UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
the quarterly period ended September 30, 2009





OR





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934


From
________________ to ________________








HuntMountain
Resources Ltd.


(Exact
name of registrant as specified in its charter)





Washington
            001-01428
            68-0612191(State
      or other jurisdiction of incorporation)
            (Commission
      File  Number)
            (IRS
      Employer Identification No.)





1611
      N. Molter Road, Ste. 201
              Liberty
      Lake, Washington
            
            99019(Address
      of principal executive offices)
            
            (Zip
      Code)








(509)
892-5287


(Registrant's
telephone number, including area code)





________________________________________________________


(Former
name, former address & former fiscal year, if changed since last
report)





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


Yes    x          No   
o





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





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





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





State the
number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date 76,251,362.










HUNTMOUNTAIN
RESOURCES LTD.


FORM
10-Q


FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER30, 2009





PART
I





Item
1.   Financial Information





HuntMountain
      Resources Ltd. and Subsidiaries(An
      Exploration Stage Enterprise)Consolidated
      Balance SheetsSeptember 30,
            
            
            December 31,2009
            
            
            2008(unaudited)AssetsCURRENT
      ASSETS:Cash
      and cash equivalents:Cash
            
            $
            126,727
            
            
            $
            62,162Short
      term cash investments - domestic
            
            
            14,888
            
            
            
            14,246Short-term
      cash investments - Argentina
            
            
            146,155
            
            
            
            174,076Total
      cash and cash equivalents
            
            
            287,770
            
            
            
            250,484Receivables
            
            
            152,382
            
            
            
            153,135Prepaid
      expenses
            
            
            62,466
            
            
            
            77,453Accrued
      interest receivable
            
            
            7,456
            
            
            
            5,909Deposits
      paid to vendors
            
            
            584,000
            
            
            
            584,000Total
      current assets
            
            
            1,094,074
            
            
            
            1,070,981PROPERTY
      AND EQUIPMENT, NET:
            
            
            554,321
            
            
            
            1,323,204OTHER
      ASSETS:Receivable
      - V.A. tax, Argentina, net
            
            
            441,448
            
            
            
            380,153Land
      - La Josefina Estancia
            
            
            710,000
            
            
            
            710,000Performance
      bond
            
            
            183,193
            
            
            
            98,927Property
      deposits and property purchase option
            
            
            341,500
            
            
            
            341,500Investments
            
            
            7,331
            
            
            
            7,331Total
      other assets
            
            
            1,683,472
            
            
            
            827,911Total
      assets
            
            $
            3,331,867
            
            
            $
            3,222,095Liabilities
      and Stockholders’ Equity (Deficit)CURRENT
      LIABILITIES:Trade
      accounts payable
            
            $
            1,851,662
            
            
            $
            2,376,402Accrued
      wages and related taxes
            
            
            83,770
            
            
            
            115,260Employee
      expense payable
            
            
            -
            
            
            
            3,412Tax
      payable, Argentina
            
            
            58,932
            
            
            
            123,290Shareholder
      loan, including interest payable
            
            
            -
            
            
            
            1,898,534Net
      short term note payable
            
            
            2,583,842
            
            
            
            -Accrued
      interest on note payable
            
            
            338,370
            
            
            
            -Other
      payable
            
            
            -
            
            
            
            202,500Note
      payable
            
            
            28,516
            
            
            
            -Total
      current liabilities
            
            
            4,945,093
            
            
            
            4,719,397COMMITMENTS
      & CONTINGENCIES
            
            
            -
            
            
            
            -STOCKHOLDERS’
      EQUITY (DEFICIT):Preferred
      stock – 10,000,000 shares, $0.001 par value, authorized;-0- shares issued
      and outstanding
            
            
            -
            
            
            
            -Common
      stock – 300,000,000 shares, $0.001 par value, authorized;76,251,362 shares
      issued and outstanding
            
            
            76,251
            
            
            
            76,251Additional
      paid-in capital
            
            
            58,478,873
            
            
            
            50,975,578Retained
      earnings - prior to exploration stage
            
            
            90,527
            
            
            
            90,527Deficit
      accumulated during the exploration stage
            
            
            (60,152,145
            )
            
            
            (52,448,659
            )Accumulated
      other comprehensive gain (loss)
            
            
            (106,733
            )
            
            
            (190,999
            )Total
      stockholders’ equity (deficit)
            
            
            (1,613,226
            )
            
            
            (1,497,302
            )Total
      liabilities and stockholders’ equity (deficit)
            
            $
            3,331,867
            
            
            $
            3,222,095The
      accompanying condensed notes are an integral part of these consolidated
      financial statements.







HuntMountain
      Resources Ltd. and Subsidiaries(An
      Exploration Stage Enterprise)Consolidated
      Statements of OperationsThree months ended September 30,
              
              
              Nine months ended September 30,
              
              
              From Inception of
                Development Stage2009
              
              
              2008
              
              
              2009
              
              
              2008
              
              
              July 1, 2005 through(unaudited)
              
              
              (unaudited)
              
              
              (unaudited)
              
              
              (unaudited)
              
              
              September 30, 2009INCOME:
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -EXPENSES:Professional
      fees
              
              
              156,687
              
              
              
              242,207
              
              
              
              566,468
              
              
              
              669,279
              
              
              
              2,195,693Marketing
              
              
              2,222
              
              
              
              15,453
              
              
              
              3,492
              
              
              
              36,106
              
              
              
              231,496Exploration
      expenses
              
              
              131,930
              
              
              
              2,041,123
              
              
              
              718,381
              
              
              
              4,304,688
              
              
              
              8,593,455Travel
      expenses
              
              
              25,683
              
              
              
              81,608
              
              
              
              110,429
              
              
              
              214,667
              
              
              
              667,408Administrative
      and office expenses
              
              
              73,829
              
              
              
              118,103
              
              
              
              239,906
              
              
              
              296,264
              
              
              
              985,996Payroll
      expenses
              
              
              162,467
              
              
              
              241,893
              
              
              
              602,154
              
              
              
              660,181
              
              
              
              2,465,014Stock
      compensation expense
              
              
              -
              
              
              
              86,900
              
              
              
              7,000
              
              
              
              193,400
              
              
              
              434,862Common
      stock and options issued for services
              
              
              -
              
              
              
              52,000
              
              
              
              -
              
              
              
              127,000
              
              
              
              479,838Interest
      expense and banking charges
              
              
              129,389
              
              
              
              58,057
              
              
              
              321,344
              
              
              
              291,845
              
              
              
              845,519Other
      expense - Argentina
              
              
              -
              
              
              
              -
              
              
              
              20,407
              
              
              
              -
              
              
              
              107,647Value
      added tax net present value adjustment
              
              
              23,234
              
              
              
              -
              
              
              
              110,044
              
              
              
              -
              
              
              
              1,063,564Depreciation
      expense
              
              
              21,867
              
              
              
              12,754
              
              
              
              67,490
              
              
              
              27,887
              
              
              
              165,136727,308
              
              
              
              2,950,098
              
              
              
              2,767,115
              
              
              
              6,821,317
              
              
              
              18,235,627LOSS
      BEFORE OTHER INCOME
              
              
              (727,308
              )
              
              
              (2,950,098
              )
              
              
              (2,767,115
              )
              
              
              (6,821,317
              )
              
              
              (18,235,627
              )OTHER
      INCOME/(EXPENSE):Financing
      charge
              
              
              -
              
              
              
              (6,396,670
              )
              
              
              (2,837,295
              )
              
              
              (22,870,956
              )
              
              
              (31,687,292
              )Amortization
      of debt discount
              
              
              (1,909,859
              )
              
              
              (2,962,173
              )
              
              
              (2,438,842
              )
              
              
              (6,857,457
              )
              
              
              (10,657,327
              )Dividend
      and interest income
              
              
              3,762
              
              
              
              2,071
              
              
              
              13,593
              
              
              
              6,071
              
              
              
              94,086Income
      from partnership interest
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              5,423Gain
      on sale of fixed assets
              
              
              -
              
              
              
              -
              
              
              
              5
              
              
              
              -
              
              
              
              2,424Foreign
      exchange gain/(loss)
              
              
              45,428
              
              
              
              -
              
              
              
              202,435
              
              
              
              -
              
              
              
              202,435Accretion
      of VAT discount, Argentina
              
              
              17,994
              
              
              
              -
              
              
              
              66,465
              
              
              
              -
              
              
              
              66,465Net
      other income
              
              
              -
              
              
              
              (17,710
              )
              
              
              -
              
              
              
              (23,852
              )
              
              
              -Debt
      forgiveness
              
              
              57,268
              
              
              
              -
              
              
              
              57,268
              
              
              
              -
              
              
              
              57,268LOSS
      BEFORE INCOME TAXES:
              
              
              (2,512,715
              )
              
              
              (12,324,579
              )
              
              
              (7,703,486
              )
              
              
              (36,567,510
              )
              
              
              (60,152,145
              )Income
      taxes:
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -NET
      LOSS AFTER TAXES from continued operations
              
              $
              (2,512,715
              )
              
              $
              (12,324,579
              )
              
              $
              (7,703,486
              )
              
              $
              (36,567,510
              )
              
              $
              (60,152,145
              )OTHER
      COMPREHENSIVE GAIN/(LOSS)
              
              
              44,085
              
              
              
              -
              
              
              
              84,267
              
              
              
              -
              
              
              
              (106,733
              )COMPREHENSIVE
      LOSS
              
              $
              (2,468,631
              )
              
              $
              (12,324,579
              )
              
              $
              (7,619,219
              )
              
              $
              (36,567,510
              )
              
              $
              (60,258,878
              )BASIC
      AND DILUTED COMPREHENSIVE LOSS PER SHAREbased
      on weighted-average shares outstanding
              
              $
              (0.03
              )
              
              $
              (0.18
              )
              
              $
              (0.10
              )
              
              $
              (0.88
              )WEIGHTED-AVERAGE
      COMMON SHARES OUTSTANDING, BASIC AND DILUTED
              
              
              76,251,362
              
              
              
              69,139,541
              
              
              
              76,251,362
              
              
              
              41,562,999The
      accompanying notes are an integral part of these consolidated financial
      statements.


2




HuntMountain
      Resources Ltd. and Subsidiaries(An
      Exploration Stage Enterprise)Consolidated
      Statements of Cash FlowsFrom InceptionNine months ended
            
            
            of Exploration StageSeptember 30,
            
            
            July 1, 2005 through2009
            
            
            2008
            
            
            September 30, 2009(unaudited)
            
            
            (unaudited)
            
            
            (unaudited)Increase
      (Decrease) in Cash and Cash EquivalentsCASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
            
            $
            (7,619,219
            )
            
            $
            (36,567,510
            )
            
            $
            (60,067,878
            )Adjustments
      to reconcile net loss to net
      cash used in operating activitiesDepreciation
      expense
            
            
            67,490
            
            
            
            27,887
            
            
            
            165,136Stock
      option compensation expense
            
            
            7,000
            
            
            
            193,400
            
            
            
            434,862Common
      stock and options issued for services
            
            
            -
            
            
            
            127,000
            
            
            
            479,838Financing
      charge
            
            
            2,837,295
            
            
            
            22,870,956
            
            
            
            31,687,292Amortization
      of debt discount
            
            
            2,438,842
            
            
            
            6,857,457
            
            
            
            10,657,327Gain
      on sale of precious metal investments
            
            
            -
            
            
            
            -
            
            
            
            (15,194
            )Value
      added tax net present value adjustment
            
            
            110,044
            
            
            
            -
            
            
            
            110,044Accretion
      of VAT discount
            
            
            (66,465
            )
            
            
            -
            
            
            
            (66,465
            )Decrease
      (increase) in receivables
            
            
            (170,941
            )
            
            
            (888,969
            )
            
            
            (704,229
            )Decrease
      (increase) in prepaid expenses
            
            
            14,987
            
            
            
            10,136
            
            
            
            (62,466
            )Decrease
      (increase) in deposits paid to vendors
            
            
            -
            
            
            
            -
            
            
            
            (584,000
            )Accrued
      interest income
            
            
            (1,548
            )
            
            
            -
            
            
            
            (7,456
            )Increase
      (decrease) in accounts payable
            
            
            (623,999
            )
            
            
            783,708
            
            
            
            1,834,979Increase
      in interest payable, shareholder loan
            
            
            309,837
            
            
            
            -
            
            
            
            338,371Increase
      in accrued liabilities
            
            
            -
            
            
            
            (21,596
            )
            
            
            146,385Increase
      (decrease) in other payable
            
            
            (202,500
            )
            
            
            -
            
            
            
            -Increase
      in note payable
            
            
            28,516
            
            
            
            -
            
            
            
            28,516Net
      cash used in operating activities
            
            
            (2,870,660
            )
            
            
            (6,607,531
            )
            
            
            (15,624,938
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Land
      purchases
            
            
            -
            
            
            
            -
            
            
            
            (710,000
            )Performance
      bond
            
            
            -
            
            
            
            -
            
            
            
            (247,486
            )Property
      deposits
            
            
            -
            
            
            
            (135,000
            )
            
            
            (271,500
            )Property
      purchase option
            
            
            -
            
            
            
            -
            
            
            
            (70,000
            )Sale
      of precious metal investments
            
            
            -
            
            
            
            -
            
            
            
            28,913Acquisition
      of equipment
            
            
            (5,665
            )
            
            
            (413,582
            )
            
            
            (717,528
            )Net
      cash used in investing activities
            
            
            (5,665
            )
            
            
            (548,582
            )
            
            
            (1,987,601
            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from convertible note financing
            
            
            2,905,466
            
            
            
            7,034,754
            
            
            
            13,817,028Proceeds
      from sale of common stock
            
            
            -
            
            
            
            -
            
            
            
            1,132,870Proceeds
      from shareholder loan
            
            
            -
            
            
            
            -
            
            
            
            1,870,000Net
      cash provided by financing activities
            
            
            2,905,466
            
            
            
            7,034,754
            
            
            
            16,819,898Effect
      of currency translation on cash
            
            
            8,145
            
            
            
            (294,790
            )
            
            
            (27,509
            )NET
      INCREASE (DECREASE) IN CASH AND CASH
      EQUIVALENTS
            
            
            37,287
            
            
            
            (416,148
            )
            
            
            (820,150
            )CASH
      AND CASH EQUIVALENTS, BEGINNING OF
      YEAR/PERIOD
            
            
            250,484
            
            
            
            653,304
            
            
            
            1,107,921CASH
      AND CASH EQUIVALENTS, END OF
      YEAR/PERIOD
            
            $
            287,770
            
            
            $
            237,155
            
            
            $
            287,770Supplemental
      Disclosures of Cash Flow Information:NON-CASH
      FINANCING ACTIVITIES:Conversion
      of note into equity
            
            
            -
            
            
            
            10,163,010
            
            
            
            10,313,010Cashless
      exercise of options
            
            
            -
            
            
            
            189
            
            
            
            188,829Accrued
      interest
            
            
            (309,837
            )
            
            
            246,413
            
            
            
            (750,068
            )Conversion
      of accrued interest into equity
            
            
            -
            
            
            
            411,562
            
            
            
            411,562Conversion
      of shareholder loan to convertible note
            
            
            3,760,500
            
            
            
            -
            
            
            
            3,760,500Income
      taxes, paid net of refunds:
            
            
            -
            
            
            
            -
            
            
            
            -Interest
      paid:
            
            
            -
            
            
            
            -
            
            
            
            -The
      accompanying notes are an integral part of these consolidated financial
      statements.


3


HuntMountain
Resources Ltd. and Subsidiaries


Condensed
Notes to Consolidated Financial Statements (unaudited)





Note
1: Basis of Presentation





HuntMountain
Resources Ltd. (the Company), a Washington corporation, was formed in 2005 when
Metaline Mining and Leasing Company, a Washington corporation since 1927, merged
with and into the Company in August 2005.  The Company’s business plan
is to acquire interests in exploration properties in North and South
America.  As of the end of 2008, the Company had acquired one
exploration property in Nevada, seven properties in the province of Santa Cruz
in Argentina, one property in Mexico and an option on two properties in Quebec.
The Company continues to actively evaluate additional properties in North and
South America.





The
unaudited financial statements have been prepared by the management of the
Company, pursuant to the rules and regulations of the Securities and Exchange
Commission (the SEC).  Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been omitted
pursuant to such SEC rules and regulations.  These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008, which was filed with the SEC on April 14, 2009.  In
the opinion of management of the Company, the foregoing statements contain all
adjustments necessary to present fairly the financial position of the Company as
of September 30, 2009 and its results of operations and cash flows for the three
month and nine month periods ended September 30, 2009 and September 30,
2008.  The interim results reflected in the foregoing financial
statements are not considered indicative of the results expected for the full
fiscal year.





The
accompanying consolidated financial statements include the accounts of
HuntMountain Resources Ltd. (“HMR”), a Washington corporation, its wholly-owned
Canadian subsidiary HuntMountain Resources LTD (“HMR LTD”), HMR’s wholly owned
Mexican subsidiary Cerro Cazador Mexico S.A. De C.V. (“CCM”), HMR’s wholly-owned
subsidiary HuntMountain Investments, LLC (“HMI”), and Cerro Cazador S.A.
(“CCSA”), an Argentine subsidiary 95% owned by HMR and 5% owned by
HMI.





HMR LTD
is incorporated in British Columbia and provincially registered in
Yukon.  HMR LTD was formed for the purpose of holding Canadian
exploration properties, should the Company acquire an interest in any such
properties.  CCM was incorporated to acquire a property package in
Chihuahua, Mexico. HMI was incorporated for the specific purpose of holding
shares in subsidiary companies.  CCSA was formed in Argentina for the
purpose of holding Argentine exploration properties and executing agreements in
Argentina.





Note
2: Going Concern





As shown
in the accompanying financial statements, the Company has had no revenues and
has incurred an accumulated deficit from the inception of the development stage
of approximately $60,195,443 through September 30, 2009. These factors raise
substantial doubt about the Company’s ability to continue as a going concern.
Management intends to seek additional capital from new equity securities
offerings that will provide funds needed to increase liquidity, fund internal
growth and fully implement its business plan.





Historically,
the Company has funded its operations with proceeds from related party loans
that were converted into shares of its common stock. Should the Company be
unsuccessful in raising additional funds through future private placements, its
business, and, as a result, its financial position, results of operations and
cash flow will likely be materially adversely impacted. As such, substantial
doubt as to the Company’s ability to continue as a going concern remains as of
the date of these financial statements.





The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence. An estimated $3,000,000 is believed necessary to
continue operations and increase development through the next twelve months. The
timing and amount of capital requirements will depend on a number of factors,
including exploration and acquisition expenses and the general operations of the
continuing operations of the Company.


4


Note
3: Summary of Significant Accounting Policies





This
summary of significant accounting policies is presented to assist in the
understanding of the financial statements. The financial statements and notes
are representations of the Company’s management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America and have been
consistently applied in the preparation of the financial
statements.




Accounting
Method




The
Company’s financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.




Accounts
Receivable





The
Company carries its accounts receivable at net realizable value. On a periodic
basis, the Company evaluates its accounts receivable and determines if an
allowance for doubtful accounts is necessary, based on a history of past
write-offs and collections and current credit conditions. At September 30, 2009
the Company’s accounts receivable balance was $154,296 compared to $153,135 at
December 31, 2008. The Company’s receivables balance includes no allowance for
doubtful accounts based upon management’s expectations and
analysis.





Use
of Estimates





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





Cash
and Cash Equivalents





Cash and
cash equivalents include short-term cash investments that have an initial
maturity of 90 days or less. In the normal course of business, 30% of all funds
wire transferred from the Company to CCSA are withheld by the Government of
Argentina. These withheld amounts are invested in money market instruments until
the Government of Argentina approves CCSA’s formal application for release.
Funds held in this fashion are included in short-term cash
investments.





Principles
of Consolidation





The
consolidated financial statements include the accounts of the Company and its
wholly and majority-owned subsidiaries after elimination of intercompany
accounts and transactions. All of the wholly owned subsidiaries of the Company
are named above in Note 1 – Basis of Presentation.





Marketable
Securities





The
Company accounts for marketable securities in accordance with FASB ASC Topic 320
Investments Debt and Equity.  Debt securities and equity securities
that have readily determinable fair values are to be classified in three
categories:





Held to
Maturity – the positive intent and ability to hold to
maturity.  Amounts are reported at amortized cost, adjusted for
amortization of premiums and accretion of discounts.





Trading
Securities – bought principally for purpose of selling them in the near
term.  Amounts are reported at fair value, with unrealized gains and
losses included in earnings.





Available
for Sale – not classified in one of the above categories.  Amounts are
reported at fair value, with unrealized gains and losses excluded from earnings
and reported separately as a component of stockholders’ equity.





At this
time, the Company holds securities classified as available for
sale.  See Note 6 - Investments for further details.





Mineral
Development Costs





All
exploration expenditures are expensed as incurred. Significant property
acquisition payments for active exploration properties are capitalized. If no
economic ore body is discovered, previously capitalized costs are expensed in
the period the property is abandoned. Expenditures to develop new mines, to
define further mineralization in existing ore bodies, and to expand the capacity
of operating mines, are capitalized and amortized on a units-of-production basis
over proven and probable reserves.


5


Should a
property be abandoned, its capitalized costs are charged to operations. The
Company charges to the consolidated statement of operations the allocable
portion of capitalized costs attributable to properties sold. Capitalized costs
are allocated to properties sold based on the proportion of claims sold to the
claims remaining within the project area.





Equipment





The
Company evaluates equipment for impairment annually, or when events or changes
in circumstances indicate that the related carrying amount may not be
recoverable.  If the sum of estimated future net cash flows on an
undiscounted basis is less than the carrying amount of the related asset
grouping, an asset impairment is considered to exist.  The related
impairment loss is measured by comparing estimated future net cash flows on a
discounted basis to the carrying amount of the asset.  Changes in
significant assumptions underlying future cash flow estimates may have a
material effect on the Company’s financial position and results of
operations.  To date no such impairments have been
identified.





Office
Equipment and vehicles are stated at cost and depreciated on the straight-line
basis over an estimated useful life of 3 years.





Drilling
and excavation equipment is stated at cost on the balance sheet for September
30, 2009. The Company has not begun depreciating drilling and excavation
equipment because the equipment has not been placed into service.





Earnings
Per Share





The
Company follows guidance provided by FASB ASC Topic 260 Earnings Per Share,
which provides for calculation of “basic” and “diluted” earnings per share.
Basic earnings per share includes no dilution and is computed by dividing net
income available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity similar to
fully diluted earnings per share. Although there were common stock equivalents
outstanding on September 30, 2009, they were not included in the calculation of
earnings per share because they would have been considered
anti-dilutive.





Basic
earnings per share are computed using the weighted average number of shares
outstanding during the years (76,251,362 in the third quarter of 2009 and
69,139,541 in the third quarter of 2008).





As of
September 30, 2009 and 2008, the Company had outstanding options and warrants
for a total of 47,941,248 and 46,401,248, respectively, of additional shares
which were considered anti-dilutive.





Deferred
Income Tax





Deferred
income tax is provided for differences between the bases of assets and
liabilities for financial and income tax reporting.  A deferred tax
asset, subject to a valuation allowance, is recognized for estimated future tax
benefits of tax-basis operating losses being carried forward.





Provision
for Taxes





Income
taxes are provided based upon the liability method of accounting pursuant to ASC
740-10-25 Income Taxes –
Recognition.  Under the approach, deferred income taxes are
recorded to reflect the tax consequences in future years of differences between
the tax basis of assets and liabilities and their financial reporting amounts at
each year-end.  A valuation allowance is recorded against deferred tax
assets if management does not believe the Company has met the “more likely than
not” standard imposed by ASC 740-10-25-5 to allow recognition of such an
asset.





Reclamation
and Remediation





Expenditures
for ongoing compliance with environmental regulations that relate to current
operations are expensed or capitalized as appropriate. Expenditures resulting
from the remediation of existing conditions caused by past operations that do
not contribute to future revenue generations are expensed. Liabilities are
recognized when environmental assessments indicate that remediation efforts are
probable and the costs can be reasonably estimated.


6


Estimates
of such liabilities are based upon currently available facts, existing
technology and presently enacted laws and regulations taking into consideration
the likely effects of inflation and other societal and economic factors, and
include estimates of associated legal costs. These amounts also reflect prior
experience in remediating contaminated sites, other companies’ clean-up
experience and data released by The Environmental Protection Agency or other
organizations. Such estimates are by their nature imprecise and can be expected
to be revised over time because of changes in government regulations,
operations, technology and inflation. Recoveries are evaluated separately from
the liability and, when recovery is assured, the Company records and reports an
asset separately from the associated liability.





Recent
Accounting Pronouncements





In May,
2009, FASB issued ASC 855 Subsequent Eventswhich
establishes principles and requirements for subsequent events. In accordance
with the provisions of ASC 855, the Company currently evaluates subsequent
events through the date the financial statements are available to be
issued.   The Company does not expect that the adoption of this
standard to have a material impact on our financial statements.


In June
2009, the FASB issued Statement of Financial Accounting Standards No. 166,
“Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140,”
(“SFAS 166”). SFAS 166 eliminates the concept of a “qualifying special-purpose
entity,” changes the requirements for derecognizing financial assets, and
requires additional disclosures in order to enhance information reported to
users of financial statements by providing greater transparency about transfers
of financial assets, including securitization transactions, and an entity’s
continuing involvement in and exposure to the risks related to transferred
financial assets. SFAS 166 is effective for fiscal years beginning after
November 15, 2009. The Company will adopt SFAS 166 in fiscal 2010. The Company
does not expect that the adoption of SFAS 166 will have a material impact on the
financial statements.





SFAS No.
166 has not yet been codified and in accordance with ASC 105, remains
authoritative guidance until such time that it is integrated in the FASB ASC.
SFAS No. 166 is effective for financial asset transfers occurring after the
beginning of an entity’s first fiscal year that begins after November 15, 2009
and early adoption is prohibited.  The Company does not expect that
the adoption of SFAS 166 will have a material impact on the financial
statements.




In June
2009, the FASB issued Statement of Financial Accounting Standards No. 167,
“Amendments to FASB Interpretation No. 46(R),” (“SFAS 167”). The amendments
include: (1) the elimination of the exemption for qualifying special purpose
entities, (2) a new approach for determining who should consolidate a
variable-interest entity, and (3) changes to when it is necessary to reassess
who should consolidate a variable-interest entity. SFAS 167 is effective for the
first annual reporting period beginning after November 15, 2009 and for interim
periods within that first annual reporting period. The Company will adopt SFAS
167 in fiscal 2010. The Company does not expect that the adoption of SFAS 167
will have a material impact on the financial statements.




SFAS No.
167 has not yet been codified and in accordance with ASC 105, remains
authoritative guidance until such time that it is integrated in the FASB ASC.
SFAS No. 167 is effective as of the beginning of the first fiscal year that
begins after November 15, 2009, early adoption is prohibited. The Company does
not expect that the adoption of SFAS 167 will have a material impact on the
financial statements.





In June
2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
CodificationTMand the Hierarchy of Generally
Accepted Accounting Principles—a replacement of FASB Statement No. 162,
which is codified in FASB ASC 105, Generally Accepted Accounting
Principles (“ASC 105”). ASC 105 establishes the Codification as the
source of authoritative GAAP in the United States (the “GAAP hierarchy”)
recognized by the FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (“SEC”) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. Once the Codification is in effect, all of its content will
carry the same level of authority and the GAAP hierarchy will be modified to
include only two levels of GAAP, authoritative and non-authoritative. ASC 105 is
effective for financial statements issued for interim and annual periods ending
after September 15, 2009. We adopted the requirements of ASC 105 in the third
quarter of 2009; the adoption had no material effect on the Company’s financial
condition or results of operation.


7


Fair
Value Measurements





The
Company's financial instruments as defined by FASB ASC 825-10-50, include cash,
receivables, accounts payable and accrued expenses.  All instruments
are accounted for on a historical cost basis, which, due to the short maturity
of these financial instruments, approximates fair value at September 30, 2009.
The performance bond was marked to market on September 30, 2009 and September
30, 2008.





FASB ASC
820 defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles, and expands
disclosures about fair value measurements.  FASB ASC 820 establishes a
three-tier fair value hierarchy which prioritizes the inputs used in measuring
fair value as follows:





Level 1:
Quoted prices are available in active markets for identical assets or
liabilities. Active markets are those in which transactions for the asset or
liability occur with sufficient frequency and volume to provide pricing
information on an ongoing basis.





Level 2:
Pricing inputs are other than quoted prices in active markets included in Level
1, which are either directly or indirectly observable as of the reporting date.
Level 2 includes those financial instruments that are valued using models or
other valuation methodologies. These models are primarily industry-standard
models that consider various assumptions, including quoted forward prices for
commodities, time value, volatility factors, and current market and contractual
prices for the underlying instruments, as well as other relevant economic
measures. Substantially all of these assumptions are observable in the
marketplace throughout the full term of the instrument, can be derived from
observable data or are supported by observable levels at which transactions are
executed in the marketplace.





Level 3:
Pricing inputs include significant inputs that are generally unobservable from
objective sources. These inputs may be used with internally developed
methodologies that result in management’s best estimate of fair value. Level 3
instruments include those that may be more structured or otherwise tailored to
the Company’s needs.





As
required, financial assets and liabilities are classified in their entirety
based on the lowest level of input that is significant to the fair value
measurement.  The Company’s assessment of the significance of a
particular input to the fair value measurement requires judgment, and may affect
the valuation of fair value assets and liabilities and their placement within
the fair value hierarchy levels.





The
following table discloses by level within the fair value hierarchy the Company’s
assets and liabilities measured and reported on the Consolidated Balance Sheets
as of September 30, 2009, at fair value on a recurring basis:





Total
            
            
            Level
      I
            
            
            Level
      II
            
            
            Level
      IIIAssets:Performance
      bond
            
            $
            185,741
            
            
            $
            185,741
            
            
            $
            0
            
            
            $
            0Receivable
      – V.A. Tax
            
            
            447,859
            
            
            
            0
            
            
            
            0
            
            
            
            447,859Total:
            
            $
            633,600
            
            
            $
            185,741
            
            
            $
            0
            
            
            $
            447,859





The
performance bond, required to secure the Company’s rights to explore the La
Josefina property, is a step-up coupon US dollar bond issued by the Government
of Argentina with a face value of $600,000 and a maturity date of 2035. The bond
was originally purchased for $251,613 and had a value of $185,741 on September
30, 2009.





The
Receivable - V.A. Tax accrued due to the payment of valued added tax on certain
transactions in Argentina. The Company will realize this credit as an offset
against V.A. taxes due on future revenues.  This asset is reported at
net present value based upon the Company’s estimate of an expected benefit
period of 7 years and a discount rate of 18.6% based upon the average Argentine
interest rates.





Concentration
of Credit Risk





The
Company maintains its cash and cash equivalents in multiple financial
institutions.  Balances in the United States are insured by the
Federal Deposit Insurance Corporation (FDIC) up to $250,000 per
institution.  Balances on deposit may occasionally exceed FDIC insured
amounts.All of the
Company’s cash in U.S. bank accounts was FDIC insured at September 30, 2009. The
Company also maintains cash in an Argentine bank. The Argentine accounts, which
had a U.S. dollar balance of $250,849 at September 30, 2009, are considered
uninsured.


8


Foreign
Currency Translation





Our
international operations use the US Dollar as their functional currency. The
financial statements of international subsidiaries are translated to their U.S.
dollar equivalents at end-of-period currency exchange rates for monetary assets
and liabilities and at average currency exchange rates for revenues and
expenses. Translation adjustments for international subsidiaries are recorded as
a loss in the accompanying Consolidated Statements of Operations. Transaction
gains and losses resulting from fluctuations in currency exchange rates on
transactions denominated in currencies other than the functional currency are
recognized as incurred in the accompanying Consolidated Statements of
Operations, except for certain inter-company balances designated as long-term
investments.





Other
Comprehensive Income




The
Company follows guidance provided by FASB ASC Topic 220 “Comprehensive Income”,
which establishes guidelines for the reporting and display of comprehensive
income (loss) and its components in financial statements. Comprehensive income
(loss) includes the accrued gain or loss on the performance bond. (discussed in
Note 5 – Performance Bond).




Derivative
Instruments





The
Company follows guidance provided by FASB ASC 815, Derivatives and Hedging,
which is intended to improve financial standards for derivative instruments and
hedging activities by requiring enhanced disclosures to enable investors to
better understand their effects on an entity's financial position, financial
performance and cash flows. Entities are required to provide enhanced
disclosures about how and why an entity uses derivative instruments; how
derivative instruments and related hedged items are accounted for under ASC 815;
and how derivative instruments and related hedged items affect an entity's
financial position, financial performance and cash flows.  ASC 815 was
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, which for the Company was the fiscal year
beginning January 1, 2009.  The Company adopted ASC 815-10-65 at
January 1, 2009; however the adoption of this statement did not have a material
effect on its financial results.


If
certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss is
recognized in income in the period of change.





Historically,
the Company has not entered into derivative contracts to hedge existing
risks.





Compensated
Absences





The
Company has not accrued for compensated absences because the amounts are deemed
to be immaterial.





Reclassifications





Certain
prior year amounts in the accompanying financial statements have been
reclassified to conform to the fiscal 2008 presentation. These reclassifications
have resulted in no changes to the Company’s accumulated deficit or the net loss
presented.





Beneficial
Conversion Feature of Convertible Notes





Following
the guidance provided by ASC Topic 470 “Debt with Conversion and Other Options”,
the Company allocated proceeds first to the warrants issuable upon conversion of
the note. The value of the warrants was recorded on the balance sheet as debt
discounts and increases to shareholder’s equity. The debt discounts are being
amortized over the remaining life of the convertible note. The value of warrants
in excess of the actual debt advance amounts were expensed as financing
fees.





Once the
Company allocated proceeds of convertible note advances to the warrant values,
the embedded conversion feature of shares issuable on conversion of the notes
was recognized. All amounts relating to the share values were expensed as
financing fees.


9


Note
4: Stock option plan





The
Company’s 2005 Stock Plan permits the granting of up to 3,000,000 non-qualified
stock options, incentive stock options, and restricted shares of common stock to
employees, directors, and consultants.  At September 30, 2009, there
were 2,295,000 stock options granted to directors, employees, or consultants of
which 2,245,000 options were vested as of September 30, 2009. The fair value of
each option is estimated on the vesting date using the Black-Scholes option
pricing model.





There
were no options that vested during the quarter ended September 30, 2009;
therefore, the Company’s total stock option expense for the quarter was
zero.  Expenses for the remaining options will be recorded as they
vest through 2012.





The
following table summarizes the terms of the options outstanding at September 30,
2009:





Number
      of Options
            
            
            Weighted
      Average Exercise Price
            
            
            Weighted
      Average Remaining Contractual Life (Years)
            
            
            Number
      of Exercisable Options at September 30, 200990,000
            
            
            $
            0.20
            
            
            
            2.39
            
            
            
            90,000700,000
            
            
            $
            0.25
            
            
            
            1.85
            
            
            
            700,000100,000
            
            
            $
            0.30
            
            
            
            2.08
            
            
            
            100,00010,000
            
            
            $
            0.34
            
            
            
            0.83
            
            
            
            10,00050,000
            
            
            $
            0.38
            
            
            
            3.84
            
            
            
            50,000650,000
            
            
            $
            0.45
            
            
            
            2.81
            
            
            
            650,0005,000
            
            
            $
            0.55
            
            
            
            1.75
            
            
            
            5,00055,000
            
            
            $
            0.60
            
            
            
            3.23
            
            
            
            55,000150,000
            
            
            $
            0.63
            
            
            
            2.59
            
            
            
            150,000100,000
            
            
            $
            0.64
            
            
            
            3.95
            
            
            
            100,000100,000
            
            
            $
            0.67
            
            
            
            4.67
            
            
            
            50,000285,000
            
            
            $
            0.76
            
            
            
            3.61
            
            
            
            285,000TOTALS
            
            
            2,295,000
            
            
            $
            0.44
            
            
            
            2.71
            
            
            
            2,245,000








Note
5: Performance bond





During
the quarter ended March 31, 2007, the Company's wholly-owned subsidiary, Cerro
Cazador S.A., was required to purchase a performance bond as a condition of the
exploration agreement on the La Josefina property in Argentina.  The
bond was originally purchased for $251,613 and had a value of $214,762 at
December 31, 2007. As of the quarter ended September 30, 2009, the value of the
bond decreased to $185,741. The decline in value is presented on our balance
sheet as Other Comprehensive Income (Loss). The bond has a face value of
$600,000, or 10% of our required investment under the terms of the
agreement.





Note
6: Investments





The
Company holds an interest in two units of Pondera Partners, Ltd., a producing
oil project located in Teton County, Montana. This investment was valued at cost
on the Company’s balance sheet at $7,331 on September 30, 2009.





Note
7: Convertible Note





On June
2, 2009, pursuant to approval from its board of directors, the Company obtained
an unsecured loan for multiple advances up to $5,000,000 (“the June 2009 Note”)
from Hunt Family Limited Partnership (“HFLP”), a related party. The June 2009
Loan supersedes and replaces the shareholder loan owed to HFLP that had a
balance of $3,198,510 on March 31, 2009.


10


The June
2009 Note, which matures on December 31, 2009, bears interest at a rate of
eleven percent (11%) per annum. All principal and accrued interest balances due
pursuant to the June 2009 Note are convertible at the option of the holder into
units of the Company’s common stock, at a conversion price of $0.10 per unit,
where each unit consists of one share and one warrant to purchase a common
share. Each warrant issued pursuant to conversion of the June 2009 Note shall
have an exercise price of $0.10 per share and a seven (7) year expiration from
the date of issuance.





In
addition, concurrently and in consideration for the issuance of the June 2009
Note, all warrants previously issued to HFLP pursuant to the conversion of Notes
shall be cancelled and an equal number of warrants to acquire common shares at
an exercise price of $0.10 and a maturity date of April 22, 2016 shall be
issued. On June 2, 2009 the Company recognized a financing fee expense of
$2,837,295 to reflect the difference in the Black-Scholes valuation of the new
warrants and the cancelled warrants.





Concurrently
and in consideration for the issuance of the June 2009 Note the Company granted
to HFLP a 3% Net Smelter Royalty (“NSR”) on all of the Company’s resource
properties in Mexico, past, present and future. The Company also granted an
additional 2,000,000 warrants with a $0.10 exercise price and a seven year term
in conjunction with the inception of the June Note structure.





The
Company recognized the beneficial conversion feature associated with the June
Note’s convertibility into shares and warrants. The total value of the shares
was determined based on the trading price of the Company’s shares at the time of
the draw on the June Note. The total value of warrants was determined using the
Black Scholes option pricing model. In employing this model, the Company used
the actual three month T-Bill rate on the advance dates for the risk-free rate.
Similarly, the actual share price on advance dates was used in the
calculation.  The Company assumed expected volatility of 105.06%, no
dividends and a five year horizon in all Black Scholes option pricing
calculations.





In the
third quarter of 2009, $853,500 was received under the June Note and the total
value of warrants from issuances of the June Note was $947,278 and the total
value of shares was $1,133,600. Since the value of beneficial conversion feature
exceeded the amount borrowed, the Company recognized a debt discount to
completely offset the amount borrowed. Total advances in 2009 under the June
Note equal $2,934,000. As of September 30, 2009 the balance of the June Note
is:





Principal
            
            $
            4,804,000Discount
            
            
            2,220,158Net
            
            $
            2,538,842





Note
8: Commitments and Contingencies





On June
24, 2009 the Company entered into a Letter of Intent with a Canadian Capital
Pool company (“the CPC”) pursuant to which the CPC intends to acquire all of the
issued and outstanding shares of Cerro Cazador S.A. (“CCSA”), the Company’s
Argentine subsidiary, in a reverse takeover transaction (“RTO”). In conjunctions
with this proposed transaction, the CPC intends to raise funds through the
issuance of common shares. All of the funds raised pursuant to this share
issuance will be used for CCSA’s ongoing operations.  Upon completion of the
RTO, the Company would own 68.8% of the CPC’s issued and outstanding common
shares and 100% of its non-voting convertible preferred shares. The company’s
post-RTO fully diluted equity ownership of the CPC will be
79.1%.





Note
9: Subsequent events





Subsequent
to September 30, 2009 the Company borrowed an additional $45,000 pursuant to the
June Note.





The
Company has evaluated subsequent events through November 19, 2009, the date the
financial statements were available for issue.








Item
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS





Forward
Looking Statements


11


This form
10-Q and other documents we file with the Securities and Exchange Commission
(“SEC”) contain forward-looking statements that are based on current
expectations, estimates, forecasts and projections about us, our future
performance, our business, our beliefs and our management’s
assumptions.  All statements other than statements of historical facts
are forward-looking statements, including any statements of the plans and
objectives of management for future operations, projections of revenue earnings
or other financial items, any statements regarding future economic conditions or
performance, and any statement of assumptions underlying any of the
foregoing.  Some of these forward-looking statements may be identified
by the use of words in the statements such as “anticipate,” “estimate,” “could,”
“would,” “expect,” “project,” “intend,” “plan,” “believe,” “seek,” “should,”
“may,” “assume,” “continue,” variations of such words and similar
expressions.  These statements are not guarantees of future
performance and involve certain risks, uncertainties, and assumptions that are
difficult to predict.  We caution you that our performance and results
could differ materially from what is expressed, implied, or forecast by our
forward-looking statements due to general financial, economic, regulatory and
political conditions affecting the economy and markets, as well as more specific
risks and uncertainties affecting the Company.  The Company operates
in a rapidly changing environment that involves a number of risks, some of which
are beyond the Company’s control.  Future operating results and the
Company’s stock price may be affected by a number of factors.  Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in the section entitled “ITEM 1. BUSINESS,” and all
subsections therein, including, without limitation, the subsection entitled,
“FACTORS THAT MAY AFFECT THE COMPANY,” and the section entitled “MARKET FOR
REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS,” all contained in our
Annual Report on Form 10-K for the year ended December 31,
2007.  Given these risks and uncertainties, any or all of these
forward-looking statements may prove to be incorrect.  Therefore, you
should not rely on any such forward-looking statements.  Furthermore,
we do not intend (and we are not obligated) to update publicly any
forward-looking statements.  You are advised, however, to consult any
further disclosures we make on related subjects in our reports to the Securities
and Exchange Commission.





Overview





We are
engaged in the business of acquiring, exploring and developing mineral
properties, primarily those containing gold, silver and associated base metals.
Through our Latin American subsidiaries we hold mining claims in Santa Cruz
province, Argentina and the state of Chihuahua, Mexico. Additionally, we hold an
option to acquire a 100% interest in two properties in the province of Quebec,
Canada and a 10 year lease on a mining property in the state of
Nevada.





The
Company is currently evaluating other exploration and development properties in
North and South America.





On June
24, 2009 the Company announced that it had entered into a Letter of Intent with
Sinomar Capital Corp. (“Sinomar”), a Canadian Capital Pool Corporation, pursuant
to which Sinomar will acquire all of the issued and outstanding shares of CCSA
in a reverse takeover (“RTO”) transaction. This transaction is intended to be
Sinomar’s Qualifying Transaction pursuant to Policy 2.4 of the TSX Venture
Exchange and is therefore subject to regulatory approval. Upon completion of the
RTO, the Company would own 68.8% of Sinomar’s issued and outstanding common
shares and 100% of Sinomar’s non-voting convertible preferred shares. The
company’s post-RTO fully diluted equity ownership of Sinomar is
79.1%.





In
conjunction with the RTO, Sinomar and the Company engaged Wolverton Securities
to raise a minimum of CDN$2,000,000 and a maximum of CDN$3,000,000 via short
form offering document and private placement.





Results
of Operations





Three
month period ended September 30, 2009 compared to September 30,
2008





We had no
revenues from operations during the recently completed quarter. Our only income
has been derived from interest and dividends on our cash and cash investments.
Interest and dividend income for the three-month period ended September 30, 2009
increased to $14,310 from $2,071 for the same period ended September 30, 2008.
This increase was due to higher interest income during the quarter ended
September 30 2009 relative to the quarter ended September 30, 2008.




We had a
comprehensive loss of $2,468,631 during the three-month period ended September
30, 2009.  This compares to a comprehensive loss of $12,324,579 during
the three-month period ended September 30, 2008. The decrease in our
comprehensive loss was due to significantly lower financing charges and
amortization of debt discount expense relating to the Company’s convertible
notes and lower exploration expenditures.





During
this most recently completed quarter, the Company primarily focused its
exploration expenditures in Argentina.


12


We
anticipate continuing net losses until such time as we sufficiently develop
properties for production or subsequent acquisition by another company. Our
ongoing expenses consist of exploration expenses on properties that we have
acquired; payroll; investor relations and marketing; travel, administrative and
office expenses; accounting, legal, and consulting expenses related to complying
with reporting requirements of the Securities Exchange Act of 1934; and expenses
incurred in the search for exploration properties that meet our acquisition
criteria.





Working
Capital, Cash and Cash Equivalents





The
Company’s working capital deficit for the nine month period ending September 30,
2009 was $(3,851,019) compared to $(3,648,416) on December 31, 2008. The ratio
of current assets to current liabilities was 0.22  to 1 at September
30, 2009 compared to 0.23 to 1 at December 31, 2008. Working capital decreased
during the nine month period ended September 30, 2009 compared to the same
period in 2008 due primarily to the Company’s shareholder loan balance and a
reduction in short term investments.





Net cash
used in operating activities was $2,870,660 for the nine month period in 2009
compared with $6,607,531 used in operating activities in the same period during
2008.  The decrease is the result of a reduction in net loss during
the six months ended September 30, 2009.





During
the nine month period ending September 30, 2009, investing activities used
$5,665 compared with $548,582 during that same period in 2008. The decrease
relates to the Company’s purchase of a drill rig and excavation equipment in the
nine month period ended September 30, 2009.





Cash flow
from financing activities was $2,905,466 during the nine month period ended
September 30, 2009 compared to $7,034,754 during that same period in 2008. The
decrease is due to a reduction of convertible note financing in the nine month
period ended September 30, 2009.





As a
result, cash and cash equivalents increased by $37,287 during the nine month
period ended September 30, 2009. This compares to a decrease in cash and cash
equivalents of $416,148 in the nine month period ended September 30, 2008. The
Company has cash and cash equivalents of $287,770 as of September 30, 2009. It
will be necessary for the Company to raise additional capital to continue the
Company's business activities.





Trade
accounts payable decreased to $1,851,662 from $2,376,402 on December 31, 2008 as
a result of decreased exploration activity in Argentina.





Item
3. Quantitative & Qualitative Disclosures about Market Risk





Not
Applicable.





Item
4. Controls and Procedures





a)
            Evaluation
      of Disclosure Controls and
Procedures





In
connection with the preparation of this report on Form 10-Q, an evaluation was
carried out by the Company’s management, with the participation of the chief
executive officer and the chief financial officer, of the effectiveness of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)).
Disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports filed or submitted under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified
in the Commission’s rules and forms and that such information is accumulated and
communicated to management, including the chief executive officer and the chief
financial officer, to allow timely decisions regarding required
disclosures.





Based on
that evaluation, the Company’s management concluded, as of the end of the period
covered by this report, that the Company’s disclosure controls and procedures
were not effective in recording, processing, summarizing, and reporting
information required to be disclosed, within the time periods specified in the
Commission’s rules and forms, and that such information was accumulated and
communicated to management, including the chief executive officer and the chief
financial officer, to allow timely decisions regarding required
disclosures.


13


b)
            Changes
      in Internal Control over Financial
Reporting





There
have been no changes in internal control over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) during the period ended September 30, 2009,
that materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.





PART II — OTHER
INFORMATION




ITEM
      1.
            LEGAL
      PROCEEDINGS




None




ITEM
      1A.
            RISK
      FACTORS




We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide the information under this item.





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





None





ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES




None





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




Not
applicable




ITEM
      5.
            OTHER
      INFORMATION




None




Item
      6.
            Exhibits





31.1--Certification required by Rule 13a-14(a) or
      Rule 15d-14(a). Tim Hunt


31.2--Certification required by Rule 13a-14(a) or
      Rule 15d-14(a). Bryn Harman


32.1--Certification required by Rule 13a-14(a) or
      Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of
      2002,  18 U.S.C. Section 1350, Tim
  Hunt


32.2--Certification required by Rule 13a-14(a) or
      Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of
      2002,  18 U.S.C. Section 1350, Bryn
  Harman


14


SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.








HUNTMOUNTAIN
RESOURCES LTD.








BY:
            TIM HUNT
            
            DATE:  November
      20, 2009TIM
      HUNT, CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICERBY:
            BRYN HARMAN
            
            DATE:
      November 20, 2009BRYN
      HARMAN, CHIEF FINANCIAL OFFICER





15