploration |  |   | Stockholders'  |  
|                                      |  | Shares             |  |   | Amount     |  |   | Paid-in Capital |   |   | Income (Loss) |   |   | Subscribed  |  |   | Stage          |   |   | Equity     |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2006            |  | 67,231,000         |  | $ | 67,231     |  | $ | 12,898,687      |   | $ | (121,606      | ) | $ | -           |  | $ | (9,406,774     | ) | $ | 3,437,538  |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock              |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|in connection with the acquisition to |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|five investors, $3.975 per share      |  | 16,825,000         |  |   | 16,825     |  |   | 66,862,550      |   |   | -             |   |   | -           |  |   | -              |   |   | 66,879,375 |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of stock options for         |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|82,946 shares of common stock         |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|to three officers and employee        |  | -                  |  |   | -          |  |   | 132,634         |   |   | -             |   |   | -           |  |   | -              |   |   | 132,634    |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for cash     |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Reg. D - Private Placement,           |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|$3.00 per share, net of $381,990      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|commission and $79,513 issuance costs |  | 4,520,666          |  |   | 4,521      |  |   | 13,095,978      |   |   | -             |   |   | -           |  |   | -              |   |   | 13,100,499 |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for cash     |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Reg. S - Private Placement,           |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|$3.00 per share, net of $111,100      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|commission and $8,842 issuance costs  |  | 575,000            |  |   | 575        |  |   | 1,604,483       |   |   | -             |   |   | -           |  |   | -              |   |   | 1,605,058  |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for cash     |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Reg. S - Private Placement,           |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|$3.00 per share, net of $525,386      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|commission and $85,513 issuance costs |  | 2,226,161          |  |   | 2,226      |  |   | 6,065,358       |   |   | -             |   |   | -           |  |   | -              |   |   | 6,067,584  |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Amortization of stock options issued  |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|to employee and officer over          |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|vesting period                        |  | -                  |  |   | -          |  |   | 10,470          |   |   | -             |   |   | -           |  |   | -              |   |   | 10,470     |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock              |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|for mining claims recorded            |  | 1,400,000          |  |   | 1,400      |  |   | (1,400          | ) |   | -             |   |   | -           |  |   | -              |   |   | -          |  
|at initial transaction                |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Common stock subscribed for           |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|exercise of warrants                  |  | -                  |  |   | -          |  |   | -               |   |   | -             |   |   | 195,000     |  |   | -              |   |   | 195,000    |  
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Net loss June 30, 2007                |  | -                  |  |   | -          |  |   | -               |   |   | -             |   |   | -           |  |   | (1,536,959     | ) |   | (1,536,959 | )
|                                      |  |                    |  |   |            |  |   |                 |   |   |               |   |   |             |  |   |                |   |   |            |  
|Balance, June 30, 2007                |  | 92,777,827         |  | $ | 92,778     |  | $ | 100,668,760     |   | $ | (121,606      | ) | $ | 195,000     |  | $ | (10,943,733    | ) | $ | 89,891,199 |  

See Accompanying Notes to these Consolidated Financial Statements
  
  F-3

---

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

|                                                       |   |                                |   |   |                     |   |   | Period from         |  
|------------------------------------------------------ | - | ------------------------------ | - | - | ------------------- | - | - | ------------------- | -
|                                                       |   |                                |   |   |                     |   |   | January 14, 2000    |  
|                                                       |   |                                |   |   |                     |   |   | (Date of inception) |  
|                                                       |   | For
      the six months ended |   |   | through             |  
|                                                       |   | June
      30, 2007            |   |   | June
      30, 2006 |   |   | June
      30, 2007 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                   |   |                                |   |   |                     |   |   |                     |  
|Net loss                                               | $ | (1,536,959                     | ) | $ | (1,685,104          | ) | $ | (10,943,733         | )
|Adjustments to reconcile loss from operating           |   |                                |   |   |                     |   |   |                     |  
|to net cash used in operating activities:              |   |                                |   |   |                     |   |   |                     |  
|Amortization
      of debt discount                    |   | -                              |   |   | -                   |   |   | 300,000             |  
|Depreciation                                           |   | 14,243                         |   |   | 2,966               |   |   | 256,676             |  
|Stock based
      expenses                             |   | 143,103                        |   |   | 273,386             |   |   | 850,925             |  
|Impairment loss                                        |   | -                              |   |   | -                   |   |   | 259,917             |  
|Gain on settlement                                     |   | -                              |   |   | -                   |   |   | (228,636            | )
|Loss on disposition of fixed
      assets              |   | -                              |   |   | 4,398               |   |   | 5,737               |  
|Amortization
      of prepaid expense                  |   | 9,999                          |   |   | -                   |   |   | 9,999               |  
|Changes in operating assets and liabilities:           |   |                                |   |   |                     |   |   |                     |  
|Amounts receivable                                     |   | -                              |   |   | -                   |   |   | 11,005              |  
|Other current assets                                   |   | (120,014                       | ) |   | -                   |   |   | (226,249            | )
|Other assets                                           |   | -                              |   |   | (31,245             | ) |   | (183,040            | )
|Accounts payable and accrued
      liabilities         |   | (328,306                       | ) |   | 14,255              |   |   | 709,844             |  
|                                                       |   |                                |   |   |                     |   |   |                     |  
|Net cash used in operating activities                  |   | (1,817,934                     | ) |   | (1,421,344          | ) |   | (9,177,555          | )
|                                                       |   |                                |   |   |                     |   |   |                     |  
|CASH FLOW FROM INVESTING ACTIVITIES                    |   |                                |   |   |                     |   |   |                     |  
|Cash paid on mineral property claims                   |   | -                              |   |   | -                   |   |   | (777,134            | )
|Cash paid for merger option                            |   | -                              |   |   | -                   |   |   | (200,000            | )
|Cash paid for intangible assets                        |   | -                              |   |   | -                   |   |   | (180,068            | )
|Cash paid to VRIC on closing date                      |   | (9,900,000                     | ) |   | -                   |   |   | (9,900,000          | )
|Cash paid for additional acquisition
      costs       |   | (130,105                       | ) |   | -                   |   |   | (130,105            | )
|Purchase of property and equipment                     |   | (971,553                       | ) |   | (20,202             | ) |   | (1,285,936          | )
|                                                       |   |                                |   |   |                     |   |   |                     |  
|Net cash used in investing activities                  |   | (11,001,658                    | ) |   | (20,202             | ) |   | (12,473,243         | )
|                                                       |   |                                |   |   |                     |   |   |                     |  
|CASH FLOW FROM FINANCING ACTIVITIES                    |   |                                |   |   |                     |   |   |                     |  
|Proceeds from stock issuance                           |   | 21,453,817                     |   |   | 6,271,376           |   |   | 30,416,001          |  
|Stock issuance costs                                   |   | (677,570                       | ) |   | -                   |   |   | (677,570            | )
|Proceeds from borrowings from related
      party      |   | -                              |   |   | -                   |   |   | 2,880,201           |  
|Proceeds/payments on loan payable                      |   | -                              |   |   | (15,000             | ) |   | 504,035             |  
|Principal payments on capital lease payable            |   | (20,000                        | ) |   | -                   |   |   | (20,000             | )
|Cash paid on deferred purchase liability               |   | (150,000                       | ) |   | -                   |   |   | (150,000            | )
|Proceeds from subscribed stock                         |   | 195,000                        |   |   | -                   |   |   | 465,000             |  
|                                                       |   |                                |   |   |                     |   |   |                     |  
|Net cash provided by financing activities              |   | 20,801,247                     |   |   | 6,256,376           |   |   | 33,417,667          |  
|                                                       |   |                                |   |   |                     |   |   |                     |  
|EFFECT OF FOREIGN CURRENCY EXCHANGE RATE ON
      CASH |   | -                              |   |   | (11,769             | ) |   | (100,966            | )
|                                                       |   |                                |   |   |                     |   |   |                     |  
|NET CHANGE IN CASH                                     |   | 7,981,655                      |   |   | 4,803,061           |   |   | 11,665,903          |  
|                                                       |   |                                |   |   |                     |   |   |                     |  
|CASH AT BEGINNING OF PERIOD                            |   | 3,684,248                      |   |   | 705,856             |   |   | -                   |  
|                                                       |   |                                |   |   |                     |   |   |                     |  
|CASH AT END OF PERIOD                                  | $ | 11,665,903                     |   | $ | 5,508,917           |   | $ | 11,665,903          |  

See Accompanying Notes to these Consolidated Financial Statements
  
  F-4

---

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

|                                                                    |   |                                |  |   |                     |  |   | Period from         | 
|------------------------------------------------------------------- | - | ------------------------------ |  | - | ------------------- |  | - | ------------------- | 
|                                                                    |   |                                |  |   |                     |  |   | January 14, 2000    | 
|                                                                    |   |                                |  |   |                     |  |   | (Date of inception) | 
|                                                                    |   | For
      the six months ended |  |   | through             | 
|                                                                    |   | June
      30, 2007            |  |   | June
      30, 2006 |  |   | June
      30, 2007 | 
|                                                                    |   | -                              |  |   |                     |  |   |                     | 
|CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)                   |   |                                |  |   |                     |  |   |                     | 
|SUPPLEMENTAL INFORMATION                                            |   |                                |  |   |                     |  |   |                     | 
|Interest Paid                                                       | $ | 44                             |  | $ | -                   |  | $ | 50,795              | 
|Income Taxes Paid                                                   | $ | -                              |  | $ | -                   |  | $ | -                   | 
|Non-cash investing and financing activities:                        |   |                                |  |   |                     |  |   |                     | 
|Capital equipment purchased through financing                       | $ | 135,239                        |  | $ | -                   |  | $ | 135,239             | 
|Assets acquired for common stock issued
      for the acquisition   | $ | 66,879,375                     |  | $ | -                   |  | $ | 66,879,375          | 
|Assets acquired for liabilities incurred in the acquisition         | $ | 43,325,716                     |  | $ | -                   |  | $ | 43,325,716          | 
|Merger option payment applied to the
      acquisition              | $ | 200,000                        |  | $ | -                   |  | $ | 200,000             | 
|Reclassify joint venture option agreement to slag project           | $ | 690,000                        |  | $ | -                   |  | $ | 690,000             | 
|Stock options for common stock issued
      in satisfaction of debt | $ | -                              |  | $ | -                   |  | $ | 1,200,000           | 
|Stock issued for conversion of                                      |   |                                |  |   |                     |  |   |                     | 
|accounts payable, 100,000
      shares at $0.72                     | $ | -                              |  | $ | -                   |  | $ | 72,000              | 
|Stock issued for compensation                                       |   |                                |  |   |                     |  |   |                     | 
|50,000 shares at $2.06                                              | $ | -                              |  | $ | 103,000             |  | $ | 103,000             | 

See Accompanying Notes to these Consolidated Financial Statements
  
  F-5

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Basis of presentation- The accompanying unaudited
        financial statements have been prepared in accordance with Securities
        and Exchange Commission requirements for interim financial statements.
        Therefore, they do not include all of the information and footnotes required
        by accounting principles generally accepted in the United States for complete
        financial statements. The financial statements should be read in conjunction
        with the Form 10-KSB for the year ended December 31, 2006 of Searchlight
        Minerals Corp. (the "Company").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The interim financial statements present the balance
        sheet, statements of operations and cash flows of the Company. The financial
        statements have been prepared in accordance with accounting principles
        generally accepted in the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | These financial statements have been prepared by the
        Company without audit, and include all adjustments (which consist solely
        of normal recurring adjustments) which, in the opinion of management,
        are necessary for a fair presentation of financial position and results
        of operations. Certain information and footnote disclosures normally included
        in financial statements prepared in accordance with generally accepted
        accounting principles have been condensed or omitted, although the Company
        believes that the disclosures are adequate to make the information presented
        not misleading. It is suggested that these financial statements be read
        in conjunction with the Companys audited financial statements and
        the notes thereto for the year ended December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Description of business Searchlight Minerals
        Corp. referred to as the Company 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 development of mining and mineral properties.
        Upon the location of commercially minable reserves, the Company plans
        to prepare for mineral extraction and enter the development stage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | History- The Company was incorporated on January
        12, 1999 pursuant to the laws of the State of Nevada under the name L.C.M.
        Equity, Inc. From 1999 to 2005, the Company operated primarily as a biotechnology
        research and development company with its headquarters in Canada and an
        office in the UK. On November 2, 2001, the Company entered into an acquisition
        agreement with Regma Bio Technologies, Ltd. pursuant to which Regma Bio
        Technologies, Ltd. entered into a reverse merger with us with the surviving
        entity named Regma Bio Technologies Limited. On February 2,
        2004, the Company changed its name from Regma Bio Technologies Limited
        to Phage Genomics, Inc. In February, 2005, the Company announced
        its reorganization from a biotechnology research and development company
        to a company focused on the development and acquisition of mineral properties.
        In connection with its reorganization the Company entered into mineral
        option agreements to acquire an interest in the Searchlight Claims. 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. to
        "Searchlight Minerals Corp. effective June 23, 2005.

F-6

---

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 approximately $10,943,733 from operations as of June 30,
        2007 and has not commenced its mining and mineral processing operations,
        rather, still in the exploration stage, raising substantial doubt about
        the Companys ability to continue as a going concern.                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company will seek additional sources of capital
        through the issuance of debt or equity financing, but there can be no
        assurance the Company will be successful in accomplishing its objectives.                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The ability of the Company to continue as a going concern
        is dependent on additional sources of capital and the success of the Companys
        plan. The financial statements do not include any adjustments that might
        be necessary if the Company is unable to continue as a going concern.                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Principles of consolidation The consolidated
        financial statements include the accounts of the Company and its wholly-owned
        subsidiaries, Clarkdale Minerals, LLC (CML) and Clarkdale Metals, Corp.
        (CMC). Significant intercompany accounts and transactions have been eliminated.                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Use of estimates- The preparation of financial
        statements in conformity with accounting principles generally accepted
        in the United States requires management to make estimates and assumptions
        that affect the reported amounts of assets and liabilities and disclosure
        of contingent assets and liabilities at the date of the financial statements
        and the reported amounts of revenue and expenses during the reporting
        period. Actual results could differ from those estimates.                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Mineral rights- The Company capitalizes acquisition
        and option costs of mineral property rights. The amount capitalized represents
        fair value at the time the mineral rights are acquired. The accumulated
        costs of acquisition for properties that are developed to the stage of
        commercial production will be amortized using the unit-of-production method.                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Exploration costs Mineral exploration
        costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Fixed assets- Fixed assets are stated at cost
        less accumulated depreciation. Depreciation is provided principally on
        the straight-line method over the estimated useful lives of the assets,
        which are generally 3 to 39 years. The cost of repairs and maintenance
        is charged to expense as incurred. Expenditures for property betterments
        and renewals are capitalized. Upon sale or other disposition of a depreciable
        asset, cost and accumulated depreciation are removed from the accounts
        and any gain or loss is reflected in other income (expense).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company periodically evaluates whether events and
        circumstances have occurred that may warrant revision of the estimated
        useful life of fixed assets or whether the remaining balance of fixed
        assets should be evaluated for possible impairment. The Company uses an
        estimate of the related undiscounted cash flows over the remaining life
        of the fixed assets in measuring their recoverability.                                                                                                                                                                     

F-7

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Impairment of long-lived assets- We review and
        evaluate our long-lived assets for impairment at least annually and also
        when events or changes in circumstances indicate the related carrying
        amounts may not be recoverable. Asset impairment is considered to exist
        if the total estimated future cash flows, on an undiscounted basis, are
        less than the carrying amount of the long-lived asset. An impairment loss
        is measured and recorded based on discounted estimated future cash flows.
        Future cash flows are based on estimated quantities of recoverable minerals,
        expected gold and other commodity prices (considering current and historical
        prices, price trends and related factors), production levels and cash
        costs of production, capital and reclamation costs, all based on detailed
        engineering life-of-mine plans.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In estimating future cash flows, assets are grouped
        at the lowest levels for which there are identifiable cash flows that
        are largely independent of future cash flows from other asset groups.
        With the exception of other mine-related exploration potential and exploration
        potential in areas outside of the immediate mine-site, all assets at a
        particular operation are considered together for purposes of estimating
        future cash flows. In the case of mineral interests associated with other
        mine-related exploration potential and exploration potential in areas
        outside of the immediate mine-site, cash flows and fair values are individually
        evaluated based primarily on recent exploration results.                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Various factors could impact our ability to achieve
        forecasted production schedules from proven and probable reserves. Additionally,
        commodity prices, capital expenditure requirements and reclamation costs
        could differ from the assumptions used in the 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.                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Fair value of financial instruments- Financial
        accounting standards Statement No. 107, Disclosure About Fair Value
        of Financial Instruments, requires the Company to disclose, when
        reasonably attainable, the fair market values of its assets and liabilities
        which are deemed to be financial instruments. The carrying amounts and
        estimated fair values of the Companys financial instruments approximate
        their fair value due to the short-term nature.                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Revenue recognition- Revenues are recognized
        during the period in which the revenues are received. Costs and expenses
        are recognized during the period in which they are incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Research and development- All research and development
        expenditures during the period have been charged to operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Earnings (loss) per share- The Company follows
        SFAS No. 128, Earnings Per Share and SFAS No. 150, Accounting
        for Certain Financial Instruments with Characteristics of Both Liabilities
        and Equity, which establish standards for the computation, presentation
        and disclosure requirements for basic and diluted earnings per share for
        entities with publicly-held common shares and potential common stock issuances.
        Basic earnings (loss) per share are computed by dividing net income by
        the weighted average number of common shares outstanding. In computing
        diluted earnings per share, the weighted average number of shares outstanding
        is adjusted to reflect the effect of potentially dilutive securities,
        such as stock options and warrants. Common stock equivalent shares are
        excluded from the computation if their effect is antidilutive. Common
        stock equivalents, which include stock options and warrants to purchase
        common stock, on June 30, 2007 and December 31, 2006 that were not included
        in the computation of diluted EPS because the effect would be antidilutive
        were 25,525,499 and 27,196,773, respectively.                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Income taxes- The Company accounts for its income
        taxes in accordance with Statement of Financial Accounting Standards No.
        109, which requires recognition of deferred tax assets and liabilities
        for future tax consequences attributable to differences between the financial
        statement carrying amounts of existing assets and liabilities and their
        respective tax bases and tax credit carry-forwards. Deferred tax assets
        and liabilities are measured using enacted tax rates expected to apply
        to taxable income in the years in which those temporary differences are
        expected to be recovered or settled. The effect on deferred tax assets
        and liabilities of a change in tax rates is recognized in income in the
        period that includes the enactment date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Comprehensive income (loss) The companys
        accumulated other comprehensive loss consists of the accumulated foreign
        currency translation adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Segment information- The Company discloses segment
        information in accordance with Statements of Financial Accounting Standards
        (SFAS) No. 131, Disclosures about Segments of an Enterprise and
        Related Information, which uses the Management approach to determine
        reportable segments. The Company operates under one segment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Stock-based compensation- On December 16, 2004,
        the FASB issued SFAS No. 123R, Share- Based Payment, which
        replaces SFAS No. 123, Accounting for Stock-Based Compensation
        and supersedes APB Opinion No. 25, Accounting for Stock Issued to
        Employees. SFAS No. 123R requires all share-based payments to employees,
        including grants of employee stock options, to be recognized in the financial
        statements based on the grant date fair value of the award. SFAS No. 123R
        was to be effective for interim or annual reporting periods beginning
        on or after June 15, 2005, but in April 2005 the SEC issued a rule that
        will permit most registrants to implement SFAS No. 123R at the beginning
        of their next fiscal year, instead of the next reporting period as required
        by SFAS No. 123R. The pro forma disclosures previously permitted under
        SFAS No. 123 no longer will be an alternative to financial statement recognition.
        Under SFAS No. 123R, the Company must determine the appropriate fair value
        model to be used for valuing share-based payments, the amortization method
        for compensation cost and the transition method to be used at date of
        adoption. The transition methods include prospective and retroactive adoption
        option. Under the retroactive option, prior periods may be restated either
        as of the beginning of the year of adoption or for all periods presented.
        The prospective method requires

F-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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | that compensation expense be recorded for all unvested
        stock options and restricted stock at the beginning of the first quarter
        of adoption of SFAS No. 123R, while the retroactive methods would record
        compensation expense for all unvested stock options and restricted stock
        beginning with the first period restated. The Company has adopted the
        requirements of SFAS No. 123R for the fiscal year beginning after December
        31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | New accounting pronouncements
        In February 2007, the FASB issued SFAS No. 159, The Fair Value Option
        for Financial Assets and Financial Liabilities  Including an amendment
        of FASB Statement No. 115 (SFAS 159), which permits
        entities to choose to measure many financial instruments and certain other
        items at fair value that are not currently required to be measured at
        fair value. The objective is to improve financial reporting by providing
        entities with the opportunity to mitigate volatility in reported earnings
        caused by measuring related assets and liabilities differently without
        having to apply complex hedge accounting provisions. SFAS 159 also establishes
        presentation and disclosure requirements designed to facilitate comparisons
        between entities that choose different measurement attributes for similar
        types of assets and liabilities. SFAS 159 does not affect any existing
        accounting literature that requires certain assets and liabilities to
        be carried at fair value, nor eliminate disclosure requirements included
        in other accounting standards, including requirements for disclosures
        about fair value measurements included in SFAS 157, Fair Value Measurements,
        and SFAS 107, Disclosures about Fair Value of Financial Instruments.
        SFAS 159 is effective for our fiscal year beginning after November 15,
        2007. We are currently assessing the impact that the adoption of SFAS
        159 will have on our financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In September 2006, the FASB issued Statement No. 158
        Employers Accounting for Defined Benefit Pension and Other
        Postretirement Plans (SFAS 158). SFAS 158 requires companies
        to recognize the over funded or under funded status of a defined benefit
        postretirement plan as an asset or liability in its statement of financial
        position and to recognize changes in that funded status in the year in
        which the changes occur through comprehensive income. SFAS 158 requires
        companies to measure the funded status of a plan as of the date of its
        year-end statement of financial position, with limited exceptions. The
        Company adopted SFAS 158 effective for the fiscal year ending December
        31, 2006. Adoption of this statement had no impact on the Companys
        financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In September 2006, the FASB issued statement No. 157,
        Fair Value Measurements (SFAS 157). SFAS 157 defines
        fair value, establishes a framework for measuring fair value in accordance
        with accounting principles generally accepted in the United States, and
        expands disclosures about fair value measurements. SFAS 157 is effective
        for fiscal years beginning after November 15, 2007, with earlier application
        encouraged. Any amounts recognized upon adoption as a cumulative effect
        adjustment will be recorded to the opening balance of retained earnings
        in the year of adoption. We have not yet determined the impact of this
        Statement on its financial position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In September 2006, the Securities and Exchange Commission
        issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 considers
        the effects of prior year misstatements when quantifying misstatements
        in the current year financial statements. It is effective for fiscal years
        ending after November 15, 2006. The Company does not believe the adoption
        of SAB 108 will have a material impact on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-10

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
        POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In August 2006, the SEC published amendments to the
        disclosure requirements for executive and director compensation, related
        party transactions, director independence and other corporate governance
        matters, security ownership of officers and directors. The rules affect
        disclosure in proxy statements, annual reports and registration statements.
        These amendments are effective for filings for fiscal years ending on
        or after December 15, 2006. The effect of these amendments have been incorporated
        into our financial reporting.                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In July 2006, the Financial Accounting Standards Board
        (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty
        in Income Taxes  an interpretation of FASB Statement No. 109
        (FIN 48), which clarifies the accounting and disclosure for
        uncertainty in tax positions. FIN 48 seeks to reduce the diversity in
        practice associated with certain aspects of the recognition and measurement
        related to accounting for income taxes. This interpretation is effective
        for fiscal years beginning after December 15, 2006. The Company is currently
        in the process of evaluating the financial impact of this statement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In March 2006, the FASB issued SFAS No. 156, Accounting
        for Servicing of Financial Assets: (SFAS 156), which requires
        all separately recognized servicing assets and servicing liabilities to
        be initially measured at fair value. SFAS 156 permits, but does not require,
        the subsequent measurement of servicing assets and servicing liabilities
        at fair value. Adoption is required as of the beginning of the first fiscal
        year that begins after September, 15, 2006. The adoption of SFAS 156 is
        not expected to have a material effect on the Companys financial
        position, results of operations or cash flows.           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In February 2006, the FASB issued SFAS No. 155, Accounting
        for Certain Hybrid Financial Instruments, an amendment of FASB Statements
        No. 133 and 140 (SFAS 155). SFAS 155 clarifies certain
        issues relating to embedded derivatives and beneficial interests in securitized
        financial assets. The provisions of SFAS 155 are effective for all financial
        instruments acquired or issued after fiscal years beginning after September
        15, 2006. Adoption of this statement is expected to have no impact on
        the Companys financial position or results of operations.                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | FIXED ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Fixed assets consist of the following as of June 30,
        2007 and December 31, 2006:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |                               |   | June 30, 2007 |  |   | December 31, | 
| | ----------------------------- | - | ------------- |  | - | ------------ | 
| |                               |   |               |  |   | 2006         | 
| |                               |   |               |  |   |              | 
| | Furniture and fixtures        | $ | 28,781        |  | $ | 15,600       | 
| | Lab equipment                 |   | 2,804         |  |   | 2,804        | 
| | Computers and equipment       |   | 30,992        |  |   | 17,788       | 
| | Income property               |   | 309,750       |  |   | --           | 
| | Construction in progress      |   | 925,029       |  |   | --           | 
| | Vehicles                      |   | 38,175        |  |   | --           | 
| | Site equipment                |   | 117,203       |  |   |              | 
| |                               |   |               |  |   |              | 
| |                               |   | 1,452,734     |  |   | 36,192       | 
| | Less accumulated depreciation |   | 20,248        |  |   | 6,005        | 
| |                               |   |               |  |   |              | 
| |                               | $ | 1,432,486     |  | $ | 30,187       | 

F-11

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

|3. | MERGER WITH TRANSYLVANIA INTERNATIONAL,
        INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | This merger was treated as a statutory merger
        for tax purposes whereby, CML was the surviving merger entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company also formed a second wholly owned
        subsidiary CMC, for the purpose of developing a processing plant at the
        Clarkdale Slag Project.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Closing of the TI acquisition occurred on
        February 15, 2007 (the Closing Date) and was subject to, among
        other things, the following terms and conditions:                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-12

---

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

|3. | MERGER WITH TRANSYLVANIA INTERNATIONAL, INC.
        (continued)                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                         
|   | Total consideration paid was approximately $120.3 million
        for the TI acquisition. The following table reflects the components of
        purchase consideration:

Purchase price:Cash payments
      $
      10,100,000Common stock issued
      
      66,879,375Monthly payments, current portion
      
      395,001Monthly payments, net of current portion
      
      3,252,403Due to VRIC
      
      6,400,000Acquisition costs
      
      127,000Deferred income tax liability - Clarkdale slag project
      
      33,151,312Total purchase price
      $
      120,305,091


In accordance with SFAS 141, Business
  Combinations, the purchase price of $120.3 million has been allocated to the
  assets acquired and liabilities assumed, based on their respective fair values
  at the date of acquisition. The purchase price was allocated to the real property
  assets based on fair market values determined using an independent real estate
  appraisal firm. The purchase price allocated to the Clarkdale slag project was
  determined based on the overall consideration given. The following table reflects
  allocation of the purchase consideration.

Preliminary allocation of purchase price:Clarkdale slag project
      $
      110,779,191Land - slag pile site
      
      5,916,150Land
      
      3,300,000Income property and improvements
      
      309,750Net assets acquired
      $
      120,305,091


|   | The Clarkdale slag project valuation also includes $690,000
        previously capitalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | For the six months ended June 30, 2007, TI operations
        were limited to minor rental activity revenue of approximately $10,000
        and rental expenses and property holding costs of approximately $8,000
        for net pre tax income of approximately $2,000. Based on the limited activity,
        pro-forma results for the comparative quarter in 2006 are not presented
        in these interim financial statements.                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4. | MINING CLAIMS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | As of June 30, 2007, mining claims totaling $127,134
        consist of twenty mining claims located in Searchlight, Nevada. The mining
        claims were acquired during 2005 with issuance of 1,400,000 shares of
        the Companys common stock and the provision that the Company, at
        its option, issue an additional 1,400,000 shares each year in June for
        three remaining years. If at any time before each subsequent issuance
        of shares, the Company does not choose to continue the transaction, it
        is under no obligation to issue further shares and would no longer hold
        the mining claims.

F-13

---

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

|4. | MINING CLAIMS(continued)                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The mining claims are capitalized as tangible assets
        in accordance with Emerging Issues Task Force abstract 04-02. Upon completion
        of a bankable feasibility study, the claims will be amortized using the
        unit-of-production method over the life of the claim. If the Company does
        not continue with exploration after the completion of the feasibility
        study, the claims will be expensed at that time.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The total transaction was valued at an agreed upon price
        of $2,000 per claim for a total of $40,000 plus actual costs incurred
        by the former owner in maintaining the claims of $87,134.                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|5. | LOAN PAYABLE  FORMER OFFICERS AND DIRECTORS                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | As of June 30, 2007 and December 31, 2006, loans payable
        to related parties totaling $382,792 consists of borrowings from former
        officers and directors of the Company. These individuals have not had
        any involvement in management of the Company since February 2005. The
        balance of the loan is non-interest bearing, unsecured and without any
        fixed repayment terms.                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|6. | CAPITAL LEASE PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company leases equipment under capital lease. Capital
        lease payable consisted of the following at June 30, and December 31,                                                                                                                                                                                                                                                                                                            

Monthly
      
      
      InterestLender
      Collateral
      
      
      Payment
      
      
      Rate
      
      
      Maturity
      
      
      2007
      
      
      2006Caterpillar Financial ServicesServices Corporation
      Equipment
      
      $
      2,200
      
      
      4.45%
      
      
      Jul-11
      
      $
      96,239
      
      $
      --96,239
      
      
      --Capital lease payable, current portion
      
      
      
      
      
      
      
      
      
      
      
      
      (20,302
      )
      
      --Capital lease payable, net of currentportion
      
      
      
      
      
      
      
      
      
      
      
      $
      75,937
      
      $
      --


F-14

---

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

|6. | CAPITAL LEASE PAYABLE(continued)                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                 
|   | The following table represents future minimum lease
        payments on capital lease payable for the six months ending June 30,

2008
      $
      24,2022009
      
      26,4012010
      
      26,4012011
      
      26,401Thereafter
      
      2,200Total future minimum
          lease payments
      $
      105,605Imputed interest
      
      (9,366
      )Present value of future minimum lease payments
      $
      96,239


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

2007
      
      
      2006Site Equipment
      $
      116,239
      
      
      --Accumulated amortization
      
      (5,651
      )
      
      --$
      110,588
      
      
      --


|7. | STOCKHOLDERS EQUITY                                                                                                 
|-- | ---------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                      
|   | During the six months ended June 30, 2007,
        the Companys stockholders activities consisted of the following:
|   |                                                                                                                      
|   | a)                                                                                                                   

F-15

---

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

|7. | STOCKHOLDERS EQUITY(continued)
|-- | -------------------------------
|   |                                
|   | b)                             
|   |                                
|   | c)                             

F-16

---

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

|7. | STOCKHOLDERS EQUITY(continued)
|-- | -------------------------------
|   |                                
|   | d)                             
|   |                                
|   | e)                             

|   | Warrants associated with the 2007 equity issuances do
        not constitute a registration payment arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8. | OPTION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On April 30, 2007, the Board of Directors adopted the
        2007 Stock Option Plan (the 2007 Plan) and determined to cease
        granting any further options under the Companys 2006 Stock Option
        Plan. Under the terms of the 2007 Plan, options to purchase up to 40,000,000
        shares of common stock of the Company may be granted to eligible Participants.
        The 2007 Plan provides that the option price for incentive stock options
        be the fair market value of the stock at the date of the grant and the
        option price for non-qualified stock options be no less than 85% of the
        fair market value of the stock at the date of the grant. Options granted
        under the 2007 Plan become exercisable and expire as determined by the
        Board of Directors. 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 reduced the number of shares of the Companys
        common stock available for issuance under the 2007 Plan to a maximum of
        4,000,000.

F-17

---

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

|8. | OPTION PLAN(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On April 7, 2006, the Board of Directors of
        Searchlight adopted the 2006 Stock Option Plan (the "Plan"). Under the
        terms of the Plan, options to purchase up to 40,000,000 shares of common
        stock that may be granted to our employees, officers, directors, and eligible
        consultants of Searchlight. The Plan provides that the option price be
        the fair market value of the stock at the date of grant as determined
        by the Board of Directors. Options granted become exercisable and expire
        as determined by the Board of Directors. The maximum aggregate number
        of shares of our common stock that may be optioned and sold under the
        Plan will be increased effective the first day of each of our fiscal quarters,
        beginning with the fiscal quarter commencing July 1, 2006, by an amount
        equal to the lesser of: (i) 15% of the total increase in the number of
        shares of common Stock outstanding during the previous fiscal quarter;
        or (ii) a lesser number of shares of common stock as may be determined
        by the board of Searchlight.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | During the six months ended June 30, 2007,
        the Company granted stock options as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Compensation expense for the six months
  ended June 30, 2007 and for the three months ended March 31, 2007 related to
  granting of stock options was $143,104 and $129,294, respectively.

Stock options  During the
  six months ended June 30, 2007 and the year ended December 31, 2006, the Company
  granted stock options to employees and directors totaling 82,946 and 870,000,
  respectively, with a weighted average strike price of $3.99 and $2.25 per share,
  respectively. Certain stock options were exercisable upon grant and have a life
  of 5 years. As of June 30, 2007 stock options outstanding totaled 3,952,946
  with a weighted average strike price of $0.84 per share.

The following table summarizes the Companys
  stock option activity for the six months ended June 30, 2007:

| |                             |  | Number of |  |   | Weighted       | 
| | --------------------------- |  | --------- |  | - | -------------- | 
| |                             |  | Shares    |  |   | Average        | 
| |                             |  |           |  |   | Exercise Price | 
| | Balance, December 31, 2006  |  | 3,870,000 |  | $ | 0.77           | 
| | Options granted and assumed |  | 82,946    |  |   | 3.99           | 
| | Options expired             |  | --        |  |   | --             | 
| | Options cancelled           |  | --        |  |   | --             | 
| | Options exercised           |  | --        |  |   | --             | 
| |                             |  |           |  |   |                | 
| | Balance, June 30, 2007      |  | 3,952,946 |  | $ | 0.84           | 

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:

F-18

---

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

|8. | OPTION PLAN(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | For the six months ended June 30, 2007 using specific
        grant dates; no dividend yield; expected volatility of 76.6%; risk free
        interest rate of 4.56% to 4.68%; and expected lives of 2 to 5 years for
        all employee and non- employee stock options. Accordingly, the Company
        valued the services under SFAS No. 123R relating to non-statutory stock
        options upon grant in 2007 for $143,104 as of June 30, 2007. Based on
        recent historical stock activity the equal probability option pricing
        model was applied.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The following table summarizes information about options
        granted during the six months ended June 30, 2007:                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Exercise PriceEquals, ExceedsOr
      WeightedNumber of Options
      Is Less than Mkt.
      Average
      Range of
      WeightedGranted
      Price of Stock
      Exercise
      Exercise
      Average FairDuring 2007
      On Grant Date
      Price
      Price
      Value82,946
      Equals
      $ 3.99
      $3.45 to $4.04
      $ 0.40--
      Exceeds
      $ --
      $ -- to $ --
      $ ----
      Less Than
      $ --
      $ -- to $ --
      $ --82,946
      Equals
      $ 3.99
      $3.45 to $4.04
      $ 0.40


Stock options/warrants 
  During the six months ended June 30, 2007 the Company granted stock warrants
  related to common stock issued through a private placement totaling 3,660,913
  with a strike price of $4.50 per share and stock warrants totaling 178,345 were
  issued to underwriters of the private placement with a strike price of $4.50
  per share.

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

During the six months ended June 30,
  2007 the Company issued stock options for 82,946 shares of common stock to three
  officers and two employees with strike price of $3.45 to $4.04 per share.

The following table summarizes information
  about options/warrants granted during the six months ended June 30, 2007:

| |                                      |  | Number of  |  |   | Weighted       | 
| | ------------------------------------ |  | ---------- |  | - | -------------- | 
| |                                      |  | Shares     |  |   | Average        | 
| |                                      |  |            |  |   | Exercise Price | 
| | Balance, December 31, 2006           |  | 20,160,000 |  | $ | 0.51           | 
| | Options/warrants granted and assumed |  | 3,922,204  |  | $ | 4.49           | 
| | Options/warrants expired             |  | --         |  |   | --             | 
| | Options/warrants cancelled           |  | --         |  |   | --             | 
| | Options/warrants exercised           |  | --         |  |   | --             | 
| |                                      |  |            |  |   |                | 
| | Balance, June 30, 2007               |  | 24,082,204 |  | $ | 1.16           | 

F-19

---

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

|9.  | PROPERTY RENTAL AGREEMENTS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company through its subsidiary CML has the following
        lease and rental agreements as lessor:                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Clarkdale Arizona Central Railroad  Lease                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | CML has a month-to month rental agreement with Clarkdale
        Arizona Central Railroad. The rental payment is $1,700 per month.                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Commercial Building  Lease                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | CML rents commercial building space to two tenants.
        The rental arrangements for both tenants stem from expired leases and
        are month-to-month. Rent under these agreements totaled $1,260 per month.                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Land Lease  Wastewater Effluent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | CML entered into a lease on August 25, 2004 with the
        Town of Clarkdale, AZ (Clarkdale). The Company provides approximately
        60 acres of land to Clarkdale for disposal of Class B effluent. In return,
        the Company has first right to purchase up to 46,000 gallons per day of
        the effluent for its use at fifty percent (50%) of the potable water rate.
        In addition, if Class A effluent becomes available, the Company may purchase
        that at seventy five percent (75%) of the potable water rate.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The term of the lease is 5 years with a one year extension
        available. At such time as Clarkdale no longer uses the property for effluent
        disposal, and for a period of twenty five (25) years measured from the
        date of the lease, the Company has a continuing right to purchase Class
        B, and if available, Class A at then market rates.                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10. | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company is a Nevada corporation and is subject to
        federal and Arizona income taxes. Nevada does not impose a corporate income
        tax.                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The provision for income taxes consisted of the following
        at June 30, 2007 and December 31, 2006,                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                  |   | June 30, 2007 |   |   | December 31, |  
| | -------------------------------- | - | ------------- | - | - | ------------ | -
| |                                  |   |               |   |   | 2006         |  
| |                                  |   |               |   |   |              |  
| | Income tax benefit at 34%        | $ | (522,566      | ) | $ | (1,241,566   | )
| | Non-deductible and other         |   | 2,128         |   |   | 3,199        |  
| | Change in valuation allowance    |   | 520,438       |   |   | 1,238,367    |  
| |                                  |   |               |   |   |              |  
| | Provision for income
      taxes | $ | --            |   | $ | --           |  

F-20

---

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

|10. | INCOME TAXES(continued)                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                       
|    | Significant components of the Companys net deferred
        income tax assets at June 30, 2007 and December 31, 2006 were as follows:

| |                                  |   | June 30, 2007 |   |   | December 31, |  
| | -------------------------------- | - | ------------- | - | - | ------------ | -
| |                                  |   |               |   |   | 2006         |  
| |                                  |   |               |   |   |              |  
| | Net Operating loss carry forward | $ | 2,091,730     |   | $ | 1,619,947    |  
| | Option compensation              |   | 247,853       |   |   | 199,198      |  
| |                                  |   |               |   |   |              |  
| | Deferred income tax asset        |   | 2,339,583     |   |   | 1,819,145    |  
| | Valuation allowance              |   | (2,339,583    | ) |   | (1,819,145   | )
| |                                  |   |               |   |   |              |  
| |                                  | $ | --            |   | $ | --           |  

A full valuation allowance was established
  for net deferred tax assets due to the uncertainty of realizing these deferred
  tax assets based on conditions existing at June 30, 2007 and December 31, 2006.

Significant components of the Companys
  net deferred income tax liabilities at June 30, 2007 and December 31, 2006 were
  as follows:

| |                               |   | June 30, 2007 |  |   | December 31, | 
| | ----------------------------- | - | ------------- |  | - | ------------ | 
| |                               |   |               |  |   | 2006         | 
| |                               |   |               |  |   |              | 
| | Clarkdale slag project        | $ | 33,151,312    |  | $ | --           | 
| |                               |   |               |  |   |              | 
| | Deferred income tax liability | $ | 33,151,312    |  | $ | --           | 

|    | Deferred income tax liability was recorded on excess
        of fair market value acquired over income tax basis at combined statutory
        federal and state rate of 38.5% with the corresponding increase in the
        purchase price allocation of the assets acquired.                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company had cumulative net operating losses of approximately
        $6,152,146 and $4,764,549 as of June 30, 2007 and December 31, 2006, respectively
        for federal income tax purposes. The net operating loss carryforwards
        expiring between 2027 and 2025. The Company had no material loss carryforwards
        for state income tax purposes.
|    |                                                                                                                                                                                                                                                                                                                                                                       
|11. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                       
|    | Lease obligations The Company rents office
        space in Henderson Nevada. The lease terms expired in November, 2006 and
        the company continues to rent the existing space under month- to-month
        terms for $4,000 per month.                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                       
|    | Rental expense, resulting from this operating lease
        agreement, approximated $20,151 for the six months ended June 30, 2007
        and $12,151 for three months ended March 31, 2007.                                                                                                                                                                         

F-21

---

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

|11. | COMMITMENTS AND CONTINGENCIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Employment contracts Ian R. McNeil. The
        Company entered into an employment agreement with Ian R. McNeil effective
        January 1, 2006. Pursuant to the terms of the agreement, Mr. McNeil is
        to be paid an annual salary of $108,000 and a bonus of $36,000 on execution
        of the agreement, in consideration of which Mr. McNeil agreed to act as
        the Companys President and Chief Executive Officer. 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.                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | On February 16, 2007, the Company increased the salary
        of Mr. McNeil under this agreement to $190,000 with no material changes
        to the overall terms of the agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Carl S. Ager. The Company entered into an employment
        agreement with Carl S. Ager effective January 1, 2006. Pursuant to the
        terms of the agreement, Mr. Ager is to be paid an annual salary of $80,000
        and a bonus of $26,666 on execution of the agreement, in consideration
        of which Mr. Ager agreed to act as the Companys Treasurer and Secretary.
        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.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | On February 16, 2007, the Company increased the salary
        of Mr. Ager under this agreement to $160,000 with no material changes
        to the overall terms of the agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Melvin L. Williams. The Company entered into an employment
        agreement with Melvin L. Williams effective June 14, 2006. Pursuant to
        the terms of the agreement, Mr. Williams is to be paid an annual salary
        of $60,000 based on 300-400 hours worked and bonus consisting of 50,000
        restricted shares of the Companys common stock and 100,000 options
        to purchase additional shares of common stock at a price of $2.06 per
        share exercisable for a period of five years until June 14, 2011, with
        the options vesting 50% on the first anniversary of the execution of the
        agreement, in consideration of which Mr. Williams agreed to act as the
        Companys Chief Financial Officer. 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.

F-22

---

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

|11. | COMMITMENTS AND CONTINGENCIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | On February 16, 2007, the Company increased the salary
        of Mr. Williams under this agreement to $130,000, based on an increase
        in hours worked to 600-800 hours worked and no other material changes
        to the overall terms of the agreement.                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | In consideration of the acquisition of the Clarkdale
        Slag Project from VRIC, the Company has agreed to certain additional payments.
        The terms of and conditions of these payments are discussed in more detail
        in Note 3.                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|12. | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Financial instruments that potential subject the Company
        to concentration of credit risk consist of cash investments. The Company
        places its temporary cash investments with one financial institution.
        Cash accounts at the financial institution are insured by the Federal
        Deposit Insurance Corporation for up to $100,000 per financial institution.                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|13. | CONCENTRATION OF ACTIVITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the six months ended June 30, 2007, the Company
        purchased services from one major vendor Talson Corporation that exceeded
        more than 10% of total purchases and amounted to approximately $552,000.                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|14. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | During the six months ended June 30, 2007 and 2006,
        the Company utilized the services of NMC to provide technical assistance
        and financing related activities. These services related primarily to
        the Clarkdale Slag Project and Searchlight Claims project.                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | In addition to the above fees, NMC provided dedicated
        use of its laboratory, instrumentation, milling equipment and research
        facilities. NMC provided invoices for these fees plus expenses.                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the six months ended June 30, 2007, the Company
        incurred total fees and reimbursement of expenses to NMC of $180,000 and
        $51,046, respectively at June 30, 2007, the Company had an outstanding
        balance due to NMC of $20,053.                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the three months ended June 30, 2007, the Company
        incurred total fees and reimbursement of expenses to NMC of $90,000 and
        $30,271, respectively.                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|15. | SUBSEQUENT EVENT  WARRANT EXERCISE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Subsequent to June 30, 2007, on August 9, 2007, the
        Company issued 400,000 shares of common stock from the exercise of warrants
        resulting in cash proceeds of $260,000. Warrants exercised were for 400,000
        shares at $0.65 per share. Each of the warrants was set to expire on January
        18, 2008. Cash proceeds of $195,000 from the exercise of warrants were
        received prior to June 30, 2007 and were reported as subscribed common
        stock. Remaining cash proceeds of $65,000 were received in July 2007.

F-23

---

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

FORWARD LOOKING STATEMENTS

The information in this discussion contains forward-looking
statements. These forward-looking statements involve risks and uncertainties,
including statements regarding our capital needs, business strategy and
expectations. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as may,
will, should, expect, plan, intend, anticipate, believe,
estimate, predict, potential, or continue, the negative of such terms or
other comparable terminology. These statements reflect the current views of
management with respect to future events and are subject to risks, uncertainties
and other factors that may cause our actual results, performance or
achievements, or industry results, to be materially different from those
described in the forward-looking statements. Such risks and uncertainties
include those set forth under the caption Managements Discussion and Analysis
or Plan of Operation and elsewhere in this Quarterly Report. In evaluating
these statements, you should consider various factors, including the risks
discussed below, and, from time to time, in other reports we file with the
United States Securities and Exchange Commission (the SEC), including our
Annual Reports on Form 10-KSB, our Quarterly Reports on Form 10-QSB and our
Current Reports on Form 8-K.

INTRODUCTION

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

Our current plan of operation on the Clarkdale Slag Project
during the next twelve months is to complete our materials study, continue our
pilot testing and site work in Clarkdale, construct our first unit (module) of
production, and, subject to positive results from our pre-feasibility studies
and the results from our one unit module of production, finance and construct a
processing facility. The unit module consists of a module intended to process up
to 200 tons of slag material per day. If the results from our pre-feasibility
studies and the production results from the operation of our one unit module are
not sufficiently positive for us to proceed with the construction of our
proposed processing facility we will have to scale back or abandon our proposed
operations on the Clarkdale Slag Project.

Our current plan of operation on the Searchlight Gold Project
is to continue the metallurgical testing program to determine the most favorable
production-scale extraction methods to optimize recovery of precious metals,
drill for reserves (18 holes) and to perform a pre-feasibility study. We have
not earned any revenues to date and do not anticipate earning revenues until
such time as we enter into commercial production of our properties.

RECENT CORPORATE DEVELOPMENTS

We experienced the following significant corporate developments
since the completion of our quarter ended March 31, 2007:

|1. | During the quarter ended June 30, 2007, significant
      progress was made on the Company's Clarkdale Slag Project, including: (i)
      advancement in the building construction and site remediation program on
      the Clarkdale project site, (ii) employment of a full-time operations
      manager, (iii) completion of purchase orders for much of the processing
      equipment to be used in the first module of production, and (iv) receipt
      of a report, prepared by Independent Mining Consultants (IMC) of Tucson,
      Arizona, outlining the tonnage and grade estimate of our slag pile in
      Clarkdale, Arizona. See Item 2. Plan of Operation-Clarkdale Slag
      Project, below.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | On May 14, 2007 the Company entered into an agreement
      with The Talson Corporation (TC) for the purpose of providing certain
      construction and refurbishing services in connection with development
      of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

3

---

|   | the first unit module for the Clarkdale Slag Project.
      Pursuant to the terms of the agreement, as amended on June 4, 2007: (i)
      the Company agreed to pay a sum of $2,118,653 in consideration of the
      construction and refurbishing services to be provided by TC to the
      Company, subject to additional amounts to be included in the final
      contract sum for overhead on the project, and (ii) TC agreed to
      substantially complete the contract work under the agreement by no later
      than 180 days from the execution of the initial agreement. The agreement
      may be terminated by the Company at any time without cause.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | Effective April 30, 2007, our Board of Directors adopted
      our 2007 Stock Option Plan (the "2007 Plan") and determined to cease
      granting any further options under our 2006 Stock Option Plan. Under the
      terms of the 2007 Plan, options to purchase up to 40,000,000 shares of our
      common stock may be granted to eligible Participants. The 2007 Plan
      provides that the option price for incentive stock options be the fair
      market value of the stock at the date of the grant and the option price
      for non- qualified stock options be no less than 85% of the fair market
      value of the stock at the date of the grant. Options granted under the
      2007 Plan become exercisable and expire as determined by the Board of
      Directors. The effective date of the 2007 Plan is April 30,
2007.                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4. | On April 30, 2007, our Board of Directors amended and
      restated our bylaws (the Amended Bylaws). The amendment to the bylaws
      was for the purpose of, among other things, removing certain outdated and
      redundant provisions that existed in our prior bylaws with respect to
      corporate governance, shareholder and director meeting procedures, and to
      amend the structure of our board of directors to provide for staggered
      terms to assure continuity and stability in our board of
  directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5. | On May 8, 2007, the Board of Directors determined to
      cease granting any further options under our 2003 Nonqualified Stock
      Option Plan and reduced the number of shares of the Companys common stock
      available for issuance under the 2007 Stock Option Plan to a maximum of
      4,000,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6. | On June 15, 2007 the Company held its annual meeting of
      shareholders (the 2007 AGM). At the 2007 AGM all stockholder proposals
      were approved by a majority vote of the stockholders, see Item 4.
      Submission of matters to a vote of security holders, below. At a board of
      directors meeting held immediately following the 2007 AGM the following
      officers of the Company were reappointed to hold office until their
      successors have been duly elected and qualified: Ian R. McNeil was
      reappointed as Chief Executive Officer and President, Carl S. Ager was
      reappointed as Vice President, Secretary and Treasurer, and Melvin L.
      Williams was reappointed as Chief Financial Officer. Also on June 15, 2007
      the board reappointed Robert D. McDougal as sole member of the Companys
      audit and compensation committees and Ian R. McNeil, Carl S. Ager and
      Robert D. McDougal were reappointed to the Companys disclosure committee.
      Subsequently on July 27, 2007 the Company appointed Harry Crockett to
      serve on the Companys compensation committee.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|7. | On June 29, 2007, we approved the issuance of 1,400,000
      shares of our common stock to certain claim owners in connection with the
      option agreements dated February 8, 2005 among Searchlight and the mineral
      claim owners. The issuance was completed pursuant to Section 4(2) of the
      Securities Act of 1933. As of the date of this quarterly report we have
      issued 4,200,000 of 5,600,000 shares of our common stock required to
      complete our acquisition of the Searchlight Claims. See Item 2.
      Unregistered Sales of Equity Securities And Use of Proceeds,
  below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|8. | Effective July 1, 2007, our Board of Directors approved a
      director compensation policy for our non- employee directors. Under our
      new compensation policy commencing July 1, 2007 our non- employee
      directors receive compensation as follows: (i) each non-employee director
      will be issued annually such number of restricted shares of our common
      stock as is equal to the sum of $36,000, to be issued on a quarterly basis
      based on the closing price of our stock on the last day of trading in each
      fiscal quarter; and (ii) each non-employee director will receive an annual
      retainer of $36,000 payable in monthly installments. The above restricted
      stock awards and annual retainer are subject to the non-employee
      directors continued service to the Company during the fiscal
  year.                                                                                                                                                                                                                                                                                      

4

---

PLAN OF OPERATION

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the six
months ended June 30, 2007 and changes in our financial condition from our year
ended December 31, 2006. The following discussion should be read in conjunction
with the Managements Discussion and Analysis or Plan of Operation included in
our Annual Report on Form 10-KSB for the year ended December 31, 2006.

Clarkdale Slag Project

As of the date of this Quarterly Report, we received chain of
custody analysis results from eighteen drill holes and a 750-pound bulk sample
taken from the slag pile located on our Clarkdale Slag Project under the
supervision of Mountain States R&D International Inc. (MSRDI). These holes
were drilled as part of a materials study being conducted by MSRDI on our
behalf. Sample preparation and analysis was performed under MSRDIs chain of
custody sampling.

During the quarter ended June 30, 2007, as part of our
materials study, we received a report, prepared by Independent Mining
Consultants (IMC) of Tucson, Arizona, outlining the tonnage and grade estimate
of our slag pile in Clarkdale, Arizona. A summary of the estimates contained in
the report is as follows:

Slag Pile
    Tons in Millions
    Au opt*
    Ag opt*
    Cu %*
    Zn %*
    Fe %*East
    19.86
    0.50
    0.10
    0.34
    2.47
    33.18West**
    0.34
    0.39
    0.07
    0.22
    1.70
    31.30Combined
    20.20
    0.50
    0.10
    0.34
    2.46
    33.15


| | **Notes** |                                                                                                                                                                                                               
| | --------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | opt       | (ounces per ton)                                                                                                                                                                                              
| | *         | Independent Mining Consultants accepted the certified
      chain-of-custody data as presented by Mountain States R&D
      International Inc and did not perform independent verification of this
      data.
| | **        | Volume of the west slag- was calculated and supplied to
      Independent Mining Consultants by Dr. Richard Hewlett, an independent
      mining consultant to the Company.                                   

Independent Mining Consultants was presented with the drill
hole and bulk density data as well as the topographic maps showing the present
day surface of the slag pile. Independent Mining Consultants has used this
information to develop the estimated volume and tonnage of the slag pile.
Mountain States R&D International Inc, utilizing Chain-of-Custody
parameters, certified the grade of the slag pile that was used to determine the
volume and tonnage of the slag pile. All tonnage is reported in short tons
(2,000 pounds).

Volume and Tonnage Estimate

The slag pile was created when molten slag from the Clarkdale
copper smelter was dumped and solidified during the years 1915-1952. As the
dumping continued, the pile increased in size to its present dimensions. The
slag pile is bisected by an active railroad line that splits the pile into two
sections of slag generated from the smelting of copper concentrates from milling
operations, located on the east and west sides of the railroad track. The
eastern portion of the slag pile is the larger of the two, and its volume and
tonnage have been calculated by Independent Mining Consultants. The volume of
the west portion of the slag pile has been calculated by Dr. Richard Hewlett, an
independent mining consultant retained by Searchlight. The volume estimates are
as follows:

Volume EstimateSlag Pile
    (million cubic feet)East
    198.0West
    3.4Total Volume
    201.4


During our drilling program, drill hole samples were collected
at 2.5 -foot intervals, weighed and bagged. The average bulk density of the
drill hole cuttings was calculated to be 200.6 pounds per cubic foot. This
equates

5

---

to an average tonnage factor of 9.97 cubic feet per ton and
therefore, the estimate of the in-place tonnage of the slag pile is as follows:

Slag Pile
    Tonnage Estimate(million tons)East
    19.86West
    0.34Total Volume
    20.20


Other slag has been recently identified on the property and is
expected to be further delineated in the future.

Grade Estimate

Mountain States R & D Inc. (MSRDI) was retained by
Searchlight to collect and analyze samples of the slag pile under
Chain-of-Custody protocol. The slag grades from the 18-hole sonic drilling
program were reported under MSRDIs certification.

A computer block model of the East Slag pile was developed and
the grade of the five metals assayed (gold, silver, copper, zinc and iron) were
estimated into the block model from the drill data using an inverse distance
squared method. The following data was used to compile the estimated grades from
the East and West Slag piles:

Drill Hole
    Composite
      Footage
    Gold Au (opt)
    Silver Ag (opt)
    Copper Cu (%)
    Zinc Zn (%)
    Iron Fe (%)SD1
    0.0  55.0
    0.210
    -
    0.70
    2.10
    32.1SD2
    0.0  60.0
    0.213
    -
    0.73
    2.13
    34.6SD3
    0.0  109.0
    0.228
    -
    0.37
    2.99
    33.4SD4
    0.0  80.0
    0.190
    -
    0.39
    3.29
    32.3SD5
    0.0  89.0
    0.229
    -
    0.39
    2.29
    30.2SD6
    0.0  50.0
    0.216
    -
    0.36
    3.04
    32.5SD7
    0.0  111.5
    0.667
    0.249
    0.26
    3.10
    36.2SD8
    0.0  117.5
    0.716
    0.140
    0.29
    2.79
    33.3SD9
    0.0  114.0
    0.633
    0.153
    0.34
    2.43
    32.7SD10
    0.0  112.5
    0.669
    0.110
    0.32
    2.57
    33.5SD11
    0.0  131.0
    0.571
    0.127
    0.32
    2.18
    33.4SD12
    0.0  89.0
    0.428
    0.109
    0.31
    1.99
    32.1SD13
    0.0  127.5
    0.590
    0.114
    0.39
    2.86
    33.3SD14
    0.0  107.5
    0.538
    0.139
    0.36
    2.14
    33.0SD15
    0.0  89.0
    0.483
    0.143
    0.33
    1.96
    32.8SD16
    0.0  118.0
    0.633
    0.125
    0.31
    2.49
    34.8SD17
    0.0  116.0
    0.657
    0.116
    0.30
    2.36
    35.0SD18
    0.0  36.0
    0.390
    0.070
    0.22
    1.70
    31.3


Our current plan of operation on the Clarkdale Slag Project is
to complete our materials study, continue our pilot testing and site work in
Clarkdale, construct our first unit (module) of production. The materials study,
continuing in the third quarter of 2007, is expected to show total and
processable tonnage as well as the grade study completed by independent
engineers. In the third quarter of 2007, we hope to complete our pilot testing
and continue site work which will include finalizing the metallurgy and flow
sheet, optimizing the processing protocols and begin rehabilitating the
operations site. We then anticipate our first module of production, designed to
determine the economics of the project and serve as final feasibility of the
project, to be completed in the fourth quarter of 2007. If the feasibility of
the project proves economic, financing and construction of the processing
facility is expected to commence in the first quarter of 2008.

Until such time as we have established economic feasibility of
the Clarkdale Slag Project through our pre-feasibility studies and the operation
of our one unit module of production from the slag pile, there is no assurance
that we will proceed to the construction of our proposed processing facility. If
the results from our pre-feasibility studies and the production results from the
operation of our one unit module are not sufficiently

6

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positive for us to proceed with the construction of our
processing facility we will have to scale back or abandon our proposed
operations on the Clarkdale Slag Project.

Searchlight Gold Project

In early 2007, we received the initial results of the
metallurgical and analytical analysis on the chain of custody surface samples
and bulk samples (6 tons) samples taken from the project area by Arrakis Inc.
Our current plan of operation on the Searchlight Gold Project is to continue the
metallurgical testing program to determine the most favorable production-scale
extraction methods to optimize recovery of precious metals, drill for reserves
(18 holes) and to perform a pre-feasibility study. The metallurgical testing
program which includes independent metallurgical testing, bulk sampling,
concentration tests, milling and leaching and extraction tests to optimize
recovery of precious metals is expected to be completed in the fourth quarter of
2007. A drilling and pre-feasibility program, which is expected to include an
18-hole drill program, chain-of-custody sampling and assaying of drill hole
material, pilot plant tests and a pre-feasibility report, is then anticipated to
begin in the fourth quarter of 2007.

The table below provides an overview of the results from
metallurgical tests received from Arrakis during the six months ended June 30,
2007:

Chain of Custody Results Summary

|COC Tests (1)        | Feed GradeGold (opt)***(1)(2)** | Extracted GradeGold (opt)* (1)(2) | Leach Method
      (1)
|-------------------- | ------------------------------- | --------------------------------- | ----------------------
|Bench Leach Tests    |                                 |                                   |                       
|SP4  500grams       | 0.58                            | 0.24  0.42                       | 48 hr Leach           
|SP4  50lbs head     | 0.54                            |                                   |                       
|Con 1                | 1.56                            | 0.36                              | 96 hr leach           
|Con 2                | 0.93                            | 0.75                              | 96 hr leach           
|Bulk Leach Tests     |                                 |                                   |                       
|BL1 - 1,000 lbs      | 0.58                            | 0.25                              | 48 hr Leach           
|BL2 - 1,000 lbs      | 0.58                            | 0.22                              | 48 hr Leach           
|BL3  9,000 lbs head |                                 |                                   |                       
|1,674 lbs cons       | 0.90                            | 0.21                              | 72 hr Leach           
|Autoclave Tests      |                                 |                                   |                       
|TP2-12  200 grams   | 0.34  0.39                     | 0.03  0.26                       | 1.5 hr Autoclave      
|TP8  200 grams      | 0.37                            | 0.16                              | 1.5 hr Autoclave      
|TP9 (TP8 tails)      |                                 | 0.14                              | 1.5 hr Autoclave      
|Total                |                                 | 0.30                              | 3.0
      hr Autoclave

| | **Notes** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *         | *opt (ounces per ton)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (1)       | Gold analysis was performed by Arrakis, Inc. under
      chain-of-custody parameters. Analysis of all head ore samples was done by
      3 acid digestion in a Milestone Ethos Plus microwave sample digester and
      analyzed by a Perkin Elmer 5100 graphite furnace atomic adsorption (GFAA)
      system with Zeeman background correction. Pregnant solutions from all
      bench and bulk tests were analyzed for Au using calibration blanks and
      standards corrected with matching sample matrix to the specific solution
      being read.
| | (2)       | Feed Grade is the initial gold content in the sample.
      Extracted Grade is the amount of gold leached into
  solution.                                                                                                                                                                                                                                                                                                                                                                                                                                 

Results of the chain of custody surface samples from
metallurgical tests received from Arrakis are as follows:

Surface Sample I.D.
    Feed GradeAu (opt)*SS5
    0.39SS6
    0.48SS7
    0.55SS8
    0.69


* opt (ounces per ton)

7

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While the feed grade of the preliminary samples indicated
significant gold content, the grade recovered into solution from sample SS8 in a
bottle roll leach test approximated 0.19 opt gold. Following this initial
sampling, Arrakis tested a variety of bench scale leach methods in order to
improve extraction of the gold. The bench testing and optimization of leach
conditions improved the extraction efficiency to 72% and outlined a protocol for
bulk leach testing. To further the work program, six tons of COC bulk samples
were collected from the Searchlight property on September 14, 2005.

Results from analyses of the bulk samples were as follows:

Bulk Test I.D.
    Feed Grade
      Au (opt)*
    Extracted
      Grade Au (opt)*BL 1
    0.58
    0.25BL 2
    0.58
    0.22BL 3
    0.90
    0.21  * opt (ounces per ton)


Arrakis has begun work on examining pressure leaching via
autoclave to enhance both the kinetics and extraction efficiency of gold from
solution. A series of 11 autoclave tests were conducted using 200-gram samples
in a Parr 1 liter pressure reactor. Solution analysis was completed by Arrakis,
Inc. The results of such tests are summarized in the following table:

Autoclave Test I.D.*
    Feed Grade
      Au (opt)**
    Extracted
      Grade Au (opt)**TP2
    0.37
    0.07TP3
    0.39
    0.08TP4
    0.38
    0.03TP5
    0.37
    0.15TP6
    0.34
    0.19TP7
    0.37
    0.03TP8
    0.37
    0.16TP9
    0.37
    0.14TP10
    0.37
    0.23TP11
    0.37
    0.26TP12
    0.37
    0.15


**Notes:***
    All samples approximated 200 grams in 1 liter of
      solution. Leach time for all samples approximated 90 min and the sample
      for TP7 was dead roasted prior to leaching.****
    opt (ounces per
ton)


The current work plan for the Searchlight Gold Project is to
continue the metallurgical testing program to determine the most favorable
production-scale extraction methods to optimize recovery of precious metals.
Once these results are obtained, we intend to embark on an 18 hole drilling
program and perform a pre-feasibility study.

Cash Requirements

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

EXPENSE
    COSTAdministrative Expenses
    $2,000,000Legal and Accounting Expenses
    $600,000Consulting Services
    $1,000,000


8

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|EXPENSE                                         | COST       
|----------------------------------------------- | -----------
|                                                |            
|Clarkdale Slag Project                          |            
|•      Materials Study                          | $50,000    
|•     
      Pilot Testing/Site Work            | $300,000   
|•      First Module of Production               | $7,000,000 
|•     
      Processing Facility (begin)        | $15,000,000
|                                                | $22,350,000
|                                                |            
|Searchlight Gold Project                        |            
|•     
      Metallurgical Testing Program      | $400,000   
|•      Drilling and Feasibility Program (begin) | $300,000   
|                                                | $700,000   
|TOTAL                                           | $26,650,000

We recorded a net operating loss of $1,536,959 for the six
months ended June 30, 2007 and have an accumulated deficit of $10,943,733 since
inception. As at June 30, 2007 we had cash of $11,665,903 and for the next
twelve months, management anticipates that the minimum cash requirements to fund
our proposed exploration program and our continued operations will be
$26,650,000. Accordingly we do not have sufficient funds to meet our planned
expenditures over the next twelve months and will need to obtain further
financing to fund our operations. See Future Financings, below.

RESULTS OF OPERATIONS

Second Quarter and Six Month Summary

Second
        Quarter Ended June 30
      
      Six
        Months Ended June 30Percentage
      
      
      
      Percentage2007
      2006
      Increase /
      
      2007
      2006
      Increase /(Decrease)
      
      
      
      (Decrease)Revenue
      $11,960
      $-
      100%
      
      $19,580
      $-
      100%Operating
      (986,731)
      (1,064,487)
      7.3%
      
      (1,708,279)
      (1,680,706)
      1.6%ExpensesInterest and
      117,842
      -
      100%
      
      151,740
      -
      100%Dividend IncomeNet Loss
      $(856,929)
      $(1,068,885)
      (19.8%)
      
      $(1,536,959)
      $(1,685,104)
      8.8%


Revenue

During the quarter ended June 30, 2007 we received revenues of
$11,960 from leases and rentals of our commercial buildings and certain
facilities acquired in connection with our acquisition of Transylvania
International, Inc. (TI). 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) lease of a commercial
building space to two tenants at a rate of $1,260 per month. The lease
arrangements are on a month to month basis with no formal agreements. We are
presently in the exploration stage of our business, have not earned any revenues
from our planned operations to date, and do not anticipate earning revenues
until such time as we enter into commercial production of the Clarkdale Slag
Project, the Searchlight Claims or other mineral properties we may acquire from
time to time.

9

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Expenses

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

Second
        Quarter Ended June 30
      
      Six
        Months Ended June 30Percentage
      
      
      
      Percentage2007
      2006
      Increase /
      
      2007
      2006
      Increase /(Decrease)
      
      
      
      (Decrease)Mining exploration and
      $253,676
      $620,796
      (59.1%)
      
      $638,984
      $1,022,888
      (37.5%)evaluationGeneral and administrative
      721,602
      441,518
      63.4%
      
      1,055,052
      654,852
      61.1%Depreciation
      11,453
      2,173
      427.1%
      
      14,243
      2,966
      380.2%Total Operating Expenses
      $986,731
      $1,064,487
      (7.3)%
      
      $1,708,279
      $1,680,706
      1.6%


Operating expenses for the six months ended June 30, 2007
increased by 1.6% as compared to the comparative period in 2006 primarily as a
result of increased professional and administrative expenses associated with
holding our 2007 annual meeting of stockholders, the acquisition of Transylvania
International, Inc., the completion of our equity financings and the preparation
of our Registration Statement on Form SB-2.

During the three and six months ended June 30, 2007 the Company
incurred total fees and reimbursement expenses of $90,000 and $180,000,
respectively,to Nanominerals Corp.(NMC)an affiliate of
the Company, for technical consulting services provided by NMC in connection
with the Companys mineral exploration projects.During the six months
ended June 30, 2007 the Company also reimbursed NMC $51,046 for expenses
relating to use of NMCs laboratory, instrumentation, milling equipment and
research facilities.

Liquidity and Financial Condition

|Working Capital     |                        |                            |                      
|------------------- | ---------------------- | -------------------------- | ---------------------
|                    |                        |                            | Percentage           
|                    | At June
      30, 2007 | At
      December 31, 2006 | Increase / (Decrease)
|Current Assets      | $11,882,153            | $3,790,483                 | 213.5%               
|Current Liabilities | (8,374,302)            | (1,583,306)                | 428.9%               
|Working Capital     | $3,507,851             | $2,207,177                 | 58.9%                

|Cash Flows                                        |                     |                    
|------------------------------------------------- | ------------------- | -------------------
|                                                  | Six Months Ended    | Six Months Ended   
|                                                  | June
      30, 2007 | June
      30, 2006
|Cash Flows used in Operating
      Activities     | $1,817,934          | $1,421,344         
|Cash Flows used in Investing Activities           | $11,001,658         | $20,202            
|Cash Flows provided by
      Financing Activities | $20,801,247         | $6,256,376         
|Net Increase in Cash During Period                | $7,981,655          | $4,803,061         

Property and Equipment.Property and equipment increased
by $1,106,792 during the six month period ended June 30, 2007. The increase was
primarily due to site improvement and equipment at the Clarkdale Slag
Project.

Working Capital. The increase in our working capital
surplus from $2,207,177 as at December 31, 2006 as compared to a working capital
surplus of $3,507,851 as at June 30, 2007 was primarily due to the increase in
cash

10

---

flows from financing activities of $20,801,247 from private
placements of our securities completed during the six months ended June 30,
2007.

Income Tax Liability.Included in long term liabilities
in the accompanying consolidated financials statements is a balance of
$33,151,312 for deferred tax liability relating to the Clarkdale Slag Project.
Deferred income tax liability was recorded on excess of fair market value
acquired over income tax basis at a combined statutory federal and state rate of
38.5% with the corresponding increase in the purchase price allocation of the
assets acquired. As of June 30, 2007 and December 31, 2006, we had net operating
loss carryforwards of approximately $6,152,146 and $4,764,549, respectively for
federal income taxes. The net operating loss carryforwards expire between 2025
and 2027.

Equity Compensation.On April 30, 2007, we adopted our
2007 Stock Option Plan (the "2007 Plan"). Under the terms of the 2007 Plan, as
amended May 8, 2007, options to purchase up to 4,000,000 shares of common stock
that may be granted to our employees, officers, directors, and eligible
consultants. As at June 30, 2007 7,246 options have been granted under the 2007
with an exercise price of $3.45 per share. The options are fully vested and
expire on June 15, 2009. During the six months ended June 30, 2007 we issued
under our 2006 Stock Option Plan options to acquire 75,700 shares of common
stock to three of our executive officers and an employee with an exercise price
of $4.04 per share. The options are fully vested and expire on February 16,
2012. Compensation expense for the six months ended June 30, 2007 related to
granting of stock options was $143,103.

Future Financings

Our plan of operation calls for significant expenses in
connection with our Clarkdale Slag Project and Searchlight Gold Project. We
recorded a net operating loss of $1,536,959 for the six months ended June 30,
2007 and have an accumulated deficit of $10,943,733 since inception. As at June
30, 2007 we had cash of $11,665,903 and for the next twelve months, management
anticipates that the minimum cash requirements to fund our proposed exploration
program and our continued operations will be $26,650,000. Accordingly we do not
have sufficient funds to meet our planned expenditures over the next twelve
months and will need to seek additional financing to meet our planned
expenditures.

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

OFF-BALANCE SHEET ARRANGEMENTS

None.

CRITICAL ACCOUNTING POLICIES

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

Use of Estimates

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

11

---

Property and Equipment

Property and equipment are stated at cost less accumulated
depreciation. Depreciation is calculated using the straight-line method over
three to thirty nine years with the exception of leasehold improvements.
Leasehold improvements are depreciated on a straight-line basis over the term of
the lease.

Principles of Consolidation

The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. Significant
intercompany accounts and transactions have been eliminated.

Mineral Property Acquisition and Exploration Costs

Mineral Rights - The Company capitalizes acquisition and
option costs of mineral property rights. The amount capitalized represents fair
value at the time the mineral rights are acquired. The accumulated costs of
acquisition for properties that are developed to the stage of commercial
production will be amortized using the unit-of-production method.

Exploration Costs  Mineral exploration costs are
expensed as incurred.

Depreciation, Amortization and Capitalization

The Company records depreciation and amortization when
appropriate, using both straight-line and declining balance methods over the
estimated useful life of the assets. Expenditures for maintenance and repairs
are charged to expense as incurred. Additions, major renewals and replacements
that increase the property's useful life are capitalized. Property sold or
retired, together with the related accumulated depreciation, is removed from the
appropriate accounts and the resultant gain or loss is included in net income.

Fixed Assets - Fixed assets are stated at cost less
accumulated depreciation. Depreciation is provided principally on the
straight-line method over the estimated useful lives of the assets, which are
generally 3 to 39 years. The cost of repairs and maintenance is charged to
expense as incurred. Expenditures for property betterments and renewals are
capitalized. Upon sale or other disposition of a depreciable asset, cost and
accumulated depreciation are removed from the accounts and any gain or loss is
reflected in other income (expense). The Company periodically evaluates whether
events and circumstances have occurred that may warrant revision of the
estimated useful life of fixed assets or whether the remaining balance of fixed
assets should be evaluated for possible impairment. The Company uses an estimate
of the related undiscounted cash flows over the remaining life of the fixed
assets in measuring their recoverability.

RISKS AND UNCERTAINTIES

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

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

|- | our ability to locate a
      profitable mineral property;                                                         
|- | -------------------------------------------------------------------------------------------------------------------
|- | positive results from our
      feasibility studies on the Searchlight Claims 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.                                                                                  

12

---

Our plan of operation calls for significant expenses in
connection with the exploration of the Searchlight Claims and drilling and
sampling activities on the Clarkdale Slag Project which will require us to
obtain additional financing. We recorded a net loss of $1,536,959 for the six
months ended June 30, 2007 and have an accumulated deficit of $10,943,733 as at
June 30, 2007. As at June 30, 2007 we had cash of $11,665,903 and for the next
twelve months, management anticipates that the minimum cash requirements to fund
our proposed exploration program and our continued operations will be
$26,650,000. Accordingly we do not have sufficient funds to meet our planned
expenditures over the next twelve months and will need to obtain further
financing to fund our operations.

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

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

Our current plan of operation on the Clarkdale Slag Project is
to complete our materials study, continue our pilot testing and site work in
Clarkdale, construct our first unit (module) of production and finance. In the
third quarter of fiscal 2007, we hope to complete our pilot testing and continue
site work which will include finalizing the metallurgy and flow sheet,
optimizing the processing protocols and begin rehabilitating the operations
site. We then anticipate our first module of production, designed to determine
the economics of the project and serve as final feasibility of the project, to
be completed in the fourth quarter of 2007. If the feasibility of the project
proves economic, financing and construction of the processing facility is
expected to commence in the first quarter of 2008.

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

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

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

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

Our executive officers and directors do not have any formal
training as geologists or in the technical aspects of management of a mineral
exploration company. With no direct training or experience in these areas, our
management may not be fully aware of the specific requirements related to
working within this industry. Our management's decisions and choices may not
take into account standard engineering or managerial

13

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approaches mineral exploration companies commonly use.
Consequently, our operations, earnings, and ultimate financial success could
suffer irreparable harm due to management's lack of experience in this
industry.

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

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

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

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

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

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

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

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

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

The search for valuable minerals involves numerous hazards. As
a result, we may become subject to liability

14

---

for such hazards, including pollution and other hazards against
which we cannot insure or against which we may elect not to insure. At the
present time we have no coverage to insure against these hazards. The payment of
such liabilities may have a material adverse effect on our financial position.

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

We are currently undertaking drilling and sampling activities
on the Clarkdale Slag Project site in order to assess whether the slag possesses
mineralized material capable of commercial extraction. Once the results from the
drill program are fully analyzed, we intend to undertake the next steps on the
project. These next steps may include more drilling, analytical work, and
testing of material on a larger scale (such as a test plant) and building a
production facility. Until such time as we have established economic feasibility
of the Clarkdale Slag Project through our pre-feasibility studies and the
operation of our one unit module of production from the slag pile, there is no
assurance that we will proceed to the construction of a proposed processing
facility. If the results from our pre-feasibility studies and the production
results from the operation of our one unit module are not sufficiently positive
for us to proceed with the construction of our proposed processing facility we
will have to scale back or abandon our proposed operations on the Clarkdale Slag
Project. There is no assurance that actual recoveries of base and precious
metals or other minerals re-processed from the slag pile will be economically
feasible. If metal recoveries are less than projected, then our metal sales will
be less than anticipated and may not equal or exceed the cost of mining and
recovery in which case our operating results and financial conditions will be
adversely affected.

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

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

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

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

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

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

|- | Costs of bringing the property into production including
      exploration work, preparation of production feasibility studies, and
      construction of production facilities;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | Availability and costs of financing;                                                                                                                                            
|- | Ongoing costs of production; and                                                                                                                                                
|- | Environmental compliance regulations and restraints.                                                                                                                            

The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately predicted, such as market fluctuations, the lack of milling
facilities and processing equipment near the Searchlight Claims, the success of
our drilling and sampling activities on the Clarkdale Slag Project and such
other factors as government regulations, including

15

---

regulations relating to allowable production, exporting of
minerals, and environmental protection. If we do not find a mineral reserve or
if we cannot explore the mineral reserve, either because we do not have the
money to do it or because it will not be economically feasible to do it, we will
have to cease operations.

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

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

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

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

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

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

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

Our common stock is considered to be a penny stock since it
does not qualify for one of the exemptions from the definition of penny stock
under Section 3a51-1 of the Securities Exchange Act of 1934 (the Exchange

16

---

Act). Our common stock is a penny stock because it meets one
or more of the following conditions (i) the stock trades at a price less than
$5.00 per share; (ii) it is not traded on a recognized national exchange;
(iii) it is not quoted on the Nasdaq Stock Market, or even if so, has a price
less than $5.00 per share; or (iv) is issued by a company that has been in
business less than three years with net tangible assets less than $5 million.

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

ITEM
3.               
CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer,
we have evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that these disclosure controls and procedures
are effective.

There were no changes in our internal control over financial
reporting during the three months ended June 30, 2007 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

17

---

PART II - OTHER INFORMATION

ITEM
1.               
LEGAL PROCEEDINGS.

None.

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

During the three months ended June 30, 2007, we completed the
following unregistered sales of our securities:

|1. | On June 29, 2007, we approved the issuance of 1,400,000
      shares of our common stock to certain claim owners in connection with the
      option agreements dated February 8, 2005 among Searchlight and the mineral
      claim owners. The issuance was completed pursuant to Section 4(2) of the
      Securities Act. All securities issued were endorsed with a restrictive
      legend confirming that the securities cannot be resold without
      registration under the Securities Act or an applicable exemption from the
      registration requirements of the Securities Act.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM
3.               
DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM
4.               
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

We held an annual meeting of our stockholders on June 15, 2007
for the purpose of adopting the following proposals:

|1. | To elect to our Board of Directors: one Class I director
      to hold office until the 2010 annual meeting of our stockholders, two
      Class II directors to hold office until the 2009 annual meeting of our
      stockholders, and one Class III director to hold office until the 2008
      annual meeting of our stockholders, or until the directors respective
      successors are duly elected and qualified;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                             
|2. | To ratify the appointment of Brown Armstrong, Paulden,
      McCown, Starbuck, Thornburgh & Keeter Accountancy Corporation for the
      fiscal year ending December 31, 2007; and                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                             
|3. | To approve our 2007 Stock Option
Plan.                                                                                                                                                                                                                                                                                                                                                                                      

At the annual meeting, the above proposals were approved by a
majority of our stockholders. The results of the shareholder vote taken on the
proposals was as follows:

Proposals
    For
    Against
    Abstain/Withheld
    Broker Non-
      VotesClass I Director Nominee: Ian R. McNeil
    45,850,998
    -
    209,100
    7,300,876Class II Director Nominee: Harry B.
      Crockett
    45,850,998
    -
    209,100
    7,300,876Class II Director Nominee: Carl S. Ager
    45,850,998
    -
    209,100
    7,300,876Class III Director Nominee: Robert D.
      McDougal
    46,044,598
    -
    15,500
    7,300,876Ratification of Brown Armstrong as our
      Independent Registered
    46,054,523
    4,500
    575
    7,300,876Accounting FirmApproval of 2007 Stock Option Plan
    44,715,612
    920,311
    383,675
    7,300,876


18

---

ITEM
5.               
OTHER INFORMATION.

None.

ITEM
6.               
EXHIBITS.

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

|Exhibit |                                                                                                                                                                                                                                            
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                            
|3.1     | Articles of
      Incorporation of L.C.M. Equity, Inc.(1)                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                            
|3.2     | Amended and Restated Bylaws.(30)                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                            
|3.3     | Certificate of Amendment to Articles of
      Incorporation.(2)                                                                                                                                                                            
|        |                                                                                                                                                                                                                                            
|3.4     | Certificate of Amendment to Articles of
      Incorporation.(3)                                                                                                                                                                            
|        |                                                                                                                                                                                                                                            
|3.5     | Certificate of Amendment to Articles of
      Incorporation.(12)                                                                                                                                                                           
|        |                                                                                                                                                                                                                                            
|3.6     | Certificate of Change to Authorized
      Capital.(13)                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                            
|4.1     | Specimen Stock Certificate.(1)                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                            
|4.2     | Form of US Warrant Certificate dated February 23,
      2007.(26)                                                                                                                                                                          
|        |                                                                                                                                                                                                                                            
|4.3     | Form of US Brokers Warrant Certificate dated February
      23, 2007.(26)                                                                                                                                                                 
|        |                                                                                                                                                                                                                                            
|4.4     | Form of Non-US Warrant Certificate dated February 23,
      2007.(26)                                                                                                                                                                      
|        |                                                                                                                                                                                                                                            
|4.5     | Form of Non-US Brokers Warrant Certificate dated
      February 23, 2007.(26)                                                                                                                                                             
|        |                                                                                                                                                                                                                                            
|4.6     | Form of Warrant Certificate dated March 21,
      2007.(27)                                                                                                                                                                                
|        |                                                                                                                                                                                                                                            
|4.7     | Form of Brokers Warrant Certificate dated March 21,
      2007.(27)                                                                                                                                                                       
|        |                                                                                                                                                                                                                                            
|10.1    | 2002 Nonqualified Stock Option Plan.(4)                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                            
|10.2    | 2003 Nonqualified Stock Option Plan.(5)                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                            
|10.3    | Letter Agreement between Phage Genomics, Inc.,
      Searchlight Minerals Inc., Kiminco Inc., Pass Minerals Inc., Debra L.
      Matheson, and Pilot Plant Inc. dated February 8, 2005.(8)                                                 
|        |                                                                                                                                                                                                                                            
|10.4    | Letter Agreement between Phage Genomics Inc., Searchlight
      Minerals, Inc., K. Ian Matheson, and Pilot Plant Inc. dated February 8,
      2005.(8)                                                                                     
|        |                                                                                                                                                                                                                                            
|10.5    | Letter Agreement between Phage Genomics, Inc.,
      Searchlight Minerals, Inc., K. Ian Matheson, and Bear Dog Mines Inc. dated
      February 8, 2005.(8)                                                                                 
|        |                                                                                                                                                                                                                                            
|10.6    | Letter Agreement between Phage Genomics, Inc.,
      Searchlight Minerals, Inc., K. Ian Matheson, and Gold Hunter Inc. dated
      February 8, 2005.(8)                                                                                    
|        |                                                                                                                                                                                                                                            
|10.7    | Letter Agreement between Phage Genomics, Inc.,
      Searchlight Minerals, Inc., Kiminco Inc., Pass Minerals Inc., Michael D.
      Anderson, Farrell Drozd, Michael I. Matheson, and Pass Minerals Inc. dated
      February 8, 2005.(8)  
|        |                                                                                                                                                                                                                                            
|10.8    | Letter Agreement between Phage Genomics, Inc.,
      Searchlight Minerals, Inc., K. Ian Matheson, and Britti Gold Inc. dated
      February 8, 2005.(8)                                                                                    
|        |                                                                                                                                                                                                                                            
|10.9    | Letter Agreement between Phage Genomics, Inc.,
      Searchlight Minerals, Inc., Kiminco Inc., Pass Minerals Inc., Michael D.
      Anderson, Geosearch Inc., Patrick I. Matheson, and Geotech Mining Inc.
      dated February 8, 2005.(8)
|        |                                                                                                                                                                                                                                            
|10.10   | Letter Agreement between Phage Genomics, Inc.,
      Searchlight Minerals, Inc., Kiminco Inc., Pass Minerals Inc., and Gold
      Crown Inc. dated February 8, 2005.(8)                                                                    
|        |                                                                                                                                                                                                                                            
|10.11   | Engagement Letter dated June 17, 2005 between Searchlight
      Minerals Corp. and Clarion Finanz AG.(10)                                                                                                                                  

19

---

|Exhibit |                                                                                                                                                                                                                                                   
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                   
|10.12   | Extension Agreement dated effective June 22, 2005 among
      Searchlight Minerals Corp., K. Ian Matheson, Searchlight Minerals, Inc.
      and Pilot Plant Inc.(10)                                                                              
|        |                                                                                                                                                                                                                                                   
|10.13   | Extension Agreement dated effective June 22, 2005 among
      Searchlight Minerals Corp., K. Ian Matheson, Searchlight Minerals, Inc.
      and Bear Dog Mines Inc.(10)                                                                           
|        |                                                                                                                                                                                                                                                   
|10.14   | Extension Agreement dated effective June 22, 2005 among
      Searchlight Minerals Corp., K. Ian Matheson, Searchlight Minerals, Inc.
      and Gold Hunter Inc.(10)                                                                              
|        |                                                                                                                                                                                                                                                   
|10.15   | Extension Agreement dated effective June 22, 2005 among
      Searchlight Minerals Corp.,, K. Ian Matheson, Searchlight Minerals, Inc.,
      Pass Minerals Inc., Michael D. Anderson, Farrell Drozd and Michael I.
      Matheson.(10)           
|        |                                                                                                                                                                                                                                                   
|10.16   | Extension Agreement dated effective June 22, 2005 among
      Searchlight Minerals Corp., K. Ian Matheson, Searchlight Minerals, Inc.
      and Britti Gold Inc.(10)                                                                              
|        |                                                                                                                                                                                                                                                   
|10.17   | Extension Agreement dated effective June 22, 2005 among
      Searchlight Minerals Corp., K. Ian Matheson, Searchlight Minerals, Inc.,
      Geotech Mining Inc., Michael D. Anderson, Geosearch Inc. and Patrick B.
      Matheson.(10)          
|        |                                                                                                                                                                                                                                                   
|10.18   | Extension Agreement dated effective June 22, 2005 among
      Searchlight Minerals Corp., K. Ian Matheson, Searchlight Minerals, Inc.
      and Gold Crown Minerals Inc.(10)                                                                      
|        |                                                                                                                                                                                                                                                   
|10.19   | Assignment Agreement dated for reference June 1, 2005
      between Searchlight Minerals Corp. and Nanominerals Corp.(11)                                                                                                                         
|        |                                                                                                                                                                                                                                                   
|10.20   | First Amendment to Assignment Agreement between
      Nanominerals Corp. and Searchlight Minerals Corp. dated August 31,
      2005.(15)                                                                                                          
|        |                                                                                                                                                                                                                                                   
|10.21   | Second Amendment to Assignment Agreement between
      Nanominerals Corp. and Searchlight Minerals Corp. dated October 24,
      2005.(14)                                                                                                        
|        |                                                                                                                                                                                                                                                   
|10.22   | Office Suite Lease Agreement between Burnett &
      Williams Executive Suites and Searchlight Minerals Corp. dated September
      6, 2005.(15)                                                                                                  
|        |                                                                                                                                                                                                                                                   
|10.23   | Finders Fee Agreement between Searchlight Minerals Corp.
      and S&P Investors, Inc. dated December 7, 2005.(16)                                                                                                                               
|        |                                                                                                                                                                                                                                                   
|10.24   | Employment Agreement between Searchlight Minerals Corp.
      and Carl S. Ager dated as of January 1, 2006.(17)                                                                                                                                   
|        |                                                                                                                                                                                                                                                   
|10.25   | Employment Agreement between Searchlight Minerals Corp.
      and Ian R. McNeil dated as of January 1, 2006.(17)                                                                                                                                  
|        |                                                                                                                                                                                                                                                   
|10.26   | Employment Agreement between Searchlight Minerals Corp.
      and Melvin L. Williams dated as of June 14, 2006.(18)                                                                                                                               
|        |                                                                                                                                                                                                                                                   
|10.27   | 2006 Stock Option Plan.(19)                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                   
|10.28   | Engineering Services Agreement dated as of May 1, 2006
      with Cimetta Engineering and Construction Co.(20)                                                                                                                                    
|        |                                                                                                                                                                                                                                                   
|10.29   | Office Suite Lease Agreement between Burnett &
      Williams Executive Suites and Searchlight Minerals Corp. dated July 20,
      2006.(9)                                                                                                       
|        |                                                                                                                                                                                                                                                   
|10.30   | Contract for Engineering Services between URS Corporation
      and Verde River Iron Company LLC dated March 21, 2005.(9)                                                                                                                         
|        |                                                                                                                                                                                                                                                   
|10.31   | Contract for Drilling Services dated May 23, 2006 between
      Boart Longyear Company and Searchlight Minerals Corp. and Contact for
      Services dated October 17, 2005 between Boart Longyear Company and
      Searchlight Minerals Corp.(9)
|        |                                                                                                                                                                                                                                                   
|10.32   | Letter Agreement dated November 22, 2006 among Verde
      River Iron Company, LLC, Harry B. Crockett, Gerald Lembas and Searchlight
      Minerals Corp. (22)                                                                                    
|        |                                                                                                                                                                                                                                                   
|10.33   | Notice of Exercise Option.(23)                                                                                                                                                                                                                    

20

---

|Exhibit |                                                                                                                                                                                                                               
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                               
|10.34   | Amendment No.
        1 to Letter Agreement dated February 15, 2007.(24)                                                                                                                                                      
|        |                                                                                                                                                                                                                               
|10.35   | Agreement and
        Plan of Merger dated February 15, 2007 between Verde River Iron Company,
        LLC, Transylvania International, Inc., Clarkdale Minerals LLC and Searchlight
        Minerals Corp.(24)               
|        |                                                                                                                                                                                                                               
|10.36   | Special Warranty
        Deed dated February 15, 2007.(24)                                                                                                                                                                    
|        |                                                                                                                                                                                                                               
|10.37   | Bill of Sale
        dated February 15, 2007.(24)                                                                                                                                                                             
|        |                                                                                                                                                                                                                               
|10.38   | Agreement between
        Transylvania International, Inc. and Reynold P. Radoccia, Architect dated
        November 14, 2005.(24)                                                                                            
|        |                                                                                                                                                                                                                               
|10.39   | Effluent lease
        dated August 25, 2004 between Town of Clarkdale, Transylvania International,
        Inc. and Verde River Iron Company, LLC.(24)                                                                       
|        |                                                                                                                                                                                                                               
|10.40   | Articles of
        Merger between Transylvania International, Inc. and Clarkdale Minerals
        LLC dated February 15, 2007.(24)                                                                                           
|        |                                                                                                                                                                                                                               
|10.41   | First Amendment
        to Employment Agreement dated February 16, 2007 between Searchlight Minerals
        Corp. and Ian McNeil.(25)                                                                                        
|        |                                                                                                                                                                                                                               
|10.42   | First Amendment
        to Employment Agreement dated February 16, 2007 between Searchlight Minerals
        Corp. and Carl Ager.(25)                                                                                         
|        |                                                                                                                                                                                                                               
|10.43   | First Amendment
        to Employment Agreement dated February 16, 2007 between Searchlight Minerals
        Corp. and Melvin Williams.(32)                                                                                   
|        |                                                                                                                                                                                                                               
|10.44   | Non-Exclusive
        Agency Agreement dated February 9, 2007 between Empire Financial Group,
        Inc. and Searchlight Minerals Corp.(26)                                                                                 
|        |                                                                                                                                                                                                                               
|10.45   | Agency Agreement
        dated January 30, 2007 between S&P Investors, Inc. and Searchlight
        Minerals Corp.(26)                                                                                                        
|        |                                                                                                                                                                                                                               
|10.46   | Agency Agreement
        dated January 31, 2007 between Zuri Invest Limited and Searchlight Minerals
        Corp.(26)                                                                                                        
|        |                                                                                                                                                                                                                               
|10.47   | Agency Agreement
        dated March 21, 2007 between D&D Securities Company and Searchlight
        Minerals Corp.(27)                                                                                                       
|        |                                                                                                                                                                                                                               
|10.48   | 2007 Stock Option
        Plan.(31)                                                                                                                                                                                           
|        |                                                                                                                                                                                                                               
|14.1    | Code of Ethics.(21)                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                               
|21.1    | List of Subsidiaries.(28)                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                               
|31.1    | Certification
        of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                
|        |                                                                                                                                                                                                                               
|31.2    | Certification
        of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                
|        |                                                                                                                                                                                                                               
|32.1    | Certification
        of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                
|        |                                                                                                                                                                                                                               
|32.2    | Certification
        of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                
|        |                                                                                                                                                                                                                               
|99.1    | Audited Financial
        Statements of Transylvania International, Inc. for the years ended December
        31, 2006 and December 31, 2005.(24)                                                                             
|        |                                                                                                                                                                                                                               
|99.2    | Unaudited Pro
        Forma Combined Balance Sheet and Statement of Operations giving effect
        to Searchlight Minerals Corp.s acquisition of Transylvania International,
        Inc., effective February 15, 2007 (29)
|        |                                                                                                                                                                                                                               
|99.3    | Audit Committee
        Charter.(21)                                                                                                                                                                                          

21

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|Exhibit |                                       
|------- | --------------------------------------
|Number  | Description of Exhibits               
|        |                                       
|99.4    | Disclosure
      Committee Charter.(6)



|**Notes:** |                                                                                                                              
|---------- | -----------------------------------------------------------------------------------------------------------------------------
|(1)        | Filed with the SEC as an exhibit to our Registration
      Statement on Form 10-SB originally filed on July 11, 2000.        
|(2)        | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on April 1, 2002.                           
|(3)        | Filed with the SEC as an exhibit to our Form 8-K filed on
      December 22, 2003;                                           
|(4)        | Filed with the SEC as an exhibit to our Form S-8
      Registration Statement filed on April 10, 2002.                       
|(5)        | Filed with the SEC as an exhibit to our Form S-8 filed on
      June 30, 2003.                                               
|(6)        | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on April 13, 2004.                          
|(7)        | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on April 13, 2004.                          
|(8)        | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on April 15, 2005.                          
|(9)        | Filed with the SEC as an exhibit to our Second Amended
      Registration Statement on Form SB-2/A filed on October 30, 2006.
|(10)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on June 24, 2005.                             
|(11)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on June 16, 2005.                             
|(12)       | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on August 22, 2005.                      
|(13)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on October 14, 2005.                          
|(14)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on October 28, 2005.                          
|(15)       | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on November 21, 2005.                    
|(16)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on December 13, 2005.                         
|(17)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on March 2, 2006.                             
|(18)       | Filed with the SEC as an exhibit to our Registration
      Statement on Form SB-2 originally filed on April 3, 2006.         
|(19)       | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on May 15, 2006.                         
|(20)       | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on August 14, 2006.                      
|(21)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on September 27, 2006.                        
|(22)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on November 28, 2006.                         
|(23)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on January 16, 2007.                          
|(24)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on February 22, 2007.                         
|(25)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on February 23, 2007.                         
|(26)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on March 5, 2007.                             
|(27)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on March 29, 2007.                            
|(28)       | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on April 17, 2007.                          
|(29)       | Filed with the SEC as an exhibit to our Amended Current
      Report on Form 8-K/A filed on April 26, 2007.                  
|(30)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on May 4, 2007.                               
|(31)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on May 10, 2007.                              
|(32)       | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on June 20, 2006.                             

22

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SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



|      |                       |     | SEARCHLIGHT MINERALS CORP.           
|----- | --------------------- | --- | -------------------------------------
|      |                       |     |                                      
|      |                       |     |                                      
|Date: | August
      15, 2007 | By: | /s/
      Ian R. McNeil              
|      |                       |     | IAN R. McNEIL                        
|      |                       |     | President and Chief Executive Officer
|      |                       |     | (Principal Executive Officer )       
|      |                       |     |                                      
|      |                       |     |                                      
|      |                       |     |                                      
|      |                       |     |                                      
|Date: | August
      15, 2007 | By: | /s/
      Melvin L. Williams         
|      |                       |     | MELVIN L. WILLIAMS                   
|      |                       |     | Chief Financial Officer              
|      |                       |     | (Principal Financial Officer )       

---