**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-Q**




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


For
      the
      quarterly period ended June 30, 2008




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


For
      the
      transition period from _______ to _______.




Commission
      file number 000- 30995




**SEARCHLIGHT
      MINERALS CORP.**


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




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




**(702)
      939-5247**


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




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




Yes  xNo  ̈


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




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




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


Yes   ̈  No  x


As
      of
      August 11, 2008, the registrant had 105,728,409 outstanding shares of common
      stock.









TABLE
          OF
          CONTENTS
 
 PART
                    I – FINANCIAL INFORMATION
                2Item
                    1. Financial Statements
                2Item
                    2. Management’s Discussion and Analysis of Financial Condition and Results
                    of Operations
                29Item
                    3. Quantitative and Qualitative Disclosures About Market
                    Risk
                46Item
                    4. Controls and Procedures
                46PART
                    II - OTHER INFORMATION
                46Item
                    1. Legal Proceedings
                46Item
                    1A. Risk Factors
                46Item
                    2. Unregistered Sales of Equity Securities and Use of
                    Proceeds
                47Item
                    3. Defaults Upon Senior Securities
                47Item
                    4. Submission of Matters to a Vote of Security Holders
                47Item
                    5. Other Information
                47Item
                    6. Exhibits
                48SIGNATURES
                49
  1


**PART
      I – FINANCIAL INFORMATION**




**Item
      1. Financial Statements**




SEARCHLIGHT
      MINERALS CORP.


(AN
      EXPLORATION STAGE ENTERPRISE)


CONSOLIDATED
      BALANCE SHEETS


(UNAUDITED)





June 30, 2008
            
            December 31, 2007(restated)ASSETSCurrent
                assetsCash
                and cash equivalents
            
            $
            13,538,031
            
            $
            12,007,344Prepaid
                expenses
            
            
            132,727
            
            
            192,789Total
                current assets
            
            
            13,670,758
            
            
            12,200,133Property
                and equipment, net
            
            
            8,984,271
            
            
            5,064,460Mineral
                properties
            
            
            16,947,419
            
            
            12,702,258Slag
                project
            
            
            120,766,877
            
            
            120,766,877Land
                - smelter site and slag pile
            
            
            5,916,150
            
            
            5,916,150Land
            
            
            3,300,000
            
            
            3,300,000Reclamation
                bond and deposits
            
            
            284,000
            
            
            183,000Total
                non-current assets
            
            
            156,198,717
            
            
            147,932,745Total
                assets
            
            $
            169,869,475
            
            $
            160,132,878LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilitiesAccounts
                payable
            
            $
            946,542
            
            $
            849,910Accounts
                payable - related party
            
            
            45,926
            
            
            41,974VRIC
                payable, current portion
            
            
            187,144
            
            
            179,830Capital
                lease payable, current portion
            
            
            23,498
            
            
            22,983Total
                current liabilities
            
            
            1,203,110
            
            
            1,094,697Long-term
                liabilitiesVRIC
                payable, net of current portion
            
            
            2,058,092
            
            
            2,153,530Capital
                lease payable, net of current portion
            
            
            52,438
            
            
            64,317Deferred
                tax liability
            
            
            51,363,915
            
            
            50,619,658Total
                long-term liabilities
            
            
            53,474,445
            
            
            52,837,505Total
                liabilities
            
            
            54,677,555
            
            
            53,932,202Stockholders'
                equityCommon
                stock, $0.001 par value; 400,000,000 sharesauthorized,
                105,728,409 and 96,865,391 shares,respectively,
                issued and outstanding
            
            
            105,728
            
            
            96,865Additional
                paid-in capital
            
            
            126,748,860
            
            
            116,223,907Common
                stock subscribed
            
            
            18,000
            
            
            108,000Accumulated
                deficit during exploration stage
            
            
            (11,680,668
            )
            
            (10,228,096
            )Total
                stockholders' equity
            
            
            115,191,920
            
            
            106,200,676Total
                liabilities and stockholders' equity
            
            $
            169,869,475
            
            $
            160,132,878





See
      Accompanying Notes to these Consolidated Financial Statements




2


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, 2008
            
            June 30, 2007
            
            June 30, 2008
            
            June 30, 2007
            
            June 30, 2008(restated)
            
            
            
            (restated)Revenue
                - rents
            
            $
            7,740
            
            $
            11,960
            
            $
            17,040
            
            $
            19,580
            
            $
            53,450Operating
                expensesMineral
                exploration and evaluation expenses
            
            
            334,390
            
            
            163,676
            
            
            448,908
            
            
            458,984
            
            
            4,510,618Mineral
                exploration and evaluationexpenses
                - related party
            
            
            90,000
            
            
            90,000
            
            
            180,000
            
            
            180,000
            
            
            1,035,000Administrative
                - Clarkdale site
            
            
            272,769
            
            
            —
            
            
            507,908
            
            
            —
            
            
            1,021,667General
                and administrative
            
            
            689,031
            
            
            721,558
            
            
            1,281,025
            
            
            1,055,008
            
            
            4,888,875General
                and administrative - related party
            
            
            10,722
            
            
            —
            
            
            27,125
            
            
            —
            
            
            52,386Depreciation
            
            
            15,430
            
            
            11,453
            
            
            30,552
            
            
            14,243
            
            
            75,562Total
                operating expenses
            
            
            1,412,342
            
            
            986,687
            
            
            2,475,518
            
            
            1,708,235
            
            
            11,584,108Loss
                from operations
            
            
            (1,404,602
            )
            
            (974,727
            )
            
            (2,458,478
            )
            
            (1,688,655
            )
            
            (11,530,658
            )Other
                income (expense):Loss
                on equipment disposition
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (4,526
            )Interest
                expense
            
            
            (887
            )
            
            (44
            )
            
            (1,837
            )
            
            (44
            )
            
            (3,899
            )Interest
                and dividend income
            
            
            40,479
            
            
            117,842
            
            
            138,839
            
            
            151,740
            
            
            530,202Total
                other income (expense)
            
            
            39,592
            
            
            117,798
            
            
            137,002
            
            
            151,696
            
            
            521,777Loss
                before income taxes
            
            
            (1,365,010
            )
            
            (856,929
            )
            
            (2,321,476
            )
            
            (1,536,959
            )
            
            (11,008,881
            )Income
                tax benefit
            
            
            505,275
            
            
            270,094
            
            
            868,904
            
            
            540,188
            
            
            3,471,381Loss
                from continuing operations
            
            
            (859,735
            )
            
            (586,835
            )
            
            (1,452,572
            )
            
            (996,771
            )
            
            (7,537,500
            )Discontinued
                operations:Loss
                from discontinued operations
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (4,143,168
            )Net
                loss
            
            $
            (859,735
            )
            $
            (586,835
            )
            $
            (1,452,572
            )
            $
            (996,771
            )
            $
            (11,680,668
            )Loss
                per common share - basic and dilutedLoss
                from continuing operations
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )Loss
                from discontinued operations
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                loss
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )Weighted
                average common shares outstanding -Basic
                and diluted
            
            
            104,276,436
            
            
            91,393,212
            
            
            102,853,530
            
            
            84,593,103





See
      Accompanying Notes to these Consolidated Financial Statements




3




SEARCHLIGHT
      MINERALS CORP.


(AN
      EXPLORATION STAGE ENTERPRISE)


CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY


(UNAUDITED)





AccumulatedCommon
            
            Deficit During
            
            TotalCommon Stock
            
            Additional
            
            Stock
            
            Exploration
            
            Stockholders'Shares
            
            Amount
            
            Paid-in
                Capital
            
            Subscribed
            
            Stage
            
            EquityBalance,
                December 31, 2007 (restated)
            
            
            96,865,391
            
            $
            96,865
            
            $
            116,223,907
            
            $
            108,000
            
            $
            (10,228,096
            )
            $
            106,200,676Issuance
                of common stockfor
                cash, $0.65 per sharefrom
                exercise of warrants
            
            
            3,890,000
            
            
            3,890
            
            
            2,524,610
            
            
            (65,000
            )
            
            —
            
            
            2,463,500Issuance
                of common stockfor
                cash Reg. S - PrivatePlacement,
                $1.60 per share
            
            
            1,637,500
            
            
            1,638
            
            
            2,618,362
            
            
            —
            
            
            —
            
            
            2,620,000Issuance
                of common stockfor
                cash Reg. D - PrivatePlacement,
                $1.60 per share
            
            
            1,643,750
            
            
            1,644
            
            
            2,628,356
            
            
            —
            
            
            —
            
            
            2,630,000Issuance
                of commonstock
                as commissionin
                connection withforeign
                offering
            
            
            80,000
            
            
            80
            
            
            (80
            )
            
            —
            
            
            —
            
            
            —Amortization
                of stock optionsissued
                to officer overvesting
                period
            
            
            —
            
            
            —
            
            
            859
            
            
            —
            
            
            —
            
            
            859Issuance
                of common stockfor
                cash, $0.25 per sharefrom
                exercise of stock options
            
            
            200,000
            
            
            200
            
            
            49,800
            
            
            (25,000
            )
            
            —
            
            
            25,000Issuance
                of common stockfor
                directors' compensation
            
            
            11,768
            
            
            11
            
            
            35,989
            
            
            (18,000
            )
            
            —
            
            
            18,000Issuance
                of common stockfor
                mining claims
            
            
            1,400,000
            
            
            1,400
            
            
            2,630,600
            
            
            —
            
            
            —
            
            
            2,632,000Effect
                of modification of stock optionsissued
                to an employee
            
            
            —
            
            
            —
            
            
            36,457
            
            
            —
            
            
            —
            
            
            36,457Common
                stock subscribedfor
                directors' compensation
            
            
            —
            
            
            —
            
            
            —
            
            
            18,000
            
            
            —
            
            
            18,000Net
                loss June 30, 2008
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,452,572
            )
            
            (1,452,572
            )Balance,
                June 30, 2008
            
            
            105,728,409
            
            $
            105,728
            
            $
            126,748,860
            
            $
            18,000
            
            $
            (11,680,668
            )
            $
            115,191,920





See
      Accompanying Notes to these Consolidated Financial Statements




4




SEARCHLIGHT
      MINERALS CORP.


(AN
      EXPLORATION STAGE ENTERPRISE)


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(UNAUDITED)




Period fromJanuary 14, 2000(Date of inception)For the six months ended
            
            throughJune 30, 2008
            
            June 30, 2007
            
            June 30, 2008(restated)CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (1,452,572
            )
            $
            (996,771
            )
            $
            (11,680,668
            )Deduct:
                Loss from discontinued operations
            
            
            —
            
            
            —
            
            
            (4,143,168
            )Loss
                from continuing operations
            
            
            (1,452,572
            )
            
            (996,771
            )
            
            (7,537,500
            )Adjustments
                to reconcile loss from operatingto
                net cash used in operating activities:Depreciation
            
            
            30,552
            
            
            14,243
            
            
            75,562Stock
                based expenses
            
            
            73,316
            
            
            143,103
            
            
            1,031,478Loss
                on disposition of fixed assets
            
            
            —
            
            
            —
            
            
            5,875Amortization
                of prepaid expense
            
            
            86,445
            
            
            9,999
            
            
            256,858Changes
                in operating assets and liabilities:
            
            
            .Other
                current assets
            
            
            (19,591
            )
            
            (120,014
            )
            
            (382,793
            )Other
                assets
            
            
            (101,000
            )
            
            —
            
            
            (284,000
            )Accounts
                payable and accrued liabilities
            
            
            (269,650
            )
            
            (328,306
            )
            
            (103,324
            )Deferred
                income taxes
            
            
            (868,904
            )
            
            (540,188
            )
            
            (3,471,381
            )Net
                cash used in operating activities
            
            
            (2,521,404
            )
            
            (1,817,934
            )
            
            (10,409,225
            )Net
                cash used in operating activities from discontinued
                operations
            
            
            —
            
            
            —
            
            
            (2,931,324
            )CASH
                FLOW FROM INVESTING ACTIVITIESCash
                paid on mineral property claims
            
            
            —
            
            
            —
            
            
            (87,134
            )Cash
                paid for joint venture and merger option
            
            
            —
            
            
            —
            
            
            (890,000
            )Cash
                paid to VRIC on closing date
            
            
            —
            
            
            (9,900,000
            )
            
            (9,900,000
            )Cash
                paid for additional acquisition costs
            
            
            —
            
            
            (130,105
            )
            
            (130,105
            )Capitalized
                interest
            
            
            (91,877
            )
            
            (66,852
            )
            
            (254,049
            )Purchase
                of property and equipment
            
            
            (3,495,044
            )
            
            (971,553
            )
            
            (7,692,426
            )Net
                cash used in investing activities
            
            
            (3,586,921
            )
            
            (11,068,510
            )
            
            (18,953,714
            )Net
                cash used in investing activities from discontinued
                operations
            
            
            —
            
            
            —
            
            
            (452,618
            )CASH
                FLOW FROM FINANCING ACTIVITIESProceeds
                from stock issuance
            
            
            7,738,500
            
            
            21,453,817
            
            
            43,514,501Stock
                issuance costs
            
            
            —
            
            
            (677,570
            )
            
            (677,570
            )Principal
                payments on capital lease payable
            
            
            (11,364
            )
            
            (20,000
            )
            
            (40,303
            )Principal
                payments on deferred purchase liability
            
            
            (88,124
            )
            
            (83,148
            )
            
            (255,952
            )Proceeds
                from subscribed stock
            
            
            —
            
            
            195,000
            
            
            360,000Net
                cash provided by financing activities
            
            
            7,639,012
            
            
            20,868,099
            
            
            42,900,676Net
                cash provided by financing activities from discontinued
                operations
            
            
            —
            
            
            —
            
            
            3,384,236NET
                CHANGE IN CASH AND CASH EQUIVALENTS
            
            
            1,530,687
            
            
            7,981,655
            
            
            13,538,031CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
            
            
            12,007,344
            
            
            3,684,248
            
            
            —CASH
                AND CASH EQUIVALENTS AT END OF PERIOD
            
            $
            13,538,031
            
            $
            11,665,903
            
            $
            13,538,031


See
        Accompanying Notes to these Consolidated Financial Statements




5


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




CONSOLIDATED
                STATEMENTS OF CASH FLOWS
                (continued)




SUPPLEMENTAL
                INFORMATIONInterest
                Paid, net of capitalized amounts
            
            $
            1,837
            
            $
            44
            
            $
            54,650Income
                Taxes Paid
            
            $
            —
            
            $
            —
            
            $
            —Non-cash
                investing and financing activities:Capital
                equipment purchased through financing
            
            $
            363,442
            
            $
            —
            
            $
            808,132Assets
                acquired for common stock issued for the acquisition
            
            $
            —
            
            $
            66,879,375
            
            $
            66,879,375Assets
                acquired for common stock issued for mineral properties
            
            $
            2,632,000
            
            $
            —
            
            $
            10,710,000Assets
                acquired for liabilities incurred in the acquisition
            
            $
            —
            
            $
            2,501,187
            
            $
            2,501,187Net
                deferred tax liability assumed
            
            $
            1,613,161
            
            $
            48,076,734
            
            $
            55,197,465Merger
                option payment applied to the acquisition
            
            $
            —
            
            $
            200,000
            
            $
            200,000Reclassify
                joint venture option agreement to slag project
            
            $
            —
            
            $
            690,000
            
            $
            690,000Warrants
                issued in connection with joint venture optionagreement
                related to slag project
            
            $
            —
            
            $
            —
            
            $
            1,310,204Stock
                options for common stock issued in satisfaction of debt
            
            $
            —
            
            $
            —
            
            $
            1,200,000Capitalization
                of related party liability to equity
            
            $
            —
            
            $
            —
            
            $
            742,848Stock
                issued for conversion ofaccounts
                payable, 100,000 shares at $0.72
            
            $
            —
            
            $
            —
            
            $
            72,000Stock
                issued for compensation50,000
                shares at $2.06
            
            $
            —
            
            $
            —
            
            $
            103,000





See
      Accompanying Notes to these Consolidated Financial Statements




6




SEARCHLIGHT
      MINERALS CORP.


(AN
      EXPLORATION STAGE ENTERPRISE)


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





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





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





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





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





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




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




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




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




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)





Going
      concern - The
      Company incurred cumulative net losses of $11,680,668 as of June 30, 2008 and
      has not commenced its mining and mineral processing operations, rather, still
      in
      the exploration stage, raising substantial doubt about the Company’s ability to
      continue as a going concern.





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





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





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





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





The
      Company capitalizes acquisition and option costs of mineral rights as tangible
      assets in accordance with Emerging Issues Task Force abstract 04-02 (“EITF
      04-02”), “Whether Mineral Rights are Tangible or Intangible Assets and Related
      Issues”. Upon completion of a bankable feasibility study, the claims will be
      amortized using the unit-of-production method over the life of the claim. If
      the
      Company does not continue with exploration after the completion of the
      feasibility study, the claims will be expensed at that time.





Capitalized
      interest cost - The
      Company capitalizes interest cost related to acquisition, development and
      construction of property and equipment which is designed as integral parts
      of
      the manufacturing process of this project. The capitalized interest is recorded
      as part of the asset it relates to and will be amortized over the asset’s useful
      life once production commences. Interest cost capitalized was $91,877 and
      $66,852 for the periods ended June 30, 2008 and 2007, respectively.




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)





Exploration
      costs –
Mineral
      exploration costs are expensed as incurred.





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





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





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




Impairment
      of long-lived assets –
It
      is
      the Company’s policy to capitalize mineral rights and mineral properties
      acquired as tangible assets in accordance with EITF 04-02. The Company has
      two
      mineral properties that are in exploration stage and has considered the Value
      Beyond Proven and Probable (VBPP) in accordance with Emerging Issues Task Force
      Issue No. 04-03 (“EITF 04-03”), “Mining Assets: Impairment and Business
      Combinations” in evaluating the carrying value of these mineral assets. The fair
      value of a mining asset generally includes both VBPP and an estimate of the
      future market price of the minerals. The Company has continued to follow its
      plan of exploration for each of the properties since the dates of their
      acquisition.




The
      Company reviews and evaluates long-lived assets for impairment when events
      or
      changes in circumstances indicate the related carrying amounts may not be
      recoverable. For evaluation of possible impairment, the Company considers EITF
      04-03 . The assets are also subject to impairment consideration under Statement
      of Financial Accounting No. 144 (“SFAS 144”), “Accounting for Impairment or
      Disposal of Long-lived Assets” if events or circumstances indicate that their
      carrying amount might not be recoverable. As of June 30, 2008 exploration
      progress on these properties is on target with our exploration and evaluation
      plan and no events or circumstances have happened to indicate the related
      carrying values of the properties may not be recoverable.





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





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




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)





Discontinued
      operations - On
      February 10, 2005, the Company announced that it was reorganizing itself and
      changing its focus from biotech to becoming a mineral exploration company,
      dedicated to the discovery and exploration of gold and other precious metal
      deposits. Activity between January 1 and February 10, 2005 consisted of minor
      general and administrative expenses and as a result was not included in loss
      from discontinued operations. The consolidated unaudited statement of operations
      for the period from January 14, 2000 (date of inception) through June 30, 2008
      contains net losses prior to January 1, 2005 of $4,143,168 from discontinued
      operations.





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





Fair
      value of financial instruments -
      Financial Accounting Standards No. 107 (“SFAS 107), “Disclosure about Fair Value
      of Financial Instruments”, requires the Company to disclose, when reasonably
      attainable, the fair market values of its assets and liabilities which are
      deemed to be financial instruments. The carrying amounts and estimated fair
      values of the Company’s financial instruments approximate their fair
      value.





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




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




Earnings
      (loss) per share - The
      Company follows Statement of Financial Accounting Standard No. 128 (“SFAS 128”),
“Earnings Per Share” and Statement of Financial Accounting Standard No. 150
      (“SFAS 150”), “Accounting for Certain Financial Instruments with Characteristics
      of Both Liabilities and Equity,” which establish standards for the
      computation, presentation and disclosure requirements for basic and diluted
      earnings per share for entities with publicly-held common shares and potential
      common stock issuances. Basic earnings (loss) per share are computed by dividing
      net income by the weighted average number of common shares outstanding. In
      computing diluted earnings per share, the weighted average number of shares
      outstanding is adjusted to reflect the effect of potentially dilutive
      securities, such as stock options and warrants. Common stock equivalent shares
      are excluded from the computation if their effect is antidilutive. Weighted
      average of common stock equivalents, which include stock options and warrants
      to
      purchase common stock, on June 30, 2008 and December 31, 2007 that were not
      included in the computation of diluted EPS because the effect would be
      antidilutive were 24,361,656 and 25,352,205, respectively.




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)





Income
      taxes - The
      Company accounts for its income taxes in accordance with SFAS 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.





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





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





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




11


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




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





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




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





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





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





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




12


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




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





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





2.
            PROPERTY
                AND EQUIPMENT





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





June
                30,
              2008
            
            December
                31,
              2007Furniture
                and fixtures
            
            $
            34,694
            
            $
            34,694Lab
                equipment
            
            
            2,804
            
            
            2,804Computers
                and equipment
            
            
            45,040
            
            
            32,594Income
                property
            
            
            309,750
            
            
            309,750Construction
                in progress
            
            
            8,225,456
            
            
            4,408,796Capitalized
                interest
            
            
            254,050
            
            
            162,173Vehicles
            
            
            38,175
            
            
            38,175Site
                equipment
            
            
            148,586
            
            
            119,2039,058,555
            
            
            5,108,189Less
                accumulated depreciation
            
            
            74,284
            
            
            43,729$
            8,984,271
            
            $
            5,064,460





Depreciation
      expense was $30,552 and $14,243 for the six months ended June 30, 2008 and
      2007,
      respectively.




13


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




3.
            CLARKDALE
                SLAG PROJECT




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




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





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





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




The
      following table reflects the components of the Slag Project :




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




14


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




3.
            CLARKDALE
                SLAG PROJECT (continued)




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




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




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




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




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




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




The
      Company has accounted for the payments based on the Project Funding Date and
      the
      payments based on future cash flow as contingent consideration. Upon meeting
      the
      contingency requirements, the purchase price of the Clarkdale Slag Project
      with
      be adjusted accordingly at that time.




The
      Company believes the acquisition of the Clarkdale Slag Project was beneficial
      because it provides for 100% ownership of the properties and fosters greater
      opportunity to finance and further develop the project.




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




15


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




4.
            MINERAL
                PROPERTIES - MINING CLAIMS





As
      of
      June 30, 2008 mining claims totaling $16,947,419 consist of twenty mining claims
      located near Searchlight, Nevada. The mining claims were acquired during 2005
      with issuance of 1,400,000 shares of the Company’s common stock and the
      provision that the Company, at its option, issue an additional 1,400,000 shares
      each year in June for three remaining years. On June 25, 2008, the Company
      issued the remaining 1,400,000 shares and received the title to the mining
      claims in consideration of the satisfaction of the option agreement.





On
      August
      26, 2005, the Company paid $180,500 to the Bureau of Land Management as a bond
      for future reclamation work in Searchlight, Nevada.





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





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





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




16


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




5.
            CAPITAL
                LEASE PAYABLE




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




Lender
            
            Collateral
            
            Monthly
              Payment
            
            Interest
              Rate
            
            Maturity
            
            June 30,
              2008
            
            December 31,
              2007Caterpillar
                Financial ServicesCorporation
            
            Equipment
            
            $
            2,200
            
            
            4.45
            %
            
            Jul-11
            
            $
            75,936
            
            $
            87,30075,936
            
            
            87,300Capital
                lease payable, current portion
            
            
            
            
            
            
            
            
            
            
            (23,498
            )
            
            (22,983
            )Capital
                lease payable, net of current portion
            
            
            
            
            
            
            
            
            
            $
            52,438
            
            $
            64,317




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




2009
                
                $
                26,4012010
                
                
                26,4012011
                
                
                26,4012012
                
                
                2,200Thereafter
                
                
                —Total
                    future minimum lease payments
                
                $
                81,403Imputed
                    interest
                
                
                (5,467
                )Present
                    value of future minimum lease payments
                
                $
                75,936





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





June
                30, 2008
            
            December
                31,
              2007Site
                Equipment
            
            $
            116,239
            
            $
            116,239Accumulated
                amortization
            
            
            (31,481
            )
            
            (16,952
            )$
            84,758
            
            $
            99,287




17


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




6.
            CLARKDALE
                ACQUISITION PAYABLE





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





The
      Company has recorded a liability for this commitment using imputed interest
      based on its best estimate of future cash flows. The effective interest rate
      used was 8.00%, resulting in an initial present value of $2,501,187 and imputed
      interest of $1,128,813.





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




2009
              
              $
              187,1442010
              
              
              202,6772011
              
              
              219,4992012
              
              
              237,7182013
              
              
              257,448Thereafter
              
              
              1,140,750$
              2,245,236VRIC
                  payable, current portion
              
              
              (187,144
              )VRIC
                  payable, net of current portion
              
              $
              2,058,092




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




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




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




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




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




18


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




7.
            STOCKHOLDERS’
                EQUITY





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





a)
            On
                June 30, 2008, the Company awarded 4,326 shares each to its two non
                officer directors pursuant to its directors’ compensation policy. The
                share award was priced at $2.08 and has been recorded as directors’
                compensation expense of $18,000 and common stock subscribed as of
                June 30,
                2008.





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





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





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





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





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





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




19


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




7.
            STOCKHOLDERS’
                EQUITY(continued)





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





8.
            OPTION
                PLAN





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





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





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




Expenses
      for the six months ended June 30, 2008 and 2007 related to vesting and granting
      of stock options were $859 and $143,104, respectively and are included in
      general and administrative expense. The
      Company recorded $36,457 in stock option modification expense during the three
      months June 30, 2008. No such stock option modifications occurred
      before.





Stock
      options –
      Du ring
      the
      six months ended June 30, 2008, the Company did not grant any stock options
      awards. As of June 30, 2008 stock options outstanding totaled 3,452,946 with
      a
      weighted average strike price of $0.97 per share.





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




20


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




8.
            OPTION
                PLAN(continued)





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




Number
                of
              Shares
            
            Weighted
              Average
              Exercise PriceBalance,
                December 31, 2007
            
            
            3,652,946
            
            $
            0.93Options
                granted and assumed
            
            
            —
            
            
            —Options
                expired
            
            
            —
            
            
            —Options
                cancelled
            
            
            —
            
            
            —Options
                exercised
            
            
            (200,000
            )
            
            0.25Balance,
                June 30, 2008
            
            
            3,452,946
            
            $
            0.97





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





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





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





Accordingly,
      the Company valued the services under SFAS No. 123R relating to non-statutory
      stock options upon grant in 2007 for $859 as of June 30, 2008. Based on recent
      historical stock activity the equal probability option pricing model was
      applied.





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





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




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





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




21


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


8.
            OPTION
                PLAN(continued)





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





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





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





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





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





Number
                of
              Shares
            
            Weighted
              Average
              Exercise
                PriceBalance,
                December 31, 2007
            
            
            24,944,708
            
            $
            1.26Options/warrants
                granted and assumed
            
            
            1,640,625
            
            
            2.40Options/warrants
                expired
            
            
            —
            
            
            —Options/warrants
                cancelled
            
            
            —
            
            
            —Options/warrants
                exercised
            
            
            (4,090,000
            )
            
            (0.63
            )Balance,
                June 30, 2008
            
            
            22,495,333
            
            $
            1.46





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.




22


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




9.
            PROPERTY
                RENTAL AGREEMENTS AND LEASES(continued)





Land
      Lease – Wastewater Effluent





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





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




23


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




10.
            INCOME
                TAXES





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





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





June
                30,
              2008
            
            June
                  30,2007Income
                tax benefit per financial statements
            
            $
            (882,110
            )
            $
            (584,044
            )Non-deductible
                and other
            
            
            2,125
            
            
            2,128Change
                in valuation allowance
            
            
            11,081
            
            
            (8,730
            )Rate
                change
            
            
            -
            
            
            50,458Income
                tax benefit
            
            $
            (868,904
            )
            $
            (540,188
            )





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





June
                30,
              2008
            
            December
                31, 2007**Deferred
                income tax assets:**Net
                operating loss carryforward
            
            $
            3,833,550
            
            $
            2,964,646Option
                compensation
            
            
            339,142
            
            
            324,962Gross
                deferred income tax asset
            
            
            4,172,692
            
            
            3,289,608Valuation
                allowance
            
            
            (334,279
            )
            
            (323,198
            )3,838,413
            
            
            2,966,410**Deferred
                income tax liabilities:**Property,
                plant & equipment
            
            
            4,863
            
            
            1,764Acquisition
                related liabilities
            
            
            55,197,465
            
            
            53,584,304Net
                deferred income tax liability
            
            $
            51,363,915
            
            $
            50,619,658





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





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





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




24


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




10.
            INCOME
                TAXES(continued)





The
      Company had cumulative net operating losses of approximately $10,088,289 and
      $7,801,699 as of June 30, 2008 and December 31, 2007, respectively for federal
      income tax purposes. The Company had cumulative state net operating losses
      of
      approximately $3,173,645 and $1,795,792 as of June 30, 2008 and December 31,
      2007, respectively. The net operating loss carryforwards will be expiring
      between 2025 and 2028.





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





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




25


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




11.
              COMMITMENTS
                  AND CONTINGENCIES





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





Rental
      expense, resulting from this operating lease agreement, approximated $29,400
      and
      $20,151 for the six months ended June 30, 2008 and 2007,
      respectively.





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





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





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





Clarkdale
      slag project purchase agreement –
In
      consideration of the acquisition of the Clarkdale Slag Project from VRIC, the
      Company has agreed to certain additional payments. The terms of and conditions
      of these payments are discussed in more detail in Note 3 and 6.




26


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




12.
            CONCENTRATION
                OF CREDIT RISK





Financial
      instruments that potentially subject the Company to concentration of credit
      risk
      consist of cash investments. The Company places its temporary cash investments
      in United States Treasury instruments and with two financial institutions.
      Cash
      accounts at these financial institutions are insured by the Federal Deposit
      Insurance Corporation for up to $100,000 per financial institution.





13.
            CONCENTRATION
                OF ACTIVITY





For
      the
      six months ended June 30, 2008, the Company purchased services from two major
      vendors, Talson Corporation and Cimetta Engineering, which exceeded more than
      10% of total purchases and amounted to approximately $1,132,537 and $525,892,
      respectively.





14.
                RELATEDPARTY TRANSACTIONS





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





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





For
      the
      six months ended June 30, 2008, the Company incurred total fees and
      reimbursement of expenses to NMC of $180,000 and $51,953, respectively at June
      30, 2008, the Company had an outstanding balance due to NMC of
      $35,204.





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





The
      Company incurred total fees and reimbursement of expenses to CMOW of $27,035
      and
      $90, respectively, for the six months ended June 30, 2008. At June 30, 2008,
      the
      Company had an outstanding balance due to CMOW of $10,722.




27


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




15.
            RESTATEMENT
                OF PRIOR FINANCIAL STATEMENTS





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




Summarized
                  Consolidated Statement of Operations -For
                  the three months ended June 30, 2007
              
              As
                  Reported
              
              Adjustments
              
              As
                  RestatedTotal
                  operating expenses
              
              $
              986,687
              
              $
              -
              
              $
              986,687Loss
                  from operations
              
              
              (974,727
              )
              
              -
              
              
              (974,727
              )Income
                  tax benefit
              
              
              -
              
              
              270,094
              a
              
              270,094Net
                  loss
              
              $
              (856,929
              )
              $
              270,094
              a
              $
              (586,835
              )Loss
                  per common share
              
              $
              (0.01
              )
              
              
              
              $
              (0.01
              )
  Summarized
                  Consolidated Statement of Operations -For
                  the six months ended June 30, 2007
              
              As
                  Reported
              
              Adjustments
              
              As
                  RestatedTotal
                  operating expenses
              
              $
              1,708,235
              
              $
              -
              
              $
              1,708,235Loss
                  from operations
              
              
              (1,688,655
              )
              
              -
              
              
              (1,688,655
              )Loss
                  from operations before income tax
              
              
              (1,536,959
              )
              
              -
              
              
              (1,536,959
              )Income
                  tax benefit
              
              
              -
              
              
              540,188
              a
              
              540,188Net
                  loss
              
              $
              (1,536,959
              )
              $
              540,188
              a
              $
              (996,771
              )





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





The
      restatement adjustments are as follows:





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




28




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




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




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




**Executive
      Overview**




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




**Clarkdale
      Slag Project**




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




29







**Figure
      1. Production Module Outline**




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




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




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




30




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




We
      have
      budgeted $10,950,000 for our work program on the Clarkdale Slag Project over
      the
      next twelve months, which includes assembling and operating the production
      module, performing the feasibility study as well as Phase II expansion
      preparations. In the first quarter of 2008, we expended approximately $1,000,000
      to immediately address Phase II long lead-time items such as grading 12 acres
      of
      land, drilling a well and preparing the architecture and engineering drawings
      for the proposed full-scale production facility. A decision on allocating
      approximately $6,000,000 of additional funds for the Phase II expansion will
      be
      made once the first production module is operational and its results are
      analyzed.




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




**Searchlight
      Gold Project**




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




In
      the
      fall of 2007, our ability to carry out a drilling program on the project was
      halted by the suspension of the Searchlight claim owners’ Plan of Operations
      (“Plan”) due to a dispute between the United States Bureau of Land Management
      (the “BLM”) and one of our current principal stockholders and former officers
      and directors, K. Ian Matheson, on a project unrelated to ours.




Since
      the
      fall of 2007, we have taken steps to obtain a new Plan and the associated
      drilling permits. During the second quarter of 2008, we made our final issuance
      of 1,400,000 shares to the Searchlight Project claim owners, and we now have
      title to the 20 160-acre claims. Also during the second quarter of 2008, we
      staked over-top the project area with 142 20-acre claims. However, we also
      have
      retained the original underlying 160-acre claims covering the 3,200 acre project
      area.




On
      August
      7, 2008, with the help of our independent consultant, Enviroscientists, Inc.,
      we
      submitted a new Plan to the BLM for consideration, which includes an 18 hole
      drill program and a 36 acre mining pit.




31




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




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




**Anticipated
      Cash Requirements**




Over
      the
      next twelve months, our management anticipates that the minimum cash
      requirements for funding our proposed exploration and development program and
      our continued operations will be approximately $11,050,000. As at June 30,
      2008,
      we had cash reserves in the amount of $13,538,031. Our cash position at June
      30,
      2008 exceeds our anticipated minimum 12 month budget of $11,050,000 by
      approximately $2,488,031.




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




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




**EXPENSE**
                
                **COST**Administrative
                    Expenses
                
                $
                2,000,000Legal
                    and Accounting Expenses
                
                $
                1,100,000Consulting
                    Services
                
                $
                2,000,000**SUBTOTAL**
                
                **$**
                **5,100,000****Clarkdale
                    Slag Project**Building
                    Rehabilitation
                
                $
                750,000Production
                    Module Assembly
                
                $
                2,500,000Production
                    Module Operation
                
                $
                1,200,000Feasibility
                    Study
                
                $
                500,000Phase
                    II - Preparation for expansion to 2,000 tons per day
                
                $
                6,000,000**SUBTOTAL**
                
                **$**
                **10,950,000****Searchlight
                    Gold Project**Metallurgical
                    Testing Program
                
                $
                600,000Drilling
                    and Pre-Feasibility Program
                
                $
                400,000**SUBTOTAL**
                
                **$**
                **1,000,000****TOTAL**
                
                **$**
                **17,050,000**




32




**Critical
      Accounting Policies**




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




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




We
      capitalize acquisition and option costs of mineral rights as tangible assets
      in
      accordance with Emerging Issues Task Force abstract 04-02 (“EITF
      04-02”), “Whether Mineral Rights are Tangible or Intangible Assets and Related
      Issues”. Upon
      completion of a bankable feasibility study, the claims will be amortized using
      the unit-of-production method over the life of the claim. If we do not continue
      with exploration after the completion of the feasibility study, the claims
      will
      be expensed at that time.




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




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




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




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




33




**Restatement
      of 2007 and Prior Financial Statements**




**Overview**




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




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




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




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




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




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




**Clarkdale
      Slag Project**




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




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




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




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




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




34




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




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




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




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




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




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




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




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




In
      accordance with Emerging Issues Task Force Issue 98-11 “Accounting for Acquired
      Temporary Differences in Certain Purchase Transactions That Are Not Accounted
      for as Business Combinations” (EITF 98-11), the purchase price of $130 million
      was allocated to the assets acquired and liabilities assumed, based on their
      respective fair values at the date of acquisition. The purchase price allocated
      to the real properties was based on fair market values determined using an
      independent real estate appraisal firm and the fair value of the remaining
      assets acquired and liabilities assumed were based on management’s best
      estimates taking into account all available information at the
      time.




35




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




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




**Searchlight
      Gold Project Claims**




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





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




36




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




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





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





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





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





Summarized
                Consolidated Statement of Operations -For
                the three months ended June 30, 2007
            
            As Reported
            
            Adjustments
            
            As RestatedTotal
                operating expenses
            
            $
            986,687
            
            $
            -
            
            $
            986,687Loss
                from operations
            
            
            (974,727
            )
            
            -
            
            
            (974,727
            )Income
                tax benefit (5)
            
            
            -
            
            
            270,094
            
            
            270,094Net
                loss (5)
            
            $
            (856,929
            )
            $
            270,094
            
            $
            (586,835
            )Loss
                per common share
            
            $
            (0.01
            )
            
            
            
            $
            (0.01
            )




Summarized
                Consolidated Statement of Operations -For
                the six months ended June 30, 2007
            
            As Reported
            
            Adjustments
            
            As RestatedTotal
                operating expenses
            
            $
            1,708,235
            
            $
            -
            
            $
            1,708,235Loss
                from operations
            
            
            (1,688,655
            )
            
            -
            
            
            (1,688,655
            )Loss
                from operations before income tax
            
            
            (1,536,959
            )
            
            -
            
            
            (1,536,959
            )Income
                tax benefit (5)
            
            
            -
            
            
            540,188
            
            
            540,188Net
                loss (5)
            
            $
            (1,536,959
            )
            $
            540,188
            
            $
            (996,771
            )




37




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




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


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


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


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


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





**Results
      of Operations**




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




Three
                  Months Ended June 30,
              
              Six
                  Months Ended June 30,2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)
              
              2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)Revenue
              
              $
              7,740
              
              $
              11,960
              
              
              (35.3
              )%
              $
              17,040
              
              $
              19,580
              
              
              (12.9
              )%OperatingExpenses
              
              
              (1,412,342
              )
              
              (986,687
              )
              
              43.1
              %
              
              (2,475,518
              )
              
              (1,708,235
              )
              
              44.9
              %Other
                  Income
              
              
              39,592
              
              
              117,798
              
              
              (66.4
              )%
              
              137,002
              
              
              151,696
              
              
              (9.7
              )%Income
                  tax benefit
              
              
              505,275
              
              
              270,094
              
              
              87.1
              %
              
              868,904
              
              
              540,188
              
              
              60.9
              %Net
                  Loss
              
              $
              (859,735
              )
              $
              (586,835
              )
              
              46.5
              %
              $
              (1,452,572
              )
              $
              (996,771
              )
              
              45.7
              %




***Revenue***




***Six
      month period ended June 30, 2008 compared to 2007*** .
      During
      the six month period ended June 30, 2008, we received revenues of $17,040
      compared to $19,580 for the same period ended in 2007 from leases and rentals
      of
      our commercial buildings and certain facilities acquired in connection with
      our
      acquisition of Transylvania. The property leases consist of: (i) a rental
      agreement with Clarkdale Arizona Central Railroad for the use of certain
      facilities at a rate of $1,700 per month; and (ii) a lease of a commercial
      building space to two tenants at a rate of $880 per month. The lease
      arrangements are on a month to month basis with no formal
      agreements.




***Three
      month period ended June 30, 2008 compared to 2007*** .
      During
      the three month period ended June 30, 2008 we received revenues of $7,740
      compared to $11,960 for the same period ended in 2007. The decrease in revenue
      from the prior year was largely due to fewer tenants leasing the commercial
      building.




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




38





***Operating
      Expenses***




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


Three
                  Months Ended June 30,
              
              Six
                  Months Ended June 30,2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)
              
              2008
              
              2007
                (restated)
              
              Percent
                Increase/
                (Decrease)Mineral
                  exploration and evaluation expenses
              
              $
              334,390
              
              $
              163,676
              
              
              104.3
              %
              $
              448,908
              
              $
              458,984
              
              
              2.2
              %Mineral
                  exploration and evaluation expenses - related party
              
              
              90,000
              
              
              90,000
              
              
              0.0
              %
              
              180,000
              
              
              180,000
              
              
              0.0
              %Administrative
                  - Clarkdale site
              
              
              272,769
              
              
              —
              
              
              n/a
              
              
              507,908
              
              
              —
              
              
              n/aGeneral
                  and administrative
              
              
              689,031
              
              
              721,558
              
              
              (4.5
              )%
              
              1,281,025
              
              
              1,055,008
              
              
              21.4
              %General
                  and administrative -
                related
                  party
              
              
              10,722
              
              
              —
              
              
              n/a
              
              
              27,125
              
              
              —
              
              
              n/aDepreciation
              
              
              15,430
              
              
              11,453
              
              
              34.7
              %
              
              30,552
              
              
              14,243
              
              
              114.5
              %Total
                  Operating Expenses
              
              $
              1,412,342
              
              $
              986,687
              
              
              43.1
              %
              $
              2,475,518
              
              $
              1,708,235
              
              
              44.9
              %




***Six
      month period ended June 30, 2008 compared to 2007.*** Operating expenses increased to $2,475,518 during the six month period ended
      June 30, 2008 from $1,708,235 during the six month period ended June 30, 2007.
      Operating expense increased during the six month period ended June 30, 2008
      compared to the corresponding period in 2007 primarily as a result of increases
      in general and administrative expenses and Clarkdale site administrative
      expenses.




General
      and administrative expenses increased to $1,281,025 during the six month period
      ended June 30, 2008 from $1,055,008 during the six month period ended June
      30,
      2007. General and administrative expenses increased primarily as a result of
      (i)
      increased professional and administrative expenses associated with the
      completion of our equity financings, the preparation of our 2007 annual report
      on Form 10-KSB and legal and accounting fees; (ii) increased expenses related
      to
      the administration of the Clarkdale Slag Project site; and (iii) increased
      compensation paid to our executive officers and our directors.




Included
      in general and administrative expenses for the six month period ended June
      30,
      2008 and 2007 were compensation expenses related to the option vesting and
      option grants of $859 and $143,104, respectively.




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




39




In
      addition, we incurred $27,125 during the six month period ended June 30, 2008
      for general and administrative expenses for accounting support services to
      Cupit, Milligan, Ogden & Williams, CPAs, an affiliate of Melvin L. Williams,
      our Chief Financial Officer. We did not incur such expenses to such firm during
      the six month period ended June 30, 2007.




Mineral
      exploration and evaluation expenses decreased to $448,908 during the six month
      period ended June 30, 2008 from $458,984 during the six month period ended
      June
      30, 2007. Mineral exploration and evaluation expenses decreased primarily as
      a
      result of our focus on our construction efforts for the Clarkdale Slag
      Project.




Included
      in mineral exploration and evaluation expenses were the amounts of $180,000
      and
      $180,000 paid during the six month period ended June 30, 2008 and 2007,
      respectively, to Nanominerals Corp. (one of our principal stockholders and
      an
      affiliate of Ian R. McNeil, our Chief Executive Officer and President and a
      director, and Carl S. Ager, our Vice President, Secretary and Treasurer and
      a
      director) for technical assistance and financing related activities provided
      by
      Nanominerals in connection with the exploration and development of our mineral
      projects.




Further
      we paid $507,908 for administrative expenses relating to the Clarkdale Slag
      Project during the six month period ended June 30, 2008. Such expenses were
      minor during the six month period ended June 30, 2007 and were included in
      general and administrative expense.




For
      the
      six month period ended June 30, 2008, we purchased services from two major
      vendors, Talson Corporation and Cimetta Engineering, which exceeded more than
      10% of total purchases and amounted to approximately $1,132,537 and $525,892,
      respectively. For
      the
      six month period ended June 30, 2007, we purchased services from one major
      vendor Talson Corporation that exceeded more than 10% of total purchases and
      amounted to approximately $552,000.




***Three
      month period ended June 30, 2008 compared to 2007*** .
      Operating expenses increased to $1,412,342 during the three month period ended
      June 30, 2008 from $986,687 during the three month period ended June 30, 2007.
      Operating expense increased during the three month period ended June 30, 2008
      compared to the corresponding period in 2007 primarily as a result of increases
      in mineral exploration and evaluation expenses and Clarkdale site administrative
      expenses.




General
      and administrative expenses decreased to $689,031 during the three month period
      ended June 30, 2008 from $721,558 during the three month period ended June
      30,
      2007. General and administrative expenses decreased primarily as a result of
      no
      compensation expense recognized related to the option vesting and option grants
      as compared to the corresponding period of 2007 offset by increased legal and
      accounting fees.




In
      addition, we incurred $10,722 during the three month period ended June 30,
      2008
      for general and administrative expenses for accounting support services to
      Cupit, Milligan, Ogden & Williams, CPAs, an affiliate of Melvin L. Williams,
      our Chief Financial Officer. We did not incur such expenses to such firm during
      the three month period ended June 30, 2007.




Mineral
      exploration and evaluation expenses increased to $334,390 during the three
      month
      period ended June 30, 2008 from $163,676 during the three month period ended
      June 30, 2007. Mineral exploration and evaluation expenses increased primarily
      as a result of
      increased activity at the Clarkdale site and increased focus on Searchlight
      Gold
      Project as compared to the corresponding period of 2007.




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




40




Further
      we paid $272,769 for administrative expenses relating to the Clarkdale Slag
      Project during the three month period ended June 30, 2008. Such expenses were
      minor during the three month period ended June 30, 2007 and were included in
      general and administrative expense.




***Other
      Income and Expenses***




***Six
      month period ended June 30, 2008 compared to 2007.*** Total
      other income decreased to $137,002 during the six month period ended June 30,
      2008 from $151,696 during the six month period ended June 30, 2007. The decrease
      in total other income primarily resulted from a decrease in interest and
      dividend income. The decrease in interest and dividend income earned is
      attributable to lower interest rates during the six month period ended June
      30,
      2008 as compared to the same period in 2007.




***Three
      month period ended June 30, 2008 compared to 2007*** .
      Total
      other income decreased to $39,592 during the three month period ended June
      30,
      2008 from $117,798 during the three month period ended June 30, 2007. The
      decrease in total other income primarily resulted from a decrease in interest
      and dividend income. The decrease in interest and dividend income earned is
      attributable to lower interest rates during the three month period ended June
      30, 2008 as compared to the same period in 2007.




***Income
      Tax Benefit***




***Six
      month period ended June 30, 2008 compared to 2007.*** Income
      tax benefit increased to $868,904 for the six month period ended June 30, 2008
      from $540,188 during the six month period ended June 30, 2007. The increase
      in
      income tax benefit primarily resulted from the increase in net operating losses
      during the six month period ended June 30, 2008 from the six month period ended
      June 30, 2007.




***Three
      month period ended June 30, 2008 compared to 2007*** .
      Income
      tax benefit increased to $505,275 for the three month period ended June 30,
      2008
      from $270,094 during the three month period ended June 30, 2007. The increase
      in
      income tax benefit primarily resulted from the increase in net operating losses
      during the three month period ended June 30, 2008 from the three month period
      ended June 30, 2007.




***Net
      Loss***




***Six
      month period ended June 30, 2008 compared to 2007.*** The
      aforementioned factors resulted in a net loss of $1,452,572, or $0.01 per common
      share, for the six month period ended June 30, 2008, as compared to a net loss
      of $996,771, or $0.01 per common share, for the six month period ended June
      30,
      2007.




***Three
      month period ended June 30, 2008 compared to 2007*** .
      The
      aforementioned factors resulted in a net loss of $859,735, or $0.01 per common
      share, for the three month period ended June 30, 2008, as compared to a net
      loss
      of $586,835, or $0.01 per common share, for the three month period ended June
      30, 2007.




As
      of
      June 30, 2008 and December 31, 2007, we had cumulative net operating loss
      carryforwards of approximately $10,088,289 and $7,801,699, respectively for
      federal income taxes. As of June 30, 2008 and December 31, 2007, we had
      cumulative net operating losses of approximately $3,173,645 and $1,795,792,
      respectively for state income tax purposes. The net operating loss carryforwards
      expire between 2025 and 2028.




41




**Liquidity
      and Capital Resources**




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




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




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




**Working
      Capital**




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




At June 30, 2008
            
            At December 31,
              2007
              (restated)
            
            Percent
              Increase/(Decrease)Current
                Assets
            
            $
            13,670,758
            
            $
            12,200,133
            
            
            12.1
            %Current
                Liabilities
            
            
            (1,203,110
            )
            
            (1,094,697
            )
            
            9.9
            %Working
                Capital
            
            $
            12,467,648
            
            $
            11,105,436
            
            
            12.3
            %




As
      of
      June 30, 2008, we had an accumulated deficit of $11,680,668. As of June 30,
      2008, we had working capital of $12,467,648, compared to working capital of
      $11,105,436 as of December 31, 2007. The increase in our working capital was
      primarily attributable to the completion of our private placements in 2008
      partially offset by our net loss and capital expenditures. Cash and cash
      equivalents were $13,538,031 as of June 30, 2008, as compared to $12,007,344
      as
      of December 31, 2007. Property and equipment increased to $8,984,271 as of
      June
      30, 2008 from $5,064,460 as of December 31, 2007. The increase primarily
      resulted from site improvements and equipment acquisitions at the Clarkdale
      Slag
      Project.




Included
      in long term liabilities in the accompanying consolidated financials statements
      is a balance of $51,363,915 for deferred tax liability relating to the Clarkdale
      Slag Project and Searchlight Gold Project. A deferred income tax liability
      was
      recorded on the excess of fair market value for the asset acquired over income
      tax basis at a combined statutory federal and state rate of 38% with the
      corresponding increase in the purchase price allocation of the assets
      acquired.




42




**Cash
      Flows**




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




Six
                Months Ended June 30,2008
            
            2007
              (restated)
            
            Percent
              Increase/(Decrease)Cash
                Flows Used in OperatingActivities
            
            $
            (2,521,404
            )
            $
            (1,817,934
            )
            
            38.7
            %Cash
                Flows Used in InvestingActivities
            
            
            (3,586,921
            )
            
            (11,068,510
            )
            
            (67.6
            )%Cash
                Flows Provided by FinancingActivities
            
            
            7,639,012
            
            
            20,868,099
            
            
            (63.4
            )%Net
                Increase in Cash During Period
            
            $
            1,530,687
            
            $
            7,981,655
            
            
            (80.8
            )%




Net
      cash
      used in operating activities increased to $2,521,404 during the six month period
      ended June 30, 2008 from $1,817,934 during the six month period ended June
      30,
      2007. The increase in cash used in operating activities was primarily due to
      operating losses from our exploration activity and general and administrative
      expenses, offset by non-cash elements which were primarily related to change
      in
      deferred tax liability of $868,904 and change in accounts payable and accrued
      liabilities of $269,650.




We
      used
      $3,586,921 in investing activities during the six month period ended June 30,
      2008, as compared to $11,068,510 during the six month period ended June 30,
      2007. The decrease in the six month period ended June 30, 2008 was primarily
      a
      result of the payment to Verde River Iron Company (“VRIC”), an affiliate of a
      member of our board of directors, Harry B. Crockett, of $9,900,000 in connection
      with the acquisition of VRIC’s wholly owned subsidiary, Transylvania, during the
      six month period ended June 30, 2007, offset by property and equipment purchases
      of $3,495,044 relating to the Clarkdale Slag Project during the six month period
      ended June 30, 2008.




Net
      cash
      provided by financing activities was $7,639,012 for the six month period ended
      June 30, 2008 compared to $20,868,099 for the six month period ended June 30,
      2007. Net cash provided by financing activities during the six month period
      ended June 30, 2008 primarily resulted from the receipt of $5,250,000 from
      the
      proceeds of private placements of our securities and $2,528,500 from the
      exercise of warrants, offset by $88,124 of cash paid to VRIC based on our
      $30,000 monthly obligation to VRIC under the terms of the Transylvania
      reorganization agreement. Net cash provided by financing activities during
      the
      six month period ended June 30, 2007 primarily resulted from the receipt of
      $21,453,817 from the gross proceeds of private placements of our
      securities.




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




·
              our
                  ability to locate a profitable mineral
                  property;




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




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




·
              our
                  ability to generate revenues.




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




43




Our
      plan
      of operation calls for significant expenses in connection with the development
      of the Clarkdale Slag Project and the exploration of the Searchlight Gold
      Project. Over the next twelve months, our management anticipates that the
      minimum cash requirements for funding our proposed exploration and development
      program and our continued operations will be approximately $11,050,000. As
      at
      June 30, 2008, we had cash reserves in the amount of $13,538,031. Our cash
      position at June 30, 2008 exceeds our anticipated minimum 12 month budget of
      $11,050,000 by approximately $2,488,031.




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




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




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




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




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




**Off-Balance
      Sheet Arrangements**




None.




**Recent
      Accounting Pronouncements**


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




44


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


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




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




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




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




45




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




N ot
      applicable.




**Item
      4. Controls and Procedures**




**Controls
      and Procedures**




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




**Changes
      in Internal Control Over Financial Reporting**




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




**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings**




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




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




**Item
      1A. Risk Factors**




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




46




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




On
      May 5,
      2008, we issued 100,000 shares of common stock upon the exercise of stock
      options at an exercise price of $0.25 per share, by K. Ian Matheson, one of
      our
      principal stockholders. These securities were issued pursuant to Section 4(2)
      of
      the Securities Act.




On
      May
      15, 2008, we issued 11,768 shares of our common stock to our non-management
      directors. These shares were issued pursuant to the director compensation policy
      for our non-management directors based on: (i) a price of $2.80 per share with
      respect to 6,428 shares, being the closing price of our common stock on December
      31, 2007, being the last trading day of the fourth quarter of 2007, and (ii)
      a
      price of $3.37 per share with respect to 5,340 shares, being the closing price
      of our common stock on March 31, 2008, being the last trading day of the first
      quarter of 2008. These securities were issued pursuant to Section 4(2) of the
      Securities Act.




On
      June
      16, 2008, we issued 100,000 shares of common stock upon the exercise of stock
      options at an exercise price of $0.25 per share These securities were issued
      pursuant to Section 4(2) of the Securities Act.




On
      June
      25, 2008, we issued 1,400,000 shares of our common stock to the Searchlight
      Claim owners in connection with the option agreements dated February 8, 2005
      with the Searchlight Claim owners. The shares were issued pursuant to Section
      4(2) of the Securities Act.




**Item
      3. Defaults Upon Senior Securities**




None.




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




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




**Item
      5. Other Information**




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





On
      May 5,
      2008, after consulting with Brown Armstrong Paulden McCown Starbuck Thornburgh
      & Keeter Accountancy Corporation, our independent accountants, our
      management and our audit committee, concluded that our audited financial
      statements for the year ended December 31, 2007, and our unaudited interim
      financial statements for the periods ended June 30, 2007 should not be relied
      upon. Based upon our continued review of comments received from the Commission
      with respect to their review of our amended Registration Statement on Form
      SB-2/A, our management and our audit committee have concluded restatements
      should be made to our consolidated balance sheets and statements of
      operations.




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




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




47




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




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




**EXHIBIT
      TABLE**





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




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




48




**SIGNATURES**




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




**SEARCHLIGHT
                MINERALS CORP.**
              a
                Nevada corporationDate:
                August 11, 2008
            By:
            /s/
                Ian R.
                McNeilIan
                R. McNeilPresidentandChief
                Executive Officer
              (Principal
                Executive Officer)Date:
                August 11, 2008
            By:
            /s/Melvin L. WilliamsMelvin
                L. WilliamsChief
                Financial Officer
              (Principal
                Accounting Officer)




49