Searchlight Minerals Corp. - FORM 10-K

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EX-23.1 - EXHIBIT 23.1 - Searchlight Minerals Corp.	v307156_ex23-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

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

For the fiscal year ended December 31, 2011.

¨	Transition report pursuant to 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.

(Name of registrant as specified in its charter)

Nevada		98-0232244
State or other jurisdiction of incorporation or organization		I.R.S. Employer Identification Number

#120 - 2441 West Horizon Ridge Pkwy.
Henderson, Nevada		89052
Address of principal executive offices		Zip Code

(702) 939-5247

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001

Common Stock Purchase Rights

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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. (Check one):

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨	Smaller reporting company x
(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

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2011 (96,015,737 shares) was approximately $39,366,452 (computed based on the closing sale price of the common stock at $0.41 per share as of such date). Shares of common stock held by each officer and director and each person owning more than ten percent of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of the affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of common stock of the issuer outstanding as of April 11, 2012 was 131,018,318 shares.

TABLE OF CONTENTS

		PAGE

PART I		3
Item 1.	Business	3
Item 1A.	Risk Factors	16
Item 1B.	Unresolved Staff Comments	34
Item 2.	Properties	34
Item 3.	Legal Proceedings	36
Item 4.	Mine Safety Disclosure	36
PART II		36
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6.	Selected Financial Data	39
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	41
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 8.	Financial Statements and Supplementary Data	55
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	56
Item 9A.	Controls and Procedures	56
Item 9B.	Other Information	58
PART III		58
Item 10.	Directors, Executive Officers and Corporate Governance	58
Item 11.	Executive Compensation	72
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	90
Item 13.	Certain Relationships and Related Transactions, and Director Independence	92
Item 14.	Principal Accountant Fees and Services	99
PART IV		100
Item 15.	Exhibits and Financial Statement Schedules	100

PART I

Item 1.

Business

General

Exploration Stage Company. We are an exploration stage company engaged in a slag reprocessing project and the acquisition and exploration of mineral properties. We hold interests in two mineral projects, our Clarkdale Slag Project and our Searchlight Gold Project. Our business is presently focused on our two mineral projects:

the Clarkdale Slag Project, located in Clarkdale, Arizona, which is a reclamation project to recover precious and base metals from the reprocessing of slag produced from the smelting of copper ore mined at the United Verde Copper Mine in Jerome, Arizona; and

the Searchlight Gold Project, which involves exploration for precious metals on mining claims near Searchlight, Nevada.

Clarkdale Slag Project. 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 ore mined at the United Verde Copper Mine in Jerome, Arizona. Metallurgical testing and project exploration on the Clarkdale Slag Project by us have been ongoing since 2005. We have estimated that there are approximately 20 million tons of slag available to be processed at the Clarkdale site.

Since the second half of 2010, we have pursued autoclaving in an effort to prove our ability to commercially extract and recover precious and base metals from the slag material at our Clarkdale Slag Project. Autoclaving, a proven technology that is widely used within the mining industry, is a chemical leach process that utilizes elevated temperature and pressure in a closed autoclave system to extract precious and base metals from our slag material.

During the third quarter of 2011, we received the results of a progress report from an independent engineering firm SGS Lakefield Research Chile, S.A. (“SGS”). SGS performed a number of autoclave tests, under various metallurgical conditions, using both pressure oxidation (“POX”) and pressure oxidative leach (“POL”) testing methodologies. Results from the optimized POX and POL tests both resulted in approximately 0.5 opt (ounces per ton) of gold extracted into solution. The optimized POX tests produced slightly less than or equal to 0.5 opt gold and the optimized POL tests produced 0.5 opt gold or slightly greater. These results confirm the previous autoclave test results performed by our technical consultants, which yielded up to 0.5 opt of gold into solution using both of these methods. These results are consistent with other tests and analyses conducted by other independent consultants, as well as our pilot test conducted previously at the Clarkdale Facility using a similar leach in an ambient temperature and pressure environment, rather than under autoclave conditions. Moreover, the SGS test results reaffirm that autoclaving does not dissolve the levels of iron and silica into solution as did the ambient leach, which we believe will improve our ability to recover gold from solution and thus improving process technical feasibility.

We performed additional autoclave tests through our consultants and SGS to confirm and prove the repeatability of the optimized metallurgical protocols that yielded the highest gold extraction into solution at SGS.

SGS has advised us that the results of this test work are largely based on the analysis carried out on gold solutions emanating from the tests, by atomic absorption spectrophotometry. These analyses of gold in solution are not in agreement with conventional fire assays analyses, therefore the amount of gold in solution determined by atomic absorption spectroscopy needs to be confirmed. Both SGS and Arrakis, Inc. (“Arrakis”) have recommended proceeding directly to the recovery of gold from solution using carbon or ion exchange resin technologies or other commonly used methods of extracting gold from solution. The recovery of gold will not only define the most cost-effective method of such recovery, but should also provide a tighter definition to the total process system mass balance.

During the first quarter of 2012, we began limited continuous pilot tests in a multi-compartment autoclave (25 liters) at an internationally recognized engineering firm. If these tests show that our autoclave process can extract significant quantities of gold into solution from our slag material, they will serve as the basis for planning the next phase of the project which will be focused on the initiation and completion of a bankable feasibility study. These limited continuous pilot tests replicate a commercial autoclave system and should provide sufficient operating data to design and conduct the larger 7-10 day continuous pilot test in a larger multi-compartment autoclave (50 liters) required to obtain a bankable feasibility study and to design a commercial-scale production facility.

Concurrent with this work, we are also performing gold recovery and extraction tests to determine the best method of recovering gold from the pregnant leach solution. This important step will also provide the data necessary to determine the recovered gold grade from solution and is expected to result in the production of gold dore, providing determination of recoverable gold grades.

Previous to our autoclave efforts, we devoted considerable effort and financial resources to the designing and engineering of a production module, which included finalizing a production flow sheet, sourcing and purchasing equipment, as well as refurbishing a module building and constructing an electrowinning building. The module and electrowinning buildings were designed to allow for the grinding, leaching, filtering and extraction of precious and base metals from the slag material and was anticipated to be able to process between 100 and 250 tons of slag material per day. The process of building and equipping the module was completed in late 2008. In 2009, we began executing our plan of operation on the Clarkdale Slag Project, which included the start-up and operation of the production module, in an effort to achieve consistent levels of gold, silver, copper and zinc extraction that would support the economic feasibility of a commercial production facility.

We ran into delays in construction and numerous technical difficulties in connection with the scaling up of the processes previously tested for the commercialization of the Clarkdale Slag Project. Although we were able to assay the milled slag product from the crushing and grinding circuit that demonstrated the presence of 0.4 ounces per ton of gold in the slag material, the benign leach chemistry used in the production module was unable to duplicate the results of the liberation of gold from the slag material achieved in the pilot plant. The key to the potential success of the flow sheet involves the mechanical liberation of the metals by proper grinding. This process proved to be a significant challenge for the larger grinding equipment installed on site. After an entire year of innovative attempts and modifications, the grinding circuit did not liberate the precious metals sufficiently to allow the simple and benign halide leach circuit to operate effectively. We concluded that investigation of alternative grinding and leaching methods was necessary in order to solve the problem.

In mid-2010, we brought in additional technical expertise to assist in determining alternative ways of commercially processing the slag material. During the first half of 2010, we made a strategic decision to pursue a “multi-path” approach to the accomplishment of our technical and gold production objectives at the Clarkdale Slag Project in order to determine the most effective technique for the extraction of precious and base metals from the slag material. We are currently pursuing the autoclaving method.

Searchlight Gold Project. The Searchlight Gold Project involves exploration for precious metals on mining claims near Searchlight, Nevada. Our Searchlight Claims are comprised of non-patented placer mining claims located on federal land administered by the United States Bureau of Land Management (“BLM”). Drilling and mining activities on the Searchlight Claims must be carried out in accordance with a Plan of Operations or permit issued by the BLM.

On February 11, 2010, we received final approval of our Plan of Operations from the BLM, which allows us to conduct an 18-hole drill program on our project area. However, in an effort to conserve our cash and resources, we have decided to postpone further exploration on our Searchlight Gold Project until we are better able to determine the feasibility of our Clarkdale Slag Project. If we decide to resume our exploration program, work on the project site will be limited to the scope within the Plan of Operations.

We have not been profitable since inception and there is no assurance that we will develop profitable operations in the future. Our net loss for the years ended December 31, 2011 and 2010 was $3,415,345 and $1,740,115, respectively. As of December 31, 2011, we had an accumulated deficit of $27,615,741. We cannot assure you that we will have profitable operations in the future.

Corporate History

We were incorporated on January 12, 1999 pursuant to the laws of the State of Nevada under the name L.C.M. Equity, Inc., later changed to Phage Genomics, Inc. From 1999 to 2005, we operated primarily as a biotechnology research and development company with headquarters in Canada. In February 2005, we changed our business from biotechnology research and development to a company focused on the exploration and acquisition of mineral properties in the Searchlight, Nevada area. On June 23, 2005, we changed our name to “Searchlight Minerals Corp.”

On September 30, 2005, we effected a forward split of our common stock on a two-for-one basis. All per share amounts and number of shares outstanding in this report have been retroactively adjusted and restated to give effect to the forward split.

Our principal executive offices are located at 2441 W. Horizon Ridge Pkwy., Suite 120, Henderson, Nevada, 89052. Our telephone number is (702) 939-5247. Our Internet address is www.searchlightminerals.com. Through a link on the “Recent Filings” section of our website, we make available the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”): our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. All such filings are available free of charge. Information contained on our website or that is accessible through our website should not be considered to be part of this report.

Acquisition of Searchlight Gold Project Claims

On February 8, 2005, and as amended June 22, 2005, we entered into option agreements with the owners of the Searchlight Claims. Each claim relates to a separate 160 acre parcel on the 3,200-acre site. Prior to entering into the option agreements with us, the Searchlight Claim owners had optioned their respective interests in the claims to Searchlight Minerals, Inc. (“SMI”), a company controlled by K. Ian Matheson, one of our former officers, directors and principal stockholders. Between July 2005 and June 2008, we issued 5,600,000 of the shares of our common stock to the Searchlight Claim owners in full consideration for the purchase of all of the Searchlight Claims, which was completed in June 2008.

Acquisition of Clarkdale Slag Project

Assignment Agreement with Nanominerals. Under the terms of an Assignment Agreement, dated June 1, 2005, and as amended, Nanominerals Corp. (“Nanominerals”), a privately owned Nevada corporation (and one of our current principal stockholders, and an affiliate of Ian R. McNeil one of our former officers and directors, and Carl S. Ager, our current Vice President/Secretary/Treasurer and a director), assigned to us its 50% financial interest and the related obligations arising under a Joint Venture Agreement, dated May 20, 2005, between Nanominerals and Verde River Iron Company, LLC (“VRIC”), an affiliate of a former member of our board of directors, Harry B. Crockett. Each of the amendments to the Assignment Agreement were negotiated on our behalf by Mr. Matheson, who served as an executive officer and/or a director at the time of the execution of the amendments. The joint venture related to the exploration, testing, construction and funding of the Clarkdale Slag Project.

Under the terms of the various agreements between the Company, Nanominerals and VRIC, we have a continuing obligation to pay an aggregate royalty consisting of 5.0% of the “net smelter returns” from the Clarkdale Slag Project. Such royalty is divided equally between Nanominerals and VRIC.

The term “net smelter returns” under the agreement means the actual proceeds received by us, from any mint, smelter or other purchaser for the sale of bullion, concentrates or ores produced from the Clarkdale Slag Project and sold, after deducting from such proceeds the following charges to the extent that they are not deducted by the smelter or purchaser in computing payment:

in the case of the sale of bullion, refining charges (including penalties) only;

in the case of the sale of concentrates, smelting and refining charges, penalties and the cost of transportation, including related insurance, of such concentrates from the Clarkdale Slag Project property to any smelter or other purchaser; and

in the case of any material containing a mineral or minerals of commercial economic value mined or processed from the Clarkdale Slag Project which may be shipped to a purchaser, refining charges for bullion and charges for smelting, refining and the cost of transportation, including related insurance, from the mill to any smelter or other purchaser for concentrates.

Reorganization with Transylvania International, Inc. Under the terms of a letter agreement, dated November 22, 2006 and as amended on February 15, 2007, with VRIC, Harry B. Crockett, one of our former directors, and Gerald Lembas, and an Agreement and Plan of Merger with VRIC and Transylvania, dated and completed on February 15, 2007, we acquired all of the outstanding shares of Transylvania from VRIC through the merger of Transylvania into our wholly-owned subsidiary, Clarkdale Minerals LLC, a Nevada limited liability company. As a result of the merger, we own title to the approximately 200 acre property underlying the slag pile located in Clarkdale, Arizona, approximately 600 acres of additional land adjacent to the project property and a commercial building in the town of Clarkdale, Arizona. In accordance with the terms of these agreements, we:

paid $200,000 in cash to VRIC on the execution of the Letter Agreement;

paid $9,900,000 in cash to VRIC on the Closing Date; and

issued 16,825,000 shares of our common stock, valued at $3.975 per share, using the average of the high and low prices of our common stock on the closing date, to Harry B. Crockett and Gerald Lembas, the equity owners of VRIC, and certain designates of VRIC under the agreements, who are not our affiliates.

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

we agreed to continue to pay VRIC $30,000 per month until the earlier of: (i) the date that is 90 days after we receive a report of the commercial, technical and environmental feasibility of the processing and smelting of metals and other mineral materials from a deposit that is prepared in such depth and detail as would be acceptable to lending institutions in the United States, or a “bankable feasibility study,” or (ii) the tenth anniversary of the date of the execution of the letter agreement.

The acquisition agreement also contains additional contingent payment terms which are based on the date that a bankable feasibility study relating to the Clarkdale Slag Project establishes that the project is economically viable and bankable (the “Project Funding Date”):

we have agreed to pay VRIC $6,400,000 within 90 days after we receive a bankable feasibility study;

we have agreed to pay VRIC a minimum annual royalty of $500,000, commencing 90 days after we receive a bankable feasibility study, 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 minimum royalty remains payable until the first to occur of: (1) the end of the first calendar year in which the percentage royalty equals or exceeds $500,000; or (2) February 15, 2017. In any calendar year in which the minimum royalty remains payable, the combined minimum royalty and percentage royalty will not exceed $500,000; and

we have agreed to pay VRIC an additional amount of $3,500,000 from the net cash flow of the Clarkdale Slag Project after such time that we have constructed and are operating a processing plant or plants that are capable of processing approximately 2,000 tons of slag material per day at the Clarkdale Slag Project. The acquisition agreement does not include a specific provision with respect to the periods at the end of which “net cash flow” is measured, once the production threshold has been reached. Therefore, the timing and measurement of specific payments may be subject to dispute. The parties intend to negotiate a clarification of this provision in good faith before the production threshold has been reached.

We account for this as a contingent payment, and upon meeting the contingency requirements, the purchase price of the Clarkdale Slag Project will be adjusted to reflect the additional consideration.

Under the terms of these agreements, the parties terminated the Joint Venture Agreement. However, we continue to have an obligation to pay Nanominerals a royalty consisting of 2.5% of the net smelter returns on any and all proceeds of production from the Clarkdale Slag Project. Therefore, when added to VRIC’s 2.5% royalty, we have an obligation to pay an aggregate of 5% of the net smelters returns to Nanominerals and VRIC on any and all proceeds of production from the Clarkdale Slag Project.

Clarkdale Slag Project

Location and Access. The Clarkdale Slag Project is located in Clarkdale, Arizona, approximately 107 miles north of Phoenix, Arizona and about 50 miles southwest of Flagstaff, Arizona in Yavapai County (see Figure 1, below). The project site is located at a 3,480 feet elevation on approximately 833 deeded acres of industrial zoned land near the town of Clarkdale.

Figure 1 –Clarkdale Slag Pile

Slag is the waste product of the smelting process. The slag at the Clarkdale Slag Project originated from a large, copper ore smelting operation located on our property in Clarkdale, Arizona. The copper ore was mined in Jerome, Arizona during the period 1915-1952, when the Clarkdale smelter was one of the largest copper smelters in the world. Jerome is a historic mining district, located approximately 6 miles west of Clarkdale at an elevation of 5,435 feet, which produced copper extracted from massive sulfide deposits mined at Jerome (1889-1952) and smelted at both Jerome (1889-1915) and Clarkdale (1915-1952).

Molten slag from the Clarkdale smelter was hauled by rail to the deposit site and poured onto the property, much like a lava flow. The slag cooled and hardened into the large slag pile which now exists at the Clarkdale site. The hardened slag has a glassy, volcanic lava-like appearance, and has a high iron and silica content. It contains some thin layers of coarse material, which appear to have been undigested from the smelter. The hardening process causes fracturing at the surface and within the layers beneath the surface. As a result, the slag pile consists of both solid sheets and coarse material deposited layer upon layer.

The slag pile currently occupies approximately 45 acres on the property and, as determined from the drilling and analysis programs, has a graduating thickness of between 60 and 130 feet and contains approximately 20 million tons of slag material. The slag pile borders the Verde River and an active railroad track. The track divides the pile into two sections located east and west of the track. The eastern portion of the slag pile is the larger of the two, as approximately 98% of the slag pile is located in the east section of the property.

Current Work Program. Since the second half of 2010, we have pursued autoclaving in an effort to prove our ability to commercially extract and recover precious and base metals from the slag material at our Clarkdale Slag Project. Autoclaving, a proven technology that is widely used within the mining industry, is a chemical leach process that utilizes elevated temperature and pressure in a closed autoclave system to extract precious and base metals from our slag material.

During the third quarter of 2011, we received the results of a progress report from independent engineering firm SGS Lakefield Research Chile, S.A. (“SGS”). SGS performed a number of autoclave tests, under various metallurgical conditions, using both pressure oxidation (“POX”) and pressure oxidative leach (“POL”) testing methodologies. Results from the optimized POX and POL tests both resulted in approximately 0.5 opt (ounces per ton) of gold extracted into solution. The optimized POX tests produced slightly less than or equal to 0.5 opt gold and the optimized POL tests produced 0.5 opt gold or slightly greater. These results confirm the previous autoclave test results performed by our technical consultants, which yielded up to 0.5 opt of gold into solution using both of these methods. These results are consistent with other tests and analyses conducted by other independent consultants as well as our pilot test conducted previously at the Clarkdale Facility using a similar leach in an ambient temperature and pressure environment, rather than under autoclave conditions. Moreover, the SGS test results reaffirm that autoclaving does not dissolve the levels of iron and silica into solution as did the ambient leach, which we believe will improve our ability to recover gold from solution and thus improving process technical feasibility.

SGS has advised us that the results of this test work is largely based on the analysis carried out on gold solutions emanating from the tests, by atomic absorption spectrophotometry. These analyses of gold in solution are not in agreement with conventional fire assays analyses, therefore the amount of gold in solution determined by atomic absorption spectroscopy needs to be confirmed. Both SGS and Arrakis, Inc. (“Arrakis”) have recommended proceeding directly to the recovery of gold from solution using carbon or ion exchange resin technologies or other commonly used methods of extracting gold from solution. The recovery of gold will not only define the most cost-effective method of such recovery, but should also provide a tighter definition to the total process system mass balance.

Autoclave Tests and Analysis. We engaged SGS to conduct bench-scale autoclave testing on material from our Clarkdale Slag Project, which contains approximately 20 million tons of copper smelter slag. SGS, with offices and laboratory facilities in Australia, Canada, Chile, Europe, Mexico, South Africa and Russia, has been providing metallurgical testing for the mining industry for over 60 years and is recognized as a world leader in the development and demonstration of bankable flowsheets and pilot plant programs. We retained SGS because SGS has the necessary qualifications, credentials and equipment to independently evaluate the processing methodology and autoclaving results previously achieved by our technical consultants.

Previous bench-and pilot-scale tests conducted during 2010 at the Clarkdale, Arizona pilot facility (the “Plant”) demonstrated that gold, copper and zinc could be extracted into an acid solution using chlorine compounds coupled with sulfuric acid at ambient temperature and pressure. However, due to the large quantity of iron and silica also dissolved during the process, the gold was extremely difficult to remove from solution.

We therefore sought alternate autoclaving methods for extracting metals from the slag. The methods that were examined included POX and POL. The POX method is a two-step process that uses sulfuric acid under elevated temperature and pressure to pre-treat (oxidize) an ore and dissolve base metals into solution prior to dissolving gold into solution in a subsequent ambient temperature and pressure leach. The POL method represents a variation of the Pressure Acid Leach (“PAL”) method, which operates at low pH with selective chemistry to dissolve the metal or metals of interest directly in the autoclave, resulting in a one-step process that places gold into solution. Test data confirms that if conducted correctly, only the metal of interest is placed into solution, with very minimal amounts of other elements being dissolved.

During the second half of 2010 and first half of 2011, Arrakis, an independent metallurgical testing and analytical company, as well as our other independent consultants conducted over 100 bench-scale autoclave tests. The majority were comprised of two-part POX tests in which the Clarkdale slag was pre-oxidized in an 8-liter Parr Autoclave using sulfuric acid, and then the residue was subjected to the same chlorine chemistry leach originally used at the Plant to extract gold into solution. The POX tests indicated that a gold grade of 0.5 opt could be consistently placed into solution with reduced iron and silica, which we believe will improve our ability to recover gold from solution and thus improving process technical feasibility. A qualified and internationally recognized independent third party laboratory was therefore sought to confirm these results as a precursor to performing a continuous autoclave pilot test. SGS was retained to perform these tests. Our technical team subsequently traveled to Santiago, Chile with chain-of-custody Clarkdale slag samples and testing was commenced.

Six POX tests and 12 POL tests were conducted by SGS at its facilities in the third quarter of 2011. The initial tests for both methods showed lower gold values being recovered into solution while later optimized tests for both methods showed significantly higher gold values. This increase was due in large part to the necessarily empirical method of the autoclave tests whereby problems involving autoclave mechanical issues and chemistry formulations were resolved as they were identified. As subsequently corrected autoclave tests were conducted, gold values in solution increased. Both POX and POL tests therefore resulted in negligible amounts of gold recovered into solution at the beginning of the testing when several problems existed and approximately 0.5-0.6 opt gold at the end of the test period, as test protocols were optimized.

James Murray, President, Arrakis, managed and coordinated the test work; Richard Kunter, Richard S. Kunter and Associates, provided technical direction to the engineering firm’s testing program assisted by Roger Kelley, R.J. Kelley, Consulting Metallurgist, all of whom provided independent expert reports to us with regard to the results at the engineering firm’s facilities. The conclusions drawn by the three independent consultants, in reviewing the engineering firm’s test work, confirm the results and conclusions of the engineering firm.

Additionally, since the POL method involves fewer process steps resulting in lower operating costs, and appears to consistently place higher grades of gold into solution, this process is likely superior to the POX method in achieving desired results. We currently are using the POL method in our limited continuous pilot testing.

We expect to develop a more thorough economic analysis of the full-scale production facility, including specific capital and operating costs, funding schedules and funding sources during the feasibility evaluation. The scope, size, timing and cost of a full-scale production facility will be addressed in the bankable feasibility study. If we determine that we should use autoclaving, the capital costs will likely be higher than those of other methods, including open-vessel leaching, and such costs will need to be considered when comparing the various extraction and recovery methods.

History. Prior to 2007, while conducting testing on the slag material and to assist in the process of designing a large scale production module, we initially conducted our testing in a smaller scale pilot plant. During this initial testing process, we determined that we could effectively liberate gold, silver, copper and zinc from smaller quantities of ground slag material by employing:

a mechanical process to break up the slag material using a small vibratory mill in our crushing and grinding circuit, and

a relatively benign (halide) chemical leaching process to liberate the precious and base metals from the crushed and ground slag.

Our primary goal consistently has been to demonstrate the economic viability of the Clarkdale Slag Project, including the generation of a bankable feasibility study. This work has required developing a technically viable flow sheet for extracting gold, silver, copper and zinc from the slag material at the Clarkdale Slag Project site. We began work on the Clarkdale Slag Project under a joint venture arrangement with Verde River Iron Company (“VRIC”), the then-existing owners of the Clarkdale Slag Project site. We engaged qualified independent engineers, and drilled and sampled the slag pile, under chain-of-custody standards, in order to understand potential grades and tonnages. After obtaining results from these efforts, we proceeded to work on the metallurgy capable of unlocking the value of the metals contained in the slag material. To achieve this objective, we operated a small pilot plant in Phoenix, Arizona, and completed an internal pre-feasibility study. The results of this work demonstrated that, with proper grinding, a simple halide leach could extract the precious and base metals in sufficient quantities which could potentially be economically viable. The next step involved the construction of a larger pilot plant (production module) at the Clarkdale Slag Project site, which was designed to test the commercial viability of the process and to complete a feasibility study. We proceeded to build one production module rather than complete a theoretical feasibility study. Concurrently, we completed the acquisition of the Clarkdale Slag Project site from the previous owners.

Thereafter, we designed and built a production module which was anticipated to process between 100 and 250 tons of slag material per day. The process of building and equipping the module was completed in late 2008. We ran into delays in construction and numerous technical difficulties in connection with the scaling up of the processes previously tested for the commercialization of the Clarkdale Slag Project. Although we were able to assay the milled slag product from the crushing and grinding circuit that demonstrated the presence of 0.4 ounces per ton of gold in the slag material, the benign leach chemistry used in the production module was unable to duplicate the results of the liberation of gold from the slag material achieved in the pilot plant.

Most of 2009 was devoted to attempts to commission and optimize the production module, during which time we encountered numerous challenges involving its crushing and grinding circuit. In early 2010, we brought in experienced outside engineering resources to better define and execute on a multi-pronged approach to achieve commercial feasibility of the Clarkdale Slag Project. This refocusing effort has resulted in significant progress, both operationally and from a research and development perspective.

The key to the potential success of the flow sheet involves the mechanical liberation of the metals by proper grinding. This process proved to be a significant challenge for the larger grinding equipment installed on site. After an entire year of innovative attempts and modifications, the grinding circuit did not liberate the precious metals sufficiently to allow the simple and benign halide leach circuit to operate effectively. We concluded that investigation of alternative grinding and leaching methods was necessary in order to solve the problem. We conducted preliminary studies of these alternative approaches to the process flow sheet, which have shown promising results and are the current focus of our efforts.

Initially during the start-up of the production module, emphasis was placed on the crushing and grinding circuit since it was believed, and shown in the pilot plant, that in order to leach the highest amount of gold from the slag material with our benign halide leach, mechanical liberation of gold particles was necessary via a very fine grind. As we began to crush and grind larger amounts of slag material through the production module, we encountered a number of equipment wear issues. Highly abrasive carbon-rich ferro-silicates (containing carbon, iron and silica) comprise about 90% of the slag material. The hardness of these materials caused significant wear and tear on the metal crushers and grinders. Further, as we increased the amount of slag material in the crushing and grinding circuit, we experienced difficulties in grinding the slag material into a fine enough material to be effectively leached by our benign halide leaching process. Our experience with the slag material in the larger scale production module required us to seek out more advanced hard facing technology and wear-resistant surfacing media for our crushing and grinding equipment. Initially, we believed that the wear issues relating to the throughput rate of the crushing and grinding circuit had been resolved. However, work during the first half of 2010 revealed that these issues were still present.

As a result of the challenges that arose with the equipment wear issues and our not being able to grind the slag material in the production module continuously, we adjusted the chemical characteristics of the leach to a more acidic leach in an effort to put less emphasis on the mechanical liberation and put more emphasis on the chemical liberation in an effort to maximize gold extraction from the slag material. Our goal was to achieve similar results in gold extraction from the slag material to those obtained in the smaller scale pilot plant, without significantly changing the grinding circuit or seeking alternatives to the design of the larger scale production module that might have a significantly greater capital cost than we had originally planned. In doing this testing, we encountered difficulties with the liberation of excess amounts of iron and silica in the leaching process, which resulted in difficulties with our filtration process and made the recovery of gold from the pregnant leach solution more difficult.

Because of these challenges, which have affected our ability to operate the production module on a continuous basis, the data from our operations reflects that our production module will not be able to process 100 to 250 tons per day, as originally planned. However, we anticipate the continued use of the facility for analytical purposes. The information received from the operation of the production module has been invaluable in providing information on how to process the slag and extract the base and precious metals on a commercial scale. In particular, we have a significant amount of data on various grinds and leach chemistries and their affect on leaching the desired (gold, silver, copper and zinc) and undesired (iron and silica) metals into solution. We also have a better understanding of the equipment wear issues that need to be considered when dealing with such hard and abrasive material. All of this data has provided us with a strong knowledge base that can be drawn upon as we continue to make adjustments to our process going forward.

During 2010, our technical team tested four potential flow sheets in an effort to identify new grinding, leaching extraction and equipment alternatives that would be suitable and commercially viable for the extraction of precious and base metals from the slag material. Based on this testing program, we believe that autoclaving shows the most promise, and have determined to pursue this method since the second half of 2010.

To test the commercial viability of the autoclave approach, we performed over 100 bench-scale (6-liter autoclave) tests which showed to be successful in leaching gold into solution from the slag material. In an effort to maximize gold extraction from the slag material, we tested several different leach protocols and grind sizes during our autoclave tests. Results of these bench tests by our consultants indicate that autoclaving can provide gold recoveries into solution of up to 0.5 ounces per ton (opt) from the samples which we have tested. Prior sampling tests on the slag pile have reflected that there may be variances in the amount of gold per ton within the composition of the slag in different parts of the slag pile.

Although the plant site in Clarkdale remains a valuable resource for the technical team, it no longer requires the previous levels of staffing during our autoclave testing and feasibility testing activities. Thus, as of early September 2010, we reduced the number of employees working at the Clarkdale Slag Project by approximately 50% to levels appropriate only for essential and necessary tasks, while assuring that important permits remain in good standing.

Clarkdale Development Agreement. In January 2009, we submitted a development agreement to the Town of Clarkdale for the construction of an Industrial Collector Road. The purpose of the road is to provide us with the capability to enhance the flow of industrial traffic to and from the Clarkdale Slag Project. The construction of the road is a required infrastructure improvement under the terms of our conditional use permit with the Town of Clarkdale. The Town of Clarkdale approved the development agreement on January 9, 2009.

Under the development agreement, we are obligated to complete the construction of the road within two years after the effective date of the agreement. However, it is our understanding that the contingencies to effectuate the development agreement have not been met at this time, and, therefore, the effective date has not yet been determined.

We estimate that the initial cost of construction of the road will be approximately $3,500,000 and that the cost of the additional enhancements will be approximately $1,200,000. We will be required to fund the costs of this construction. Based on the uncertainty of the timing of these contingencies, we have not included these costs in our current operating plans or budgets. However, we will require additional project financing or other financing in order to fund the construction of the road and the additional enhancements. The failure to complete the road and the additional enhancements in a timely manner under the development agreement would have a material adverse effect on the Clarkdale Slag Project and our operations.

Searchlight Gold Project

Location and Access. The Searchlight Gold Project is a 3,200-acre placer gold project located about 50 miles south of Las Vegas and 2 miles south of Searchlight, Nevada. Access is by vehicle from Highway 95. The mining claims were staked in the period between 1998 and 2003 as 160-acre association placer mining claims on federal land administered by the BLM. We own title to the Searchlight Claims.

The Searchlight Claims are located in parts of Sections 1, 12-13 and 24-25 of Township 29 South, Range 63 East and Sections 19 and 30 of Township 29 South, Range 64 East Clark County, Nevada. During the second quarter of 2008, we “double staked” the Searchlight property by filing, with the BLM and the Clark County, Nevada Recorder, 142 new and separate 20-acre placer claims overtop of the twenty existing 160-acre claims. We were only able to “double stake” 2,840 acres out of the 3,200 acre site due to various regulatory restrictions on staking of certain of the smaller land parcels on the site. We have maintained the twenty prior 160-acre claims to provide us with a basis to retain the priority of and defend our existing 160-acre mining claims.

The Searchlight District is a well known, historic gold camp. Mining occurred in the area during the period 1900-1950, where some 250,000 ounces of gold were produced from quartz-sulphide-hematite veins to depths of greater than 1,000 feet with minor placer gold produced. However, there has been no prior history of mining on the land related to the Searchlight Claims.

Work Program Status. 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 intend to continue to explore their applicability to the Searchlight Gold Project.

On February 11, 2010, we received final approval of our Plan of Operations from the BLM, which allows us to conduct an 18-hole drill program on our project area. However, in an effort to conserve our cash and resources, we have decided to postpone further exploration on our Searchlight Gold Project until we are better able to determine the feasibility of our Clarkdale Slag Project. Once we have decided to resume our exploration program, work on the project site will be limited to the scope within the Plan of Operations. To perform any additional drilling or mining on the project, we would be required to submit a new application to the BLM for approval prior to the commencement of any such additional activities.

Competition

We are an exploration stage company. We compete with other mineral resource exploration companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration companies with whom we compete have greater financial and technical resources than us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration. This competition could adversely impact on our ability to finance further exploration on our mineral properties.

Compliance With Government Regulation

The site for the Clarkdale Slag Project is located in the Town of Clarkdale, Arizona and as a result, most of the operational permits are subject to their authority. The environmental permits, however, are subject to the authority of the State of Arizona. For our current level of operations, we believe we have obtained all of the permits necessary to operate the Clarkdale Slag Project as currently configured at this time. Prior to beginning the development of the processing facility, we expect that we will require additional permits.

The mining industry in the United States is highly regulated. We intend to secure all necessary permits for the exploration and development of the Clarkdale Slag Project and the Searchlight Gold Project. The technical consultants that we hire are experienced in conducting mineral exploration and metallurgical activities and are familiar with the necessary governmental regulations and permits required to conduct such activities. As such, we expect that our consultants will inform us of any government permits that we will be required to obtain prior to conducting any planned activities on our two aforementioned projects. We are not able to estimate the full costs of complying with environmental laws at this time since the full nature and extent of our proposed processing and mining activities cannot be determined until we complete a bankable feasibility study and have a full design of a proposed production facility for the Clarkdale Slag Project and complete our exploration program on the Searchlight Gold Project.

If we enter into full scale production on our Clarkdale Slag Project or the development of our Searchlight Gold Project, of which there are no assurances, the cost of complying with environment laws, regulations and permitting requirements will be substantially greater than in the exploration or preliminary development phases because the increase in the size of the project. Permits and regulations will control all aspects of any development or production program if the project continues to those stages because of the potential impact on the environment. Examples of regulatory requirements include:

water discharge will have to meet water standards;

dust generation will have to be minimal or otherwise remediated;

dumping of material on the surface will have to be re-contoured and re-vegetated;

an assessment of all material to be left on the surface will need to be environmentally benign;

ground water will have to be monitored for any potential contaminants;

the socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be remediated; and

there will have to be an impact report of the work on the local fauna and flora.

Employees

As of December 31, 2011, we had eighteen full-time and one part-time employee. We also had two significant consultants who provide services to our Clarkdale Slag Project operations. None of our employees are currently represented by a union or covered by a collective bargaining agreement. Management believes its employee relations are satisfactory.

Item 1A. Risk Factors

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

This report contains forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.

The risk factors referred to in this report could materially and adversely affect our business, financial conditions and results of operations and cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The risks and uncertainties described below are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.

The industry and market data contained in this report are based either on our management’s own estimates or, where indicated, independent industry publications, reports by governmental agencies or market research firms or other published independent sources and, in each case, are believed by our management to be reasonable estimates. However, industry and market data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey of market shares. We have not independently verified market and industry data from third-party sources. In addition, consumption patterns and customer preferences can and do change. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be verifiable or reliable.

RISK FACTORS

An investment in our common stock is very risky. Our financial condition is unsound. You should not invest in our common stock unless you can afford to lose your entire investment. You should carefully consider the risk factors described below, together with all other information in this report, before making an investment decision. If an active market is ever established for our common stock, the trading price of our common stock could decline due to any of these risks, and you could lose all or part of your investment. You also should refer to the other information set forth in this report, including our financial statements and the related notes.

Risks Relating to Our Business

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

We were incorporated on January 12, 1999 and initially were engaged in the business of biotechnology research and development. In February, 2005, we changed our business to mineral exploration. We have a limited history upon which we may make an evaluation of the future success or failure of our current business plan.

We have a history of operating losses and have an accumulated deficit. We recorded a net loss of $3,415,345 and $1,740,115 for the years ended December 31, 2011 and 2010, respectively, and have incurred cumulative net losses from operations of $27,615,741 and $24,200,396 as of December 31, 2011 and 2010, respectively. In addition, we had cash reserves of approximately $6,161,883 and $6,996,027 at December 31, 2011 and 2010, respectively. We have not commenced our proposed mineral processing and mining operations and are still in the exploration stages of our proposed operations. Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future.

We 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:

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

positive results from our autoclave processing tests;

obtaining a bankable feasibility study for the Clarkdale Slag Project that demonstrates that the Clarkdale Slag Project is commercially viable;

obtaining the necessary financing to implement the business plan based on the bankable feasibility study, including any equity and debt financing that may be required;

our ability to generate revenues; and

our ability to locate a profitable mineral property.

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 plans. In addition, our losses may increase in the future as we expand our business plan. These losses, among other things, have had and will continue to have an adverse effect on our working capital, total assets and stockholders’ equity. If we are unable to achieve profitability, the market value of our common stock will decline and there would be a material adverse effect on our financial condition.

Our exploration and evaluation plan calls for significant expenses in connection with the Clarkdale Slag Project and our corporate operations at this time. During the next 12 months, our management anticipates that the minimum cash requirements for funding our proposed testing and feasibility programs and our continued operations will be approximately $7,300,000. As of April 11, 2012, we had cash reserves of $4,300,000. Our current financial resources may not be sufficient to allow us to meet the anticipated costs of our testing and feasibility programs and operating overhead during the next 12 months and we may require additional financing in order to fund these activities. We do not currently have any financing arrangements in place for such, and there are no assurances that we will be able to obtain additional financing in an amount sufficient to meet our needs or on terms that are acceptable to us.

In addition, if we receive a bankable feasibility study, we will have to pay $6,400,000 to VRIC in connection with our Agreement and Plan of Merger with VRIC and Transylvania. To satisfy this obligation, we will be required to obtain additional financing within 90 days of receipt of such a bankable feasibility study.

Obtaining additional financing is subject to a number of factors, including the market prices for 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.

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

Actual capital costs, operating costs and economic returns may differ significantly from our estimates and there are no assurances that any future activities will result in profitable mining operations.

We are an exploration stage company and are still in the process of exploring and testing our mineral projects. We do not have any historical mineral operations upon which to base our estimates of costs. Decisions about the exploration, testing and construction of our mineral properties will ultimately be based upon feasibility studies. Feasibility studies derive cost estimates based primarily upon:

anticipated tonnage, grades and metallurgical characteristics of the slag to be processed or the ore to be mined and processed;

anticipated recovery rates of gold and other metals from the slag or the ore;

cash operating costs of comparable facilities and equipment; and

anticipated weather/climate conditions.

To date, we have only conducted an internal pre-feasibility study of the Clarkdale Slag Project. In particular:

we have conducted limited amounts of drilling at the site;

process testing has been limited to smaller scale pilot plants and bench scale testing;

our slag processing concepts, metallurgical flow sheets and estimated recoveries are still in exploration stages; and

once a bankable feasibility study and necessary financing are obtained and we build a processing plant, actual metallurgical recoveries may fail to meet preliminary estimates.

In order to demonstrate the large scale viability of the project, we will need to complete a bankable feasibility study that addresses the economic viability of the project. Capital and operating costs and economic returns, and other estimates contained in our bankable feasibility study may differ significantly from our current estimates. There is no assurance that our actual capital and operating costs will not exceed our current estimates. In addition, delays to construction schedules may negatively impact the net present value and internal rates of return for our mineral properties. There are no assurances that actual recoveries of base and precious metals or other minerals processed from our mineral projects will be economically feasible or that actual costs will match our pre-feasibility estimates. We cannot be certain at this time when a bankable feasibility study will be completed, if at all, and if successfully completed, when a commercial-scale production facility will be ready for operation.

Feasibility estimates typically underestimate future capital needs and operating costs. Our projected operating and capital cost estimates are in preliminary stages and may be subject to significant, upward adjustment based on future events, including the results of any final feasibility study which we may develop.

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

As we have not established any reserves on either our Clarkdale Slag Project or Searchlight Gold Project to date, there is no assurance that actual recoveries of minerals from material mined during exploration mining activities will equal or exceed our exploration costs on our mineral properties. To date, we are continuing to test metallurgical processes on our Clarkdale slag material. Since we have determined that we cannot move to production scale from our original design determined from our pilot-scale and have now turned to experimenting with autoclave technology, assuming this technique proves promising, no assurance can be given that projected mineral recoveries will be achieved.

To test the commercial viability of the autoclave approach, we have performed over 100 bench-scale (6-liter autoclave) tests which have shown to be successful in leaching gold into solution from the slag material. Bench testing by our consultants indicate that autoclaving can provide gold recoveries of up to 0.5 ounces per ton (opt) from the samples which we have tested. However, prior sampling tests on the slag pile have reflected that there may be variances in the amount of gold per ton within the composition of the slag in different parts of the slag pile. Therefore, there can be no assurances given that we will be able to recover the same amount of precious and base metals from all parts of the slag pile. If mineral recoveries are less than projected, then our sales of minerals will be less than anticipated and may not equal or exceed the cost of exploration and recovery, in which case our operating results and financial condition will be materially, adversely affected.

Obtaining a bankable feasibility study that shows that our Clarkdale Slag Project is viable and constructing a facility to implement the study will result in our need to raise significant financing.

At this time we do not know the actual cost of conducting a bankable feasibility study based on an autoclave process or implementing such a study into an operating autoclaving facility at the Clarkdale site. However, we believe that the amount of funds necessary both to conduct the study and, if successful, to develop a facility will be significant. We will require additional financing in order to fund both of these stages in our business plan. We anticipate that these financings, if completed, will be a combination of equity and debt. Obtaining additional financing is subject to a number of factors, including the market prices for base and precious metals. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

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. 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.

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

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

costs of bringing the property into production including exploration work, preparation of production feasibility studies, and construction of production facilities;

availability and costs of financing;

ongoing costs of production; and

environmental compliance regulations and restraints.

The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the lack of milling facilities and processing equipment near the Searchlight Gold Project, the success of our metallurgical and processing activities on the Clarkdale Slag Project and such other factors as government regulations, including regulations relating to allowable production, exporting of minerals, and environmental protection. If we do not find a mineral reserve or if we cannot explore the mineral reserve, either because we cannot obtain an approved Plan of Operations, do not have the money to do so or because it will not be economically feasible to do so, we will have to cease operations.

Our rights under the Searchlight Claims may be difficult to retain and may not apply to all metals and minerals located on the Searchlight property.

Our rights in the 20 placer mineral claims (the “Searchlight Claims”) with respect to a contiguous, approximately 3,200-acre site located on Federal land administered by the BLM near Searchlight, Nevada are the subject of unpatented mining claims (mining claims to which the deeds from the U.S. Government have not been received) made under the General Mining Law of 1872. The Searchlight Claims were assigned to us in June 2008 by the original locators (those persons who locate, or are entitled to locate, land or mining claims, and fix the boundaries of land claims) of such claims under an Option Agreement for the Searchlight Claims. Legal title to the Searchlight property is held by the United States and there are numerous conditions that must be met for a mining claimant to obtain and retain legal rights in the land and minerals claimed. Because title to unpatented mining claims is subject to inherent uncertainties, it is difficult to determine conclusively the ownership of such claims. These uncertainties relate to such things as sufficiency of mineral discovery, proper posting and marking of boundaries and possible conflicts with other claims not determinable from descriptions of record. Since a substantial portion of all mineral exploration, development and mining in the United States now occurs on unpatented mining claims, this uncertainty is inherent in the mining industry.

The present status of our unpatented mining claims located on public lands allows us the exclusive right to mine and remove valuable metals, such as precious and base metals, that are in placer form (mineral which has been separated from its host rock by natural processes). We also are allowed to use the surface of the land solely for purposes related to mining and processing the metal-bearing ores. However, legal ownership of the land remains with the United States. Placer mining claims (ground with defined boundaries that contains metals in the earth, sand, or gravel, and is not fixed in the rock) are not sufficient to claim lode mineralization (a deposit in consolidated rock as opposed to a placer deposit), and any metals in veins or in bedrock need to be separately claimed by lode claims. Therefore, we may not have legal rights with respect to any lode deposits within the property that is the subject of the Searchlight Claims.

In order for us to assert a valid right in the 160 acre Searchlight Claims which we acquired in June 2008, there must have been a discovery with respect to the Searchlight Claims prior to their transfer. The concept of the validity of the “discovery” of a mining claim is a legal standard. Generally, the BLM considers a discovery to be the identification of adequate amounts of minerals such that a reasonable person would seek to develop the claim as a commercial enterprise. Based on the results of our testing and sampling on the properties prior to transfer of title to the related Searchlight Claims to us, we believe that we have a valid basis to assert that we have made a discovery with respect to the claims located on the contiguous property that is the subject of the Searchlight Claims. Further, we are working to explore the Searchlight property and to evaluate and plan for the exploration of the Searchlight Claims. However, if the BLM was to determine that a discovery was not made on any of the 20 (160 acre) association placer claims (a placer location made by an association of persons in one location covering up to 160 acres) before any of such claims were conveyed by the related group of locators of a particular claim to us, any of such claims could implode to a 20-acre parcel surrounding the point of discovery and potentially result in the loss of our rights in the surrounding 140 acres of the particular claim. Further, placer mining claims ultimately are required to have discovery on each 10-acre portion in order to be considered valid in their entirety. Therefore, if the BLM was to determine that a discovery was not made on any of the 10-acre portions of the association placer claims before any of such claims were conveyed to us, any of such claims could implode to a 10-acre parcel and potentially result in the loss of our rights in the surrounding 150 acres of the particular claim. At this time, there are no adversarial proceedings by the BLM to challenge any of the 20 association placer claims. However, there can be no assurances that adversarial proceedings will not occur in the future, and if such proceedings occur, the BLM will not successfully challenge these claims, which could have a material adverse effect on the Searchlight Project and our operations.

During the second quarter of 2008, we “double staked” the Searchlight property by filing, with the BLM and the Clark County, Nevada Recorder, 142 new and separate 20-acre placer claims overtop of the twenty existing 160-acre claims. We were only able to “double stake” 2,840 acres out of the 3,200 acre site due to various regulatory restrictions on staking of certain of the smaller land parcels on the site. We have maintained the twenty prior 160-acre claims to provide us with a basis to retain the priority of and defend our existing 160-acre mining claims. However, we are subject to the risk that when we, a single entity, acquire title to association placer claims from an association of prior, multiple locators, there could be potential problems for us in the future:

First, the validity of the association of the prior locators could always be challenged by the BLM if the BLM believed that the association was not properly assembled or if there were any “dummy locators” (place-holder locators who did not contribute to the association). A “properly assembled” placer association is comprised of 2–8 individuals or companies who each may claim 20 acres and each owns a full interest in the claim. The individuals may not be employees of one of the companies. These individuals and/or entities must be involved actively in the business of developing the claim. Use of an uninvolved individual or entity as a locator for the purpose of acquiring additional acreage may constitute fraud, and the entire claim could be declared void. A “dummy locator” is an individual or entity who is not actively involved with the development of the claims, and whose name has been used for the purpose of acquiring additional acreage. The action of using dummy locator(s) may constitute fraud, and under existing laws, the claim located by use of dummy locator(s) can be declared void from its inception.

Second, if there was deemed to be a discovery on any 160-acre claim following the transfer to us, the claims could implode to a 20-acre parcel surrounding the point of discovery of each claim and potentially leave the surrounding 140 acres unavailable for re-staking, and potentially to a 10-acre parcel and leave the surrounding 150 acres unavailable for re-staking.

Third, the location of the 20-acre claims may cause an implied abandonment of the older claims. Should a problem occur in the future with the 160-acre claims, we could revert to the 20-acre or 10-acre claims, if necessary. Also, we will incur additional costs because we have to maintain two sets of claims.

We believe that “double staking” the property enhances our existing claims because “double staking” with 20-acre claims provides a more secure basis for asserting our claim rights than our existing 160-acre claims because they were located and are held solely by us, as a single entity and not as an association of two or more entities. Holding 20-acre claims as a single entity reduces the likelihood that the BLM will challenge the validity of the claims based on the existence of “dummy locators.” If the BLM challenges the validity of the 160-acre claims or we are forced to abandon such claims, we would revert to the 20-acre claims covering only the 2,840 acres. Any regulatory permits that we have applied or may apply for (i.e., drilling, and mining) would have to be conducted within the related 2,840 acres. However, if the BLM was to determine that a discovery was not made on any of the 10-acre portions of the 20-acre association placer claims, any of such claims could implode to a 10-acre parcel and potentially result in the loss of our rights in the adjoining 10 acres of the particular claim.

Further, we are required to make annual rental payments to the Federal government in connection with our claims. If we fail to make our required payments in the future, the related claims would be void.

In addition, the BLM has been excluding significant amounts of land in southern Nevada from mining and development over the past few decades. The BLM has designated this excluded land as an “Area of Critical Environmental Concern” (ACEC). Any person that wishes to stake mining claims would not be able to do so in these affected areas. However, if a person already owns valid claims before the land is designated as an ACEC, the claimant would have those claims grandfathered in. In the case of the Searchlight Claims, the Searchlight Project has not been designated as an ACEC and our 160-acre claims were originally located between 1990 and 2003. If the BLM decides in the future to designate the Searchlight Project site as an ACEC, and also challenges our 160-acre claims, we would have to rely on our “double staked” claims to preserve the Searchlight Claims. Although we believe that, in such event, our “double staked” claims would survive a challenge by the BLM, there can be no assurances to that effect and the successful challenge of some or all of the Searchlight Claims would have a material adverse effect on the Searchlight Project and our operations.

If we do not complete the construction of an Industrial Collector Road pursuant to an agreement with the Town of Clarkdale, Arizona within two years after the effective date of the agreement, we may lose our conditional use permit from the Town of Clarkdale with respect to the Clarkdale Slag Project, and we may not have sufficient funds to complete construction of the road. The loss of the permit would have a material adverse effect on the Clarkdale Slag Project and our operations.

In January 2009, we submitted a development agreement to the Town of Clarkdale for the construction of an Industrial Collector Road. The purpose of the road is to provide us with the capability to enhance the flow of industrial traffic to and from the Clarkdale Slag Project. The construction of the road is a required infrastructure improvement under the terms of our conditional use permit with the Town of Clarkdale. The Town of Clarkdale approved the development agreement on January 9, 2009.

The development agreement provides that its effective date will be the later of (i) 30 days from the approving resolution of the agreement by the Clarkdale Town Council; or (ii) the date on which the Town of Clarkdale obtains a connection dedication from separate property owners who have land that will be utilized in construction of the road; or (iii) the date on which the Town of Clarkdale receives the proper effluent permit. The Town of Clarkdale has approved the development agreement, and although the remaining two contingencies with respect to the effectiveness of the development agreement have not yet been met, such contingencies are beyond our control. However, it is our understanding that the remaining two contingencies have not been met at this time, and, therefore, the effective date has not yet been determined.

Under the development agreement, we are obligated to complete the construction of the road within two years after the effective date of the agreement. If we do not complete the road within the two year period, we may lose our conditional use permit from the Town of Clarkdale. Further, as a condition of our developing any of our property that is adjacent to the Clarkdale Slag Project, we will be required to construct additional enhancements to the road. We will have ten years from the start of construction on the road in which to complete the additional enhancements. However, we do not currently have any defined plans for the development of the adjacent property.

We estimate that the initial cost of construction of the road will be approximately $3,500,000 and that the cost of the additional enhancements will be approximately $1,200,000. We will be required to fund the costs of this construction and we may not have the necessary funds to complete construction when required under the agreement. Based on the uncertainty of the timing of these contingencies, we have not included these costs in our current operating plans or budgets. However, we will require additional project financing or other financing in order to fund the construction of the road and the additional enhancements. There are no assurances that we will be able to obtain additional financing in an amount sufficient to meet our needs or on terms that are acceptable to us. The failure to complete the road and the additional enhancements in a timely manner under the development agreement would have a material adverse effect on the Clarkdale Slag Project and our operations.

The nature of mineral exploration and production activities involves a high degree of risk; we could incur a write-down on our investment in any project.

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

Many exploration programs do not result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Uncertainties as to the metallurgical amenability of any minerals discovered may not warrant the mining of these minerals on the basis of available technology. Our operations are subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as:

encountering unusual or unexpected formations;

environmental pollution;

personal injury and flooding;

decrease in recoverable reserves due to lower precious and base metal prices; and

changing environmental laws and regulations.

If management determines, based on any factors including the foregoing, that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write-down on our investment in such property interests on our financial statements. Further, we may become subject to liability for such hazards, including pollution and other hazards against which we cannot insure or against which we may elect not to insure. At the present time, we have no coverage to insure against these hazards. Such a write-down or the payment of such liabilities may have a material adverse effect on our financial position.

Our industry is highly competitive, mineral lands are scarce and we may not be able to obtain quality properties.

In addition to us, many companies and individuals engage in the mining business, including large, established mining companies with substantial capabilities and long earnings records. There is a limited supply of desirable mineral lands available for claim staking, lease, or acquisition in the United States and other areas where we may conduct exploration activities. We may be at a competitive disadvantage in acquiring mining properties since we must compete with these individuals and companies, many of which have greater financial resources and larger technical staffs. Mineral properties in specific areas which may be of interest or of strategic importance to us may be unavailable for exploration or acquisition due to their high cost or they may be controlled by other companies who may not want to sell or option their interests at reasonable prices. In addition, the Clarkdale slag pile is a finite, depleting asset. Therefore, the life of the Clarkdale Slag Project will be finite, if it is ever developed to the point of economic feasibility. Our long-term viability depends upon finding and acquiring new resources from different sites or properties. There can be no assurances that the Clarkdale Slag Project will become economically viable, and if so, that we will achieve or obtain additional successful economic opportunities.

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

There are several governmental regulations that materially restrict mineral exploration. We will be subject to applicable federal, state and local laws as we carry out our exploration program on the Clarkdale Slag Project and the Searchlight Gold Project. We are required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. Further, the United States Congress is actively considering amendment of the federal mining laws. Among the amendments being considered are imposition of significant royalties payable to the United States and more stringent environmental and reclamation standards, either of which would increase the cost of operations of mining projects. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration program.

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

water discharge will have to meet drinking water standards;

dust generation will have to be minimal or otherwise remediated;

dumping of material on the surface will have to be re-contoured and re-vegetated with natural vegetation;

an assessment of all material to be left on the surface will need to be environmentally benign;

ground water will have to be monitored for any potential contaminants;

the socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be remediated; and

there will have to be an impact report of the work on the local fauna and flora including a study of potentially endangered species.

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

We must comply with complex environmental regulations which are increasing and costly.

Our exploration operations are regulated by federal, state and local environmental laws that relate to the protection of air and water quality, hazardous waste management and mine reclamation. These regulations will impose operating costs on us. If the regulatory environment for our operations changes in a manner that increases the costs of compliance and reclamation, then our operating expenses may increase. This would result in an adverse effect on our financial condition and operating results.

Compliance with environmental quality requirements and reclamation laws imposed by federal, state and local governmental authorities may:

require significant capital outlays;

materially affect the economics of a given property;

cause material changes or delays in our intended activities; and

expose us to lawsuits.

These authorities may require us to prepare and present data pertaining to the effect or impact that any proposed exploration for or production of minerals may have upon the environment. The requirements imposed by any such authorities may be costly, time consuming, and may delay operations. Future legislation and regulations designed to protect the environment, as well as future interpretations of existing laws and regulations, may require substantial increases in equipment and operating costs and delays, interruptions, or a termination of operations. We cannot accurately predict or estimate the impact of any such future laws or regulations, or future interpretations of existing laws and regulations, on our operations.

Affiliates of our management and principal stockholders have conflicts of interest which may differ from those of ours and yours and we only have four independent board members.

We have ongoing business relationships with affiliates of our management and principal stockholders. In particular, we have continuing obligations under the agreements under which we acquired the assets relating to our Clarkdale Slag Project. We remain obligated to pay a royalty which may be generated from the operations of the Clarkdale Slag Project to Nanominerals, one of our principal stockholders, which is an affiliate of a member of our executive management and board of directors, Carl S. Ager. We also have engaged Nanominerals as a paid consultant to provide technical services to us. Further, one of our board members, Robert D. McDougal, serves as the chief financial officer and a director of Ireland Inc., a publicly traded, mining related company, which is an affiliate of Nanominerals. In addition, another member of our executive management and one of our directors, Martin B. Oring, serves as a consultant to Ireland, Inc. These persons are subject to a fiduciary duty to exercise good faith and integrity in handling our affairs. However, the existence of these continuing obligations may create a conflict of interest between us and our board members and senior executive management, and any disputes between us and such persons over the terms and conditions of these agreements that may arise in the future may raise the risk that the negotiations over such disputes may not be subject to being resolved in an arms’ length manner. In addition, Nanominerals’ interest in Ireland Inc. and its other mining related business interests may create a conflict of interest between us and our board members and senior executive management who are affiliates of Nanominerals.

Although our management intends to avoid situations involving conflicts of interest and is subject to a Code of Ethics, there may be situations in which our interests may conflict with the interests of those of our management or their affiliates. These could include:

competing for the time and attention of management;

potential interests of management in competing investment ventures; and

the lack of independent representation of the interests of the other stockholders in connection with potential disputes or negotiations over ongoing business relationships.

Although we only have four independent directors, the board of directors has adopted a written Related Person Transactions Policy, that describes the procedures used to identify, review, approve and disclose, if necessary, any transaction or series of transactions in which: (i) we were, are or will be a participant; (ii) the amount involved exceeds $120,000; and (iii) a related person had, has or will have a direct or indirect material interest. There can be no assurance that the above conflicts will not result in adverse consequences to us and the interests of the other stockholders.

We may suffer adverse consequences as a result of our reliance on outside contractors to conduct our operations.

A significant portion of our operations are currently conducted by outside contractors. As a result, our operations are subject to a number of risks, some of which are outside our control, including:

negotiating agreements with contractors on acceptable terms;

the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement;

reduced control over those aspects of operations which are the responsibility of the contractor;

failure of a contractor to perform under its agreement with us;

interruption of operations in the event that a contractor ceases its business due to insolvency or other unforeseen events;

failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and

problems of a contractor with managing its workforce, labor unrest or other employment issues.

In addition, we may incur liability to third parties as a result of the actions of our contractors. The occurrence of one or more of these risks could have a material adverse effect on our business, results of operations and financial condition.

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

Our executive officers and directors do not have any formal training as geologists or in the technical aspects of management of a mineral exploration company. With no direct training or experience in these areas, our management may not be fully aware of the specific requirements related to working within this industry. Our management's decisions and choices may not take into account standard engineering or managerial approaches mineral exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to management's lack of experience in this industry.

Base and precious metal prices are volatile and declines may have an adverse effect on our share price and business plan.

The market price of minerals is extremely volatile and beyond our control. Basic supply/demand fundamentals generally influence gold prices. The market dynamics of supply/demand can be heavily influenced by economic policy. Fluctuating metal prices will have a significant impact on our results of operations and operating cash flow. Furthermore, if the price of a mineral should drop dramatically, the value of our properties which are being explored or developed for that mineral could also drop dramatically and we might not be able to recover our investment in those properties. The decision and investment necessary to put a mine into production must be made long before the first revenues from production will be received. Price fluctuations between the time that we make such a decision and the commencement of production can completely change the economics of the mine. Although it is possible for us to protect against some price fluctuations by entering into derivative contracts (hedging) in certain circumstances, the volatility of mineral prices represents a substantial risk which no amount of planning or technical expertise can eliminate.

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

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

sales or leasing of base and precious metals by governments and central banks;

a low rate of inflation and a strong U.S. dollar;

speculative trading;

decreased demand for base and precious metals in industrial, jewelry and investment uses;

high supply of base and precious metals from production, disinvestment, scrap and hedging;

sales by base and precious metals producers, foreign transactions and other hedging transactions; and

devaluing local currencies (relative to base and precious metals prices in U.S. dollars) leading to lower production costs and higher production in certain major base and precious metals producing regions.

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

The restatement of certain of our historical consolidated financial statements may have an adverse effect on us.

We have restated certain items on our consolidated balance sheets and statements of operations for prior periods from December 31, 2008 through September 30, 2011. Based on the discovery of the errors relating to the restatements described above, our management has concluded that our internal control over financial reporting was not effective during the period from December 31, 2008 through December 31, 2011. Management had identified internal control deficiencies which, in management’s judgment, represented material weakness in internal control over financial reporting. The control deficiencies generally related to controls over the accounting for complex transactions to ensure such transactions are recorded as necessary to permit preparation of financial statements and disclosure in accordance with generally accepted accounting principles. Such complex transactions included accounting for complex financial instruments.

As a result of the events described above, we may become subject to a number of significant risks, which could have an adverse effect on our business, financial condition and results of operations, including: we may be subject to potential civil litigation, including shareholder class action lawsuits and derivative claims made on behalf of us, and regulatory proceedings or actions, the defense of which may require us to devote significant management attention and to incur significant legal expense and which litigation, proceedings or actions, if decided against us, could require us to pay substantial judgments, settlements or other penalties.

Risks Relating to Our Securities

There has been a very limited public trading market for our securities, and the market for our securities may continue to be limited and be sporadic and highly volatile.

There is currently a limited public market for our common stock. Our common stock is quoted on the National Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board (the “OTCBB”). We cannot assure you that an active market for our shares will be established or maintained in the future. The OTCBB is not a national securities exchange, and many companies have experienced limited liquidity when traded through this quotation system. Holders of our common stock may, therefore, have difficulty selling their shares, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any shares, which may be purchased, may be sold without incurring a loss. The market price of our shares, from time to time, may not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the shares in the future.

In addition, the market price of our common stock may be volatile, which could cause the value of our common stock to decline. Securities markets experience significant price and volume fluctuations. This market volatility, as well as general economic conditions, could cause the market price of our common stock to fluctuate substantially. Many factors that are beyond our control may significantly affect the market price of our shares. These factors include:

price and volume fluctuations in the stock markets;

changes in our earnings or variations in operating results;

any shortfall in revenue or increase in losses from levels expected by securities analysts;

changes in regulatory policies or law;

operating performance of companies comparable to us; and

general economic trends and other external factors.

Even if an active market for our common stock is established, stockholders may have to sell their shares at prices substantially lower than the price they paid for the shares or might otherwise receive than if an active public market existed.

Future financings could adversely affect common stock ownership interest and rights in comparison with those of other security holders.

Our board of directors has the power to issue additional shares of common stock without stockholder approval. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our existing stockholders will be reduced, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders.

If we issue any additional common stock or securities convertible into common stock, such issuance will reduce the proportionate ownership and voting power of each other stockholder. In addition, such stock issuances might result in a reduction of the per share book value of our common stock.

Our anti-takeover provisions or provisions of Nevada law, in our articles of incorporation and bylaws and the common share purchase rights that accompany shares of our common stock could prevent or delay a change in control of us, even if a change of control would benefit our stockholders.

Provisions of our articles of incorporation and bylaws, as well as provisions of Nevada law, could discourage, delay or prevent a merger, acquisition or other change in control of us, even if a change in control would benefit our stockholders. These provisions:

classify our board of directors so that only one-third of the directors are elected each year and require the vote of 66 2/3% of the outstanding stock entitled to vote in the election of directors to amend these provisions;

prohibit stockholder action by written consent and require that all stockholder actions be taken at a meeting of our stockholders; and

establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings and require the vote of 66 2/3% of the outstanding stock entitled to vote in the election of directors to amend these provisions.

In addition, the Nevada Revised Statutes contain provisions governing the acquisition of a controlling interest in certain publicly held Nevada corporations. These laws provide generally that any person that acquires 20% or more of the outstanding voting shares of certain publicly held Nevada corporations, such as us, in the secondary public or private market must follow certain formalities before such acquisition or they may be denied voting rights, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. These laws provide that a person acquires a "controlling interest" whenever a person acquires shares of a subject corporation that, but for the application of these provisions of the Nevada Revised Statutes, would enable that person to exercise (1) one-fifth or more, but less than one-third, (2) one-third or more, but less than a majority or (3) a majority or more, of all of the voting power of the corporation in the election of directors. The Control Share Acquisition Statute generally applies only to Nevada corporations with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada. Our Bylaws provide that the provisions of the Nevada Revised Statutes, known as the “Control Share Acquisition Statute” apply to the acquisition of a controlling interest in us, irrespective of whether we have 200 or more stockholders of record, or whether at least 100 of our stockholders have addresses in the State of Nevada appearing on our stock ledger. These laws may have a chilling effect on certain transactions if our articles of incorporation or bylaws are not amended to provide that these provisions do not apply to us or to an acquisition of a controlling interest, or if our disinterested stockholders do not confer voting rights in the control shares.

Each currently outstanding share of our common stock includes, and each newly issued share of our common stock will include, a common share purchase right. The rights are attached to and trade with the shares of common stock and generally are not exercisable. The rights will become exercisable if a person or group acquires, or announces an intention to acquire, 15% or more of our outstanding common stock. However, the applicable threshold percentage will not exceed 20% or more of our outstanding common stock in the case of any person or group who owned 15% or more of our outstanding common stock as of August 24, 2009. These persons may be deemed to include certain of our officers, directors and principal stockholders. The rights have some anti-takeover effects and generally will cause substantial dilution to a person or group that attempts to acquire control of us without conditioning the offer on either redemption of the rights or amendment of the rights to prevent this dilution. The rights are designed to provide additional protection against abusive or unfair takeover tactics, such as offers for all shares at less than full value or at an inappropriate time (in terms of maximizing long-term stockholder value), partial tender offers and selective open-market purchases. The rights are intended to assure that our board of directors has the ability to protect stockholders and us if efforts are made to gain control of us in a manner that is not in the best interests of us and our stockholders. The rights could have the effect of delaying, deferring or preventing a change of control that is not approved by our board of directors, which in turn could prevent our stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of the common stock.

A substantial number of our shares are available for sale in the public market and sales of those shares could adversely affect our stock price.

Sales of a substantial number of shares of common stock into the public market, or the perception that such sales could occur, could substantially reduce our stock price in the public market for our common stock, and could impair our ability to obtain capital through a subsequent sale of our securities.

Our common stock is subject to “penny stock” regulations that may affect the liquidity of our common stock.

Our common stock is subject to the rules adopted by the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges, for which current price and volume information with respect to transactions in such securities is provided by the exchange or system).

The penny stock rules require that a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which contains the following:

a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation of such duties or other requirements of securities laws;

a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and significance of the spread between the “bid” and “ask” price;

a toll-free telephone number for inquiries on disciplinary actions, definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and

such other information and in such form (including language, type, size and format), as the SEC shall require by rule or regulation.

Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:

the bid and offer quotations for the penny stock;

the compensation of the broker-dealer and its salesperson in the transaction;

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock;

the liquidity of the market for such stock; and

monthly account statements showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock such as our common stock if it is subject to the penny stock rules.

If we are, or were, a U.S. real property holding corporation, non-U.S. holders of our common stock or other security convertible into our common stock could be subject to U.S. federal income tax on the gain from the sale, exchange, or other disposition of such security.

If we are or ever have been a U.S. real property holding corporation (a “USRPHC”) under the Foreign Investment Real Property Tax Act of 1980, as amended (“FIRPTA”) and applicable United States Treasury regulations (collectively, the “FIRPTA Rules”), unless an exception described below applies, certain non-U.S. investors in our common stock (or options or warrants for our common stock would be subject to U.S. federal income tax on the gain from the sale, exchange or other disposition of shares of our common stock (or such options or warrants), and such non-U.S. investor would be required to file a United States federal income tax return. In addition, the purchaser of such common stock, option or warrant would be required to withhold from the purchase price an amount equal to 10% of the purchase price and remit such amount to the U.S. Internal Revenue Service.

In general, under the FIRPTA Rules, a company is a USRPHC if its interests in U.S. real property comprise at least 50% of the fair market value of its assets. If we are or were a USRPHC, so long as our common stock is “regularly traded on an established securities market” (as defined under the FIRPTA Rules), a non-U.S. holder who, actually or constructively, holds or held no more than 5% of our common stock is not subject to U.S. federal income tax on the gain from the sale, exchange, or other disposition of our common stock under FIRPTA. In addition, other interests in equity of a USRPHC may qualify for this exception if, on the date such interest was acquired, such interests had a fair market value no greater than the fair market value on that date of 5% of our common stock. Any of our common stockholders (or owners of options or warrants for our common stock) that are non-U.S. persons and own or anticipate owning more than 5% of our common stock (or, in the case of options or warrants, of a value greater than the fair market value of 5% of our common stock) should consult their tax advisors to determine the consequences of investing in our common stock (or options or warrants). We have not conducted a formal analysis of whether we are or have ever been a USRPHC. We do not believe that we are or have ever been a USRPHC. However, if we later determine that we were a USRPHC, then we believe that we would have ceased to be a USRPHC as of June 1, 2005 and that non-U.S. holders would not be subject to FIRPTA with respect to a sale, exchange, or other disposition of shares of our common stock (or options or warrants) after June 1, 2010.

Item 1B.

Unresolved Staff Comments

Not applicable.

Item 2.

Properties

We currently rent the office space for our corporate headquarters at the current rate of $2,980, on a month-to-month basis, from Horizon View, LLC (formerly Burnett & Williams, LLC), a Nevada limited liability company. The office space, located at 2441 West Horizon Ridge Parkway, Suite 120, Henderson, Nevada 89052, consists of approximately 1,000 square feet.

We have a month-to month rental agreement with Clarkdale Arizona Central Railroad. We receive rental income of $1,700 per month.

We rent a commercial building space to various tenants. The rental arrangements are minor in amount and are typically on a month-to-month basis. We currently receive rental income under these agreements of less than $1,000 per month.

Subject to certain exceptions and encumbrances, including, among others, certain easements and rights of way, we hold title to the following real properties located in Clarkdale, Arizona which relate to the Clarkdale Slag Project:

Location	Parcel No.	General Description of Property
Clarkdale, Arizona	Parcel I	Lots 1 and 2, Block 44, town of Clarkdale according to the plat of record in Book 5 of Maps, page 85, records of Yavapai County, Arizona, including the commercial building located thereon.
Clarkdale, Arizona	Parcel II	A portion of the Northeast quarter of Section 20, Township 16 North, Range 3 East of the Gila and Salt River Base and Meridian, Yavapai County, Arizona.
Clarkdale, Arizona	Parcel III	A parcel of land located in the Southeast quarter of Section 19, and the Southwest quarter of Section 20, Township 16 North, Range 3 East, Gila and Salt River Base and Meridian, Yavapai County, Arizona.
Clarkdale, Arizona	Parcel IV	A parcel of land located in the North half of Section 20, Township 16 North, Range 3 East, Gila and Salt River Base and Meridian, Yavapai County, Arizona.
Clarkdale, Arizona	Parcel V	A portion of Sections 17, 18, 19 and 20, Township 16 North, Range 3 East, Gila and Salt River Base and Meridian, Yavapai County, Arizona.

We have entered into a lease agreement with the Town of Clarkdale, Arizona. We provide approximately 60 acres of land to the Town of Clarkdale for disposal of Class B effluent. We have a first right to purchase up to 46,000 gallons per day of the effluent for its use at 50% of the potable water rate. In addition, if Class A effluent becomes available, we may purchase the Class A effluent at 75% of the potable water rate. The term of the lease is five years with a one year extension available. At such time as the Town of Clarkdale no longer uses the property for effluent disposal, and for a period of 25 years measured from the date of the lease, we have a continuing right to purchase Class B effluent, and if available, Class A effluent at then market rates.

Effluent is water that is reclaimed from a wastewater treatment process to remove toxins. The classifications of reclaimed effluent ranging from A+ (the best) to C (the worst), are indicative of the level of treatment that has been performed on the effluent. Treated effluents under all of these classifications may be reused, within defined parameters. The classifications determine what direct reuse is permitted for that effluent. Currently, no class of treated effluent may be used for direct human consumption. Based on the classification, reclaimed water may be used for dust control, agricultural irrigation, livestock watering, landscape irrigation, and human contact. Water quality criteria include standards regulating turbidity, fecal coliform bacteria, enteric viruses and other pathogenic organisms, and mean concentration of total nitrogen. The Town of Clarkdale has obtained an Aquifer Protection Permit to discharge the Class B effluent on to our property. The water is discharged through a sprinkler system onto the ground, where it percolates down through to the underlying aquifer.

Item 3.

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 against us at the current time.

Item 4.

Mine Safety Disclosure

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K for the year ended December 31, 2011 is included in Exhibit 95 to this Annual Report on Form 10-K.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Trading History

Our common stock is quoted on the OTCBB under the symbol “SRCH.” Trading in our common stock has not been extensive and such trades cannot be characterized as constituting an active trading market. The following is a summary of the high and low closing prices of our common stock on the OTCBB during the periods presented, as reported on the website of the NASDAQ Stock Market. Such prices represent inter-dealer prices, without retail mark-up, mark down or commissions, and may not necessarily represent actual transactions:

	Closing Sale Price
	High		Low
Year Ended December 31, 2011
Fourth Quarter	$	1.11	$	0.59
Third Quarter		1.23		0.36
Second Quarter		0.57		0.40
First Quarter		0.87		0.49
Year Ended December 31, 2010
Fourth Quarter	$	0.91	$	0.565
Third Quarter		1.28		0.38
Second Quarter		1.25		0.61
First Quarter		1.90		1.20

On April 11, 2012, the closing sales price on the OTCBB for the common stock was $1.55 as reported on the website of the NASDAQ Stock Market. As of April 11, 2012, there were 131,018,318 outstanding shares of common stock and approximately 119 stockholders of record of the common stock (not including the number of persons or entities holding stock in nominee or street name through various brokerage firms). However, the number of holders of record of our shares of common stock (including the number of persons or entities holding stock in nominee or street name through various brokerage firms) exceeds the number of holders which would permit us to terminate the registration of our common stock under Section 12(g) of the Exchange Act.

Performance Graph

The following graph compares our cumulative total stockholder return from December 31, 2006 with those of the AMEX Composite Index and the Philadelphia Gold and Silver (XAU) Index and assumes that all dividends were reinvested. The graph also assumes that U.S. $100 was invested on December 31, 2006 in (i) our common stock, (ii) the AMEX Composite Index, and (iii) the Philadelphia Gold and Silver (XAU) Index. The measurement points utilized in the graph consist of the last trading day in each calendar year, which closely approximates the last day of our fiscal year. The historical stock performance presented below is not intended to and may not be indicative of future stock performance.

	12/31/06		12/31/07		12/31/08		12/31/09		12/31/10		12/31/11

Searchlight Minerals Corp.	$	100.00		62.22		54.44		35.56		14.44		14.44

AMEX Composite Index	$	100.00		120.20		71.61		96.97		121.78		129.42

Philadelphia Gold and Silver (XAU) Index	$	100.00		122.90		88.82		121.34		164.95		133.35

The stock performance graph should not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate the stock performance graph by reference in another filing.

Dividend Policy

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

we would not be able to pay our debts as they become due in the usual course of business; or

our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our articles of incorporation.

Equity Compensation Plan Information

The following table provides information, as of December 31, 2011, with respect to options outstanding and available under our equity compensation plans, other than any employee benefit plan meeting the qualification requirements of Section 401(a) of the Internal Revenue Code:

	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in Column A
Plan Category	(A)		(B)		(C)
Equity compensation plans approved by security holders		2,662,753	$	1.14		5,322,501
Equity compensation plans not approved by security holders		1,238,200	$	1.80		-
TOTAL		3,900,953	$	1.35		5,322,501

Recent Sales of Unregistered Securities

The following sets forth information regarding unregistered securities sold in the fourth quarter of 2011:

On December 31, 2011, we issued an aggregate of options to purchase up to 54,000 shares of common stock to our non-management directors. These options were issued pursuant to the director compensation policy for our non-management directors based on an exercise price of $0.65 per share with respect to the 54,000 stock options, which was the closing price of our common stock on December 30, 2011, the last trading day of the fourth quarter of 2011. These securities were issued pursuant to Section 4(2) of the Securities Act.

Item 6.

Selected Financial Data

The following consolidated statement of operations for fiscal years 2010 and 2011 and consolidated balance sheet data for fiscal years 2010 and 2011 have been derived from our consolidated financial statements and related notes which have been audited by Brown Armstrong Accountancy Corporation for the years ended December 31, 2010 and 2011, and are included elsewhere in this document. The statements of operations data for fiscal years 2007, 2008 and 2009, and the balance sheet data for fiscal years 2007, 2008 and 2009 have been derived from our financial statements and related notes not included in this report. The following selected financial data should be read together with our financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report:

Statement of Operations Data	Year Ended December 31,
	2011			2010			2009			2008			2007

Revenues	$	Nil		$	Nil		$	Nil		$	Nil		$	Nil
Operating expenses		7,368,886			8,302,650			10,171,472			6,968,627			3,650,734
Income tax benefit		2,956,536			3,151,234			2,591,491			1,777,458			1,080,375
Loss from continuing operations		(3,415,345	)		(1,860,803	)		(7,547,586	)		(4,955,056	)		(2,221,818	)
Gain from discontinued operations		-			120,688			270,457			-			-
Net loss		(3,415,345	)		(1,740,115	)		(7,277,129	)		(4,955,056	)		(2,221,818	)
Loss per share - basic and diluted
Loss from continuing operations		(0.03	)		(0.02	)		(0.07	)		(0.05	)		(0.02	)
Gain from discontinued operations		-			-			-			-			-

Balance Sheet Data	Year Ended December 31,
	2011		2010		2009		2008		2007

Cash	$	6,161,883	$	6,996,027	$	13,099,562	$	7,055,591	$	12,007,344
Working capital		5,987,080		6,522,057		12,347,353		5,885,930		11,105,436
Total assets		165,107,440		167,916,596		174,158,105		167,479,633		160,132,878
Total liabilities		43,349,747		47,774,461		54,754,777		53,875,501		53,932,202
Total stockholders’ equity		121,757,693		120,142,135		119,403,328		113,604,132		106,200,676
Long-term debt, including current portion		1,519,426		1,763,028		1,999,066		2,217,847		2,420,660

Selected Quarterly Financial Data	Three Months Ended
	12/31/11			9/30/11			6/30/11			3/31/11			12/31/10			9/30/10

Revenues	$	Nil		$	Nil		$	Nil		$	Nil		$	Nil		$	Nil
Expenses		1,936,663			2,055,300			1,637,285			1,739,638			2,137,244			2,195,920
Loss from operations		(1,936,663	)		(2,055,300	)		(1,637,285	)		(1,739,638	)		(2,137,244	)		(2,195,920	)
Net income (loss)		1,556,296			(3,493,663	)		(1,034,798	)		(443,180	)		1,030,302			(3,130,746	)
Basic and diluted income (loss) per share		0.01			(0.03	)		(0.01	)		(0.00	)		0.01			(0.03	)

Selected Quarterly Financial Data	Three Months Ended
	6/30/10			3/31/10			12/31/09			9/30/09			6/30/09			3/31/09

Revenues	$	Nil		$	Nil		$	Nil		$	Nil		$	Nil		$	Nil
Expenses		2,131,505			1,837,981			5,046,338			1,822,933			1,729,975			1,572,226
Loss from operations		(2,131,505	)		(1,837,981	)		(5,046,338	)		(1,822,933	)		(1,729,975	)		(1,572,226	)
Net income (loss)		344,975			15,354			(4,082,256	)		(1,136,489	)		(1,078,329	)		(980,055	)
Basic and diluted income (loss) per share		0.00			0.00			(0.04	)		(0.01	)		(0.01	)		(0.01	)

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this report. This discussion and analysis may contain forward-looking statements based on assumptions about our future business. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors” and elsewhere in this report.

This discussion presents management’s analysis of our results of operations and financial condition as of and for each of the years in the two-year period ended December 31, 2011. The discussion should be read in conjunction with our financial statements and the notes related thereto which appear elsewhere in this report.

Executive Overview

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

Clarkdale Slag Project.

Current Work Program. Since the second half of 2010, we have pursued autoclaving in an effort to prove our ability to commercially extract and recover precious and base metals from the slag material at our Clarkdale Slag Project. Autoclaving, a proven technology that is widely used within the mining industry, is a chemical leach process that utilizes elevated temperature and pressure in a closed autoclave system to extract precious and base metals from our slag material.

Six POX tests and 12 POL tests were conducted by SGS at its facilities. The initial tests for both methods showed lower gold values being recovered into solution while later optimized tests for both methods showed significantly higher gold values. This increase was due in large part to the necessarily empirical method of the autoclave tests whereby problems involving autoclave mechanical issues and chemistry formulations were resolved as they were identified. As subsequently corrected autoclave tests were conducted, gold values in solution increased. Both POX and POL tests therefore resulted in negligible amounts of gold recovered into solution at the beginning of the testing when several problems existed and approximately 0.5-0.6 opt gold at the end of the test period, as test protocols were optimized.

James Murray, President, Arrakis, managed and coordinated the test work; Richard Kunter, Richard S. Kunter and Associates, provided technical direction to the engineering firm’s testing program assisted by Roger Kelley, R.J. Kelley, Consulting Metallurgist, all of whom provided independent expert reports to us with regard to the results at the engineering firm. The conclusions drawn by the three independent consultants, in reviewing the engineering firm’s test work, confirm the results and conclusions of the engineering firm.

a mechanical process to break up the slag material using a small vibratory mill in our crushing and grinding circuit, and

a relatively benign (halide) chemical leaching process to liberate the precious and base metals from the crushed and ground slag.

Searchlight Gold Project

Since 2005, we have maintained an ongoing exploration program on our Searchlight Gold Project and have contracted with 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 intend to continue to explore their applicability to the Searchlight Gold Project.

On February 11, 2010, we received final approval of our Plan of Operations from the BLM, which allows us to conduct an 18-hole drill program on our project area. However, in an effort to conserve our cash and resources, we have decided to postpone further exploration on our Searchlight Gold Project until we are better able to determine the feasibility of our Clarkdale Slag Project. Once we have decided to resume our exploration program, work on the project site will be limited to the scope within the Plan of Operations. To perform any additional drilling or mining on the project, we would be required to submit a new application to the BLM for approval prior to the commencement of any such additional activities.

Anticipated Cash Requirements

Our exploration and evaluation plan calls for significant expenses in connection with the Clarkdale Slag Project and the Searchlight Gold Project. During the next 12 months, our management anticipates that the minimum cash requirements for funding our proposed testing and feasibility programs and our continued operations will be approximately $7,300,000. As of April 11, 2012, we had cash reserves in the amount of approximately $4,300,000. Our current financial resources may not be sufficient to allow us to meet the anticipated costs of our testing and feasibility programs during the next 12 months and we may require additional financing in order to fund these activities.

A decision on allocating additional funds for Phase II of the Clarkdale Slag Project will be forthcoming if and once the feasibility study is completed and analyzed. The Phase II work program is expected to include the preparation of a bankable feasibility study, engineering and design of the full-scale production facility and planning for the construction of an Industrial Collector Road pursuant to an agreement with the Town of Clarkdale, Arizona. We estimate that our monthly expenses will increase substantially once we enter Phase II of the project. Therefore, our current financial resources may not be sufficient to allow us to meet the anticipated costs of our testing, feasibility and Phase II programs and we may require additional financing in order to fund these activities. We do not currently have any financing arrangements in place for such additional financing, and there are no assurances that we will be able to obtain additional financing in an amount sufficient to meet our needs or on terms that are acceptable to us.

If the actual costs are significantly greater than anticipated, if we proceed with our testing and feasibility activities beyond what we currently have planned, or if we experience unforeseen delays during our activities during the next 12 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 market prices for 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.

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.

Critical Accounting Policies

Use of estimates – The preparation of financial statements in conformity with GAAP requires us 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. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring estimates and assumptions include the valuation of stock-based compensation and derivative warrant liabilities, impairment analysis of long-lived assets, and realizability of deferred tax assets. Actual results could differ from those estimates.

Mineral properties - Costs of acquiring mineral properties are capitalized upon acquisition. Exploration costs and costs to maintain mineral properties are expensed as incurred while the project is in the exploration stage. Development costs and costs to maintain mineral properties are capitalized as incurred while the property is in the development stage. When a property reaches the production stage, the related capitalized costs are amortized using the units-of-production method over the proven and probable reserves.

Mineral exploration and development costs - Exploration expenditures incurred prior to entering the development stage are expensed and included in “Mineral exploration and evaluation expenses.”

Capitalized interest cost - We capitalize interest cost related to acquisition, development and construction of property and equipment which is designed as integral parts of the manufacturing process of the 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.

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

Impairment of long-lived assets – We review and evaluate our long-lived assets for impairment at each balance sheet date due to our planned exploration stage losses and document such impairment testing. Mineral properties in the exploration stage are monitored for impairment based on factors such as our continued right to explore the property, exploration reports, drill results, technical reports and continued plans to fund exploration programs on the property.

The tests for long-lived assets in the exploration, development or producing stage that would have a value beyond proven and probable reserves would be monitored for impairment based on factors such as current market value of the mineral property and results of exploration, future asset utilization, business climate, mineral prices and future undiscounted cash flows expected to result from the use of the related assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts.

Our policy is to record an impairment loss in the period when it is determined that the carrying amount of the asset may not be recoverable either by impairment or by abandonment of the property. The impairment loss is calculated as the amount by which the carrying amount of the assets exceeds its fair value. To date, no such impairments have been identified.

Results of Operations

Years Ended December 31, 2011 and 2010

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

				Year Ended December 31
	2011			2010
Revenue	$	-		$	-
Operating expenses		(7,368,886	)		(8,302,650	)
Rental revenue		24,195			25,460
Interest and dividend income		14,605			22,039
Interest expense		(1,288	)		(2,835	)
Loss on equipment disposition		(536,479	)		(14,074	)
Change in derivative warrant liability		993,386			3,260,023
Gain on dispute resolution		502,586			-
Income tax benefit		2,956,536			3,151,234
Gain (loss) from discontinued operations		-			120,688
Net loss	$	(3,415,345	)	$	(1,740,115	)

Revenue. We are currently in the exploration stage of our business, and have not earned any revenues from our planned mineral operations to date. We did not generate any revenues from inception in 2000 through the year ended December 31, 2011. We do not anticipate earning revenues from our planned mineral operations until such time as we enter into commercial production of the Clarkdale Slag Project, the Searchlight Gold Project or other mineral properties we may acquire from time to time, and of which there are no assurances.

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

	2011		2010

Mineral exploration and evaluation expenses	$	2,703,131	$	3,363,436
Mineral exploration and evaluation expenses – related party		188,203		338,970
Administrative – Clarkdale site		335,361		720,699
General and administrative		2,605,548		2,824,226
General and administrative – related party		153,939		152,069
Depreciation		1,382,704		903,250
Total operating expenses	$	7,368,886	$	8,302,650

Operating expenses decreased by 11.2% to $7,368,886 during the year ended December 31, 2011 from $8,302,650 during the year ended December 31, 2010. Operating expense decreased in 2011 compared to the corresponding period in 2010 primarily as a result of decreased exploration and evaluation expenses and general and administrative expenses, which were partially offset by increased depreciation expense.

Mineral exploration and evaluation expenses decreased by 19.6% to $2,703,131 during the year ended December 31, 2011 from $3,363,436 during the year ended December 31, 2010. Mineral exploration and evaluation expenses decreased in 2011 compared to the corresponding period in 2010 primarily as a result of our current work program on the Clarkdale Slag Project which is being conducted by outside independent laboratories. This has allowed for a reduction in on-site staffing and site operating costs. Additionally, in 2010 we pursued a multi-path approach to the accomplishment of our technical objectives in order to determine effective techniques to extract precious and base metals for the slag material. Consequently, we supplemented our internal technical team with a new project manager and additional experienced engineers resulting in additional compensation expense.

Included in mineral exploration and evaluation expenses were the amounts of $180,000 in advance royalty payments and $8,203 in expense reimbursements during the year ended December 31, 2011 and $297,500 in fees and $41,470 in expense reimbursements during the year ended December 31, 2010, to Nanominerals Corp. (one of our principal stockholders and an affiliate of Ian R. McNeil, our former Chief Executive Officer and President and a director, and Carl S. Ager, our Vice President, Secretary and Treasurer and a director) for technical assistance, including providing us with the use of its laboratory, instrumentation, milling equipment and research facilities with respect to our Searchlight Gold Project and Clarkdale Slag Project and financing related activities, including providing assistance to us when potential financiers performed technical due diligence on our projects and made technical presentations to potential investors in connection with the exploration, testing and construction of our mineral projects, and reimbursement of expenses provided by Nanominerals in connection with the exploration, testing and construction of our mineral projects.

Further, we incurred $335,361 and $720,699 of administrative expenses relating to the Clarkdale Slag Project during the years ended December 31, 2011 and 2010, respectively. Administrative costs at the Clarkdale site decreased in 2011 compared to 2010 due to a significant change in our work program for the Clarkdale Slag Project from preproduction activities to autoclave testing conducted primarily by outside independent laboratories resulting in reduced on-site activity costs.

General and administrative expenses decreased 7.7% and amounted to $2,605,548 during the year ended December 31, 2011 from $2,824,226 during the year ended December 31, 2010. Our cost control measures resulted in an approximately $230,000 reduction in consulting and filing fees, travel expenses and insurance costs. General and administrative cash based compensation also decreased for officers and directors by approximately $120,000 which was partially offset by an increase of approximately $37,000 in stock based compensation for our officers and directors.

Included in general and administrative expenses for the years ended December 31, 2011 and 2010 were directors’ compensation expenses related to the vesting of director options and option grants to directors of $73,840 and $391,862, respectively.

On October 15, 2009, we adopted our 2009 Stock Incentive Award Plan for Employees and Service Providers (the “2009 Incentive Plan”). Under the terms of the 2009 Incentive Plan, options to purchase up to 3,250,000 shares of common stock may be granted to eligible participants. On December 15, 2009, our stockholders approved the 2009 Incentive Plan. As of December 31, 2011, we have granted 1,110,000 options under the 2009 Incentive Plan with a weighted average exercise price of $1.22 per share. On October 15, 2009, we adopted our 2009 Stock Incentive Plan for Directors (the “2009 Directors Plan”). Under the terms of the 2009 Directors Plan, options to purchase up to 750,000 shares of common stock may be granted to our directors. On December 15, 2009, our stockholders approved the 2009 Directors Plan. As of December 31, 2011, 707,688 options have been granted under the 2009 Directors Plan with a weighted average exercise price of $1.13 per share. As of April 30, 2007, we adopted our 2007 Stock Option Plan (the “2007 Plan”). Under the terms of the 2007 Plan, options to purchase up to 4,000,000 shares of common stock may be granted to eligible participants. On June 15, 2007, our stockholders approved the 2007 Plan. As of December 31, 2011, 859,811 options have been granted under the 2007 Plan with a weighted average exercise price of $1.10 per share.

In addition, we incurred $153,939 and $152,069 during the years ended December 31, 2011 and 2010, respectively for general and administrative expenses for accounting support services to Cupit, Milligan, Ogden & Williams, CPAs, an affiliate of Melvin L. Williams, our Chief Financial Officer. These expenses did not change significantly during the year ended December 31, 2011 as compared to 2010.

These accounting support services included bookkeeping input for the Clarkdale facility, assistance in preparing working papers for quarterly and annual reporting, and preparation of federal and state tax filings. These expenses do not include any fees for Mr. Williams’ time in directly supervising the support staff. Mr. Williams’ compensation has been provided in the form of salary. The direct benefit to Mr. Williams was $52,339 and $62,348 of the above Cupit Milligan fees and expenses for the years ended December 31, 2011 and 2010, respectively.

Other Income and Expenses. Total other income decreased to $997,005 during the year ended December 31, 2011 from $3,290,613 during the year ended December 31, 2010. The decrease in 2011, as compared to 2010, was primarily due to less gain recognized on the change in fair value of our derivative warrant liability.

We received incidental rental revenue of $24,195 and $25,460 during the years ended December 31, 2011 and 2010, respectively, 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) rental of commercial building space to various tenants. Rental arrangements are minor in amount and are typically on a month to month basis.

Income Tax Benefit. Income tax benefit decreased by 6.2% to $2,956,536 during the year ended December 31, 2011 from $3,151,234 during the year ended December 31, 2010. The decrease in 2011, as compared to 2010, was primarily a result of the reduction in operating expenses discussed in the paragraphs above.

Gain from Discontinued Operations. Prior to our corporate restructuring in 2005, we had several accounts payable dating back and prior to 2003 which were incurred in the United Kingdom. These expenses were related to business operations which were discontinued in February 2005. In the first quarter of 2010, we updated our internal review of the status of the payables and recorded a $120,688 gain. The gain was reflected as a gain from discontinued operations. There was no tax impact as the prior expenses occurred while we operated outside the United States and the losses were not included in our net operating losses.

Net Loss. The aforementioned factors resulted in a net loss of $3,415,345 or $0.03 per common share, for the year ended December 31, 2011, as compared to a net loss of $1,740,115, or $0.02 per common share, for the year ended December 31, 2010.

As of December 31, 2011 and 2010, we had cumulative net operating loss carryforwards of approximately $33,284,612 and $26,803,688, respectively, for federal income tax purposes. The federal net operating loss carryforwards expire between 2025 and 2031.

We had cumulative state net operating losses of approximately $20,041,239 and $15,594,824 as of December 31, 2011 and 2010, respectively, for state income tax purposes. The state net operating loss carryforwards expire between 2012 and 2016.

Liquidity and Capital Resources

Historically, we have financed our operations primarily through the sale of common stock and other convertible equity securities. During 2011 and 2010, we conducted the following financings of our securities:

On December 22, 2010, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with an investor for the sale of shares of our common stock. The per share purchase price of the shares sold in each transaction equaled the volume weighted average trading price of our common stock during the ten-day trading period immediately preceding the applicable closing date (the “VWAP”), multiplied by 0.85. The final closing was completed on December 15, 2011. The offering and sale of shares of our common stock to the investor was made pursuant to our shelf registration statement on Form S-3 (File No. 333-169993), which was declared effective by the Securities and Exchange Commission on November 23, 2010. In connection with these transactions under the Purchase Agreement, we issued a total of 11,000,000 shares of common stock at a weighted per share purchase price of $0.5874, resulting in gross proceeds to us of $6,460,940. Total fees related to these issuances were $99,690.

Working Capital

The following is a summary of our working capital at December 31, 2011 and 2010:

				At December 31,
	2011			2010
Current assets	$	6,308,688		$	7,071,070
Current liabilities		(321,608	)		(549,013	)
Working capital	$	5,987,080		$	6,522,057

As of December 31, 2011, we had an accumulated deficit of $27,615,741. As of December 31, 2011, we had working capital of $5,987,080, compared to working capital of $6,522,057 as of December 31, 2010. The decrease in our working capital was primarily attributable to our net loss, capital expenditures and principal payments on our long term liabilities, offset by the receipt of gross proceeds of $4,867,190 from offerings of our securities in completed in 2011. Cash was $6,161,883 as of December 31, 2011, as compared to $6,996,027 as of December 31, 2010. Net property and equipment decreased to $11,853,534 as of December 31, 2011 from $13,900,308 as of December 31, 2010. The decrease primarily resulted from depreciation expense and to selling certain pieces of equipment.

Included in long term liabilities in the accompanying consolidated financial statements is a balance of $41,756,100 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.

Also included in long term liabilities in the accompanying consolidated financial statements is a balance of $993,386 for the year ended December 31, 2010 for deferred warrant liability related to certain private placement warrants which contain certain anti-dilution provisions. The fair value of the derivative warrant liability was determined to be zero at December 31, 2011. The deferred warrant liability is measured at fair value at each reporting period and will be settled upon the occurrence of warrant holders exercising their warrants or by the expiration of the warrants on November 12, 2012. The derivative warrant liability does not require cash settlement by us.

Cash Flows

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

				Year Ended December 31,
	2011			2010
Cash used in operating activities	$	(5,565,323	)	$	(7,086,859	)
Cash provided by (used in) investing activities		127,591			(822,698	)
Cash provided by financing activities		4,603,588			1,806,022
Net (decrease) increase in cash during period	$	(834,144	)	$	(6,103,535	)

Net Cash Used in Operating Activities. Net cash used in operating activities decreased to $5,565,323 during the year ended December 31, 2011 from $7,086,859 during the year ended December 31, 2010. The decrease in cash used in operating activities was primarily due to smaller operating losses resulting from decreased activity on our Clarkdale project.

Net Cash Provided by (Used in) Investing Activities. Investing activities provided $127,591 during the year ended December 31, 2011, as compared to cash used of $822,698 during the year ended December 31, 2010. The increase was primarily a result of a decrease in purchases of property and equipment relating to the Clarkdale Slag Project and to proceeds from equipment dispositions of $365,613.

Net Cash Used/Provided by Financing Activities. Net cash provided by financing activities was $4,603,588 for the year ended December 31, 2011 compared to $1,806,022 for the year ended December 31, 2010. Net cash provided by financing activities during the year ended December 31, 2011 primarily resulted from the receipt of $4,867,190 from the gross proceeds of private placements of our securities, offset by $228,427 of principal payments made to VRIC.

our ability to locate a profitable mineral property;

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

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

our ability to generate revenues.

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

Our exploration and evaluation plan calls for significant expenses in connection with the Clarkdale Slag Project and the Searchlight Gold Project. During 2012, our management anticipates that the minimum cash requirements for funding our proposed testing and feasibility programs and our continued operations will be approximately $7,300,000. As of April 11, 2012, we had cash reserves in the amount of approximately $4,300,000. Our current financial resources may not be sufficient to allow us to meet the anticipated costs of our testing and feasibility programs and operating overhead during the next 12 months and we may require additional financing in order to fund these activities. We do not currently have any financing arrangements in place for such additional financing, and there are no assurances that we will be able to obtain additional financing in an amount sufficient to meet our needs or on terms that are acceptable to us.

If the actual costs are significantly greater than anticipated, if we proceed with our exploration, testing and construction activities beyond what we currently have planned, or if we experience unforeseen delays during our activities during 2012, we may 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.

Contractual Obligations

The following table represents our aggregate contractual obligations (principal and interest) to make future payments as of December 31, 2011:

	One Year or Less		Over One Year To Three Years		Over Three Years To Five Years		Over Five Years		Total

Long-term obligation	$	360,000	$	720,000	$	720,000	$	60,000	$	1,860,000

Total	$	360,000	$	720,000	$	720,000	$	60,000	$	1,860,000

Off-Balance Sheet Arrangements

None.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) that are adopted by us, as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on our consolidated financial statements upon adoption.

In May 2011, the FASB issued additional guidance regarding fair value measurement and disclosure requirements. The most significant change relates to Level 3 fair value measurements and requires disclosure of quantitative information about unobservable inputs used a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements. The guidance is effective for interim and annual periods beginning on or after December 15, 2011. We do not expect adoption of the additional fair value measurement and disclosure requirements to have a material impact on its financial position or results of operations.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

We had unrestricted cash totaling $6,161,883 at December 31, 2011 and $6,996,027 at December 31, 2010. Our cash is invested primarily in money market funds and are not materially affected by fluctuations in interest rates. The unrestricted cash is held for working capital purposes. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Declines in interest rates, however, would reduce future investment income.

Item 8.

Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-1

CONSOLIDATED BALANCE SHEETS	F-3

CONSOLIDATED STATEMENTS OF OPERATIONS	F-4

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY	F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS	F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-8

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Searchlight Minerals Corp.

We have audited the accompanying consolidated balance sheets of Searchlight Minerals Corp. (An Exploration Stage Company) as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2011, including inception cumulative data prospectively from January 14, 2000 through December 31, 2011. Searchlight Minerals Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements from which the inception cumulative data prospectively from January 14, 2000 through December 31, 2005. These statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Searchlight Minerals Corp. (An Exploration Stage Company), is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Searchlight Minerals Corp. (An Exploration Stage Company) as of December 31, 2011 and 2010, and the results of its operations, stockholders’ equity, and its cash flows for each of the years in the two-year period ended December 31, 2011, including inception cumulative data prospectively from January 14, 2000 through December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming Searchlight Minerals Corp. will continue as a going concern. As described in Note 1 to the financial statements, Searchlight Minerals Corp.’s operating losses raise substantial doubt about its ability to continue as a going concern, unless Searchlight Minerals Corp. attains future profitable operations and/or obtains additional financing. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

	/s/ BROWN ARMSTRONG
	ACCOUNTANCY CORPORATION

April 12, 2012

Pasadena, California

F-1

F-2

SEARCHLIGHT MINERALS CORP.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED BALANCE SHEETS

	December 31, 2011			December 31, 2010

ASSETS

Current assets
Cash	$	6,161,883		$	6,996,027
Prepaid expenses		146,805			75,043

Total current assets		6,308,688			7,071,070

Property and equipment, net		11,853,534			13,900,308
Mineral properties		16,947,419			16,947,419
Slag project		120,766,877			120,766,877
Land - smelter site and slag pile		5,916,150			5,916,150
Land		3,300,000			3,300,000
Reclamation bond and deposits, net		14,772			14,772

Total non-current assets		158,798,752			160,845,526

Total assets	$	165,107,440		$	167,916,596

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued liabilities	$	61,496		$	254,094
Accounts payable - related party		12,725			51,317
VRIC payable, current portion - related party		247,387			228,427
Capital lease payable, current portion		-			15,175

Total current liabilities		321,608			549,013

Long-term liabilities
Derivative warrant liability		-			993,386
VRIC payable, net of current portion - related party		1,272,039			1,519,426
Deferred tax liability		41,756,100			44,712,636

Total long-term liabilities		43,028,139			47,225,448

Total liabilities		43,349,747			47,774,461

Commitments and contingencies - Note 14		-			-

Stockholders' equity
Common stock, $0.001 par value; 400,000,000 shares
authorized, 131,018,318 and 123,018,318 shares,
respectively, issued and outstanding		131,018			123,018
Additional paid-in capital		149,242,416			144,219,513
Accumulated deficit during exploration stage		(27,615,741	)		(24,200,396	)

Total stockholders' equity		121,757,693			120,142,135

Total liabilities and stockholders' equity	$	165,107,440		$	167,916,596

See Accompanying Notes to these Consolidated Financial Statements

F-3

SEARCHLIGHT MINERALS CORP.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF OPERATIONS

							For the period from
							January 14, 2000
							(date of inception)
	For the year ended						through
	December 31, 2011			December 31, 2010			December 31, 2011

Revenue	$	-		$	-		$	-

Operating expenses
Mineral exploration and evaluation expenses		2,703,131			3,363,436			13,132,065
Mineral exploration and evaluation expenses - related party		188,203			338,970			2,218,318
Administrative - Clarkdale site		335,361			720,699			3,496,355
General and administrative		2,605,548			2,824,226			19,374,652
General and administrative - related party		153,939			152,069			560,773
Depreciation		1,382,704			903,250			3,138,062

Total operating expenses		7,368,886			8,302,650			41,920,225

Loss from operations		(7,368,886	)		(8,302,650	)		(41,920,225	)

Other income (expense)
Rental revenue		24,195			25,460			148,665
Gain on dispute resolution		502,586			-			502,586
Loss on equipment disposition		(536,479	)		(14,074	)		(585,620	)
Change in fair value of derivative warrant liability		993,386			3,260,023			4,281,989
Interest expense		(1,288	)		(2,835	)		(14,143	)
Interest and dividend income		14,605			22,039			643,834

Total other income (expense)		997,005			3,290,613			4,977,311

Loss before income taxes and discontinued operations		(6,371,881	)		(5,012,037	)		(36,942,914	)

Income tax benefit		2,956,536			3,151,234			13,079,196

Loss from continuing operations		(3,415,345	)		(1,860,803	)		(23,863,718	)

Discontinued operations:
Gain (loss) from discontinued operations		-			120,688			(3,752,023	)

Net loss	$	(3,415,345	)	$	(1,740,115	)	$	(27,615,741	)

Loss per common share - basic and diluted
Loss from continuing operations	$	(0.03	)	$	(0.02	)
Gain from discontinued operations		-			-

Net loss	$	(0.03	)	$	(0.01	)

Weighted average common shares outstanding - basic and diluted		127,026,537			119,034,180

See Accompanying Notes to these Consolidated Financial Statements

F-4

SEARCHLIGHT MINERALS CORP.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

													Accumulated
										Common			Deficit During			Total
	Common Stock						Additional			Stock			Exploration			Stockholders'
	Shares			Amount			Paid-in Capital			Subscribed			Stage			Equity

Balance, January 14, 2000		-		$	-		$	-		$	-		$	-		$	-

Issuance of common stock (recapitalized)		50,000,000			50,000			(25,000	)		-			(24,999	)		1

Issuance of common stock in reverse merger		10,300,000			10,300			(5,150	)		-			(5,150	)		-

Capital contribution		-			-			1,037,126			-			-			1,037,126

Beneficial conversion feature associated with debt		-			-			300,000			-			-			300,000

Debt exchanged for common stock		48,000,000			48,000			1,152,000			-			-			1,200,000

Share-based compensation		123,022			123			1,343,821			(18,000	)		-			1,325,944

Issuance of stock options in satisfaction of debt		-			-			300,000			-			-			300,000

Return and cancellation of 70,000,000 shares of common stock		(70,000,000	)		(70,000	)		70,000			-			-			-

Issuance of 12,000,000 warrants for mineral property		-			-			1,310,204			-			-			1,310,204

Issuance of common stock for mineral property		22,425,000			22,425			77,566,950			-			-			77,589,375

Issuance of common stock in satisfaction of debt		200,000			200			124,800			-			-			125,000

Issuance of common stock for cash, net		57,720,351			57,720			57,112,276			(360,000	)		-			56,809,996

Common stock subscribed		-			-			-			378,000			-			378,000

Additional paid-in capital from cancellation of related party debt		-			-			742,848			-			-			742,848

Modification of investor warrants		-			-			4,996,955			-			-			4,996,955

Derivative warrant liability		-			-			(4,281,989	)		-			-			(4,281,989	)

Net loss for the years ended December 31, 2000 through 2009		-			-			-			-			(22,430,132	)		(22,430,132	)

Balance, December 31, 2009		118,768,373			118,768			141,744,841			-			(22,460,281	)		119,403,328

Share-based compensation		49,945			50			436,812			-			-			436,862

Issuance of common stock for cash, net		4,200,000			4,200			2,037,860			-			-			2,042,060

Net loss, December 31, 2010		-			-			-			-			(1,740,115	)		(1,740,115	)

Balance, December 31, 2010		123,018,318		$	123,018		$	144,219,513		$	-		$	(24,200,396	)	$	120,142,135

Issuance of common stock for cash, net		8,000,000			8,000			4,839,190			-			-			4,847,190

Share-based compensation		-			-			686,299			-			-			686,299

Warrants cancelled in legal settlement		-			-			(502,586	)		-			-			(502,586	)

Net loss, December 31, 2011		-			-			-			-			(3,415,345	)		(3,415,345	)

Balance, December 31, 2011	$	131,018,318		$	131,018		$	149,242,416		$	-		$	(27,615,741	)	$	121,757,693

See Accompanying Notes to these Consolidated Financial Statements

F-5

SEARCHLIGHT MINERALS CORP.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF CASH FLOWS

							Period from
							January 14, 2000
							(date of inception)
							through
	December 31, 2011			December 31, 2010			December 31, 2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,415,345	)	$	(1,740,115	)	$	(27,615,741	)
Gain (loss) from discontinued operations		-			120,688			(3,752,023	)
Loss from continuing operations		(3,415,345	)		(1,860,803	)		(23,863,718	)

Adjustments to reconcile loss from operating to net cash used in operating activities:
Depreciation		1,382,704			903,250			3,138,062
Stock based expenses		686,299			436,862			7,451,477
Loss on disposition of fixed assets		536,479			14,074			586,969
Amortization of prepaid expense		321,579			279,535			1,253,143
Allowance for bond deposit recovery		-			(180,500	)		-
Change in fair value of derivative warrant liability		(993,386	)		(3,260,023	)		(4,281,989	)
Gain on dispute resolution		(502,586	)		-			(502,586	)
Changes in operating assets and liabilities:
Prepaid expenses		(393,341	)		(232,317	)		(1,399,947	)
Reclamation bond and deposits		-			176,630			(14,772	)
Accounts payable and accrued liabilities		(231,190	)		(212,333	)		(260,192	)
Deferred income taxes		(2,956,536	)		(3,151,234	)		(13,079,196	)

Net cash used in operating activities		(5,565,323	)		(7,086,859	)		(30,972,749	)
Net cash used in operating activities from discontinued operations		-			-			(2,931,324	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid on mineral property claims		-			-			(87,134	)
Cash paid for joint venture and merger option		-			-			(890,000	)
Cash paid to VRIC on closing date - related party		-			-			(9,900,000	)
Cash paid for additional acquisition costs		-			-			(130,105	)
Capitalized interest - related party		(131,573	)		(149,079	)		(788,239	)
Proceeds from property and equipment disposition		365,613			-			366,013
Purchase of property and equipment		(106,449	)		(673,619	)		(14,400,550	)

Net cash provided (used) in investing activities		127,591			(822,698	)		(25,830,015	)
Net cash used in investing activities from discontinued operations		-			-			(452,618	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuance		4,867,190			2,121,750			66,186,685
Stock issuance costs		(20,000	)		(79,690	)		(2,124,333	)
Principal payments on capital lease payable		(15,175	)		(25,117	)		(116,238	)
Principal payments on VRIC payable - related party		(228,427	)		(210,921	)		(981,762	)

Net cash provided by financing activities		4,603,588			1,806,022			62,964,352
Net cash provided by financing activities from discontinued operations		-			-			3,384,237

NET CHANGE IN CASH		(834,144	)		(6,103,535	)		6,161,883

CASH AT BEGINNING OF PERIOD		6,996,027			13,099,562			-

CASH AT END OF PERIOD	$	6,161,883		$	6,996,027		$	6,161,883

See Accompanying Notes to these Consolidated Financial Statements

F-6

SEARCHLIGHT MINERALS CORP.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF CASH FLOWS

					Period from
					January 14, 2000
					(date of inception)
					through
	December 31, 2011		December 31, 2010		December 31, 2011

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

SUPPLEMENTAL INFORMATION

Interest paid, net of capitalized amounts	$	1,288	$	2,835	$	64,894

Income taxes paid	$	-	$	-	$	-

Non-cash investing and financing activities:
Capital equipment purchased through accounts payable and financing	$	-	$	-	$	444,690

Assets acquired for common stock issued for the acquisition	$	-	$	-	$	66,879,375

Assets acquired for common stock issued for mineral properties	$	-	$	-	$	10,220,000

Assets acquired for liabilities incurred in the acquisition	$	-	$	-	$	2,628,188

Net deferred tax liability assumed	$	-	$	-	$	55,197,465

Merger option payment applied to the acquisition	$	-	$	-	$	200,000

Reclassify joint venture option agreement to slag project	$	-	$	-	$	690,000

Warrants issued in connection with joint venture option agreement related to slag project	$	-	$	-	$	1,310,204

Stock options for common stock issued in satisfaction of debt	$	-	$	-	$	1,500,000

Capitalization of related party liability to equity	$	-	$	-	$	742,848

Stock issued for conversion of accounts payable, 200,000 shares at $0.625	$	-	$	-	$	125,000

Investor warrants issued with non-customary anti-dilution provisions	$	-	$	4,281,989	$	4,281,989

See Accompanying Notes to these Consolidated Financial Statements

F-7

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

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

Basis of presentation - The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The Company’s fiscal year-end is December 31.

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

History - The Company was incorporated on January 12, 1999 pursuant to the laws of the State of Nevada under the name L.C.M. Equity, Inc. From 1999 to 2005, the Company operated primarily as a biotechnology research and development company with its headquarters in Canada and an office in the United Kingdom (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 the Company 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 as 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.

Going concern - The Company incurred cumulative net losses of $27,615,741 from operations as of December 31, 2011 and has not commenced its commercial mining and mineral processing operations; rather, it is still in the exploration stage, raising substantial doubt about the Company’s ability to continue as a going concern. The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives.

The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company’s plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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

Use of estimates - The preparation of financial statements in conformity with GAAP 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. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates and assumptions include the valuation of stock-based compensation and derivative warrant liabilities, impairment analysis of long-lived assets, and realizability of deferred tax assets. Actual results could differ from those estimates.

F-8

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

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

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. The capitalized interest is recorded as part of the asset it relates to and will be amortized over the asset’s useful life once production commences. Interest cost capitalized from imputed interest on acquisition indebtedness was $131,573 and $149,079 for the years ended December 31, 2011 and 2010, respectively.

Mineral properties - Costs of acquiring mineral properties are capitalized upon acquisition. Exploration costs and costs to maintain mineral properties are expensed as incurred while the project is in the exploration stage. Development costs and costs to maintain mineral properties are capitalized as incurred while the property is in the development stage. When a property reaches the production stage, the related capitalized costs are amortized using the units-of-production method over the proven and probable reserves.

Mineral exploration and development costs - Exploration expenditures incurred prior to entering the development stage are expensed and included in “Mineral exploration and evaluation expenses”.

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).

Impairment of long-lived assets - The Company reviews and evaluates its long-lived assets for impairment at each balance sheet date due to its planned exploration stage losses and documents such impairment testing. Mineral properties in the exploration stage are monitored for impairment based on factors such as the Company’s continued right to explore the property, exploration reports, drill results, technical reports and continued plans to fund exploration programs on the property.

The Company's policy is to record an impairment loss in the period when it is determined that the carrying amount of the asset may not be recoverable either by impairment or by abandonment of the property. The impairment loss is calculated as the amount by which the carrying amount of the assets exceeds its fair value. To date, no such impairments have been identified.

F-9

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

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

Asset retirement obligation - The Company records the fair value of a liability for an asset retirement obligation (“ARO”) in the period that it is incurred if a reasonable estimate of fair value can be made. The fair value of the ARO is measured using expected future cash flows, discounted at the Company’s credit-adjusted risk-free interest rate. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. When the cost of the long-lived asset is depleted, the cost of the ARO is expensed over the useful life of the asset. To date, no significant asset retirement obligation exists and accordingly, no liability has been recorded.

Fair value of financial instruments - Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1		Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2		Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3		Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company’s financial instruments consist of mineral property purchase obligations and the derivative liability on stock purchase warrants. The mineral property purchase obligations are classified within Level 2 of the fair value hierarchy as their fair value is determined using interest rates which approximate market rates.

The derivative liability on stock purchase warrants was valued using the Binomial Lattice model, a Level 3 input. The change in fair value of the derivative liability is classified in other income (expense) in the statement of operations. The Company generally does not use derivative financial instruments to hedge exposures to cash flow, market or foreign currency risks. However, certain warrants contain anti-dilution provisions that are not afforded equity classification because they embody risks not clearly and closely related to the host contract. These features are required to be bifurcated and carried as a derivative liability.

The Company is not exposed to significant interest or credit risk arising from these financial instruments. The Company does not have any non-financial assets or liabilities that it measures at fair value.

Per share amounts - Basic earnings (loss) per share is computed by dividing net income (loss) 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. In these consolidated financial statements, stock options and warrants are not considered in the computation of diluted earnings per share as their inclusion would be anti-dilutive for the periods presented. Excluded stock options and warrants amounted to 26,959,678 and 28,321,361 for the years ended December 31, 2011 and 2010, respectively.

F-10

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

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

Stock-based compensation - Stock-based compensation awards are recognized in the consolidated financial statements based on the grant date fair value of the award which is estimated using the Binomial Lattice option pricing model. The Company believes that 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 the actual exercise behavior of option holders. The compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

The fair value of performance-based stock option grants is determined on their grant date through the use of the Binomial Lattice option pricing model. The total value of the award is recognized over the requisite service period only if management has determined that achievement of the performance condition is probable. The requisite service period is based on management’s estimate of when the performance condition will be met. Changes in the requisite service period or the estimated probability of achievement can materially affect the amount of stock-based compensation recognized in the financial statements.

Income taxes - The Company follows the liability method of accounting for income taxes. This method recognizes certain temporary differences between the financial reporting basis of liabilities and assets and the related income tax basis for such liabilities and assets. This method generates either a net deferred income tax liability or asset as measured by the statutory tax rates in effect. The effect of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

For acquired properties that do not constitute a business, a deferred income tax liability is recorded on GAAP basis over income tax basis using statutory federal and state rates. The resulting estimated future income tax liability associated with the temporary difference between the acquisition consideration and the tax basis is computed in accordance with Accounting Standards Codification (“ASC”) 740-10-25-51, Acquired Temporary Differences in Certain Purchase Transactions that are Not Accounted for as Business Combinations, 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.

Recent accounting standards - From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption.

In May 2011, the FASB issued additional guidance regarding fair value measurement and disclosure requirements. The most significant change relates to Level 3 fair value measurements and requires disclosure of quantitative information about unobservable inputs used a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements. The guidance is effective for interim and annual periods beginning on or after December 15, 2011. The Company does not expect adoption of the additional fair value measurement and disclosure requirements to have a material impact on its financial position or results of operations.

F-11

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

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	December 31, 2011							December 31, 2010
	Cost		Accumulated Depreciation			Net book value		Cost		Accumulated Depreciation			Net Book Value

Furniture and fixtures	$	38,255	$	(27,020	)	$	11,235	$	38,255	$	(21,555	)	$	16,700
Lab equipment		249,061		(140,634	)		108,427		249,061		(90,822	)		158,239
Computers and equipment		81,969		(53,056	)		28,913		78,568		(42,617	)		35,951
Income property		309,750		(13,017	)		296,733		309,750		(10,369	)		299,381
Vehicles		44,175		(40,433	)		3,742		44,175		(30,798	)		13,377
Slag conveyance equipment		300,916		(84,104	)		216,812		44,375		(11,094	)		33,281
Demo module building		6,630,063		(1,874,841	)		4,755,222		6,630,063		(1,211,835	)		5,418,228
Demo module equipment		35,996		(7,199	)		28,797		-		-			-
Grinding circuit		863,678		-			863,678		-		-			-
Leaching and filtration		1,300,618		(260,124	)		1,040,494		-		-			-
Fero-silicate storage		4,326		(433	)		3,893		-		-			-
Electrowinning building		1,492,853		(149,285	)		1,343,568		-		-			-
Site improvements		1,392,559		(248,691	)		1,143,868		1,299,630		(160,557	)		1,139,073
Site equipment		341,529		(223,631	)		117,898		337,140		(165,578	)		171,562
Construction in progress		1,102,014		-			1,102,014		5,957,850		-			5,957,850
Capitalized interest		788,240		-			788,240		656,666		-			656,666

	$	14,976,002	$	(3,122,468	)	$	11,853,534	$	15,645,533	$	(1,745,225	)	$	13,900,308

At December 31, 2011, construction in progress included the gold, copper and zinc extraction circuits and electrowinning equipment at the Clarkdale Slag Project. During the first quarter of 2011, certain demo module equipment, grinding circuit, leaching and filtration system, fero-silicate storage, electrowinning building and the remaining slag conveyance equipment were reclassified from construction in progress to assets that are available for use in the demonstration testing facility.

Depreciation expense was $1,382,704 and $903,250 for the years ended December 31, 2011 and 2010, respectively. The depreciation method for the grinding circuit is based on units of production. During the testing phase, units of production have thus far been limited and no depreciation expense has been recognized for the year ended December 31, 2011.

F-12

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

CLARKDALE SLAG PROJECT

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

The Company believes the acquisition of the Clarkdale Slag Project was beneficial because it provides for 100% ownership of the properties, thereby eliminating the need to finance and further develop the projects in a joint venture environment.

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

The Company applied EITF 98-03 (which has been superseded by ASC 805-10-25-1) with regard to the acquisition of the Clarkdale Slag Project. The Company determined that the acquisition of the Clarkdale Slag Project did not constitute an acquisition of a business as that term is defined in ASC 805-10-55-4, and the Company recorded the acquisition as a purchase of assets.

The Company also formed a second wholly owned subsidiary, CMC, for the purpose of developing a processing plant at the Clarkdale Slag Project.

The $130.3 million purchase price was comprised of a combination of the cash paid, the deferred tax liability assumed in connection with the acquisition, and the fair value of our common shares issued, based on the closing market price of our common stock, using the average of the high and low prices of our common stock on the closing date of the acquisition. The Clarkdale Slag Project is without known reserves and the project is exploratory in nature in accordance with Industry Guides promulgated by the Commission, Guide 7 paragraph (a)(4)(i). As required by ASC 930-805-30, Mining – Business Combinations – Initial Recognition, and ASC 740-10-25-49-55, Income Taxes – Overall – Recognition – Acquired Temporary Differences in Certain Purchase Transactions that are Not Accounted for as Business Combinations, the Company then allocated the purchase price among the assets as follows (and also further described in this Note 3 to the financial statements): $5,916,150 of the purchase price was allocated to the slag pile site, $3,300,000 to the remaining land acquired, and $309,750 to income property and improvements. The purchase price allocation to the real properties was based on fair market values determined using an independent real estate appraisal firm (Scott W. Lindsay, Arizona Certified General Real Estate Appraiser No. 30292). The remaining $120,766,877 of the purchase price was allocated to the Clarkdale Slag Project, which has been capitalized as a tangible asset in accordance with ASC 805-20-55-37, Use Rights. Upon commencement of commercial production, the material will be amortized using the unit-of-production method over the life of the Clarkdale Slag Project.

F-13

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

CLARKDALE SLAG PROJECT (continued)

Closing of the TI acquisition occurred on February 15, 2007, (the “Closing Date”) and was subject to, among other things, the following terms and conditions:

The Company paid $200,000 in cash to VRIC on the execution of the Letter Agreement;

The Company paid $9,900,000 in cash to VRIC on the Closing Date;

The Company issued 16,825,000 shares of its common stock, valued at $3.975 per share using the average of the high and low on the Closing Date, to the designates of VRIC on the closing pursuant to Section 4(2) and Regulation D of the Securities Act of 1933;

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

The Company agreed to continue to pay VRIC $30,000 per month until the earlier of: (i) the date that is 90 days after receipt of a bankable feasibility study by the Company (the “Project Funding Date”), or (ii) the tenth anniversary of the date of the execution of the letter agreement;

The acquisition agreement also contains the following additional contingent payment terms which are based on the Project Funding Date as defined in the agreement:

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

The Company has agreed to pay VRIC a minimum annual royalty of $500,000, commencing on the Project Funding Date (the “Advance Royalty”), and an additional royalty consisting of 2.5% of the net smelter returns (“NSR”) on any and all proceeds of production from the Clarkdale Slag Project (the “Project Royalty”). The Advance Royalty remains payable until the first to occur of: (i) the end of the first calendar year in which the Project Royalty equals or exceeds $500,000 or (ii) 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

The Company has agreed to pay VRIC an additional amount of $3,500,000 from the net cash flow of the Clarkdale Slag Project. The Company has accounted for this as a contingent payment and upon meeting the contingency requirements, the purchase price of the Clarkdale Slag Project will be adjusted to reflect the additional consideration.

Under the original JV Agreement, the Company agreed to pay NMC a 5% royalty on NSR payable from the Company’s 50% joint venture interest in the production from the Clarkdale Slag Project. Upon the assignment to the Company of VRIC’s 50% interest in the Joint Venture Agreement in connection with the reorganization with TI, the Company continues to have an obligation to pay NMC a royalty consisting of 2.5% of the NSR on any and all proceeds of production from the Clarkdale Slag Project. On July 25, 2011, the Company agreed to pay NMC and advance royalty payment of $15,000 per month effective January 1, 2011. The advance royalty payment is more fully discussed in Note 14.

F-14

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

CLARKDALE SLAG PROJECT (continued)

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

Purchase price:
Cash payments	$	10,100,000
Joint venture option acquired in 2005 for cash		690,000
Warrants issued for joint venture option		1,918,481
Common stock issued		66,879,375
Monthly payments, current portion		167,827
Monthly payments, net of current portion		2,333,360
Acquisition costs		127,000

Total purchase price		82,216,043

Net deferred income tax liability assumed - Clarkdale Slag Project		48,076,734

Total	$	130,292,777

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

Allocation of acquisition cost:
Clarkdale Slag Project (including net deferred income tax liability assumed of $48,076,734)	$	120,766,877
Land - smelter site and slag pile		5,916,150
Land		3,300,000
Income property and improvements		309,750

Total	$	130,292,777

F-15

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

MINERAL PROPERTIES - MINING CLAIMS

As of December 31, 2011, mining claims consisted of 3,200 acres located near Searchlight, Nevada. The 3,200 acre property is staked as twenty 160 acre claims, most of which are also double-staked as 142 twenty acre claims. At December 31, 2011, the mineral properties balance was $16,947,419.

The mining claims were acquired with issuance of 5,600,000 shares of the Company’s common stock over a three year period ending in June 2008. On June 25, 2008, the Company issued the final tranche of shares and received the title to the mining claims in consideration of the satisfaction of the option agreement.

The mining claims were capitalized as tangible assets in accordance with ASC 805-20-55-37, Use Rights. Upon commencement of commercial production, the claims will be amortized using the unit-of-production method. If the Company does not continue with exploration after the completion of the feasibility study, the claims will be expensed at that time.

In connection with the Company’s Plan of Operations (“POO”) for the Searchlight Gold Project, a bond of $7,802 was posted with the Bureau of Land Management (“BLM”) in December 2009.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at December 31, 2011 and 2010 consisted of the following:

	2011		2010

Trade accounts payable	$	44,749	$	236,019
Accrued compensation and related taxes		16,747		18,075

	$	61,496	$	254,094

Prior to the Company’s corporate restructuring in 2005, the Company had several accounts payable (the “Phage Payables”) included in trade accounts payable, dating back to 2003 and prior. These expenses were related to business operations which were discontinued in February 2005. During the first quarter of 2010, the Company updated its internal review of the status of the Phage Payables and recorded a gain of $120,688 from relief of liabilities that were cleared based on expiration of UK statutes of limitations. The Phage Payables are further discussed in Note 18.

Accounts payable – related party are discussed in Note 17.

F-16

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

DERIVATIVE WARRANT LIABILITY

On November 12, 2009, the Company issued an aggregate of 12,078,596 units of securities to certain investors, consisting of 12,078,596 shares of common stock and warrants to purchase an additional 6,039,298 shares of common stock, in a private placement to various accredited investors pursuant to a Securities Purchase Agreement. The Company paid commissions to agents in connection with the private placement in the amount of approximately $1,056,877 and warrants to purchase up to 301,965 shares of common stock.

The warrants issued to the purchasers in the private placement became exercisable on November 12, 2009. The warrants have an expiration date of November 12, 2012 and an initial exercise price of $1.85 per share. Under certain specified circumstances, the warrants may be exercised by means of a “cashless exercise.” The warrants have anti-dilution provisions, including provisions for the adjustment to the exercise price and to the number of warrants granted if the Company issues common stock or common stock equivalents at a price less than the exercise price.

The Company determined that the warrants were not afforded equity classification because the warrants are not freestanding and are not considered to be indexed to the Company’s own stock due to the anti-dilution provisions. In addition, the Company determined that the anti-dilution provisions shield the warrant holders from the dilutive effects of subsequent security issuances and therefore the economic characteristics and risks of the warrants are not clearly and closely related to the Company’s common stock. Accordingly, the warrants are treated as a derivative liability and are carried at fair value.

As of December 31, 2011, the Company adjusted the warrants as a result of each of the nine closings completed under the Seaside financing agreement which are further described in Note 8. In accordance with the terms and conditions of the warrants the following cumulative adjustments were made through December 31, 2011: (i) the exercise price was reduced from $1.85 per share to $1.74 per share, and (ii) the number of warrants was increased by 400,899 warrants.

The following table sets forth the changes in the fair value of derivative liabilities for the years ended December 31, 2011 and 2010:

Balance, December 31, 2009	$	4,253,409
Adjustment to warrants		1,186
Change in fair value		(3,261,209	)

Balance, December 31, 2010		993,386
Adjustment to warrants		25,636
Change in fair value		(1,019,022	)

Balance, December 31, 2011	$	-

F-17

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

DERIVATIVE WARRANT LIABILITY (continued)

The Company estimates the fair value of the derivative liabilities by using the Binomial Lattice pricing-model, a Level 3 input, with the following assumptions used:

	2011	2010

Dividend yield	-	-
Expected volatility	59.41% to 105.91%	69.44% to 95.10%
Risk-free interest rate	0.11% to 0.84%	0.61% to 1.60%
Expected life (years)	1.00 to 2.00	2.00 to 3.00

VRIC PAYABLE - RELATED PARTY

Pursuant to the Clarkdale acquisition agreement, the Company agreed to pay VRIC $30,000 per month until the Project Funding Date. Mr. Harry Crockett, one of the Company’s former directors, was an affiliate of VRIC. Mr. Crockett joined the Board of Directors subsequent to the acquisition. Mr. Crockett passed away in September 2010.

The Company has recorded a liability for this commitment using imputed interest based on its best estimate of future cash flows. The effective interest rate used was 8.00%, resulting in an initial present value of $2,501,187 and imputed interest of $1,128,813. The expected term used was 10 years which represents the maximum term the VRIC liability is payable if the Company does not obtain project funding.

The following table represents future principal payments on VRIC payable for each of the years ending December 31,

2012	$	247,387
2013		267,919
2014		290,156
2015		314,239
2016		340,321
Thereafter		59,404

		1,519,426
VRIC payable, current portion		247,387

VRIC payable, net of current portion	$	1,272,039

The acquisition agreement also contains payment terms which are based on the Project Funding Date as defined in the agreement. The terms and conditions of these payments are discussed in more detail in Notes 3 and 14.

F-18

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

STOCKHOLDERS’ EQUITY

Common stock Purchase Agreement - On December 22, 2010, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Seaside 88, LP (“Seaside”) for the sale of 3,000,000 shares of common stock, followed by the sale of up to 1,000,000 shares of common stock on approximately the 15^th day of the month for ten consecutive months.

The per share purchase price of the shares sold in each transaction equaled the volume weighted average trading price of the Company’s common stock during the ten-day trading period immediately preceding the applicable closing date (the “VWAP”), multiplied by 0.85. In the event that the VWAP was below $0.50 per share, the closing would not occur and was rescheduled to occur following the end of the originally scheduled closings, provided that only two closings could be rescheduled. The final closing was completed on December 15, 2011. The Company issued a total of 11,000,000 shares under the Purchase Agreement.

During the year ended December 31, 2011, the Company’s stockholders’ equity activity consisted of the following:

On December 15, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.56092 per share under the Purchase Agreement for gross proceeds of $560,920. Total fees related to this issuance were $2,500.

On November 15, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.67958 per share under the Purchase Agreement for gross proceeds of $679,575. Total fees related to this issuance were $2,500.

On October 15, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.92803 per share under the Purchase Agreement for gross proceeds of $928,030. Total fees related to this issuance were $2,500.

On September 15, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.619395 per share under the Purchase Agreement for gross proceeds of $619,395. Total fees related to this issuance were $2,500.

On April 15, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.44846 per share under the Purchase Agreement for gross proceeds of $448,460. Total fees related to this issuance were $2,500.

On March 15, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.47694 per share under the Purchase Agreement for gross proceeds of $476,935. Total fees related to this issuance were $2,500.

On February 15, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.49198 per share under the Purchase Agreement for gross proceeds of $491,980. Total fees related to this issuance were $2,500.

On January 18, 2011, the Company issued 1,000,000 shares of common stock to Seaside at a price of $0.661895 per share under the Purchase Agreement for gross proceeds of $661,895. Total fees related to this issuance were $2,500.

F-19

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

STOCK HOLDERS EQUITY (continued)

During the year ended December 31, 2010, the Company’s stockholders’ equity activity consisted of the following:

On December 23, 2010, the Company issued 3,000,000 shares of common stock to Seaside under the Purchase Agreement for gross proceeds of $1,593,750. Total fees related to this issuance were $79,690.

In November 2010, the Company issued 1,136,567 shares of common stock to an officer, a former officer and a director from the exercise of stock options resulting in cash proceeds of $500,090. The stock options had an exercise price of $0.44 and an expiration date of November 21, 2010.

In October 2010, the Company issued 63,433 shares of common stock to a director and an officer from the exercise of stock options resulting in cash proceeds of $27,910. The stock options had an exercise price of $0.44 and an expiration date of November 21, 2010.

On September 30, 2010, the Company awarded and issued 9,231 shares to a non-officer director pursuant to its directors’ compensation policy. The share award was priced at $0.975 per share and has been recorded as directors’ compensation expense of $9,000 and as common stock and additional paid-in capital.

On June 30, 2010, the Company awarded and issued 12,857 shares each to two non-officer directors pursuant to its directors’ compensation policy. The share awards were priced at $0.70 per share and have been recorded as directors’ compensation expense of $18,000 and as common stock and additional paid-in capital.

On March 31, 2010, the Company awarded and issued 7,500 shares each to two non-officer directors pursuant to its directors’ compensation policy. The share awards were priced at $1.20 per share and have been recorded as directors’ compensation expense of $18,000 and as common stock and additional paid-in capital.

F-20

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

STOCKHOLDERS’ EQUITY (continued)

During the year ended December 31, 2009, the Company’s stockholders’ equity activity consisted of the following:

On December 31, 2009, the Company awarded and issued 5,625 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at $1.60 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital.

On November 16, 2009, 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 November 23, 2010.

On November 12, 2009, the Company completed a private placement offering for gross proceeds of $15,098,245 to US accredited investors pursuant to Rule 506 of Regulation D promulgated by the Securities Act of 1933. A total of 12,078,596 units were issued at a price of $1.25. 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 an adjusted price of $1.74 per share for a period of three years from the date of issuance. Under certain specified circumstances, the warrants may be exercised by means of a “cashless exercise”.

If at any time after one year from the Closing there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the trading day immediately preceding the date of such election;

(B) = the exercise price of this warrant, as adjusted; and

(X) = the number of warrant shares issuable upon exercise of this warrant in accordance with the terms of this warrant by means of a cash exercise rather than a cashless exercise.

The warrants contain non-customary anti-dilution provisions and are therefore not afforded equity classification. Accordingly, the warrants are treated as a derivative liability and are carried at fair value as further discussed in Note 6.

In connection with this offering, the Company paid commissions to agents in the amount of $1,056,877 and issued warrants to purchase up to 301,965 shares of common stock. Additional costs related to this financing issuance were $290,196.

F-21

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

STOCKHOLDERS’ EQUITY (continued)

On November 12, 2009, the Company’s Board of Directors unilaterally determined, without any negotiations with the warrant holders, to amend the private placement warrants from the February 23, 2007, March 22, 2007, December 26, 2007 and February 7, 2008 private placement offerings. The following amendments to the private placement warrants were adopted: (i) the expiration date of the private placement warrants has been extended to November 12, 2012 and (ii) the exercise price of the private placement warrants has been decreased to $1.85 per share. In all other respects, the terms and conditions of the warrants remain the same.

The warrant modification resulted in an increase in the value of the warrants of $3,170,285 which was categorized as warrant modification expense and included in general and administrative expense. The increase in warrant value was calculated using the Binomial Lattice model with the following assumptions used:

Risk-free interest rate	1.36	%
Expected volatility	71.76	%
Expected life (years)	2.75

On September 30, 2009, the Company awarded and issued 4,945 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at $1.82 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital.

On July 29, 2009, 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 November 23, 2010.

On June 30, 2009, the Company awarded and issued 3,689 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at $2.44 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital.

On April 30, 2009, the Company’s Board of Directors unilaterally determined, without any negotiations with the warrant holders, to amend the private placement warrants from the February 23, 2007 and March 22, 2007 private placement offerings. The call provisions in the private placement warrants were restated so that the terms of such amended and restated call provisions are identical to the terms of the private placement warrants on their original dates of issuance. As a result: (i) all of the investor warrants are callable for cancellation by the Company if the volume weighted average price of the common stock exceeds $6.50 per share for 20 consecutive trading days and there is an effective registration statement registering the shares of common stock underlying the investor warrants at the time of the call of the investor warrants, (ii) the broker warrants will not have a call provision, and (iii) the previously adopted amendments with respect to the extension of the expiration dates and the reduction of the exercise price for the private placement warrants will remain unchanged.

F-22

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

STOCKHOLDERS’ EQUITY (continued)

On April 14, 2009, 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 November 23, 2010.

On March 31, 2009, the Company awarded and issued 3,284 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at $2.74 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital.

On January 30, 2009, 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 November 23, 2010.

On January 12, 2009, the Company issued 400,000 shares of common stock from the exercise of stock options resulting in cash proceeds of $100,000. Options exercised were for 400,000 shares of common stock at $0.25 per share. These stock options were subject to an expiration date of February 16, 2009.

During the year ended December 31, 2008, the Company’s stockholders’ equity activity consisted of the following:

On December 31, 2008, the Company awarded and issued 3,673 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at $2.45 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital.

On December 29, 2008, the Company amended the private placement warrants from the February 23, 2007 and March 22, 2007 private placement offerings. The following amendments to the private placement warrants were adopted: (i) the expiration date of the private placement warrants has been extended to March 1, 2010, (ii) the exercise price of the private placement warrants has been decreased to $2.40 per share, (iii) the call provision in the investor warrants is now included in the broker warrants, and (iv) the call provision in the private placement warrants has been amended so that all of such private placement warrants callable for cancellation by the Company if the volume weighted average price of the common stock exceeds $4.40 per share for 20 consecutive trading days and there is an effective registration statement registering the shares of common stock underlying the private placement warrants at the time of the call of the private placement warrants. These warrants were further amended on April 30, 2009 and on November 12, 2009.

F-23

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

STOCKHOLDERS’ EQUITY (continued)

The warrant modification resulted in an increase in the value of the warrants of $1,826,760 which was categorized as warrant modification expense and included in general and administrative expense. The increase in warrant value was calculated using the Binomial Lattice model with the following assumptions used:

Risk-free interest rate	0.36	%
Expected volatility	76.59	%
Expected life (years)	-

On September 30, 2008, the Company awarded and issued 5,142 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at $1.75 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital.

On August 26, 2008, the Company issued 100,000 shares of common stock from the exercise of nonemployee stock options resulting in cash proceeds of $25,000. Options exercised were for 100,000 shares of common stock at $0.25 per share. These stock options were subject to an expiration date of November 22, 2010.

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 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital. The Company issued the shares on September 30, 2008.

On June 25, 2008, the Company issued 1,400,000 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 shares.

On June 16, 2008, the Company issued 100,000 shares of common stock from the exercise of nonemployee stock options resulting in cash proceeds of $25,000. Options exercised were for 100,000 shares of common stock at $0.25 per share. These stock options were subject to an expiration date of November 23, 2010.

On May 5, 2008, the Company issued 100,000 shares of common stock from the exercise of nonemployee 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 16, 2009.

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 per share 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-24

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

STOCKHOLDERS’ EQUITY (continued)

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.

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.

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 the 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.

During the year ended December 31, 2007, the Company’s stockholders’ equity activity consisted of the following:

On December 31, 2007, the Company awarded 3,214 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at $2.80 per share and has been recorded as directors’ compensation expense of $18,000 and common stock subscribed as of December 31, 2007.

On December 26, 2007, the Company completed a private placement to the Arlington Group Limited of a total of 3,125,000 units at $1.60 per unit for total proceeds of $5,000,000. Each unit is comprised of one share of the Company’s common stock and one-half of one share purchase warrant. 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. In addition, the Company has issued an additional 156,250 shares of its common stock to the Arlington Group Limited, equal to 5% of the total number of units subscribed for by the Arlington Group Limited. Including the shares issued as a commission, the Company has issued an aggregate of 3,281,250 shares of its common stock and 1,562,500 share purchase warrants to the Arlington Group Limited under the private placement. The private placement was completed pursuant to the provisions of Regulation S under the Securities Act of 1933.

F-25

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

STOCKHOLDERS’ EQUITY (continued)

On December 13, 2007, the Company issued 400,000 shares of common stock from the exercise of stock options resulting in cash proceeds of $100,000. Stock options exercised were for 400,000 shares at $0.25 per share. Each of the stock options was set to expire on November 23, 2010.

On December 12, 2007, the Company received $65,000 for exercise of warrants to purchase 100,000 shares at $0.65 per share. The transaction was recorded as common stock subscribed as of December 31, 2007 pending execution of documents and issuance of shares.

On September 30, 2007, the Company awarded 3,157 shares each to its two non-officer directors pursuant to its directors’ compensation policy. The share award was priced at the nearest closing date to quarter end of $2.85 per share and has been recorded as directors’ compensation expense of $18,000 and additional paid-in capital. The Company issued the shares on November 13, 2007.

On August 16, 2007, the Company received $25,000 for exercise of options to purchase 100,000 shares at $0.25 per share. The transaction was recorded as common stock subscribed as of December 31, 2007 pending execution of documents and issuance of shares.

On August 9, 2007, the Company issued 400,000 shares of common stock from the exercise of warrants resulting in cash proceeds of $260,000. Warrants exercised were for 400,000 shares at $0.65 per share. Each of the warrants was set to expire on January 18, 2008.

On June 29, 2007, the Company issued 1,400,000 shares to the owners of the Searchlight Claims. This issuance is the third of four required share payments to complete the acquisition of the mining claims totaling 5,600,000 shares.

F-26

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

STOCKHOLDERS’ EQUITY (continued)

On March 22, 2007, the Company closed a private placement offering for gross proceeds of $6,678,483 (the "March Offering"). The securities sold pursuant to the March Offering were issued to non-US investors in accordance with the terms of Regulation S of the Securities Act of 1933. In connection with the March Offering, the Company entered into an Agency Agreement dated March 21, 2007 (the "Agency Agreement"). The securities were sold to subscribers on a best efforts agency basis. Pursuant to the terms of the Agency Agreement, the Company sold an aggregate of 2,226,161 units for gross proceeds of $6,678,483, with each unit consisting of one share of its common stock and one half of one share purchase warrant, with each whole warrant entitling the subscriber to purchase one additional share for a period of two years from the closing date at an exercise price of $4.50 per share. The warrants are callable by Searchlight if its common stock trades above $6.50 per share for 20 consecutive trading days. Also under the terms of the March Offering, the Company agreed to use its best efforts to file with the Securities and Exchange Commission a registration statement on Form SB-2, or on such other form as is available, registering the offered securities within four months after the closing of the March Offering. The Company agreed not to exercise its call rights until the registration statement registering the securities underlying the units sold has been declared effective by the SEC. An aggregate commission and corporate finance fee totaling $525,386 was paid by the company to the Agent in connection with the March Offering, and the Agent also received warrants to purchase 75,175 shares of its common stock at a price of $4.50 per share, exercisable for a period of two years from the closing date. On December 29, 2008, the Company made the following amendments to the private placement warrants: (i) the expiration date of the private placement warrants has been extended to March 1, 2010, (ii) the exercise price of the private placement warrants has been decreased to $2.40 per share, (iii) the call provision in the investor warrants is now included in the broker warrants, and (iv) the call provision in the private placement warrants has been amended so that all of such private placement warrants callable for cancellation by the Company if the volume weighted average price of the common stock exceeds $4.40 per share for 20 consecutive trading days and there is an effective registration statement registering the shares of common stock underlying the private placement warrants at the time of the call of the private placement warrants. Issuance costs related to this private placement were $85,513.

F-27

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

STOCKHOLDERS’ EQUITY (continued)

On February 23, 2007, the Company closed a private placement offering and issued 4,520,666 units for aggregate gross proceeds of $13,562,002 to accredited investors resident in the US pursuant to Regulation D of the Securities Act of 1933 (the “US Offering”). Each unit consisted of one share of its common stock and one half of one share purchase warrant, with each whole warrant entitling the subscriber to purchase one additional share for a period of two years from the closing date at an exercise price of $4.50 per share. The warrants are callable by the Company if its common stock trades above $6.50 per share for 20 consecutive trading days. Pursuant to the terms of the US Offering, the Company agreed to use its best efforts to file a registration statement declared effective by the SEC within four months of the closing date of the US Offering. The Company agreed not to exercise its call rights until the registration statement registering the securities underlying the units sold has been declared effective by the SEC. The Company further agreed to keep the registration statement effective pursuant to Rule 415 of the Securities Act for a period of eighteen months following the date the registration statement is declared effective by the SEC. A portion of the US Offering was sold on a best efforts agency basis. Commissions paid to agents in connection with the US Offering totaled $381,990, and the agents also received warrants to purchase 90,870 shares of its common stock at a price of $4.50 per share, exercisable for a period of two years from the closing date. On December 29, 2008, the Company made the following amendments to the private placement warrants: (i) the expiration date of the private placement warrants has been extended to March 1, 2010, (ii) the exercise price of the private placement warrants has been decreased to $2.40 per share, (iii) the call provision in the investor warrants is now included in the broker warrants, and (iv) the call provision in the private placement warrants has been amended so that all of such private placement warrants callable for cancellation by the Company if the volume weighted average price of the common stock exceeds $4.40 per share for 20 consecutive trading days and there is an effective registration statement registering the shares of common stock underlying the private placement warrants at the time of the call of the private placement warrants. Issuance costs related to this private placement were $79,513.

F-28

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

STOCKHOLDERS’ EQUITY (continued)

Also on February 23, 2007, the Company closed a private placement offering and issued 575,000 units for aggregate gross proceeds of $1,725,000 to non-US investors pursuant to Regulation S of the Securities Act of 1933 (the “February Offering”). Each unit consisted of one share of its common stock and one half of one share purchase warrant, with each whole warrant entitling the subscriber to purchase one additional share for a period of two years from the closing date at an exercise price of $4.50 per share. The warrants are callable by us if its common stock trades above $6.50 per share for 20 consecutive trading days. Pursuant to the terms of the Non-US Offering, the Company agreed to use its best efforts to file a registration statement declared effective by the SEC within four months of the closing date of the February Offering. The Company agreed not to exercise its call rights until the registration statement registering the securities underlying the units sold has been declared effective by the SEC. The Company further agreed to keep the registration statement effective pursuant to Rule 415 of the Securities Act for a period of eighteen months following the date the registration statement is declared effective by the SEC. Commissions paid to agents in connection with the February Offering totaled $111,100 and the agents also received warrants to purchase 12,300 shares of its common stock at a price of $4.50 per share, exercisable for a period of two years from the closing date. On December 29, 2008, the Company made the following amendments to the private placement warrants: (i) the expiration date of the private placement warrants has been extended to March 1, 2010, (ii) the exercise price of the private placement warrants has been decreased to $2.40 per share, (iii) the call provision in the investor warrants is now included in the broker warrants, and (iv) the call provision in the private placement warrants has been amended so that all of such private placement warrants callable for cancellation by the Company if the volume weighted average price of the common stock exceeds $4.40 per share for 20 consecutive trading days and there is an effective registration statement registering the shares of common stock underlying the private placement warrants at the time of the call of the private placement warrants. Issuance costs related to this private placement were $8,842.

On February 15, 2007, the Company approved the issuance of 16,825,000 shares of its common stock at $3.975 per share to five investors in connection with the Agreement and Plan of Merger dated February 15, 2007. The issuance was completed pursuant to Section 4(2) and Regulation D of the Securities Act of 1933 on the basis that each investor was a sophisticated investor and was in a position of access to relevant material information regarding its operations. Each investor delivered appropriate investment representations satisfactory to us with respect to this transaction and consented to the imposition of restrictive legends upon the certificates evidencing such share certificates.

F-29

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

STOCKHOLDERS’ EQUITY (continued)

During the year ended December 31, 2006, the Company’s stockholders’ equity activity consisted of the following:

On July 27, 2006, the Company issued 1,400,000 shares to the owners of the Searchlight Claims. This issuance is the second of four required share payments to complete the acquisition of the searchlight claims totaling 5,600,000 shares.

On June 21, 2006, the Company issued 8,506,000 shares of common stock from the exercise of warrants resulting in cash proceeds of $4,874,126. Warrants exercised were for 7,327,000 shares at $0.625 per share and 1,179,000 shares at $0.375 per share. Each of the warrants was set to expire between June 2 and June 7, 2006, and all were exercised.

On June 14, 2006, the Company issued 50,000 shares at $2.06 per share as consideration for an employment contract entered into on June 14, 2006 with a new Chief Financial Officer. In addition, the Company advanced $33,084 for withholding taxes required to be paid on total compensation of $103,000. The advance was repaid in full on December 31, 2006.

On February 9, 2006, the Company issued 1,225,000 shares of common stock and warrants to purchase an additional 612,500 shares of common stock with an exercise price of $0.625 expiring between June 2 and June 7, 2006. These are related to the penalty shares and warrants for the late registration of shares with the Securities and Exchange Commission pursuant to the private placements completed in September 2005. Pursuant to the private placements, subscribers received penalty units consisting of one share and one half of one share purchase warrant. The penalty units were exercisable into 1/10^th of the total number of units issued in the private placement if a registration statement on Form SB-2 was not declared effective within four months and one day of the closing date of the private placements. The Registration Statement was not effective prior to the filing deadline resulting in the issuance of the penalty units.

On January 18, 2006, the Company issued 39 units for $45,000 per unit where each unit consisted of 100,000 shares and 100,000 purchase warrants. Each purchase warrant was exercisable into one share at a price of $0.65 expiring on January 18, 2008. Total gross proceeds for this offering were $1,755,000.

Warrants associated with equity issuances from 2006 through 2011 do not constitute a registration payment arrangement.

F-30

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

STOCKHOLDERS’ EQUITY (continued)

During the year ended December 31, 2005, the Company’s stockholders’ activities consisted of the following:

On September 30, 2005, the Company effectuated a two-for-one forward stock split on its common stock. As a result of the stock split, the Company’s authorized number of common stock increased from 200,000,000 shares to 400,000,000 shares. Accordingly, the accompanying financial statements have been adjusted on a retroactive basis for the forward stock split to the Company’s date of inception.

On September 7, 2005, the Company issued 5,400,000 units for $0.25 per unit, where each unit consisted of one common share, one half of one purchase warrant and one nontransferable warrant exercisable into one tenth (1/10) of one unit for no additional consideration if registration requirements are not met within four months after the closing. Each purchase warrant was exercisable into one share at a price of $0.625 and expired on June 7, 2006. Total gross proceeds of this offering were $1,350,000. In connection with this brokered offering, 540,000 Brokers Warrants, exercisable at $0.25 and expiring on June 7, 2006, were issued. Each Broker Warrant was exercisable into one common share and one half of one purchase warrant. Each purchase warrant was exercisable into one common share at $0.625 and expired on June 7, 2006. Commissions paid related to this issuance were $135,000.

On September 6, 2005, the Company issued 460,000 units for $0.25 per unit, where each unit consisted of one common share, one half of one purchase warrant and one nontransferable warrant exercisable into one tenth (1/10) of one unit for no additional consideration if registration requirements are not met within four months after the closing. Each purchase warrant was exercisable into one share at a price of $0.625 and expired on June 6, 2006. Total gross proceeds of this offering were $115,000.

On September 2, 2005, the Company issued 6,390,000 units for $0.25 per unit, where each unit consisted of one common share, one half of one purchase warrant and one nontransferable warrant exercisable into one tenth (1/10) of one unit for no additional consideration if registration requirements were not met within four months after the closing. Each purchase warrant was exercisable into one share at a price of $0.625 and expired on June 2, 2006. Total gross proceeds of this offering were $1,597,500. In connection with this brokered offering, 639,000 Brokers Warrants, exercisable at $0.25 and expiring on June 2, 2006, were issued. Each Broker Warrant was exercisable into one common share and one half of one purchase warrant. Each purchase warrant was exercisable into one common share at $0.625 and expired on June 2, 2006.

On July 7, 2005, the Company issued 1,400,000 shares (post stock split) of common stock for the purchase of 20 mineral claims. The Company initially valued the total transaction based on actual costs incurred by the former owner of $87,134, plus $40,000, represented by $2,000 per claim, for a total acquisition price of $127,134. This issuance has been restated to reflect payments made by issuance of 1,400,000 shares at the market value on the date of issuance of $0.35.

F-31

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

STOCKHOLDERS’ EQUITY (continued)

On July 6, 2005, the Company issued 200,000 shares (post stock split) of common stock at $0.625 per share for reduction of debt at $125,000 as negotiated with the debtor.

On June 1, 2005, the Company approved the issuance of stock warrants for 12,000,000 shares of common stock with a strike price of $0.375 per share in connection with the Clarkdale Slag Project option. Satisfaction of the financing related closing conditions of the assignment agreement were met on September 7, 2005. On October 24, 2005, the issuance of the warrants was completed. The warrants contain an expiration date of June 1, 2015.

On February 14, 2005, the Company cancelled all of the stock options that were outstanding at December 31, 2004.

On February 11, 2005, 70,000,000 shares (post stock split) of the Company were returned to the Company and cancelled at its par value of $0.001 per share.

Private placement stock warrants - As a result of the Seaside equity funding transactions completed during the year ended December 31, 2011, the Company adjusted the warrants from the November 12, 2009 private placement offering. The following adjustments were made: (i) the exercise price was reduced to $1.74 per share, (ii) the number of warrants was increased by 296,373, and (iii) at December 31, 2011, the cumulative warrant adjustment has provided for the issuance of an additional 400,899 warrants. The accounting treatment of these adjustments is discussed in Note 6.

The following table summarizes the Company’s private placement warrant activity for the years ended December 31, 2011 and 2010:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)

Balance, December 31, 2009		13,383,650	$	1.84		2.87
Warrants granted		104,526		1.82		1.87
Warrants expired		-		-		-
Warrants exercised		-		-		-

Balance, December 31, 2010		13,488,176	$	1.84		1.87
Warrants granted		296,373		1.74		0.87
Warrants expired		-		-		-
Warrants exercised		-		-		-

Balance, December 31, 2011		13,784,549	$	1.80		0.87

F-32

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

STOCK-BASED COMPENSATION

Stock-based compensation includes grants of stock options and purchase warrants to eligible directors, employees and consultants as determined by the board of directors.

Stock option plans - The Company has adopted several stock option plans, all of which have been approved by the Company’s stockholders that authorize the granting of stock option awards subject to certain conditions. At December 31, 2011, the Company had 5,322,501 of its common shares available for issuance for stock option awards under the Company’s stock option plans.

At December 31, 2011, the Company had the following stock option plans available:

2009 Plan - Under the terms of the 2009 Plan, options to purchase up to 3,250,000 shares of common stock may be granted to eligible participants. Under the plan, the exercise price is generally equal to the fair market value of the Company’s common stock on the grant date and the maximum term of the options is generally ten years. For grantees who own more than 10% of the Company’s common stock on the grant date, the exercise price may not be less than 110% of the fair market value on the grant date and the term is limited to five years. The 2009 Plan was approved by the Company’s stockholders on December 15, 2009. As of December 31, 2011, the Company had granted 1,110,000 options under the 2009 Plan with a weighted average exercise price of $1.22 per share. As of December 31, 2011, all of the options granted were outstanding.

2009 Directors Plan - Under the terms of the 2009 Directors Plan, options to purchase up to 750,000 shares of common stock may be granted to Directors. Under the plan, the exercise price may not be less than 100% of the fair market value of the Company’s common stock on the grant date and the term may not exceed ten years. No participants shall receive more than 300,000 options under this plan in any one calendar year. The 2009 Directors Plan was approved by the Company’s stockholders on December 15, 2009. As of December 31, 2011, the Company had granted 707,688 options under the 2009 Directors Plan with a weighted average exercise price of $1.13 per share. As of December 31, 2011, all of the options granted were outstanding.

2007 Plan - Under the terms of the 2007 Plan, options to purchase up to 4,000,000 shares of common stock may be granted to eligible participants. Under the plan, the option price for incentive stock options is the fair market value of the stock on the grant date and the option price for non-qualified stock options shall be no less than 85% of the fair market value of the stock on the grant date. The maximum term of the options under the plan is ten years from the grant date. The 2007 Plan was approved by the Company’s stockholders on June 15, 2007. As of December 31, 2011, the Company had granted 859,811 options under the 2007 Plan with a weighted average exercise price of $1.10 per share. As of December 31, 2011, 845,065 of the options granted were outstanding.

Non-Employee Directors Equity Compensation Policy – Non-employee directors have a choice between receiving $9,000 value of common stock per quarter, where the number of shares is determined by the closing price of the Company’s stock on the last trading day of each quarter, or a number of options to purchase twice the number of shares of common stock that the director would otherwise receive if the director elected to receive shares, with an exercise price based on the closing price of the Company’s common stock on the last trading day of each quarter. Effective April 1, 2011, the Board of Directors implemented a policy whereby the number of options granted for quarterly compensation to each director is limited to 18,000 options per quarter.

F-33

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

STOCK-BASED COMPENSATION (continued)

Stock warrants – Upon approval of the Board of Directors, the Company grants stock warrants to consultants for services performed. These grants are on an individual transaction basis and issued upon approval of the Board of Directors.

Valuation of awards - The Company estimates the fair value of stock-based compensation awards by using the Binomial Lattice option pricing model with the following assumptions used for grants:

	2011	2010

Risk-free interest rate	0.11% - 2.24%	0.21% - 3.28%
Dividend yield	-	-
Expected volatility	65.92% - 114.95%	98.81% - 116.78%
Expected life (years)	0.71 - 8.00	1.00 - 4.94

For stock options and warrants awarded during 2011 and 2010, the expected volatility is based on the historical volatility levels on the Company’s common stock. The risk-free interest rate is based on the implied yield available on US Treasury zero-coupon issues over equivalent lives of the options.

The expected life of awards represents the weighted-average period the stock options or warrants are expected to remain outstanding and is a derived output of the Binomial Lattice model. The expected life is impacted by all of the underlying assumptions and calibration of the Company’s model. The Binomial Lattice model estimates the probability of exercise as a function of these two variables based on the entire history of exercises and cancellations on all past option grants made by the Company.

Stock-based compensation activity - During the year ended December 31, 2011, the Company granted stock-based awards as follows:

On December 31, 2011, the Company granted stock options under the 2007 Plan for the purchase of 54,000 shares of common stock at $0.65 per share. The options were granted to three of the Company’s non-management directors for directors’ compensation, are fully vested and expire on December 31, 2016. The exercise price of the stock options equaled the closing price of the Company’s common stock on the grant date.

On October 14, 2011, the Company modified the terms of one stock option grant made to a director by extending the expiration date from November 21, 2011 to June 30, 2012. The modification resulted in additional expense of $7,459.

On September 30, 2011, the Company granted stock options under the 2009 Directors Plan for the purchase of 50,943 shares of common stock at $1.06 per share. The options were granted to three of the Company’s non-management directors for directors’ compensation, are fully vested and expire on September 30, 2016. The exercise price of the stock options equaled the closing price of the Company’s common stock on the grant date.

F-34

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

STOCK-BASED COMPENSATION (continued)

On September 21, 2011, the Company granted stock options under the 2009 Incentive Plan for the purchase of 610,000 shares of common stock at $1.22 per share. The options were granted to officers and employees. 595,000 of the options are fully vested. 15,000 of the options vest upon the employees’ one year anniversaries. All of the options expire five years after the grant date. The exercise price of the stock options equaled the closing price of the Company’s common stock on the grant date.

On September 21, 2011, the Company granted stock options under the 2009 Incentive Plan for the purchase of 200,000 and 300,000 shares of common stock at $1.22 per share to two of the Company’s officers. The options vest upon completion of defined events and milestones. The options expire on the fifth anniversary of the date that they vest, but in no event later than the tenth anniversary of the agreement. The exercise price of the stock options equaled the closing price of the Company’s common stock on the grant date. At December 31, 2011, management determined that achievement of the performance conditions were probable.

On September 21, 2011, the Company granted stock options under the 2007 Plan for the purchase of 100,000 shares of common stock at $1.22 per share to the Company’s CEO. The options vest upon completion of defined events. The options expire on the fifth anniversary of the date that they vest, but in no event later than the tenth anniversary of the agreement. At December 31, 2011, management determined that achievement of the performance condition was probable. The exercise price of the stock options equaled the closing price of the Company’s common stock on the grant date.

On June 30, 2011, the Company granted stock options under the 2007 Plan for the purchase of 54,000 shares of common stock at $0.405 per share. The options were granted to three of the Company’s non-management directors for directors’ compensation, are fully vested and expire on June 30, 2016. The exercise price of the stock options equaled the closing price of the Company’s common stock on the grant date.

On March 31, 2011, the Company granted stock options under the 2007 Plan for the purchase of 105,882 shares of common stock at $0.51 per share. The options were granted to three of the Company’s non-management directors for directors’ compensation, are fully vested and expire on March 31, 2016. The exercise price of the stock options equaled the closing price of the Company’s common stock on the grant date.

On January 13, 2011, the Company granted stock purchase warrants for the purchase of 200,000 shares of common stock at $1.00 per share to a consultant. The warrants vest 25% each on April 13, 2011, July 13, 2011, October 13, 2011 and January 13, 2012. The warrants expire on January 13, 2014. The exercise price of the warrants exceeded the closing price of the Company’s common stock which was $0.76 on the grant date.

F-35

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

STOCK-BASED COMPENSATION (continued)

During the year ended December 31, 2010, the Company granted stock options as follows:

On December 31, 2010, the Company granted nonqualified stock options under the 2009 Directors Plan for the purchase of 83,076 shares of common stock at $0.65 per share. The options were granted to three of the Company’s directors for directors’ compensation, are fully vested and expire on December 31, 2015.

On November 4, 2010, the Company granted nonqualified stock options under the 2007 Plan for the purchase of 200,000 shares of common stock at $0.61 per share to a director. The options are fully vested and expire on November 21, 2011.

On October 1, 2010, the Company granted nonqualified stock options for the purchase of 300,000 shares of common stock at $0.91 per share to its CEO. Of the 300,000 options, 100,000 options vest on the grant date. The remaining 200,000 options vest over the term of the option in connection with the occurrence of certain events, as follows: (i) 100,000 options vest in connection with an equity financing or series of financings resulting in gross proceeds to the Company of at least $5,000,000, and (ii) 100,000 options vest in connection with the hiring of a new CEO or upon the completion of 30 months of service as the CEO. The options expire on the earlier of five years after their vesting date or on September 30, 2020.

On the grant date, the Company determined that achievement of the performance conditions was probable. The Company’s best estimate of the requisite service periods was determined to be twelve months for completion of $5,000,000 in equity financing and thirty months for service as CEO.

The Company determined that the vesting condition related to the completion of equity financing was satisfied in December 2010 upon execution of the Seaside Agreement which is further described in Note 8. Therefore, all of the remaining expense related to this stock option grant was recognized in December 2010. Management determined that the estimate of the requisite service period related to service as CEO remained appropriate at December 31, 2011.

On September 30, 2010, the Company granted nonqualified stock options under the 2009 Directors Plan for the purchase of 73,848 shares of common stock at $0.975 per share. The options were granted to four of the Company’s directors for directors’ compensation, are fully vested and expire on September 30, 2015.

On June 30, 2010, the Company granted nonqualified stock options under the 2009 Directors Plan for the purchase of 68,571 shares of common stock at $0.70 per share. The options were granted to the Company’s three independent directors for directors’ compensation, are fully vested and expire on June 30, 2015.

On May 3, 2010, the Company granted nonqualified stock options under the 2009 Directors Plan for the purchase of 200,000 shares of common stock at $1.06 per share. The options were granted to an independent director upon his appointment to the Board of Directors. The options vest pro rata over four years, from May 1, 2011 through May 1, 2014. The options expire on the five year anniversary of the date that they vest.

On March 31, 2010, the Company granted nonqualified stock options under the 2009 Directors Plan for the purchase of 20,000 shares of common stock at $1.20 per share. The options were granted to the Company’s two independent directors for directors’ compensation, are fully vested and expire on March 31, 2015.

F-36

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

STOCK-BASED COMPENSATION (continued)

On March 1, 2010, the Company granted nonqualified stock options under the 2009 Directors Plan for the purchase of 200,000 shares of common stock at $1.59 per share. The options were granted to an independent director upon his appointment to the Board of Directors. The options vest pro rata over four years, from March 1, 2011 through March 1, 2014. The options expire on the five year anniversary of the date that they vest.

Expenses for the years ended December 31, 2011 and 2010 related to the vesting and granting of stock-based compensation awards were $686,299 and $436,862 respectively, and are included in general and administrative and mineral exploration and evaluation expenses.

The following table summarizes the Company’s stock-based compensation activity for the years ended December 31, 2011 and 2010:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)

Balance, December 31, 2009		2,680,633		$	1.20		1.58
Options/warrants granted		1,145,495			0.98		5.23
Options/warrants expired		-			-		-
Options/warrants forfeited		(300,000	)		0.44		-
Options/warrants exercised		(1,200,000	)		0.44		-

Balance, December 31, 2010		2,326,128			1.58		3.34
Options/warrants granted		1,674,825			1.10		6.17
Options/warrants expired		(770,000	)		2.25		-
Options/warrants forfeited		-			-		-
Options/warrants exercised		-			-		-

Balance, December 31, 2011		3,230,953		$	1.17		5.07

Unvested awards - The following table summarizes the changes of the Company’s stock-based compensation awards subject to vesting for the year ended December 31, 2011:

	Number of Shares Subject to Vesting			Weighted Average Grant Date Fair Value

Unvested, December 31, 2010		600,000		$	0.99
Options/warrants granted		815,000			0.65
Options/warrants vested		(300,000	)		(0.39	)
Options/warrants cancelled		-			-

Unvested, December 31, 2011		1,115,000		$	0.90

F-37

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

STOCK-BASED COMPENSATION (continued)

As of December 31, 2011, there was $608,919 total unrecognized compensation cost related to unvested stock-based compensation awards. This cost is expected to be recognized as follows:

2012	$	416,552
2013		184,541
2014		7,826
Thereafter		-

Total	$	608,919

10.

WARRANTS AND OPTIONS

The following table summarizes all of the Company’s stock option and warrant activity for the years ended December 31, 2011 and 2010. At December 31, 2011 the total balance includes warrants issued pursuant to private placement agreements, warrants issued in 2005 in connection with the Clarkdale Slag Project (as discussed in Note 3) and stock options and warrants issued as compensation to directors, employees and consultants:

	Number of Shares			Weighted Average Exercise Price			Weighted Average Remaining Term (Years)

Balance, December 31, 2009		28,064,283		$	1.16			3.79
Options/warrants granted		1,250,021			1.05			4.95
Options/warrants expired		(300,000	)		(0.44	)		-
Options/warrants cancelled		-			-			-
Options/warranted exercised		(1,200,000	)		(0.44	)		-

Balance, December 31, 2010		27,814,304			1.18			3.09
Options/warrants granted		1,971,198			1.20			5.38
Options/warrants expired		(770,000	)		2.25			-
Options/warrants cancelled		(3,000,000	)		0.375			-
Options/warranted exercised		-			-			-

Balance, December 31, 2011		26,015,502		$	1.23			2.27

During the third quarter of 2011, the Company resolved a dispute with a shareholder. The Company recorded a gain of $502,586 related to the settlement in the form of cancellation of 3,000,000 warrants held by the shareholder. The Company used the Binomial Lattice option pricing model to establish the valuation for recording the cancellation of the warrants with the following assumptions used:

Risk-free interest rate	0.78	%
Dividend yield	-
Expected volatility	80.57	%
Expected life (years)	2.50

F-38

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

11.

STOCKHOLDER RIGHTS PLAN

The Company adopted a Stockholder Rights Plan (the “Rights Plan”) in August 2009 to protect stockholders from attempts to acquire control of the Company in a manner in which the Company’s Board of Directors determines is not in the best interest of the Company or its stockholders. Under the plan, each currently outstanding share of the Company’s common stock includes, and each newly issued share will include, a common share purchase right. The rights are attached to and trade with the shares of common stock and generally are not exercisable. The rights will become exercisable if a person or group acquires, or announces an intention to acquire, 15% or more of the Company’s outstanding common stock. The Rights Plan was not adopted in response to any specific effort to acquire control of the Company. The issuance of rights had no dilutive effect, did not affect the Company’s reported earnings per share and was not taxable to the Company or its stockholders.

12.

PROPERTY RENTAL AGREEMENTS AND LEASES

The Company, through its subsidiary CML, has the following lease and rental agreements as lessor:

Clarkdale Arizona Central Railroad – rental - CML has a month-to-month rental agreement with Clarkdale Arizona Central Railroad. The rental payment is $1,700 per month.

Commercial building rental - CML rents commercial building space to various tenants. Rental arrangements are minor in amount and are typically month-to-month.

Land lease - wastewater effluent - Pursuant to our acquisition of TI, the Company became party to a lease dated 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 original term of the lease was five years and expired on August 25, 2009; however, the lease also provided for additional one year extensions without any changes to the original lease agreement. At such time as Clarkdale no longer uses the property for effluent disposal, and for a period of 25 years measured from the date of the lease, the Company has a continuing right to purchase Class B effluent, and if available, Class A effluent at then market rates.

F-39

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

13.

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.

Significant components of the Company’s net deferred income tax assets and liabilities at December 31, 2011 and December 31, 2010 were as follows:

	2011			2010
Deferred income tax assets:

Net operating loss carryforward	$	12,648,152		$	10,185,401
Option compensation		599,128			409,050
Property, plant & equipment		565,186			299,428

Gross deferred income tax assets		13,812,466			10,893,879
Less: valuation allowance		(371,101	)		(409,050	)

Net deferred income tax assets		13,441,365			10,484,829

Deferred income tax liabilities:

Acquisition related liabilities		(55,197,465	)		(55,197,465	)

Net deferred income tax liability	$	(41,756,100	)	$	(44,712,636	)

The realizability of deferred tax assets are reviewed at each balance sheet date. The majority of the Company’s deferred tax liabilities are depletable. Such depletion will begin with the processing of mineralized material once production has commenced. Therefore, the deferred tax liabilities will reverse in similar time periods as the deferred tax assets. The reversal of the deferred tax liabilities is sufficient to support the deferred tax assets. The valuation allowance relates to Arizona state net operating loss carryforwards which will expire in 2012 and 2013.

Deferred income tax liabilities were 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 liabilities associated with the temporary difference between the acquisition consideration and the tax basis are 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.

F-40

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

13.

INCOME TAXES (continued)

A reconciliation of the tax benefit for the years ended December 31, 2011 and 2010 at US federal and state income tax rates to the actual tax provision recorded in the financial statements consisted of the following components:

	2011		2010

Income tax benefit at statutory rates	$	2,421,315	$	1,858,713

Reconciling items:
Non-deductible items		497,272		1,220,923
Change in valuation allowance		37,949		71,598

Income tax benefit	$	2,956,536	$	3,151,234

The Company had cumulative net operating losses of approximately $33,284,612 and $26,803,688 as of December 31, 2011 and 2010, respectively for federal income tax purposes. The federal net operating loss carryforwards will expire between 2025 and 2031.

State income tax allocation - The Company has elected to file consolidated tax returns with Arizona tax authorities. Tax attributes are computed using an allocation and apportionment formula as outlined in Arizona tax law. The Company computes its tax provision using its statutory federal rate plus a state factor that includes the Arizona statutory rate and the current apportionment percentage, which is then reduced by the federal tax benefit that would be obtained upon payment of the computed state taxes.

For the years ended December 31, 2011 and 2010, the state income tax benefit which is included in the total tax benefit was $304,665 and $257,495, respectively.

The Company had cumulative net operating losses of approximately $20,041,239 and $15,594,824 as of December 31, 2011 and 2010, respectively for Arizona state income tax purposes. The Arizona state net operating loss carryforwards will expire between 2012 and 2016.

Tax returns subject to examination - The Company and its subsidiaries 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 statutes of limitations, which may result in the payment of income taxes and/or decreases in its net operating losses available for carryforward. The Company is no longer subject to income tax examinations by US federal and state tax authorities for years prior to 2007. While the Company believes that 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.

F-41

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

14.

COMMITMENTS AND CONTINGENCIES

Lease obligations - The Company rents office space in Henderson, Nevada on month-to-month terms. As of December 31, 2011, the monthly rent was $2,980.

Rental expense resulting from this operating lease agreement was $35,760 and $48,255 for the years ended December 31, 2011 and 2010, respectively.

Employment contracts - Martin B. Oring. On October 1, 2010, the Company entered into an employment agreement and stock option agreement with Mr. Oring as its Chief Executive Officer and President. The agreement is on an at-will basis and the Company may terminate his employment, upon written notice, at any time, with or without cause or advance notice. The Company has agreed to pay Mr. Oring compensation of $150,000, which includes compensation as a director. Mr. Oring will be provided with reimbursement for reasonable business expenses in connection with his duties as Chief Executive Officer. Mr. Oring has voluntarily agreed not to participate in health or other benefit plans or programs otherwise in effect from time to time for executives or employees. On July 1, 2011, Mr. Oring’s annual compensation was adjusted to $200,000.

Carl S. Ager. The Company entered into an employment agreement with Carl S. Ager, its Vice President, Secretary and Treasurer, effective January 1, 2006 and as amended February 16, 2007. Pursuant to the terms of the employment agreement, the Company agreed to pay Mr. Ager an annual salary of $160,000. From September 1, 2010 through June 30, 2011, Mr. Ager voluntarily agreed to reduce his cash compensation by 25%. In addition to his annual salary, Mr. Ager may be granted a discretionary bonus and stock options, to the extent authorized by the Board of Directors. The term of the agreement is for an indefinite period, unless otherwise terminated by either party 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 salary.

Melvin L. Williams. The Company entered into an employment agreement with Melvin L. Williams, its Chief Financial Officer, effective June 14, 2006 and as amended February 16, 2007. Pursuant to the terms of the employment agreement, the Company agreed to pay Mr. Williams an annualized salary of $130,000 based on an increase in time commitment from 300-600 hours worked to 600-800 hours worked. From September 1, 2010 through June 30, 2011, Mr. Williams voluntarily agreed to reduce his cash compensation by 25%. In the event the employment agreement is terminated by the Company without cause, the Company will pay Mr. Williams an amount equal to three months’ salary in a lump sum as full and final payment of all amounts payable under the agreement.

F-42

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

14.

COMMITMENTS AND CONTINGENCIES (continued)

Purchase consideration Clarkdale Slag Project - In consideration of the acquisition of the Clarkdale Slag Project from VRIC, the Company has agreed to certain additional contingent payments. The acquisition agreement contains payment terms which are based on the Project Funding Date as defined in the agreement:

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

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 NSR on any and all proceeds of production from the Clarkdale Slag Project (the “Project Royalty”). The Advance Royalty remains payable until the first to occur of: (i) the end of the first calendar year in which the Project Royalty equals or exceeds $500,000 or (ii) February 15, 2017. In any calendar year in which the Advance Royalty remains payable, the combined Advance Royalty and Project Royalty will not exceed $500,000; and,

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 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 cease.

Clarkdale Slag Project royalty agreement - NMC - Under the original JV Agreement, the Company agreed to pay NMC a 5% royalty on NSR payable from the Company’s 50% joint venture interest in the production from the Clarkdale Slag Project. Upon the assignment to the Company of VRIC’s 50% interest in the Joint Venture Agreement in connection with the reorganization with Transylvania International, Inc., the Company continues to have an obligation to pay NMC a royalty consisting of 2.5% of the NSR on any and all proceeds of production from the Clarkdale Slag Project.

On July 25, 2011, the Company and NMC entered into an amendment (the “Third Amendment”) to the assignment agreement between the parties dated June 1, 2005. Pursuant to the Third Amendment, the Company agreed to pay advance royalties (the “Advance Royalties”) to NMC of $15,000 per month (the “Minimum Royalty Amount”) effective as of January 1, 2011. The Third Amendment also provides that the Minimum Royalty Amount will continue to be paid to NMC in every month where the amount of royalties otherwise payable would be less than the Minimum Royalty Amount, and such Advance Royalties will be treated as a prepayment of future royalty payments. In addition, fifty percent of the aggregate consulting fees paid to NMC from 2005 through December 31, 2010 were deemed to be prepayments of any future royalty payments. As of December 31, 2010, aggregate consulting fees previously incurred amounted to $1,320,000, representing credit for advance royalty payments of $660,000.

Total advance royalty payments to NMC for the year ended December 31, 2011 amounted to $180,000 and have been included in “Mineral exploration and evaluation expenses – related party” on the statement of operations.

F-43

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

14.

COMMITMENTS AND CONTINGENCIES (continued)

Development agreement - In January 2009, the Company submitted a development agreement to the Town of Clarkdale for development of an Industrial Collector Road (the “Road”). The purpose of the Road is to provide the Company the capability to transport supplies, equipment and products to and from the Clarkdale Slag Project site efficiently and to meet stipulations of the Conditional Use Permit for the full production facility at the Clarkdale Slag Project.

The timing of the development of the Road is to be within two years of the effective date of the agreement. The effective date shall be the later of (i) 30 days from the approving resolution of the agreement by the Council, (ii) the date on which the Town obtains a connection dedication from separate property owners who have land that will be utilized in construction of the Road, or (iii) the date on which the Town receives the proper effluent permit. The contingencies outlined in (ii) and (iii) above are beyond control of the Company.

The Company estimates the initial cost of construction of the Road to be approximately $3,500,000 and the cost of additional enhancements to be approximately $1,200,000 which will be required to be funded by the Company. Based on the uncertainty of the contingencies, this cost is not included in the Company’s current operating plans. Funding for construction of the Road will require obtaining project financing or other significant financing. At December 31, 2011 and through the date the consolidated financial statements were issued, these contingencies had not changed.

15.

CONCENTRATION OF CREDIT RISK

The Company maintains its cash accounts in three financial institutions. Cash accounts at these financial institutions are insured by the Federal Deposit Insurance Corporation (the “FDIC”) for up to $250,000 per institution. Additionally, under the FDIC’s expanded coverage, all non-interest bearing transactional accounts are insured in full from December 31, 2010 through December 31, 2012. This expanded coverage is separate from and in addition to the normal insurance coverage.

The Company has never experienced a material loss or lack of access to its cash accounts; however, no assurance can be provided that access to the Company’s cash accounts will not be impacted by adverse conditions in the financial markets. At December 31, 2011, of the total cash held by banks, the Company had deposits in excess of FDIC insured limits in the amount of $4,531,088.

16.

CONCENTRATION OF ACTIVITY

The Company currently utilizes a mining and environmental firm to perform significant portions of its mineral property and metallurgical exploration work programs. A change in the lead mining and environmental firm could cause a delay in the progress of the Company’s exploration programs and would cause the Company to incur significant transition expense and may affect operating results adversely.

F-44

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

17.

RELATED PARTY TRANSACTIONS

NMC - The Company utilizes the services of NMC to provide technical assistance and financing related activities. In addition, NMC provides the Company with use of its laboratory, instrumentation, milling equipment and research facilities. Mr. Ager is affiliated with NMC. Prior to January 1, 2011, the Company paid a negotiated monthly fee ranging from $15,000 to $30,000 plus reimbursement of expenses incurred. Effective January 1, 2011, the Company and NMC agreed to replace the monthly fee with an advance royalty payment of $15,000 per month and to reimburse NMC for actual expenses incurred.

The Company has an existing obligation to pay NMC a royalty consisting of 2.5% of the NSR on any and all proceeds of production from the Clarkdale Sag Project. The royalty agreement and advance royalty payments are more fully discussed in Note 14.

For the year ended December 31, 2011, the Company incurred total reimbursement of expenses to NMC of $8,203 and advance royalty payments of $180,000.

For the year ended December 31, 2010, the Company incurred total reimbursement of expenses to NMC of $41,470 and total fees of $297,500. At December 31, 2010, the Company had an outstanding balance due to NMC of $20,880.

Cupit, Milligan, Ogden & Williams, CPAs - During the year ended December 31, 2011, the Company utilized Cupit, Milligan, Ogden & Williams, CPAs (“CMOW”) to provide accounting support services. Mr. Williams is affiliated with CMOW.

The Company incurred total fees to CMOW of $153,939 and $152,069 for the years ended December 31, 2011 and 2010, respectively. Fees for services provided by CMOW do not include any charges for Mr. Williams’ time. Mr. Williams is compensated for his time under his employment agreement. The direct benefit to Mr. Williams was $52,339 and $62,348 of the above CMOW fees and expenses for the years ended December 31, 2011 and 2010, respectively. The Company had an outstanding balance due to CMOW of $12,725 and $30,437 as of December 31, 2011 and 2010, respectively.

18.

GAIN FROM DISCONTINUED OPERATIONS

Prior to the Company’s corporate restructuring in 2005, the Company had several accounts payable (the “Phage Payables”) dating back to 2003 and prior. All of these Phage Payables were incurred in the UK. These expenses were related to business operations which were discontinued in February 2005. In the first quarter of 2010, the Company updated its internal review of the status of the Phage Payables and recorded a $120,688 gain resulting from relief of liabilities that were cleared based on expiration of UK statutes of limitations. The gain is reflected as a gain from discontinued operations. There was no tax impact as the prior expenses occurred while the Company operated outside the United States and the losses are not included in the Company’s net operating losses.

F-45

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

19.

GAIN ON DISPUTE RESOLUTION

During the third quarter of 2011, the Company resolved a dispute with a shareholder. The Company recorded a gain of $502,586 related to the settlement in the form of cancellation of 3,000,000 warrants held by the shareholder. The Company used the Binomial Lattice option pricing model to establish the valuation of the warrants with the following assumptions used:

Risk-free interest rate	0.78	%
Dividend yield	-
Expected volatility	80.57	%
Expected life (years)	2.50

F-46

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with this Annual Report on Form 10-K for the year ended December 31, 2011, our management, with the participation of principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report.

In connection with the restatement to our previously filed consolidated financial statements for the years ended December 31, 2008, 2009 and 2010, and the cumulative periods from January 14, 2000 (date of inception) through December 31, 2008, 2009 and 2010, and our unaudited interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, management has subsequently determined that material weakness described below existed as of December 31, 2011. As a result of this material weakness, management, with the participation of our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) were not effective as of December 31, 2011.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting as required by Sarbanes-Oxley (SOX) Section 404A. Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;

provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our evaluation under the COSO framework, our management concluded that our internal control over financial reporting was not effective as of December 31, 2011.

Further, based on the discovery of the errors relating to the restatements of our financial statements for the years ended December 31, 2008, 2009 and 2010, and the cumulative periods from January 14, 2000 (date of inception) through December 31, 2008, 2009 and 2010, and our unaudited interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, our management concluded that our internal control over financial reporting was not effective during the period from December 31, 2008 through December 31, 2011.

We identified a material weakness in our internal control based on our assessment under the COSO framework. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis.

A material weakness regarding management’s lack of expertise in accounting for complex financial instruments has been identified by management. Specifically, we did not properly account for the issuance of certain warrants in accordance with Accounting Standards Codification 815-40-15 "Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock" and we did not account for the impact of warrant modifications. Accordingly, we have restated the previously issued consolidated financial statements for the years ended December 31, 2008, 2009 and 2010, and the cumulative periods from January 14, 2000 (date of inception) through December 31, 2008, 2009 and 2010, and our unaudited interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011.

We are a smaller reporting company under Rule 12b-2 of the Exchange Act. Therefore, this Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to certain rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Report.

Changes in Internal Control Over Financial Reporting

Based on the discovery of the errors that resulted in the restating of our financial statements for the years ended December 31, 2008, 2009 and 2010, and the cumulative periods from January 14, 2000 (date of inception) through December 31, 2008, 2009 and 2010, and our unaudited interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, we concluded that our internal control over financial reporting was not effective for the periods from December 31, 2008 through December 31, 2011.

Management has been actively engaged in developing a remediation plan to address the material deficiency in our internal control over financial reporting and disclosure controls and procedures. Implementation of the remediation plan is in process and consists of redesigning quarterly procedures to enhance management's identification, capture, review, approval and recording of contractual terms included in complex financial arrangements. Management believes the foregoing efforts will effectively remediate the material weakness. As we continue to evaluate and work to improve our internal control over financial reporting and disclosure controls and procedures, management may execute additional measures to address potential control deficiencies or modify the remediation plan described above. Management will continue to review and make necessary changes to the overall design of our internal control and disclosure control environment, as well as to policies and procedures to improve the overall effectiveness of internal control over financial reporting and disclosure controls and procedures.

During the fourth quarter of 2011, we evaluated our control process related to accounting for complex financial instruments. Based on that review, we made the following changes in our internal control over financial reporting:

We received increased guidance from our external consulting experts on complex financial instruments and increased our internal knowledge regarding such instruments.

We began implementing these procedures in the fourth quarter of 2011. If the remedial measures described above are insufficient to address any of the identified material weakness or are not implemented effectively, or if additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future.

Item 9B.

Other Information

Not applicable.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

General

Our bylaws provide that the terms of office of the members of our board of directors be divided into three classes, Class I, Class II and Class III, the members of which serve for a staggered three-year term. The terms of the current Class I, Class II and Class III directors are set to expire at the next annual meeting of stockholders for the 2013, 2012 and 2011 years, respectively. Our 2011 annual meeting has been delayed until May 8, 2012, and the term of our Class III directors will expire at the annual meeting. At each annual meeting of stockholders, directors chosen to succeed those whose terms then expire are elected for a term of office expiring at the third succeeding annual meeting of stockholders after their election or until their successors are elected and qualify, subject to their prior death, resignation or removal. Our board presently consists of six directors. Two directors serve in each class of directors. None of our directors or executive officers is related to one another.

Our board members are encouraged to attend meetings of the board of directors and the annual meeting of stockholders. The board of directors held 26 meetings and adopted one unanimous written consent in lieu of a meeting in 2011. Officers serve at the discretion of the board of directors.

The following table sets forth certain biographical information with respect to our directors and executive officers:

Name	Position	Age

Martin B. Oring	Director (Class III), Chief Executive Officer and President	66
Carl S. Ager	Director (Class II), Vice President, Secretary and Treasurer	37
J.C. McFarland	Director (Class II)	65
Robert D. McDougal	Director (Class III)	79
Michael W. Conboy	Director (Class I)	36
Jordan M. Estra	Director (Class I)	64
Melvin L. Williams	Chief Financial Officer	51

Martin B. Oring, Director, President and Chief Executive Officer. Mr. Oring has been a member of our board of directors since October 6, 2008 and our President and Chief Executive Officer since October 1, 2010. Mr. Oring, a senior financial/planning executive, has served as the President of Wealth Preservation, LLC, a financial advisory firm that serves high-net-worth individuals, since 2001. Since the founding of Wealth Preservation, LLC in 2001, Mr. Oring has completed the financial engineering, structuring, and implementation of over $1 billion of proprietary tax and estate planning products in the capital markets and insurance areas for wealthy individuals and corporations. From 1998 until 2001, Mr. Oring served as Managing Director, Executive Services at Prudential Securities, Inc., where he was responsible for advice, planning and execution of capital market and insurance products for high-net-worth individuals and corporations. From 1996 to 1998, he served as Managing Director, Capital Markets, during which time he managed Prudential Securities’ capital market effort for large and medium-sized financial institutions. From 1989 until 1996, he managed the Debt and Capital Management group at The Chase Manhattan Corporation as Manager of Capital Planning (Treasury). Prior to joining Chase Manhattan, he spent approximately eighteen years in a variety of management positions with Mobil Corporation, one of the world’s leading energy companies. When he left Mobil in 1986, he was Manager, Capital Markets & Investment Banking (Treasury). Mr. Oring is also currently a director and chief executive officer of PetroHunter Energy Corporation, and was previously a director of Parallel Petroleum Corporation, each of which is a publicly traded oil and gas exploration and production company. He also serves as a director of Falcon Oil & Gas Australia Limited, a subsidiary of Falcon Oil & Gas Ltd., an international oil and gas exploration and production company, headquartered in Denver, Colorado, which trades on the TSX Venture Exchange. Mr. Oring has served as a Lecturer at Lehigh University, the New York Institute of Technology, New York University, Xerox Corporation, Salomon Brothers, Merrill Lynch, numerous Advanced Management Seminars, and numerous in-house management courses for a variety of corporations and organizations. He has an MBA Degree in Production Management, Finance and Marketing from the Graduate School of Business at Columbia University, and a B.S. Degree in Mechanical Engineering from Carnegie Institute of Technology. As a financial planner and an executive with experience in banking and finance, and as an Audit Committee financial expert, we believe that Mr. Oring contributes his leadership skills, knowledge and finance background, and business experience to our board of directors. In addition, we believe that Mr. Oring’s membership on our board of directors helps to achieve the objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, skills and other individual qualities that contribute to board heterogeneity.

Carl S. Ager, Director, Vice President, Secretary and Treasurer. Mr. Ager has been a member of our board of directors since July 25, 2005 and our Vice President, Secretary and Treasurer since October 7, 2005. In 1997, Mr. Ager obtained his Bachelor of Applied Sciences – Engineering Geophysics degree from Queen’s University in Kingston, Ontario. Since January, 2003, Mr. Ager has been President of CSA Management Corp, a private Nevada corporation which provides consulting services, including business planning and administration. However, CSA has not had active operations since 2005. Mr. Ager also served as Vice President and a director of Nanominerals from June 2003 until June 2007. Prior to joining Nanominerals and CSA Management, Mr. Ager’s experience included working as an investment executive for Scotia McLeod, one of Canada’s leading full-service brokerage firms (2000-2002). As an engineer and an executive with experience in working with natural resource companies, we believe that Mr. Ager contributes his leadership skills, knowledge, finance and technology background, and business experience to our board of directors. In addition, we believe that Mr. Ager’s membership on our board of directors helps to achieve the objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, skills and other individual qualities that contribute to board heterogeneity.

J.C. McFarland, Director. Mr. McFarland has been a member of our board of directors since May 1, 2010. Mr. McFarland has 30 years of experience in the oil and natural gas industry with McFarland Energy, Inc., a NASDAQ-listed company, where he was Chairman and Chief Executive Officer from 1986 until its sale in 1997. Since 1997, he has been a consultant with McFarland Advisors, Inc. He served on the boards of NYSE-listed Venoco, Inc. from 2004 through the present, NYSE-listed Huntway Refining from 1988 to 2001, and privately held Gotland Oil, Inc. from 2000 to 2001. He was President of the California Independent Petroleum Association from 1996 to 1998. Mr. McFarland earned a B.S. Degree in Business Administration (Finance and Accounting) from the University of California, Berkeley, along with graduate programs in management and finance at Harvard and Stanford Universities. Mr. McFarland is a certified public accountant who has elected inactive license status, and is a “Financial Expert” in accordance with SEC and exchange listing Audit Committee requirements. In determining Mr. McFarland's qualifications to serve on our Board of Directors, the Board has considered, among other things, his experience and expertise in finance, accounting and management. In addition, the Board believes that Mr. McFarland’s membership on the Company’s Board of Directors helps to achieve the objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, skills and other individual qualities that contribute to board heterogeneity.

Robert D. McDougal, Director. Mr. McDougal has been a member of our board of directors since July 25, 2005. He is a Certified Public Accountant. He began practicing public accounting in 1973 and established his own practice in 1981. The major portion of the practice is with mining and mining related clients including public companies, private companies, partnerships and individuals. He was a director and officer of GEXA Gold Corporation, a publicly traded mining company, from 1985 to 2001. Mr. McDougal was one of the founders of Millennium Mining Corporation which has been merged into Gold Summit Corporation, a publicly traded company. He is the managing partner of GM Squared, LLC, which holds numerous mining claims. He also serves as the chief financial officer and a director of Ireland Inc., a publicly traded exploration stage company primarily focused on the acquisition and exploration of mining properties, of which Nanominerals is the principal stockholder. He served on the Nevada Society of Certified Public Accountants Committee on Natural Resources for seven years, four years as chairman. Prior to this time, Mr. McDougal served 20 years in the United States Air Force, retiring with the rank of Major. Following his retirement from the United States Air Force, Mr. McDougal obtained a Bachelor of Arts degree in accounting from the University of Nevada, Reno, graduating with distinction. As an accountant and an executive with experience in working with mining companies and as an Audit Committee financial expert, we believe that Mr. McDougal contributes his leadership skills, knowledge, finance and technology background, and business experience to our board of directors. In addition, we believe that Mr. McDougal’s membership on our board of directors helps to achieve the objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, skills and other individual qualities that contribute to board heterogeneity.

Michael W. Conboy, Director. Mr. Conboy has been a member of our board of directors since October 26, 2010. Since 2003, Mr. Conboy has worked at Luxor Capital Group, LP, an investment management firm based in New York, New York, and currently serves as its Director of Research. Luxor Capital Group, LLC is one of the Company’s principal stockholders. From 2000-2003, Mr. Conboy worked as a distressed investments analyst at ING in New York and London for ING’s internal proprietary desk, where he was actively involved in numerous restructurings. Since 2010, he also has served as the Chairman of the Board of Directors of CML Metals Corp., which is focused on redeveloping the Comstock/Mountain Lion iron ore mine in southwestern Utah. Mr. Conboy also serves as a director of Innovate Loan Servicing Corporation, a finance company focused on the subprime auto loan sector. Mr. Conboy earned his B.S. in Business Administration from Georgetown University. As an investment banker and an executive with experience in working with natural resource companies, we believe that Mr. Conboy contributes his leadership skills, knowledge, finance and industry background, and business experience to our Board of Directors. In addition, we believe that Mr. Conboy’s membership on our Board of Directors helps to achieve the objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, skills and other individual qualities that contribute to board heterogeneity.

Jordan M. Estra, Director. Mr. Estra has been a member of our board of directors since March 1, 2010. Mr. Estra is also a Director of Starcore International Mines and Meadow Bay Gold, both publicly traded gold mining companies. Since July 2010, Mr. Estra has been President and Chief Executive Officer of Ensurge, Inc., a mining investment company seeking gold mining opportunities in Brazil. He became a Director of Ensurge in February 2010. From May 2009 until July 2010, Mr. Estra had been the Managing Director of Private Equity at Sutter Securities Incorporated in San Francisco, California and Boca Raton, Florida, where he specializes in raising capital for emerging natural resource companies. From October 2009 through December 2009, Mr. Estra served as the Chief Executive Officer of Signature Exploration and Production Corp. From April 2007 to April 2009, Mr. Estra was a Managing Director of Investment Banking with Jesup & Lamont Securities, Inc. Mr. Estra was a Senior Vice President of Investment Banking with Dawson James Securities, Inc. from September 2006 to March 2007 and a Managing Director of Healthcare Investment Banking with Stanford Financial Group from June 2003 to September 2006. From 1986 to 2003 Mr. Estra held senior research and/or investment banking positions with a number of brokerage and investment banking firms. From 1971 to 1986 Mr. Estra held various positions in finance, corporate strategic planning and marketing with AMAX, Inc., a global natural resources leader with interests in precious metals, copper, lead, zinc, coal, oil and gas, molybdenum, tungsten and iron ore. He served as Assistant to the Chairman and was Vice President of Marketing and Strategic Planning when he resigned in 1986 to pursue a career on Wall Street. Mr. Estra graduated with High Distinction from Babson College with a degree in International Economics and with Honors from the Columbia University Graduate School of Business with an MBA in Finance. He holds Series 7, 24, 63, 86 and 87 securities licenses. As an investment banker and an executive with experience in working with natural resource companies and as an Audit Committee financial expert, we believe that Mr. Estra contributes his leadership skills, knowledge, finance and technology background, and business experience to our board of directors. In addition, we believe that Mr. Estra’s membership on our board of directors helps to achieve the objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, skills and other individual qualities that contribute to board heterogeneity.

Melvin L. Williams, Chief Financial Officer. Mr. Williams has been our Chief Financial Officer since June 14, 2006. Mr. Williams is a certified public accountant with over 20 years' experience in the public accounting industry with the firm of Cupit, Milligan, Ogden and Williams in Reno, Nevada. During this period, he provided auditing, consulting, merger/acquisition, valuation and tax services to companies in the manufacturing, technology, mining, healthcare and service industries, including publicly traded mining companies, as well as to various non-profit organizations. From 1984 until 1987, Mr. Williams served on the accounting staff of the University of Oregon Foundation, a private fund raising entity that also maintains endowment and trust investments for the continuing support of the University. Mr. Williams, a member of the American Institute of Certified Public Accountants since 1989, is also a member of the Nevada Society of CPAs and past president of the Reno, Nevada chapter of the Institute of Management Accountants. He earned a Bachelor of Business Administration degree at the University of Oregon in 1983.

Consultants

Nanominerals is a private Nevada corporation principally engaged in the business of mineral exploration. We have engaged Nanominerals as a consultant to provide us with the use of its laboratory, instrumentation, milling equipment and research facilities which has allowed us to perform tests and analysis both effectively and in a more timely manner than would otherwise be available from other such consultants. Dr. Charles A. Ager performs the services for us in his authorized capacity with Nanominerals under our consulting arrangement with Nanominerals. Dr. Ager currently is the sole officer and director of Nanominerals, and controls its day to day operations. The following sets forth certain biographical information with respect to Dr. Ager:

Dr. Charles A. Ager is a geophysical engineer with approximately 40 years of experience in the areas of mining discovery and production. He is a registered geophysicist in the State of California and a registered professional engineer and professional geoscientist in British Columbia, Canada. Dr. Ager received a PhD degree in geophysics from the University of British Columbia in 1974 and a Masters of Science degree from the University of British Columbia in 1972. He received his undergraduate degree in mathematics and physics from California State University, Sacramento in 1968. Dr. Ager has been associated with Nanominerals from 1988 until present. Dr. Ager was the Chairman of ABM Mining Group from 1979 until 1988, when it was acquired by Northgate Mining. ABM Mining Group was involved in providing technical and financial assistance in building and operating medium sized mining companies. Project duties included property acquisition, exploration, permitting, development, production and finance. Dr. Ager also was the President of the Ager Group of Geotechnical Companies from 1968 to 1979. The Ager Group of Geotechnical Companies was involved in providing technical and financial assistance for exploration and development projects in Canada, the United States, Africa and the Far East. Project work included the use of water, ground and air surveys in the exploration for oil and gas, coal, industrial minerals and base and precious metals. Dr. Ager is a member of the Association of Professional Engineers and Geoscientists of British Columbia, Canada, the Society of Exploration Geophysicists and the Society of Mining, Metallurgy and Exploration.

Director Qualifications

We believe that our directors should have the highest professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience at the policy-making level in business or banking. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties for us. Each director must represent the interests of all stockholders. When considering potential director candidates, the board of directors also considers the candidate’s character, judgment, age and skills, including financial literacy and experience in the context of our needs and the needs of the board of directors. In addition to considering an appropriate balance of knowledge, experience and capability, the board of directors has as an objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, skills and other individual qualities that contribute to board heterogeneity.

Independent Directors; Review, Approval or Ratification of Transactions with Related Persons

We currently have six members on our board of directors. We believe that each of J.C. McFarland, Michael W. Conboy, Jordan M. Estra and Robert D. McDougal is independent under the criteria established by Section 803A of the NYSE Amex LLC (“AMEX”) Company Guide for director independence, but that none of the remaining two members are independent. The AMEX criteria include various objective standards and a subjective test. A member of the board of directors is not considered independent under the objective standards if, for example, he or she is employed by us. Mr. Oring and Mr. Ager are not independent because they are our employees. The subjective test requires that each independent director not have a relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. We considered commercial, financial services, charitable, and other transactions and other relationships between us and each director and his or her family members and affiliated entities.

For Messrs. McFarland, Conboy, Estra and McDougal, we believe that each did not have any transactions or other relationships which would have exceeded the AMEX objective standards or would otherwise interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

With respect to our other two directors, we believe that we have ongoing business relationships with these directors or their affiliates which would not satisfy the AMEX subjective standards regarding the exercise of independent judgment in carrying out the responsibilities of a director.

We have ongoing business relationships with affiliates of our management and principal stockholders. In particular, we have continuing obligations under the agreements under which we acquired the assets relating to our Clarkdale Slag Project. We remain obligated to pay a royalty which may be generated from the operations of the Clarkdale Slag Project with Nanominerals, one of our principal stockholders, which is an affiliate of a member of our executive management and board of directors, Carl S. Ager. We also have engaged Nanominerals as a paid consultant to provide technical services to us. Further, one of our board members, Robert D. McDougal, serves as the chief financial officer and a director of Ireland, Inc., a publicly traded, mining related company, which is an affiliate of Nanominerals. In addition, Martin B. Oring, our President and Chief Executive Officer and a member of our board of directors, serves as a consultant to Ireland Inc. These persons are subject to a fiduciary duty to exercise good faith and integrity in handling our affairs. However, the existence of these continuing obligations may create a conflict of interest between us and all of our board members and senior executive management, and any disputes between us and such persons over the terms and conditions of these agreements that may arise in the future may raise the risk that the negotiations over such disputes may not be subject to being resolved in an arms’ length manner. In addition, Nanominerals’ interest in Ireland, Inc. and its other mining related business interests may create a conflict of interest between us and our board members and senior executive management who are affiliates of Nanominerals.

Because we currently only have four independent directors, the existence of these continuing obligations to our affiliates may create a conflict of interest between us and our non-independent board members and senior executive management, and any disputes between us and such persons over the terms and conditions of these agreements that may arise in the future may raise the risk that the negotiations over such disputes may not be subject to being resolved in an arms’ length manner. We intend to make good faith efforts to recruit independent persons to our board of directors. We intend to evaluate the independence of each of our directors in connection with the preparation of the proxy statement for our next annual meeting of stockholders.

Although we only have four independent directors, the board of directors has adopted a written Related Person Transactions Policy, that describes the procedures used to identify, review, approve and disclose, if necessary, any transaction or series of transactions in which: (i) we were, are or will be a participant, (ii) the amount involved exceeds $120,000, and (iii) a related person had, has or will have a direct or indirect material interest. There can be no assurance that the above conflicts will not result in adverse consequences to us and the interests of the other stockholders.

competing for the time and attention of management,

potential interests of management in competing investment ventures, and

the lack of independent representation of the interests of the other stockholders in connection with potential disputes or negotiations over ongoing business relationships.

Committee Interlocks and Insider Participation

Robert D. McDougal, a member of our board of directors, serves as the chief financial officer and a director of Ireland Inc., a publicly traded exploration stage company primarily focused on the acquisition and exploration of mining properties. Nanominerals, one of our principal stockholders and an affiliate of Carl S. Ager, one of our executive directors and officers, is the principal stockholder of Ireland Inc.

Except as set forth above, no interlocking relationship exists between any member of our board of directors and any member of the board of directors or compensation committee of any other companies, nor has such interlocking relationship existed in the past.

Committees of the Board Of Directors

Audit Committee. We have an Audit Committee and an audit committee charter. Our Audit Committee is presently comprised of Robert D. McDougal, Michael W. Conboy and Jordan M. Estra. Mr. McDougal is the Chairman of the Audit Committee. Each of Messrs. McDougal, Conboy and Estra is an independent director. We believe that each of Messrs. McDougal and Estra qualifies as an “audit committee financial expert” under Item 407(d)(5) of Regulation S-K under the Securities Act of 1933, as amended (the “Securities Act”). On September 8, 2006, we adopted a revised audit committee charter and a whistle blower policy. The purpose of the amendments to the audit committee charter is to expand on the role of the Audit Committee’s relationship with external auditors and the primary committee responsibilities. The purpose of the whistle blower policy is to encourage all employees to disclose any wrongdoing that may adversely impact us, our stockholders, employees, investors, or the public at large. The policy also sets forth (i) an investigative process of reported acts of wrongdoing and retaliation, and (ii) procedures for reports of questionable auditing, accounting and internal control matters from employees on a confidential and anonymous basis and from other interested third parties. A copy of our audit committee charter was filed as an exhibit to our Current Report on Form 8-K filed with the SEC on September 27, 2006. Our Audit Committee is responsible for:

selecting, hiring and terminating our independent auditors,

evaluating the qualifications, independence and performance of our independent auditors,

approving the audit and non-audit services to be performed by our independent auditors,

reviewing the design, implementation, adequacy and effectiveness of our internal controls and critical accounting policies,

overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters,

establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters,

reviewing with management and our independent auditors, any earnings announcements and other public announcements regarding our results of operations,

preparing the Audit Committee report that the SEC requires in our annual proxy statement,

engaging outside advisors, and

authorizing funding for the outside auditor and any outside advisors engaged by the Audit Committee.

Compensation Committee. We have a Compensation Committee and have adopted a Compensation Committee charter. Our Compensation Committee assists our board of directors in determining and developing plans for the compensation of our officers, directors and employees. Specific responsibilities include the following:

approving the compensation and benefits of our executive officers,

reviewing the performance objectives and actual performance of our officers, and

administering our stock option and other equity compensation plans.

Our Compensation Committee is comprised of Robert D. McDougal, J.C. McFarland, Michael W. Conboy and Jordan M. Estra. Mr. Estra is the Chairman of the Compensation Committee. Each of Messrs. McDougal, McFarland, Conboy and Estra is an independent director.

Nominating and Governance Committee. We have a Nominating and Governance Committee and have adopted a Nominating and Governance Committee charter. Our Nominating and Governance Committee will assist the Board of Directors by identifying and recommending individuals qualified to become members of our Board of Directors, reviewing correspondence from our stockholders, establishing, evaluating and overseeing our corporate governance guidelines, and recommending compensation plans for our directors. Specific responsibilities include the following:

evaluating the composition, size and governance of our Board of Directors and its committees and making recommendations regarding future planning and the appointment of directors to our committees,

establishing a policy for considering stockholder nominees for election to our Board of Directors,

evaluating and recommending candidates for election to our Board of Directors; and

recommending and determining the compensation of our directors.

Our Nominating and Governance Committee is comprised of Robert D. McDougal, Martin B. Oring, J.C. McFarland, Michael W. Conboy, Jordan M. Estra and Carl S. Ager. Mr. Conboy is the Chairman of the Nominating and Governance Committee. Each of Messrs. McDougal, McFarland, Conboy and Estra is an independent director. However, Messrs. Oring and Ager are not independent directors.

Disclosure Committee and Charter. We have a Disclosure Committee and a Disclosure Committee charter. A copy of the disclosure committee charter was filed as an exhibit to our Form 10-KSB filed with the SEC on April 13, 2004. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports.

Our Disclosure Committee is presently comprised of J.C. McFarland, Carl S. Ager, Robert D. McDougal, Martin B. Oring, Michael W. Conboy and Jordan M. Estra. Mr. McFarland is the Chairman of the Disclosure Committee. Each of Messrs. McFarland, McDougal, Conboy and Estra is an independent director. However, Messrs. Oring and Ager are not independent directors.

Board Leadership Structure and Risk Oversight

Our board of directors has an integrated structure in which the roles of Chairman and Chief Executive Officer are combined. The board has determined that only four of our non-management directors are independent. Generally, our board structure provides that an independent lead director presides at the executive sessions of the non-management directors and at all board meetings at which the Chairman is not present, serves as liaison between the Chairman and the independent directors, frequently communicates with the Chief Executive Officer, calls meetings of the independent directors, obtains board member and management input and sets the agenda for the board with the Chief Executive Officer, approves meeting schedules to assure there is sufficient time for discussion of all agenda items, works with the Chief Executive Officer to ensure the board members receive the right information on a timely basis, stays current on major risks and focuses the board members on such risks, molds a cohesive board, works with the Audit Committee and Compensation Committee to evaluate board and committee performance, facilitates communications among directors, assists in recruiting and retention for new board members, ensures that committee structure and committee assignments are appropriate and effective, ensures outstanding governance processes, and leads discussions regarding Chief Executive Officer performance, personal development and compensation. Our former lead independent director, Martin B. Oring, became our President and Chief Executive Officer in October 2010, and therefore, no longer is an independent director. We currently do not have a lead independent director.

The board has had several years of successful experience with a leadership structure in which the roles of Chairman and Chief Executive Officer are combined, and has determined that this structure, together with a very active and involved independent lead director or group of independent directors, is most appropriate and effective for us. The board believes that this structure promotes greater efficiency, within the context of an active and independent board, through more direct communication of critical information from management to the board and from the board to management. In addition, the Chief Executive Officer’s extensive knowledge of our business uniquely qualifies him, in close consultation with our independent directors, to lead the board in assessing risks and focusing on the issues that are most material to us.

The board’s involvement in risk oversight includes receiving regular reports from members of senior management and evaluating areas of material risk to us, including operational, financial, legal and regulatory, and strategic and reputational risks. The Audit Committee, pursuant to its charter, is responsible for overseeing the assessment of the business risk management process, including the adequacy of our overall control environment and controls in selected areas representing significant financial and business risk. In carrying out this responsibility, the Audit Committee regularly evaluates our risk identification, risk management and risk mitigation strategies and practices. In general, the reports identify, analyze, prioritize and provide the status of major risks to us. In addition, the Compensation Committee regularly considers potential risks related to our compensation programs. Further, the Disclosure Committee reviews the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports.

Related Person Transactions Policy

On March 17, 2009, the board of directors adopted a written Related Person Transactions Policy, that describes the procedures used to identify, review, approve and disclose, if necessary, any transaction or series of transactions in which: (i) we were, are or will be a participant, (ii) the amount involved exceeds $120,000, and (iii) a related person had, has or will have a direct or indirect material interest. Related party transactions, which are limited to those described in this policy, are subject to the approval or ratification by the Audit Committee in accordance with this policy.

Our Code of Ethics, which applies to our directors and executive officers, including our Chief Executive Officer, Chief Financial Officer and all senior financial officers, provides that all conflicts of interest should be avoided. Pursuant to Item 404 of Regulation S-K of the SEC, certain transactions between the issuer and certain related persons need to be disclosed in our filings with the SEC. In addition, under Section 78.140 of the Nevada Revised Statutes, certain transactions between us and our directors and officers may need to be approved by our board of directors or a duly authorized committee of the board. Finally, SEC rules require our board to assess whether relationships or transactions exist that may impair the independence of our outside directors. The policy is intended to provide guidance and direction on related party transactions.

A “related party transaction” is any transaction directly or indirectly involving any related party that would need to be disclosed under Item 404(a) of Regulation S-K. Under Item 404(a), we are required to disclose any transaction occurring since the beginning of our last fiscal year, or any currently proposed transaction, involving us where the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest. “Related party transaction” also includes any material amendment or modification to an existing related party transaction.

For purposes of the policy, “related party” means any of the following:

a director (which term when used therein includes any director nominee),

an executive officer,

a person known by us to be the beneficial owner of more than 5% of our common stock (a “5% stockholder”),

an entity which is owned or controlled by a person listed above, or an entity in which a person listed above has a substantial ownership interest or control of such entity, or

a person who is an immediate family member of any of the foregoing.

“Immediate family member” means a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such director, executive officer, nominee for director or beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee for director or beneficial owner.

All related party transactions are required to be disclosed to the Audit Committee of the board and any material related party transaction are required to be disclosed to the full board of directors. Related party transactions will be brought to management’s and the board’s attention in a number of ways. Each of our directors and executive officers is instructed and periodically reminded to inform the Office of the Secretary of any potential related party transactions. In addition, each such director and executive officer completes a questionnaire on an annual basis designed to elicit information about any potential related party transactions. Any potential related party transactions that are brought to our attention are analyzed by our legal department, or if none exists, our outside counsel, in consultation with management, as appropriate, to determine whether the transaction or relationship does, in fact, constitute a related party transaction requiring compliance with the policy.

At each of its meetings, the Audit Committee will be provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction, and the benefits to us and to the relevant related party. In determining whether to approve a related party transaction, the Audit Committee will consider, among other factors, the following factors to the extent relevant to the related party transaction:

whether the terms of the related party transaction are fair to us and on the same basis as would apply if the transaction did not involve a related party,

whether there are business reasons for us to enter into the related party transaction,

whether the related party transaction would impair the independence of an outside director,

whether the related party transaction would present an improper conflict of interests for any of our directors or executive officers, taking into account the size of the transaction, the overall financial position of the director, executive officer or related party, the direct or indirect nature of the director’s, executive officer’s or related party’s interest in the transaction and the ongoing nature of any proposed relationship, and

any other factors the Audit Committee deems relevant.

The Audit Committee will apply these factors, and any other factors it deems relevant to its determination, in a manner that is consistent with the rules and regulations promulgated by the Commission and the objectives of the policy. Given that this list of factors is non-exclusive and, further, that the factors have not been assigned any particular level of importance with respect the other factors, the Audit Committee will have a certain amount of discretion in applying these factors. The members of the Audit Committee, however, must exercise their reasonable business judgment in making a determination regarding the transaction at issue.

As a result, the specific application of these factors will be determined by the Audit Committee on a case-by-case basis. The Audit Committee will examine each factor, both individually and collectively, in the context of our overall business and financial position, as well as our short-term and long-term strategic objectives. In doing so, the Audit Committee will look at the particular facts and circumstances of the transaction at issue, as well as the totality of the circumstances surrounding the transaction as a whole. The Audit Committee will examine the relationship of the facts and circumstances with our overall business and financial position and strategic objectives. If, as and when special or unique concerns must be addressed, the Audit Committee will take such concerns into account.

For example, regarding transactions that would impair independence, if our securities become listed on a national securities exchange that requires a certain percentage of the board of directors to be independent, and the Audit Committee determines that a particular transaction will impair the independence of an outside director, potentially causing us to contradict the exchange mandated independence requirement, that particular transaction may be rejected. However, there could arise a situation where, due to the importance of the transaction to our overall business and financial position and strategic objectives and our ability to appoint another independent director, such a transaction might be approved by the Audit Committee.

Any member of the Audit Committee who has an interest in the transaction under discussion will abstain from voting on the approval of the related party transaction, but may, if so requested by the Chairperson of the Audit Committee, participate in some or all of the Audit Committee’s discussions of the related party transaction. Upon completion of its review of the transaction, the Audit Committee may determine to permit or to prohibit the related party transaction.

A related party transaction entered into without pre-approval of the Audit Committee will not be deemed to violate the policy, or be invalid or unenforceable, so long as the transaction is brought to the Audit Committee as promptly as reasonably practical after it is entered into or after it becomes reasonably apparent that the transaction is covered by the policy.

Under the policy, any “related party transaction” will be consummated or will continue only if:

the Audit Committee shall approve or ratify such transaction in accordance with the guidelines set forth in the policy and if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party,

the transaction is approved by the disinterested members of the board of directors, or

if the transaction involves compensation, that such transaction is approved of by our Compensation Committee.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines which govern, among other things, Board member criteria, responsibilities, compensation and education, Board committee composition and charters and management succession.

Code of Ethics

Our directors and executive officers, including our Chief Executive Officer, Chief Financial Officer and all senior financial officers, are bound by a Code of Ethics that complies with Item 406 of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

A Code of Ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships,

full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the SEC and in other public communications made by an issuer,

compliance with applicable governmental laws, rules and regulations,

the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code, and

accountability for adherence to the code.

We will mail without charge, upon written request, a copy of our Code of Ethics. Requests should be sent to: Searchlight Minerals Corp., 2441 W. Horizon Ridge Pkwy., Suite 120, Henderson, Nevada, 89052, Attn. Corporate Secretary.

Rule 10b5-1 Plans

The board of directors has authorized directors and other executive officers who are subject to our stock-trading pre-clearance and quarterly blackout requirements, at their election, to enter into plans, at a time they are not in possession of material non-public information, to purchase or sell shares of our common stock that satisfy the requirements of Exchange Act Rule 10b5-1. Rule 10b5-1 permits trading on a pre-arranged, “automatic-pilot” basis subject to certain conditions, including that the person for whom the plan is created (or anyone else aware of material non-public information acting on such person’s behalf) not exercise any subsequent influence regarding the amount, price and dates of transactions under the plan. Using these plans, officers and directors can gradually diversify their investment portfolios and spread stock trades over a period of time regardless of any material, non-public information they may receive after adopting their plans. As a result, trades under 10b5-1 plans by our directors, and other executive officer may not be indicative of their respective opinions of our performance at the time of the trade or of our potential future performance. The board believes that it is appropriate to permit directors and senior executives, whose ability to purchase or sell our common stock is otherwise substantially restricted by quarterly and special stock-trading blackouts and by their possession from time to time of material nonpublic information, to engage in pre-arranged trading in accordance with Rule 10b5-1. Trades by our directors and executive officers pursuant to 10b5-1 trading plans will be disclosed publicly through Form 144 and Form 4 filings with the SEC, as required by applicable law.

On September 21, 2011, Robert D. McDougal, who is one of our directors, entered into Rule 10b5-1 trading plan with respect to an agreement between Mr. McDougal and his broker to sell up to 200,000 shares of our common stock. However, on October 14, 2011, Mr. McDougal agreed to terminate the trading plan without having sold any shares under the trading plan. Further, on October 14, 2011, the Board extended the exercise period of certain options held by Mr. McDougal to purchase up to 200,000 shares of common stock at an exercise price of $0.61 per share (which were scheduled to expire on November 21, 2011) through June 30, 2012. The Rule 10b5-1 plan was set up in accordance with Rule 10b5-1 under the Exchange Act and our policies regarding stock transactions.

Stockholder Communication with Our Board of Directors

Our board of directors has established a process for stockholders to communicate with the board of directors or with individual directors. Stockholders who wish to communicate with our board of directors or with individual directors should direct written correspondence to our Corporate Secretary at our principal executive offices located at 2441 West Horizon Ridge Pkwy., Suite 120, Henderson, Nevada, 89052. Any such communication must contain:

a representation that the stockholder is a holder of record of our capital stock,

the name and address, as they appear on our books, of the stockholder sending such communication, and

the class and number of shares of our capital stock that are beneficially owned by such stockholder.

The Corporate Secretary will forward such communications to our board of directors or the specified individual director to whom the communication is directed unless such communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the Corporate Secretary has the authority to discard the communication or to take appropriate legal action regarding such communication.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership and reports of changes in ownership of our equity securities. As of the date of this Report, and based solely on our review of the copies of such reports furnished to us and written representations from the directors and executive officers, we believe that all reports needed to be filed by current Section 16 reporting persons have been filed in a timely manner for the year ended December 31, 2011, with the exception of the following:

Jordan M. Estra, one of our directors, was delinquent in the reporting of one transaction in 2011 on Form 4 which was reported on a delinquent basis on one report,

Robert D. McDougal, one of our directors, was delinquent in the reporting of one transaction in 2011 on Form 4 which was reported on a delinquent basis on one report, and

J.C. McFarland, one of our directors, was delinquent in the reporting of one transaction in 2011 on Form 4 which was reported on a delinquent basis on one report.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Process Overview. The Compensation Committee of the board of directors discharges the board of directors’ responsibilities relating to compensation of all of our executive officers. The Compensation Committee is comprised of four non-employee directors.

The agenda for meetings is determined by the Chair of the Compensation Committee with the assistance of Martin B. Oring, our President and Chief Executive Officer, and Melvin L. Williams, our Chief Financial Officer. Compensation Committee meetings are regularly attended by one or more of our officers. However, they do not attend the portion of meetings during which their own performance or compensation is being discussed. Mr. Williams and Mr. Ager support the Compensation Committee in its work by providing information relating to our financial plans, performance assessments of our executive officers and other personnel-related data. In addition, the Compensation Committee has the authority under its charter to hire, terminate and approve fees for advisors, consultants and agents as it deems necessary to assist in the fulfillment of its responsibilities.

The Compensation Committee has not delegated its authority to grant equity awards to any of our employees, including the executive officers.

Compensation Philosophy and Objectives. The Compensation Committee believes that our compensation philosophy and programs are designed to foster a performance-oriented culture that aligns our executive officers’ interests with those of our stockholders. The Compensation Committee also believes that the compensation of our executive officers is both appropriate and responsive to the goal of improving stockholder value.

The Compensation Committee’s philosophy is to link the named executive officers’ compensation to corporate performance. The base salary, bonuses and stock option grants of the named executive officers are determined in part by the Compensation Committee reviewing data on prevailing compensation practices of comparable companies with whom we compete for executive talent, and evaluating such information in connection with our corporate goals and compensation practices.

Because of our size and due to our stage of development, we do not have an extensive executive compensation program. Instead, we have a fairly simple executive compensation program that is intended to provide appropriate compensation for our executive officers.

Our current compensation arrangements for several of our executive officers, including our Chief Executive Officer, are below average compensation levels for similar positions at comparable companies. As we continue to grow, we may need to increase our recruiting of new executives from outside of the Company. This in turn may require us to pay higher compensation which may be closer to or in excess of comparable company averages.

Finally, we believe that creating stockholder value requires not only managerial talent, but active participation by all employees. In recognition of this, we try to minimize the number of compensation arrangements that are distinct or exclusive to all of our executive officers. We currently provide base salary, bonuses and long-term equity incentive compensation to a number of our employees.

Because we are an exploration company, we are in the process of refining our compensation policies and anticipate that this will be an ongoing process as our company moves forward in its exploration, testing and construction plans.

In light of the above, since our company could develop in a number of directions, such as exploration only, or exploration with a producing mine, we have looked at a broad range of mining companies to establish our compensation packages. In general, these companies consisted of a mix of smaller to medium-sized public mining companies. Most are at late stages of a mine development project or have either one or two operating mines. Although many companies were considered for comparative purposes by our Compensation Committee, initially the Compensation Committee focused on the following companies as likely to be more relevant to our own as we develop: General Moly, Inc., Allied Nevada Gold Corp., Great Basin Gold Ltd., Gryphon Gold Corp. and Midway Gold Corp. Each company’s publicly-disclosed information was compiled to provide data on executive compensation, including base pay, other cash compensation and stock-based compensation. It is our intent to formulate executive compensation packages that are both representative of industry practices and are sufficient to attract and retain capable and experienced people.

The board believes that the comparison companies noted above are a representative list of comparison companies currently, but expects the list to change to reflect developments in the mining industry and related markets. As we develop, the comparison companies will be selected to be comparative to our size and complexity at the time of the comparison. In addition, the comparison companies will also develop over time, which will necessarily result in changes in the composition of the comparison group. Future comparison groups may include some, none or all of the companies in the current group. For example, exploration companies may begin to operate mines or may be acquired in a merger or acquisition.

Our compensation policies and programs are designed to make us competitive with similar mining companies, to recognize and reward executive performance consistent with the success of our business and to attract and retain capable and experienced people. The Compensation Committee’s role and philosophy is to ensure that our compensation goals and objectives, as applied to the actual compensation paid to our executive officers, are aligned with our overall business objectives and with stockholder interests.

In addition to industry comparables, the Compensation Committee considers a variety of factors when determining both compensation policies and programs and individual compensation levels, including the stockholder interests, our overall financial and operating performance and the Compensation Committee’s assessment of each executive’s individual performance and contribution toward meeting our corporate objectives. As we develop, we will place increasing importance on the incentive-based component of compensation because we believe that a significant portion of an executive’s compensation should depend upon our overall corporate performance, including share price performance relative to our peer group.

2011 Executive Officer Compensation Components. For the year ended December 31, 2011, the principal component of compensation for our executive officers was a base salary and equity-based incentive compensation.

Base Salary. Base salaries for our executive officers, other than the Chief Executive Officer (CEO), are determined by the Compensation Committee based upon recommendations by our Chief Executive Officer, taking into account such factors as salary norms in comparable companies, individual responsibilities, performance and experience of the executive officer.

The Compensation Committee, after review of compensation paid by peer group companies, supplemented by published compensation surveys of public companies and a review of the CEO’s responsibilities, performance, and experience, sets the CEO’s salary. A review of the salaries of our executive officers is conducted at least annually.

During 2007, the Compensation Committee approved increases in base salaries for our executive officers from 2006 to realign salaries with market levels after taking into account individual responsibilities, performance and experience. The Compensation Committee determined that in connection with the closing of the acquisition of 100% of the Clarkdale Slag Project and as a result of the increase in the scope of responsibilities of our executives during 2007, it was appropriate to review the compensation of salaries for comparable executives in the peer group. The increase in the scope of responsibilities during 2007 included the additional work performed and to be performed by the executives to acquire 100% of the Clarkdale Slag Project, design and engineer our first production module, conduct multiple financings, and supervise an increased number of employees. During its review of the peer group, the Compensation Committee decided to increase the salaries of the executive officers to reduce the size of the disparity between the compensation paid to our executive officers and the compensation paid to the executive officers in the peer group. The realignment resulted in different changes in percentage increases among our executive officers because not all of the executives required the same percentage increase to narrow the gap between our officers’ salaries and the salaries for comparable executives in the peer group. The Compensation Committee was focused on bringing the dollar amount of our executives’ salaries closer to the peer group, not on increasing the salaries at the same rate as the percentage increase of market salaries. As such, market salaries increased at a lower percentage rate than our executives’ salaries. The Compensation Committee did not have a specific formula to determine the amount of the executive compensation or the specific increases for each individual executive. In addition to industry comparables, the Compensation Committee reviewed the National Association of Corporate Directors “Report of the Blue Ribbon Commission on Executive Compensation and the Role of the Compensation Committee” for 2007. Our executives’ salaries were subjectively determined in the discretion of the Compensation Committee, taking into account the foregoing factors.

The Compensation Committee considered the lack of formal training of Mr. McNeil, our former President and Chief Executive Officer, and Mr. Ager in the specific technicalities of mineral exploration, but determined that their general business management experience merited their compensation levels, and that we could engage technical mineral exploration specialists, as necessary and appropriate. Mr. Williams’ increase reflected a change in his contract, increasing his time commitment to us from a range of 300-600 hours per year to 600-800 hours per year. The Compensation Committee did not have a specific formula to determine the amount of the executive compensation.

The 2008 and 2009 salaries for our executive officers were not increased by mutual agreement between the board and the individual executives. Continuing into 2010, the Compensation Committee decided to postpone most compensation adjustments for our executive officers due to the status of the development of our mineral properties and our focus of cash resources into those projects. In September 2010, the executive officers and directors voluntarily agreed to reduce cash compensation by 25% beginning on October 1, 2010. Effective July 1, 2011, the Compensation Committee approved to restore cash compensation levels for our executive officers to the base salaries that existed prior to the 25% reduction based on the favorable results from autoclave testing.

The following charts reflect changes in the base salaries of our executive officers from 2010 to 2011:

		2010		2011		Base Salary
Name	Principal Position	Salary		Salary		% Change
Martin B. Oring	President and Chief Executive Officer	$	150,000	$	175,000		16.67	%

Ian R. McNeil	President, Chief Executive Officer and Chairman of the Board	$	190,000		Not applicable		Not applicable

Melvin L. Williams	Chief Financial Officer	$	121,875	$	113,750		(6.67	)%

Carl S. Ager	Vice President, Treasurer, and Director	$	150,000	$	130,000		(13.34	)%

Bonuses. Our cash bonus program seeks to motivate executive officers to work effectively to achieve our financial performance objectives and to reward them when such objectives are met. Bonuses for executive officers are subject to approval by the Compensation Committee. For the year ended December 31, 2011, bonuses for executive officers were not authorized per their request.

Equity-Based Incentive Compensation. Stock options are an important component of the total compensation of executive officers. We believe that stock options align the interests of each executive with those of the stockholders. They also provide executive officers a significant, long-term interest in our success and help retain key executive officers in a competitive market for executive talent. Our 2007 Stock Option Plan authorizes the Compensation Committee to grant stock options to executive officers. The number of shares owned by, or subject to options held by, each executive officer is periodically reviewed and additional awards are considered based upon past performance of the executive and the relative holdings of other executive officers. The option grants generally expire no later than five years from the date of grant.

Further, our 2009 Stock Incentive Award Plan (“2009 Incentive Plan”) provides for grants to our employees and service providers of options to purchase shares of our common stock, rights to receive the appreciation in value of common shares, awards of common shares subject to vesting and other restrictions on transfer, and other awards based on common shares. The 2009 Incentive Plan authorizes the issuance of up 3,250,000 shares of common stock.

Further, our 2007 Stock Option Plan (the “2007 Plan”) provides that options to purchase up to 4,000,000 shares of common stock may be granted to eligible participants.

For the year ended December 31, 2011, we granted Martin B. Oring, our Chief Executive Officer and President, options to purchase up to 600,000 shares of our common stock with an exercise price of $1.22 per share (based on the closing price of our common stock on the date of grant). Of the 600,000 options, 200,000 options vested on execution of the agreement. The remaining 400,000 options will vest over the term of the option in connection with the occurrence of certain events, as follows: (i) 150,000 options will vest upon completion of defined target from metallurgical tests: (ii) 150,000 will vest upon obtaining a funding commitment to construct a gold recovery facility and (iii) 100,000 vest upon the earlier of Mr. Oring remaining as CEO for 30 months or the hiring of a replacement CEO. The options each expire on the fifth anniversary of the date that they vest, but in no event later than the tenth anniversary of the agreement.

For the year ended December 31, 2011, we granted Carl S. Ager, our Vice President, options to purchase up to 325,000 shares of our common stock with an exercise price of $1.22 per share (based on the closing price of our common stock on the date of grant). Of the 325,000 options, 125,000 options vested on execution of the agreement. The remaining 200,000 options will vest over the term of the option in connection with the occurrence of certain events, as follows: (i) 100,000 options will vest upon completion of defined target from metallurgical tests and (ii) 100,000 will vest upon obtaining a funding commitment to construct a gold recovery facility. The options each expire on the fifth anniversary of the date that they vest, but in no event later than the tenth anniversary of the agreement.

For the year ended December 31, 2011, we granted Melvin L. Williams, our Chief Financial Officer, options to purchase up to 75,000 shares of our common stock with an exercise price of $1.22 per share (based on the closing price of our common stock on the date of grant). All of the options vested on execution of the agreement.

Stock Ownership Guidelines. We currently do not require our directors or executive officers to own a particular amount of our common stock. The Compensation Committee is satisfied that stock and option holdings among our directors and executive officers are sufficient at this time to provide motivation and to align this group’s interests with those of our stockholders.

Other Benefits

Health and Welfare Benefits. Our executive officers receive the same health and welfare benefits offered to other employees, including medical, and holiday pay. However, our Chief Executive Officer and President, Martin B. Oring, has voluntarily agreed not to participate in health or other benefit plans or programs otherwise in effect from time to time for our executives or employees.

Retirement Program. We currently have no Supplemental Executive Retirement Plan, or SERP, obligations. We do not have any defined benefit retirement plans.

Perquisites. We do not provide special benefits or other perquisites to any of our executive officers.

Employment Arrangements, Severance and Change of Control Benefits. Other than as described below, we are not party to any employment contracts with our officers and directors.

Martin B. Oring. On October 1, 2010, we entered into an employment agreement and non-qualified stock option agreement with Mr. Oring as our Chief Executive Officer and President. The agreement is on an at will basis and we may terminate his employment, upon written notice, at any time, with or without cause or advance notice. We have agreed to pay Mr. Oring compensation of $150,000, which includes compensation as a director. Mr. Oring will be provided with reimbursement for reasonable business expenses in connection with his duties as Chief Executive Officer. Mr. Oring has voluntarily agreed not to participate in health or other benefit plans or programs otherwise in effect from time to time for our executives or employees. Effective October 1, 2011, Mr. Oring’s compensation was increased to $200,000.

Carl S. Ager. We entered into an employment agreement with Carl S. Ager, our Vice President, Secretary and Treasurer, effective January 1, 2006 and as amended February 16, 2007. Pursuant to the terms of the employment agreement, we agreed to pay Mr. Ager an annual salary of $160,000. From October 1, 2010 through June 30, 2011, we agreed to reduce Mr. Ager’s annual base compensation to $120,000. Effective July 1, 2011, the Compensation Committee approved to restore cash compensation levels for Mr. Ager to his base salary that existed prior to the 25% reduction based on the favorable results from autoclave testing. In addition to his annual salary, Mr. Ager may be granted a discretionary bonus and stock options, to the extent authorized by our board. The term of the agreement is for an indefinite period, unless otherwise terminated by either party pursuant to the terms of the agreement. In the event that the agreement is terminated by us, other than for cause, we will provide Mr. Ager with six months written notice or payment equal to six months of his monthly salary.

Melvin L. Williams. We entered into an employment agreement with Melvin L. Williams, our Chief Financial Officer, effective June 14, 2006 and as amended February 16, 2007. Pursuant to the terms of the employment agreement, we agreed to pay Mr. Williams an annualized salary of $130,000 based on an increase in time commitment from 300-600 hours worked to 600-800 hours worked. From October 1, 2010 through June 30, 2011, we agreed to reduce Mr. Williams’ annual base compensation to $97,500. Effective July 1, 2011, the Compensation Committee approved to restore cash compensation levels for Mr. Williams to his base salary that existed prior to the 25% reduction based on the favorable results from autoclave testing. In the event the employment agreement is terminated by us without cause, we have agreed to pay Mr. Williams an amount equal to three months’ salary in a lump sum as full and final payment of all amounts payable under the agreement.

Ian R. McNeil. We entered into an employment agreement with Ian R. McNeil, our President and Chief Executive Officer, effective January 1, 2006 and as amended February 16, 2007. Pursuant to the terms of the employment agreement, we had agreed to pay Mr. McNeil an annual salary of $190,000. By letter dated as of October 1, 2010, Mr. McNeil resigned as a director as our Chairman of the Board, Chief Executive Officer and President. On October 1, 2010, Mr. McNeil entered into a Separation and Release Agreement in connection with his resignation from the Board of Directors and as an executive officer of the Company. Under the terms of the Separation and Release Agreement: (i) we agreed to pay Mr. McNeil a separation payment of $15,833 per month, less applicable taxes, in semi-monthly payments for a period of 90 days from October 1, 2010; (ii) we agreed to pay for certain health benefits of Mr. McNeil during the 90 day period; and (iii) all of the options held by Mr. McNeil will expire at their current expiration dates. Mr. McNeil gave a general release to us, subject to certain exceptions for claims that cannot be waived or released by law and for any claim by Mr. McNeil for indemnification, as provided by applicable provisions of Nevada law.

Tax and Accounting Treatment of Compensation. In our review and establishment of compensation programs and payments, we consider, but do not place great emphasis on, the anticipated accounting and tax treatment of our compensation programs on us and our executive officers. While we may consider accounting and tax treatment, these factors alone are not dispositive. Among other factors that receive greater consideration are the net costs to us and our ability to effectively administer executive compensation in the short and long-term interests of stockholders under a proposed compensation arrangement.

Our Compensation Committee and our board have considered the potential future effects of Internal Revenue Code Section 162(m), Trade or Business Expense, Certain excessive employee remuneration (“Section 162(m)”) on the compensation paid to our executive officers. Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1.0 million in any taxable year for any of our executive officers. There is an exemption from the $1 million limitation for performance-based compensation that meets certain requirements. In approving the amount and form of compensation for our executive officers, our compensation committee will continue to consider all elements of the cost to us of providing such compensation, including the potential impact of Section 162(m).

In order to qualify certain forms of equity based compensation, such as stock options, as performance-based compensation, each of the 2007 Stock Option Plan and 2009 Incentive Plan was submitted to and approved by our stockholders and is structured to provide 162(m) qualification to stock options and other forms of performance-based awards. Grants of equity based compensation under each of the 2007 Stock Option Plan and 2009 Incentive Plan may qualify for the exemption if vesting is contingent on the attainment of objectives based on performance criteria set forth by our compensation committee, and if certain other requirements are satisfied as set forth under Section 162(m). The compensation paid to any of our executive officers in 2011 and 2010 did not exceed the $1 million threshold under Section 162(m). Thus, at the present time, neither we nor any of our executives are impacted by Section 162(m).

We monitor whether it might be in our best interest to comply with Section 162(m) of the Code, but reserve the right to award future compensation which would not comply with the Section 162(m) requirements for non-deductibility if the Compensation Committee concludes that it is in our best interest to do so. We seek to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals and therefore the Compensation Committee has not adopted a policy requiring all compensation to be deductible. The Compensation Committee will continue to assess the impact of Section 162(m) on its compensation practices and determine what further action, if any, is appropriate.

We account for equity compensation paid to our employees under the rules of Accounting Standards Codification 718, “Compensation-Stock Compensation” (ASC 718), which requires us to estimate and record an expense for each award of equity compensation over the service period of the award. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred. We have not tailored our executive compensation program to achieve particular accounting results.

We intend that our plans, arrangements and agreements will be structured and administered in a manner that complies with the requirements of Internal Revenue Code Section 409A, Inclusion in gross income of deferred compensation under nonqualified deferred compensation plans (“Section 409A”). Participation in, and compensation paid under our plans, arrangements and agreements may, in certain instances, result in the deferral of compensation that is subject to the requirements of Section 409A. If our plans, arrangements and agreements as administered fail to meet certain requirements under Section 409A, compensation earned thereunder may be subject to immediate taxation and tax penalties.

Section 409A requires programs that allow executives to defer a portion of their current income to meet certain requirements regarding risk of forfeiture and election and distribution timing (among other considerations).

Section 409A requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities and penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including the named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A.

Our current compensation and benefit plans are not subject to Section 409A. We have reviewed our compensation arrangements with our executives and employees, and have determined that they are excepted from the requirements of Section 409A. The severance provisions and discretionary bonus provisions under our Employment Agreements fall within the short-term deferral rules of Treasury Regulations Section1.409A-1(b)(4). The equity awards issued under each of the 2007 Stock Option Plan and 2009 Incentive Plan (both statutory and nonstatutory stock options) are excepted from Section 409A. Statutory options under Internal Revenue Code Section 422 are not subject to Section 409A. Likewise, the nonstatutory options are excepted from Section 409A under Treasury Regulations Section 1.409A-1(b)(5)(i)(A) because the exercise prices for all awards issued thereunder are the fair market value of the underlying stock on the date the option was granted and the options do not include any feature for the deferral of compensation other than deferral of recognition of income until the later of the exercise or disposition of the option or the date the options become substantially vested. The underlying stock for all the options constitutes "service recipient stock" within the meaning of Treasury Regulation Section 1.409-A-1(b)(5)(iii). If we adopt new compensation plans that constitute non-qualified deferred compensation, they will be operated in compliance with Section 409A and regulatory guidance issued by the Internal Revenue Service.

Compensation Committee Report. The Compensation Committee of the Board has reviewed this Compensation Discussion and Analysis and discussed that analysis with management. Based on its review and discussions with management, the committee recommended to our board that this Compensation Discussion and Analysis be included in our Form 10-K for the year ended December 31, 2011. This report is provided by the following directors, who comprise the committee:

Jordan M. Estra (Chairman)

Robert D. McDougal

J.C. McFarland

Michael W. Conboy

Summary Compensation Table

The following table sets forth all compensation received during the two years ended December 31, 2011 by our Chief Executive Officer, Chief Financial Officer and each of the other most highly compensated executive officers whose total compensation exceeded $100,000 in such fiscal year. These officers are referred to as the Named Executive Officers in this Report:

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards		Option Awards ($) ⁽¹⁾		Non-Equity Incentive Plan Compensation		Non-qualified Deferred Compensation Earnings		All Other Compensation ($)			Total ($)

Martin B.		2011		30,000		-		-		217,244		-		-		145,000	⁽²⁾		392,244
Oring,		2010		37,500		-		-		187,063		-		-		-			224,563
Director,
President
and
CEO⁽²⁾
Ian R.		2011		-		-		-		-		-		-		-			-
McNeil,		2010		142,500		-		-		-		-		-		-			142,500
Former Director,
President
and
CEO⁽³⁾
Carl S.		2011		130,000		-		-		86,059		-		-		-			216,059
Ager,		2010		150,000		-		-		-		-		-		-			150,000
Director,
Vice
President
and
Secretary
(4)
Melvin L.		2011		113,750		-		-		37,723		-		-		52,339			203,812
Williams,		2010		121,875		-		-		-		-		-		62,345			184,220
Chief
Financial
Officer⁽⁵⁾

(1)

Amounts listed in this column represents the estimated fair value of option awards recognized by us under ASC 718, disregarding estimated forfeitures, for the year ended December 31, 2011, rather than amounts realized by the named individuals. See Note 9 to the consolidated financial statements (“Stock Option Plans and Warrants”) included in our Annual Report on Form 10-K for the year ended December 31, 2011 for our valuation assumptions for this expense.

(2)

Mr. Oring was appointed as our President and Chief Executive Officer on October 1, 2010. Mr. Oring entered into an employment agreement on October 1, 2010 for an annual salary of $30,000. Mr. Oring was also paid a director fee of $10,000 per month through June 30, 2011. Mr. Oring’s director fees are included in other compensation in the above table. Effective July 1, 2011, Mr. Oring’s total base compensation was increased to $200,000 per annum. Mr. Oring’s salary as our President and Chief Executive Officer was unchanged but his director fees were increased to $170,000 per annum or $14,167 per month.

(3)

Mr. McNeil was appointed as our President and Chief Executive Officer on October 7, 2005. Mr. McNeil resigned as our President and Chief Executive Officer on October 1, 2010. On October 1, 2010, Mr. McNeil entered into a Separation and Release Agreement in connection with his resignation from the Board of Directors and as an executive officer. Under the terms of the Separation and Release Agreement: (i) we agreed to pay Mr. McNeil a separation payment of $15,833 per month, less applicable taxes, in semi-monthly payments for a period of 90 days from October 1, 2010; and (ii) we agreed to pay for certain health benefits of Mr. McNeil during the 90 day period.

(4)

Mr. Ager was appointed as our Secretary, Treasurer and Chief Financial Officer on October 7, 2005. Mr. Ager entered into an employment agreement on January 1, 2006 and received an annual salary of $160,000 from January 1, 2008 until September 30, 2010. From October 1, 2010 through June 30, 2011, we agreed to reduce Mr. Ager’s annual base compensation to $120,000. Effective July 1, 2011, the Compensation Committee approved to restore cash compensation levels for Mr. Ager to his base salary that existed prior to the 25% reduction based on the favorable results from autoclave testing.

(5)

Mr. Williams was appointed as our Chief Financial Officer on June 14, 2006. Mr. Williams entered into an employment agreement on June 14, 2006 and received an annual salary of $130,000 from January 1, 2008 until September 30, 2010. From October 1, 2010 through June 30, 2011, we agreed to reduce Mr. Williams’ annual base compensation to $97,500. Effective July 1, 2011, the Compensation Committee approved to restore cash compensation levels for Mr. Williams to his base salary that existed prior to the 25% reduction based on the favorable results from autoclave testing. Other compensation includes direct benefit to Mr. Williams of $62,348 and $52,339 from fees incurred in 2010 and 2011, respectively, with Cupit, Milligan, Ogden & Williams, an affiliate of Mr. Williams, to provide accounting support services. These amounts were based on the profit percentage derived by Mr. Williams from the revenue earned by Cupit Milligan in the applicable period, as applied to the fees for services provided to us.

Outstanding Equity Awards At Fiscal Year-End

The following table provides information concerning unexercised options for each of our Named Executive Officers outstanding as of December 31, 2011:

Name and Position	Number of Securities Underlying Options (#)Exercisable			Option Awards Number of Securities Underlying Unexercised Options (#) Unexercisable			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options		Option Exercise Price		Option Expiration Date	Stock Awards Number of Shares or Units of Stock that Have Not Vested (#)
Martin B. Oring⁽¹⁾ Director, President and CEO		7,347			-			-	$	2.45	12/31/2013		-
		6,569			-			-	$	2.74	3/31/2014		-
		7,377			-			-	$	2.44	6/30/2014		-
		9,890			-			-	$	1.82	9/30/2014		-
		50,000			-			-	$	1.45	10/6/2014		-
		11,250			-			-	$	1.60	12/31/2014		-
		15,000			-			-	$	1.20	3/31/2015		-
		25,714			-			-	$	0.70	6/30/2015		-
		18,462			-			-	$	0.98	9/30/2015		-
		100,000			-			-	$	0.91	10/1/2015		-
		50,000			-			-	$	1.45	10/6/2015		-
		100,000			-			-	$	0.91	12/22/2015		-
		200,000	⁽³⁾		-			-	$	1.22	9/21/2016		-
		50,000			-			-	$	1.45	10/6/2016		-
		-			50,000	⁽¹⁾		-	$	1.45	10/6/2017		-
		-			100,000	⁽²⁾		-	$	0.91	10/1/2020		-
		-			400,000	⁽³⁾		-	$	1.22	9/21/2021		-

Ian R. McNeil former Director, President and CEO		24,800			-			-	$	4.04	2/16/2012		-
					-			-					-
Carl S. Ager Director, Vice President, Treasurer and Secretary		24,800			-			-	$	4.04	2/16/2012		-
		125,000	⁽⁴⁾		-			-	$	1.22	9/21/2016		-
		-			200,000	⁽⁴⁾		-	$	1.22	9/21/2021		-

Melvin L. Williams Chief Financial Officer		18,600			-			-	$	4.04	2/16/2012		-
		75,000			-			-	$	1.22	9/21/2016		-

(1)

On October 6, 2008, Mr. Oring was granted options to purchase up to 200,000 shares of our common stock pursuant to a non-qualified stock option agreement, of which 150,000 vested prior to December 31, 2011 and the remaining 50,000 vest on October 6, 2012.

(2)

On October 1, 2010, Mr. Oring was granted options to purchase up to 300,000 shares of our common stock pursuant to a non-qualified stock option agreement, of which 200,000 vested prior to December 31, 2011 and the remaining 100,000 vest upon the earlier to occur of Mr. Oring completing 30 months of service as CEO or the hiring of a replacement CEO.

(3)

On September 21, 2011, Mr. Oring was granted options to purchase up to 600,000 shares of our common stock pursuant to a non-qualified stock option agreement. Of the 600,000 options, 200,000 options vested on execution of the agreement. The remaining 400,000 options will vest over the term of the option in connection with the occurrence of certain events, as follows: (i) 150,000 options will vest upon completion of defined target from metallurgical tests: (ii) 150,000 will vest upon obtaining a funding commitment to construct a gold recovery facility: and (iii) 100,000 vest upon the earlier to occur of Mr. Oring completing 30 months of service as CEO or the hiring of a replacement CEO.

(4)

On September 21, 2011, Mr. Ager was granted options to purchase up to 325,000 shares of our common stock pursuant to a non-qualified stock option agreement. Of the 325,000 options, 125,000 options vested on execution of the agreement. The remaining 200,000 options will vest over the term of the option in connection with the occurrence of certain events, as follows: (i) 100,000 options will vest upon completion of defined target from metallurgical tests and (ii) 100,000 will vest upon obtaining a funding commitment to construct a gold recovery facility.

Grants of Plan Based Awards

The following table sets forth information regarding awards for the year ended December 31, 2011 under our compensation plans to each of the Named Executive Officers:

Name	Grant Date		Estimated Future Payouts Under Non- Equity Incentive Plan Awards ($) ⁽¹⁾		Estimated Future Payouts Under Equity Incentive Plan Awards (#) ⁽²⁾				All Other Stock Awards: Number of Shares of Units (#)		Exercise or Base Price of Option Awards ($) ⁽⁴⁾		Grant Date Fair Value of Stock and Option Awards ($) ⁽⁵⁾
					Restricted Stock
					Shares⁽³⁾		Options⁽³⁾
Martin B. Oring ⁽⁶⁾		9/21/2011		-		-		-		200,000		1.22		100,595
		9/21/2011		-		-		-		100,000		1.22		107,457
		9/21/2011		-		-		-		150,000		1.22		161,186
		9/21/2011		-		-		-		150,000		1.22		67,113

Carl S. Ager ⁽⁷⁾		9/21/2011		-		-		-		125,000		1.22		62,892
		9/21/2011		-		-		-		100,000		1.22		107,457
		9/21/2011		-		-		-		100,000		1.22		44,742

Melvin L. Williams ⁽⁸⁾		9/21/2011		-		-		-		75,000		1.22		37,723

(1)

There was no payout under any compensation plan relating to 2011 that constitutes non-equity incentive plan awards under SEC rules. Therefore, no potential payout amounts are listed.

(2)

The only plan-based awards granted to executive officers in 2011 were stock options. No performance shares were awarded in 2011.

(3)

There were no restricted shares awarded to executive officers in 2011.

(4)

The amount reported in this column is the per share exercise price of the options, which represents the closing price for our common stock on the date of grant.

(5)

(6)


	(7)	On September 21, 2011, Mr. Ager was granted options to purchase up to 325,000 shares of our common stock pursuant to a non-qualified stock option agreement. Of the 325,000 options, 125,000 options vested on execution of the agreement. The remaining 200,000 options will vest over the term of the option in connection with the occurrence of certain events, as follows: (i) 100,000 options will vest upon completion of defined target from metallurgical tests and (ii) 100,000 will vest upon obtaining a funding commitment to construct a gold recovery facility. The options each expire on the fifth anniversary of the date that they vest, but in no event later than the tenth anniversary of the agreement.

(8)

On September 21, 2011, Mr. Williams was granted options to purchase up to 75,000 shares of our common stock pursuant to a non-qualified stock option agreement all of which vested on execution of the agreement. The options each expire on the fifth anniversary of the date that they vest.

Option Exercises and Stock Vested

No shares were acquired by any of our Named Executive Officers during the year ended December 31, 2011 through stock option exercises.

Potential Payments upon Termination of Employment or a Change of Control

We have entered into change in control agreements with Martin B. Oring, our President and Chief Executive Officer, Carl S. Ager, our Vice President, Secretary and Treasurer, and Melvin L. Williams, our Chief Financial Officer, in connection with their respective employment agreements. The agreement with Mr. Oring provides for the vesting of any unvested options granted in connection with his employment agreement in the event of a significant corporate transaction generally resulting in a sale or change of control. The agreements for Mr. Ager and Mr. Williams provide for payments to be made to each named executive officer upon termination of employment.

In the event that the agreement with Mr. Ager is terminated by us, other than for cause, we will provide Mr. Ager with six months written notice or payment equal to six months of his monthly salary. In the event the employment agreement with Mr. Williams is terminated by us without cause, we have agreed to pay Mr. Williams an amount equal to three months’ salary in a lump sum as full and final payment of all amounts payable under the agreement.

The severance amounts are payable in cash, in a lump sum. As of December 31, 2011, in the event of a qualifying termination, Mr. Ager would have been entitled to cash payments totaling $80,000 and Mr. Williams would have been entitled to cash payments totaling $32,500.

Director Compensation

This section provides information regarding the compensation policies for our directors and amounts paid and securities awarded to these directors in the year ended December 31, 2011.

From January 1, 2008 until September 30, 2010, we agreed to pay non-employee directors compensation of $3,000 per month in cash. From October 1, 2010 through June 30, 2011, the directors agreed to reduce their base cash compensation by 25% to $2,250 per month. As of July 1, 2011, we agreed to restore the base cash compensation to $3,000 per month. In addition, directors have a choice between receiving $9,000 value of our common stock per quarter, where the appropriate number of shares to equal $9,000 is determined by the closing price of our stock on the last trading day of each quarter, or a number of options to purchase twice the number of shares of common stock that the director would otherwise receive if the director elected to receive shares, with an exercise price based on the closing price of our stock on the last trading day of each quarter. Effective April 1, 2011, the Board of Directors implemented a policy whereby the number of options granted for quarterly compensation to each director is limited to 18,000 options per quarter.

Further, our 2009 Stock Incentive Plan for Directors (“2009 Directors Plan”) provides for grants to our directors of options to purchase shares of our common stock, rights to receive the appreciation in value of common shares, awards of common shares subject to vesting and other restrictions on transfer, and other awards based on common shares. The 2009 Directors Plan authorizes the issuance of up 750,000 shares of common stock.

In addition, on October 6, 2010, we instituted a form of indemnification agreement between the directors and us, whereby directors may be indemnified by us against claims brought against them out of their services to us. All of our current directors have entered into such an indemnification agreement.

The following table summarizes the compensation paid to our non-employee directors for the year ended December 31, 2011:

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)⁽¹⁾		Option Awards ($)⁽²⁾⁽³⁾		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)		Total ($)
Robert D. McDougal ⁽⁴⁾	$	31,500		-	$	29,586		-		-	$	61,086
J.C. McFarland ⁽⁵⁾	$	31,500		-	$	22,127		-		-	$	53,627
Jordan M. Estra ⁽⁶⁾	$	31,500		-	$	22,127		-		-	$	53,627
Michael W. Conboy ⁽⁷⁾		-		-		-		-		-		-

(1)

No stock awards were granted for the year ended December 31, 2011.

(2)

Amounts listed in this column represent the compensation expense of stock option awards recognized by us under Accounting Standards Codification 718, “Compensation—Stock Compensation,” (ASC 718) for the year ended December 31, 2011, rather than the amounts realized by the named individuals. See Note 9 to the consolidated financial statements (“Stock Option Plans and Warrants”) included in our Annual Report on Form 10-K for the year ended December 31, 2011 for our valuation assumptions for this expense.

(3)

The following stock option awards were made to the directors in the table in 2011, as computed in accordance with ASC 718: (i) 35,294 stock options to Jordan M. Estra, J.C. McFarland and Robert D. McDougal with an exercise price of $0.51 per share and a grant date value of $0.21 per share (March 31, 2011): (ii) 18,000 stock options to Jordan M. Estra, J.C. McFarland and Robert D. McDougal with an exercise price of $0.405 per share and a grant date value of $0.17 per share (June 30, 2011): (iii) 16,981stock options to Jordan M. Estra, J.C. McFarland and Robert D. McDougal with an exercise price of $1.06 per share and a grant date value of $0.44 per share (September 30, 2011): (iv) 18,000 stock options to Jordan M. Estra, J.C. McFarland and Robert D. McDougal with an exercise price of $0.65 per share and a grant date value of $0.24 per share (December 31, 2011). Additionally, we extended the expiration date for 200,000 options granted to Robert D. McDougal from November 21, 2011 to June 30, 2012 and recognized $7,459 of stock option modification expense.

(4)

Mr. McDougal held 384,429 stock options and no unvested shares as stock awards, at December 31, 2011. We granted 88,275 stock options and no shares as stock awards to Mr. McDougal in 2011.

(5)

Mr. McFarland held 351,572 stock options, which included 150,000 unvested stock options, at December 31, 2011. We granted 88,275 stock options and no shares as stock awards to Mr. McFarland in 2011.

(6)

Mr. Estra held 365,143 stock options, which included 150,000 unvested stock options, at December 31, 2011. We granted 88,275 stock options and no shares as stock awards to Mr. Estra in 2011.

(7)

Mr. Conboy held no stock options and no unvested shares as stock awards, at December 31, 2011. We granted no stock options and no shares as stock awards to Mr. Conboy in 2011.

Limitation of Liability of Directors

Nevada Revised Statutes provide that, subject to certain exceptions, or unless the articles of incorporation or an amendment thereto, provide for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that his act or failure to act constituted a breach of his fiduciary duties as a director or officer, and his breach of those duties involved intentional misconduct, fraud or a knowing violation of law. Our Articles of Incorporation do not contain a provision which provides for greater individual liability of our directors and officers.

Our Articles of Incorporation include provisions for limiting liability of our directors and officers under certain circumstances and for permitting indemnification of directors, officers and certain other persons, to the maximum extent permitted by applicable Nevada law, including that:

no director or officer is individually liable to us or our stockholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer, provided, that the foregoing clause will not apply to any liability of a director or officer for any act or failure to act for which Nevada law proscribes this limitation and then only to the extent that this limitation is specifically proscribed,

any repeal or modification of the foregoing provision will not adversely affect any right or protection of a director existing at the time of such repeal or modification,

we are permitted to indemnify our directors, officers and such other persons to the fullest extent permitted under Nevada law. Our current Bylaws include provisions for the indemnification of our directors, officers and certain other persons, to the fullest extent permitted by applicable Nevada law, and

with respect to the limitation of liability of our directors and officers or indemnification of our directors, officers and such other persons, neither any amendment or repeal of these provisions nor the adoption of any inconsistent provision of our Articles of Incorporation, will eliminate or reduce the effect of these provisions, in respect of any matter occurring, or any action, suit or proceeding accruing or arising or that, but for these provisions, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of April 11, 2012 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and each of our named executive officers, and (iii) officers and directors as a group. Unless otherwise indicated, the stockholders listed possess sole voting and investment power with respect to the shares shown and the officers, directors and stockholders can be reached at our principal offices at 2441 West Horizon Ridge Parkway, Suite 120, Henderson, Nevada 89052:

	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percentage of Common Stock(1)
DIRECTORS AND OFFICERS
	Carl S. Ager		17,437,644	(2)(9)		13.25	%
	Melvin L. Williams		185,000	(3)		*
	Robert D. McDougal		634,634	(4)		*
	Martin B. Oring		1,824,109	(5)		*
	Jordan M. Estra		378,518	(6)		*
	J.C. McFarland		420,947	(7)		*
	Michael W. Conboy		0	(8)		*
	All officers and directors as a group (7 persons)		20,880,852			15.59	%
HOLDERS OF MORE THAN 5% OF OUR COMMON STOCK
	Nanominerals Corp. 3500 Lakeside Court, Suite 206 Reno, Nevada 89509		16,612,644	(9)		12.66	%
	Dr. Charles A. Ager 17146 – 20th Avenue Surrey, British Columbia, Canada V3S 9N4		17,657,834	(9)(10)		13.46	%
	Luxor Capital Group, LP 767 Fifth Avenue, 19th Floor New York, New York 10153		20,296,629	(11)		14.78	%
* Less than 1%.

(1)

Beneficial ownership is determined in accordance with the rules of the SEC. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of the date of this Report, are deemed outstanding for computing the percentage ownership of the stockholder holding the options or warrants, but are not deemed outstanding for computing the percentage ownership of any other stockholder. Unless otherwise indicated in the footnotes to this table, we believe stockholders named in the table have sole voting and sole investment power with respect to the shares set forth opposite such stockholder's name. Percentage of ownership is based on 131,018,318 shares of common stock outstanding as of April 11, 2012.

(2)

Consists of 500,000 shares of common stock and options to acquire an additional 325,000 shares of our common stock (of which 200,000 may vest after 60 days following April 11, 2012) held directly by Carl S. Ager, our Vice President, Secretary and Treasurer and a member of our board of directors. In addition, Mr. Ager is a 17.5% stockholder of Nanominerals, a company that owns 16,400,000 of our outstanding shares of common stock and warrants to purchase up to 212,644 shares of common stock. However, Mr. Ager does not have any voting or investment powers over the 16,400,000 shares or the 212,644 warrants owned by Nanominerals. For purposes of Rule 13d-3 of the Exchange Act, Mr. Ager may be deemed to be a beneficial owner of the 16,400,000 shares and the 212,644 warrants owned by Nanominerals by virtue of his ownership interest in Nanominerals. However, for purposes of Section 13(d) of the Exchange Act, Mr. Ager disclaims beneficial ownership of all but a number of shares not in excess of 2,870,000 of the 16,400,000 shares and 37,212 of the 212,644 warrants owned by Nanominerals, which reflects his 17.5% ownership interest in Nanominerals. See footnote (9) below.

(3)

Consists of 90,000 shares held directly by Melvin L. Williams and in his personal IRA, and 20,000 shares held by Cupit, Milligan, Ogden & Williams PSP and Trust, dated 1/1/97, and options to acquire an additional 75,000 shares of our common stock.

(4)

Consists of 238,155 shares held directly by Robert D. McDougal, 52,675 shares held by Robert D. McDougal as Trustee of the Robert D. McDougal and Edna D. McDougal Family Trust Dated December 13, 2007 and options to acquire an additional 343,804 shares of our common stock.

(5)

Consists of 255,000 shares held directly by Martin B. Oring, 305,000 shares held by Martin Oring Financial Trust dated December 20, 2006, a family trust of which Mr. Oring’s wife serves as a trustee, and options and warrants to acquire an additional 1,264,109 shares of common stock (of which 550,000 may vest after 60 days following April 11, 2012) held by Mr. Oring and his affiliated entities.

(6)

Consists of an aggregate of 4,000 shares held directly by Jordan M. Estra (jointly with his wife) and in his personal IRA, and options to acquire an additional 374,518 shares of our common stock (of which 150,000 may vest after 60 days following April 11, 2012) held by Mr. Estra and his affiliated entities.

(7)

Consists of 60,000 shares held by Mr. McFarland, and options to acquire an additional 360,947 shares of our common stock (of which 150,000 may vest after 60 days following April 11, 2012) held by Mr. McFarland.

(8)

Mr. Conboy is employed by Luxor Capital Group, LP as the Director of Research. However, for purposes of Section 13(d) of the Exchange Act, Mr. Conboy disclaims beneficial ownership of all shares beneficially owned by Luxor Capital Group, LP. See footnote (11) below.

(9)

Nanominerals is a privately held Nevada corporation which owns 16,400,000 shares of our common stock and warrants to purchase up to 212,644 shares of common stock. Carl S. Ager, one of our officers and directors, owns 17.5% of the issued and outstanding shares of Nanominerals. Dr. Charles A. Ager, the sole director and officer of Nanominerals, and his wife, Carol Ager, collectively own 35% of the issued and outstanding shares of Nanominerals. Further, Mr. Ager has given an irrevocable proxy to Dr. Ager to vote his shares of Nanominerals during the time that Mr. Ager serves as one of our directors or executive officers. Dr. Ager has sole voting and investment powers over the 16,400,000 shares and the 212,644 warrants owned by Nanominerals. A group of additional shareholders of Nanominerals, none of who is an officer or director of Searchlight or Nanominerals, collectively own 47.5% of the outstanding shares of Nanominerals.

(10)

These shares include the 16,400,000 shares and warrants to purchase up to 212,644 shares of common stock owned by Nanominerals. Pursuant to a Schedule 13D filed by Dr. Ager, Dr. Ager and his wife, Carol Ager, collectively own 35% of the outstanding shares of Nanominerals. Dr. Ager is the sole director and officer of Nanominerals. Further, Mr. Ager has given an irrevocable proxy to Dr. Ager to vote his shares of Nanominerals during the time that Mr. Ager serves as one of our directors or executive officers. Dr. Ager has sole voting and investment powers over the 16,400,000 shares and the 212,644 warrants owned by Nanominerals. See footnote (9) above. In addition, Dr. Ager’s affiliate, Geotech Mining Inc., owns 140,000 shares of common stock. Further Mrs. Ager owns 765,190 shares in her own name, and her affiliate, Geosearch Inc., owns an additional 140,000 shares.

(11)

Luxor Capital Group, LP (“Luxor Capital Group”) acts as the investment manager of Luxor Capital Partners, LP, Luxor Spectrum, LLC, Luxor Wavefront, LP, Luxor Capital Partners Offshore Master Fund, LP, Luxor Capital Partners Offshore, Ltd., Luxor Spectrum Offshore Master Fund, LP and Luxor Spectrum Offshore, Ltd. and to an account it separately manages (collectively, the “Luxor Reporting Entities”). The Luxor Reporting Entities beneficially own an aggregate of 14,068,062 shares of common stock and warrants to purchase up to an additional 6,228,567 shares of common stock. Luxor Management, LLC (“Luxor Management”) is the general partner of Luxor Capital Group. Christian Leone is the managing member of Luxor Management. Luxor Capital Partners Offshore Master Fund, LP is a subsidiary of Luxor Capital Partners Offshore, Ltd., and Luxor Spectrum Offshore Master Fund, LP is a subsidiary of Luxor Spectrum Offshore, Ltd. LCG Holdings, LLC (“LCG Holdings”) serves as the general partner or the managing member of certain of the Luxor Reporting Entities. Mr. Leone is the managing member of LCG Holdings. Luxor Capital Group, Luxor Management and Mr. Leone may each be deemed to be the beneficial owner of the 20,296,629 shares beneficially owned by the Luxor Reporting Entities.

Item 13. Certain Relationships and Related Transactions, and Director Independence

General

We have ongoing business relationships with affiliates of our management and principal stockholders. In particular, we have continuing obligations under the agreements under which we acquired the assets relating to our Clarkdale Slag Project. We remain obligated to pay a royalty which may be generated from the operations of the Clarkdale Slag Project to Nanominerals, one of our principal stockholders, which is an affiliate of one member of our executive management and board of directors, Carl S. Ager. We also have engaged Nanominerals as a paid consultant to provide technical services to us. Further, one of our board members, Robert D. McDougal, serves as the chief financial officer and a director of Ireland Inc., a publicly traded, mining related company, which is an affiliate of Nanominerals. In addition, our President and Chief Executive Officer and a member of our board of directors, serves as a consultant to Ireland Inc. These persons are subject to a fiduciary duty to exercise good faith and integrity in handling our affairs. However, the existence of these continuing obligations may create a conflict of interest between us and our board members and senior executive management, and any disputes between us and such persons over the terms and conditions of these agreements that may arise in the future may raise the risk that the negotiations over such disputes may not be subject to being resolved in an arms’ length manner. In addition, Nanominerals’ interest in Ireland Inc. and its other mining related business interests may create a conflict of interest between us and our board members and senior executive management who are affiliates of Nanominerals.

competing for the time and attention of management,

potential interests of management in competing investment ventures, and

the lack of independent representation of the interests of the other stockholders in connection with potential disputes or negotiations over ongoing business relationships.

Although we only have four independent directors, the board of directors has adopted a written Related Person Transactions Policy, that describes the procedures used to identify, review, approve and disclose, if necessary, any transaction or series of transactions in which: (i) we were, are or will be a participant, (ii) the amount involved exceeds $120,000, and (iii) a related person had, has or will have a direct or indirect material interest. There can be no assurance that the above conflicts will not result in adverse consequences to us and the interests of the other stockholders.

Prior to the adoption of the Related Person Transactions Policy on March 17, 2009, related party transactions were subject to our Code of Ethics, which was adopted July 18, 2006, and an unwritten policy that any transactions with related persons would be approved of by a majority of our independent, disinterested directors, and would comply with the Sarbanes Oxley Act and other securities laws and regulations. However, we did not have any independent directors until October 2008. At any point at which we did not have independent directors on our board, any transactions with related persons were approved of by a majority of our then disinterested directors.

The following is a description of related party transactions in the two most recent fiscal years ended December 31, 2011.

Transactions with Certain Former Members of Management

As of December 31, 2006, we had a related party loan payable of $382,792, which consisted of borrowings from an affiliate of our former officers and directors. In addition, $360,056 was included in accounts payable that was an intercompany payable to a former subsidiary dating back to 2002. We recorded the removal of these items at December 31, 2007 as capital transactions of related parties and increased paid-in capital by $742,848 based upon our internal review of the status of these items and determination that, based on the failure of any potential claimants to make demand for payment of such amounts, these items had been canceled by such affiliates and should be treated as capital contributions related to our restructuring.

Prior to our corporate restructuring in 2005, we had several accounts payable dating back to 2003 and prior. All of these payables were incurred in the United Kingdom. These expenses were related to business operations which were discontinued in February 2005. In 2009, we updated our internal review of the status of the payables and recorded a $270,457 gain resulting from relief of liabilities that were cleared based on expiration of United Kingdom statutes of limitations. In the first quarter of 2010, we again updated our internal review of the status of the payables and recorded a $120,688 gain resulting from the relief of the liabilities. None of these payables remain outstanding. The gains were reflected as gains from discontinued operations.

Transactions with Nanominerals Corp. and Affiliates

General. Nanominerals is a private Nevada corporation principally engaged in the business of mineral exploration. Nanominerals does not have any employees and relies on third party consultants for the provision of services. Nanominerals is one of our principal stockholders. Dr. Ager and Mrs. Ager, collectively own 35% of the outstanding common stock of Nanominerals. One of our executive officers and directors, Carl S. Ager, and our former President and Chief Executive Officer, Ian R. McNeil, are stockholders of Nanominerals, but neither currently serves as an officer, director or employee of Nanominerals. Messrs. Ager and McNeil each own 17.5% of the issued and outstanding shares of common stock of Nanominerals, representing an aggregate of 35% of the outstanding common stock of Nanominerals. Dr. Ager currently is the sole officer and director of Nanominerals, and controls its day to day operations. Further, Mr. Ager has given an irrevocable proxy to Dr. Ager to vote his shares of Nanominerals during the time that Mr. Ager serves as one of our directors or executive officers. Dr. Ager has sole voting and investment powers over the 16,400,000 shares and 212,644 common stock purchase warrants owned by Nanominerals. Messrs. Ager and McNeil are the son and son-in-law, respectively, of Dr. Ager and Mrs. Ager. Dr. Ager, Mr. Ager and Mr. McNeil may be considered promoters of the Company by virtue of their positions in the Company and Nanominerals. Nanominerals is the principal stockholder of another publicly traded mining company (Ireland Inc.) and has other mining related business interests which may create a conflict of interest between us and our board members and senior executive management who are affiliates of Nanominerals.

Consulting Arrangement with Nanominerals. Nanominerals provides us with the use of its laboratory, instrumentation, milling equipment and research facilities which has allowed us to perform tests and analysis both effectively and in a more timely manner than would otherwise be available from other such consultants. We believe that Nanominerals’ knowledge and understanding of the science and technology in our business, along with its understanding of how to implement our business plan in a practical manner, has made Nanominerals an important part of our technical team. Dr. Ager performs the services for us in his authorized capacity with Nanominerals under our consulting arrangement with Nanominerals. Nanominerals also engages the services of outside technical consultants to perform the services for us, depending on the specific goal of a particular project. Some of our consultants have worked directly with Nanominerals in an ongoing manner and performed day-to-day work and tests. The consulting services provided by Nanominerals are highly specialized and unique to the mineral exploration industry, and there is a limited number of experts that can perform these types of services. We currently do not rely solely on Nanominerals to provide us with technical expertise to guide the project technically. However, Nanominerals continues to be an important consultant to assist us with our technical challenges.

The services provided by Nanominerals include:

SEM/EDS Studies: Nanominerals uses SEM/EDS to identify the minerals (gold, silver, copper and zinc) in the slag material and understand the physical make-up of the slag. This information has provided us with an understanding how to potentially liberate the minerals from the slag material by mechanical methods (grinding). This type of work is highly specialized and very unique to the mineral exploration industry.

Grinding Studies: Looking at the ground material again using SEM/EDS, Nanominerals has assisted us in testing a number of different grinders and variables (size of material fed to grinder, grinding time, etc.) to find the best way to mechanically liberate and expose the minerals within the slag material. Without mechanical liberation, the chemicals used in the extraction process (leaching) cannot perform. Therefore, grinding is a crucial step in the overall processing of the slag material. The unique nature of the slag material (i.e. it is very hard and abrasive and the minerals are entombed within the slag) makes the proper grinding of the slag material very difficult. Grinding and crushing are commonly used in the mining industry.

Analytical and Extraction Studies: Nanominerals has provided us the use of its laboratory, instrumentation, milling equipment and research facilities and has performed (and continues to perform) analytical and extraction studies for the presence of gold, silver, copper and zinc in the slag material. Nanominerals has tested different variables (chemicals, pH, ORP, machines, instruments, etc.) to attempt to determine the most effective methods to analyze and extract the desired metals.

Flow Sheet Development: Nanominerals, in conjunction with our technical team and consultants, helps to developed a flow sheet for the Clarkdale Project to attempt to determine methods to process the slag material on a large scale, and continues to assist us in determining the most effective methods used in the process of extracting metals from the slag material.

Financings: Nanominerals has introduced us to investors and potential investors which have led to participation in our previous financings. Nanominerals has also provided assistance to us when potential financiers performed technical due diligence on our projects, including making technical presentations to potential investors. We have not provided special fees to Nanominerals in connection with such financings.

We commenced our consulting arrangement with Nanominerals in 2005 following the completion of the Assignment Agreement relating to the Clarkdale Slag Project. In 2005, we only reimbursed Nanominerals for technical expenses. However, in 2006, we began to pay Nanominerals the $30,000 monthly fee, plus expense reimbursement due to the significant amount of work that Nanominerals was performing for us. This consulting arrangement was approved by the board, including by K. Ian Matheson, who has never had a direct or indirect financial interest in Nanominerals.

The board initially determined that $30,000 per month fee was a reasonable rate for Nanominerals based on several factors:

the technical services provided by Nanominerals were highly specialized and required scientists with significant experience in mining, metallurgy and chemistry.

we required a significant amount of time to be devoted to our projects (most importantly at Clarkdale). Nanominerals was available to us nearly every day (at least 100 hours per month).

Nanominerals had available resources, such as outside scientific contacts whom the consultant could use to perform specific work (i.e. SEM specialists, metallurgists in certain specialized fields, etc.).

Nanominerals had instrumentation and laboratory facilities at its disposal, either to be able to prepare or provide technical presentations and coordinate technical due-diligence presentations to prospective investors.

Nanominerals was willing to provide the services to us on a month-to-month with the ability to terminate at any time.

Given the time commitment that we required and the general market rate for qualified consultants of approximately $500 per hour, anticipated monthly fees for the services that Nanominerals was to perform were estimated to be a minimum of $50,000. Given these criteria, we believe that engaging Nanominerals to perform these services at the $30,000 monthly rate, plus expense reimbursement, has provided an advantage to us over other technical consultants. Until August 31, 2010, we paid Nanominerals a $30,000 per month fee, together with expense reimbursement and some expenses, to cover their services. The monthly fee was reduced to $17,500 on September 1, 2010, and was further reduced to $15,000 on October 1, 2010. Effective January 1, 2011, we agreed to replace the monthly fee with an advance royalty payment of $15,000 per month and to reimburse Nanominerals for actual expenses incurred.

During the years ended December 31 2010 and 2011, we utilized the services of Nanominerals to provide technical assistance and financing related activities primarily to the Clarkdale Slag Project and Searchlight Gold Project. In addition, Nanominerals provided us with the use of its laboratory, instrumentation, milling equipment and research facilities. For the year ended December 31, 2010, we incurred total fees and reimbursement of expenses to Nanominerals of $297,500 and $41,470, respectively. For the year ended December 31, 2011, we incurred total advanced royalty payments of and reimbursement of expenses to Nanominerals of $180,000 and $8,203, respectively. No amounts were due to Nanominerals as of December 31, 2011.

Transactions with Verde River Iron Company and Harry B. Crockett

Under the terms of a letter agreement, dated November 22, 2006 and as amended on February 15, 2007, with VRIC, Harry B. Crockett and Gerald Lembas, and an Agreement and Plan of Merger with VRIC and Transylvania, dated and completed on February 15, 2007, we acquired all of the outstanding shares of Transylvania from VRIC through the merger of Transylvania into our wholly-owned subsidiary, Clarkdale Minerals LLC, a Nevada limited liability company. VRIC is an affiliate of one of our principal stockholders, Marcia Crockett, who is the widow of one of our former board members, Harry B. Crockett. As a result of the merger, we own title to the approximately 200 acre property underlying a slag pile located in Clarkdale, Arizona from which we are seeking to recover base and precious metals through the reprocessing of slag material, approximately 600 acres of additional land adjacent to the project property and a commercial building in the town of Clarkdale, Arizona. In accordance with the terms of these agreements, we: (i) paid $10,100,000 in cash to VRIC, and (ii) issued 16,825,000 shares of our common stock to Harry B. Crockett and Gerald Lembas, the equity owners of VRIC, and certain designates of VRIC under the agreements, who are not our affiliates. The $10,100,000 cash payment to VRIC consisted of (i) $9,900,000 in connection with the acquisition of Transylvania and (ii) $200,000 paid to VRIC for an option to enter into the reorganization with Transylvania.

Under the terms of our 2007 agreements to acquire Transylvania with VRIC, we have the following continuing obligations:

we agreed to continue to pay VRIC $30,000 per month (which amount we had previously paid to VRIC under the Joint Venture Agreement since June 2005) until the earlier of: (i) the date that is 90 days after we receive a bankable feasibility study, or (ii) the tenth anniversary of the date of the execution of the letter agreement,

we have agreed to pay VRIC $6,400,000 within 90 days after we receive a bankable feasibility study,

we have agreed to pay VRIC a minimum annual royalty of $500,000, commencing 90 days after we receive a bankable feasibility study, 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 minimum royalty remains payable until the first to occur of: (1) the end of the first calendar year in which the percentage royalty equals or exceeds $500,000, or (2) February 15, 2017. In any calendar year in which the minimum royalty remains payable, the combined minimum royalty and percentage royalty will not exceed $500,000, and

We have recorded a liability for the $30,000 monthly payment commitment using imputed interest based on our best estimate of future cash flows. The effective interest rate used was 8.00%, resulting in an initial present value of $2,501,187 and imputed interest of $1,128,813. The expected term used was ten years, which represents the maximum term the VRIC liability is payable if the Project Funding Date does not occur by the tenth anniversary of the date of the execution of the letter agreement. We paid $1,050,000 to VRIC from February 15, 2007 (the acquisition date) through December 31, 2009, which included $542,413 of principal and $507,587 of interest. At December 31, 2009, the balance of the principal obligation owing under the letter agreement was $1,958,774. Actual payments made under the letter agreement from January 1, 2010 through December 31, 2011 were made as follows:

	Total Payments		Amount Applied to Interest		Amount Applied to Principal		Balance

At 12/31/09:							$	1,958,774

Quarter Ended 3/31/10		90,000		38,836		51,164		1,907,610
Quarter Ended 6/30/10		90,000		37,806		52,194		1,855,416
Quarter Ended 9/30/10		90,000		36,754		53,246		1,802,170
Quarter Ended 12/31/10		90,000		35,683		54,317		1,747,853

2010 Totals	$	360,000	$	149,079	$	210,921	$	1,747,853

Quarter Ended 3/31/11		90,000		34,589		55,411		1,692,442
Quarter Ended 6/30/11		90,000		33,474		56,526		1,635,916
Quarter Ended 9/30/11		90,000		32,336		57,664		1,578,252
Quarter Ended 12/31/11		90,000		31,174		58,826		1,519,426

2011 Totals	$	360,000	$	131,573	$	228,427	$	1,519,426

Other than the total $30,000 monthly payment, which includes imputed interest as set forth in the table above, we have accounted for the payments that are dependent upon future events as contingent payments. Upon meeting the contingency requirements described above, the purchase price of the Clarkdale Slag Project will be adjusted to reflect the additional consideration.

Transactions with Affiliate of our Chief Financial Officer

During the years ended December 31, 2011 and 2010, we utilized the accounting firm of Cupit, Milligan, Ogden & Williams, an affiliate of Melvin L. Williams, our Chief Financial Officer, to provide accounting support services.

We incurred total fees to Cupit Milligan of $153,939 and $152,069 for the years ended December 31, 2011 and 2010, respectively. At December 31, 2011 and 2010, we had an outstanding balance due to the firm of $12,725 and $30,437. These accounting support services included bookkeeping input for Clarkdale facility, assistance in preparing working papers for quarterly and annual reporting, and preparation of federal and state tax filings. These expenses do not include any fees for Mr. Williams’ time in directly supervising the support staff. Mr. Williams’ compensation has been provided in the form of salary. The direct benefit to Mr. Williams of the above Cupit, Milligan fees was $52,339 and $62,348 for the years ended December 31, 2011 and 2010, respectively.

We believe that all transactions with our affiliates have been entered into on terms no less favorable to us than could have been obtained from independent third parties. We intend that any transactions with officers, directors and 5% or greater stockholders will be on terms no less favorable to us than could be obtained from independent third parties.

We currently only have four independent directors and the existence of these continuing obligations to our affiliates may create a conflict of interest between us and certain of our board members and senior executive management, and any disputes between us and such persons over the terms and conditions of these agreements that may arise in the future may raise the risk that the negotiations over such disputes may not be subject to being resolved in an arms’ length manner. We intend to make good faith efforts to recruit additional independent persons to our board of directors. We intend that any transactions with our affiliates will be approved by a majority of our independent, disinterested directors and will comply with the Sarbanes Oxley Act and other securities laws and regulations.

Item 14. Principal Accountant Fees and Services

The following table shows the fees paid or accrued by us for the audit and other services provided by Brown Armstrong Accountancy Corporation, our independent auditors for the years ended December 31, 2011 and 2010:

	2011		2010

Audit Fees	$	70,944	$	71,456
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
Total	$	70,944	$	71,456

The following table shows the fees paid or accrued by us for the audit and other services provided by Kyle L. Tingle, CPA, LLC for the years ended December 31, 2011 and 2010:

	2011		2010

Audit Fees	$	-	$	-
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		813
Total	$	-	$	813

As defined by the SEC, (i) “audit fees” are fees for professional services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-Q, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years, (ii) “audit-related fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “audit fees,” (iii) “tax fees” are fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning, and (iv) “all other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”

Under applicable SEC rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditors in order to ensure that they do not impair the auditors’ independence. The SEC’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent auditors.

Consistent with the SEC’s rules, the audit committee charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent auditors to us or any of our subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting.

PART IV

Item 15. Exhibits and Financial Statement Schedules

EXHIBIT INDEX

The following is a complete list of exhibits filed as part of this Report, 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		Item
3.1		Amended and Restated Articles of Incorporation⁽¹⁾
3.2		Amended and Restated Bylaws ⁽²⁾
4.1		Specimen Stock Certificate ⁽³⁾
4.2		Rights Agreement, dated August 24, 2009, between Searchlight Minerals Corp. and Empire Stock Transfer Inc. ⁽⁴⁾
10.1		2009 Stock Incentive Award Plan, adopted December 15, 2009 ⁽⁵⁾
10.2		2009 Equity Incentive Plan for Directors, adopted December 15, 2009 ⁽⁵⁾
10.3		2007 Stock Option Plan ⁽⁶⁾
10.4		Assignment Agreement dated for reference June 1, 2005 between Searchlight Minerals Corp. and Nanominerals Corp.⁽⁷⁾
10.5		First Amendment to Assignment Agreement between Nanominerals Corp. and Searchlight Minerals Corp. dated August 31, 2005⁽⁸⁾
10.6		Second Amendment to Assignment Agreement between Nanominerals Corp. and Searchlight Minerals Corp. dated October 24, 2005⁽⁹⁾
10.7		Employment Agreement between Searchlight Minerals Corp. and Carl S. Ager dated as of January 1, 2006 ⁽¹⁰⁾
10.8		Employment Agreement between Searchlight Minerals Corp. and Melvin L. Williams dated as of June 14, 2006 ⁽¹¹⁾
10.9		Letter Agreement dated November 22, 2006 among Verde River Iron Company, LLC, Harry B. Crockett, Gerald Lembas and Searchlight Minerals Corp. ⁽¹²⁾
10.10		Notice of Exercise Option ⁽¹³⁾
10.11		Amendment No. 1 to Letter Agreement dated February 15, 2007 ⁽¹⁴⁾
10.12		Agreement and Plan of Merger dated February 15, 2007 between Verde River Iron Company, LLC, Transylvania International, Inc., Clarkdale Minerals LLC and Searchlight Minerals Corp.⁽¹⁵⁾
10.13		Special Warranty Deed dated February 15, 2007 ⁽¹⁵⁾
10.14		Bill of Sale dated February 15, 2007 ⁽¹⁵⁾
10.15		Effluent lease dated August 25, 2004 between Town of Clarkdale, Transylvania International, Inc. and Verde River Iron Company, LLC⁽¹⁵⁾
10.16		First Amendment to Employment Agreement dated February 16, 2007 between Searchlight Minerals Corp. and Carl S. Ager.⁽¹⁶⁾
10.17		First Amendment to Employment Agreement dated February 16, 2007 between Searchlight Minerals Corp. and Melvin L. Williams.⁽¹⁶⁾

100

10.18		Employment Agreement with Martin B. Oring, dated October 1, 2010, and as amended on November 8, 2010 ^{(17), (18)}
10.19		Non-Qualified Stock Option Agreement with Martin B. Oring, dated October 1, 2010 ⁽¹⁷⁾
10.20		Separation and Release Agreement with Ian R. McNeil, dated October 1, 2010 ⁽¹⁷⁾
10.21		Mining Claim Purchase Agreements regarding transfer of title to Searchlight Claims ⁽¹⁹⁾
10.22		Development Agreement, dated as of January 9, 2009, between Clarkdale Minerals, LLC and the Town of Clarkdale, Arizona ⁽²⁰⁾
10.23		Common Stock Purchase Agreement by and between Searchlight Minerals Corp. and Seaside 88, LP, dated December 22, 2010 ⁽²¹⁾
10.24		Third Amendment to Assignment Agreement between Nanominerals Corp. and Searchlight Minerals Corp. dated July 25, 2011⁽²²⁾
14.1		Code of Ethics ⁽²³⁾
21.1		List of Wholly Owned Subsidiaries
23.1		Consent of Brown Armstrong Accountancy Corporation
23.2		Consent of Kyle L. Tingle, CPA, LLC
23.3		Consent of Scott W. Lindsay
23.4		Consent of Arrakis, Inc.
23.5		Consent of SGS Lakefield Research Chile S.A.
31.1		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934
31.2		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934
32.1		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95.1		Mine Safety Disclosure
99.1		Audit Committee Charter ⁽²³⁾
99.2		Disclosure Committee Charter ⁽²⁴⁾
99.3		Related Party Transactions Policy ⁽²⁵⁾
99.4		Compensation Committee Charter ⁽²⁶⁾
99.5		Nominating and Corporate Governance Charter ⁽²⁶⁾
99.6		Corporate Governance Guidelines ⁽²⁶⁾

(1)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on December 28, 2009.

(2)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on April 29, 2009.

(3)

Filed with the SEC as an exhibit to our Registration Statement on Form 10-SB originally filed on July 11, 2000.

(4)

Filed with the SEC as an exhibit to our Registration Statement on Form 8-A filed on August 25, 2009 (No. 000-30995), which includes as Exhibit A thereto the Form of Right Certificate and as Exhibit B thereto the Summary of Common Share Purchase Rights.

(5)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on December 17, 2009.

(6)

Filed with the SEC as an exhibit to our proxy statement on Schedule 14A filed on May 22, 2007.

(7)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on June 16, 2005.

(8)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on November 21, 2005.

(9)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on October 28, 2005.

101

(10)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on March 2, 2006.

(11)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on June 20, 2006.

(12)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on November 28, 2006.

(13)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on January 16, 2007.

(14)

Filed with the SEC as an exhibit to our registration statement on Form S-1/A (No. 333-132929) filed on February 12, 2009.

(15)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on February 22, 2007.

(16)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on February 23, 2007.

(17)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on October 4, 2010.

(18)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed on November 9, 2010.

(19)

Filed with the SEC as an exhibit to our registration statement on Form S-1/A (No. 333-132929) filed on December 23, 2008.

(20)

Filed with the SEC as an exhibit to our registration statement on Form S-1/A (No. 333-132929) filed on May 7, 2009.

(21)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on December 27, 2010.

(22)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 27, 2011.

(23)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on September 27, 2006.

(24)

Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on April 13, 2004.

(25)

Filed with the SEC as an exhibit to our registration statement on Form S-1/A (No. 333-132929) filed on September 2, 2009.

(26)

Filed with the SEC as an exhibit to Form 10-K/A filed on April 30, 2010.

102

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.

Date: April 12, 2012	SEARCHLIGHT MINERALS CORP.
	a Nevada corporation

	By:	/s/ MARTIN B. ORING
		Martin B. Oring
		President and Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ MARTIN B. ORING	Chief Executive Officer, President and Director	April 12, 2012
Martin B. Oring	(Principal Executive Officer)

/s/ CARL S. AGER	Vice President, Secretary, Treasurer and Director	April 12, 2012
Carl S. Ager

/s/ MELVIN L. WILLIAMS	Chief Financial Officer	April 12, 2012
Melvin L. Williams	(Principal Accounting Officer)

/s/ MICHAEL W. CONBOY	Director	April 12, 2012
Michael W. Conboy

/s/ ROBERT D. MCDOUGAL	Director	April 12, 2012
Robert D. McDougal

/s/ J.C. MCFARLAND	Director	April 12, 2012
J.C. McFarland

/s/ JORDAN M. ESTRA	Director	April 12, 2012
Jordan M. Estra

103

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