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

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

Executive Overview

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

Clarkdale Slag Project

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

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

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

We are now actively engaged in the testing and start-up phase of the project. Currently, the installed equipment is being tested, and it is anticipated that this will be followed by the integration of all major equipment components, including the grinding, leaching, filtering and extraction circuits. Component integration involves the fabrication, installation and connection of the equipment circuits to each other and to the buildings' centralized electrical, plumbing and air-flow systems. Testing and start-up of the full production module is anticipated to commence when systems integration is complete.

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

We anticipate that our production module will allow us to determine the economics of the project and serve as the basis for the final feasibility of the project. If the feasibility of the project proves economically viable, we expect to commence construction of a full-scale production facility where we intend to install subsequent modules in parallel which would be comparable in technology, scale and cost to the initial production module. The number of subsequent modules required to attain full-production of 2,000 tons per day will be determined once the initial production module capacity is determined. We have estimated the cost of the full-production facility (including a multiple number of modules) to be approximately $70,000,000. However, this is only an estimate. A more thorough economic analysis of the full-scale production facility is expected to occur during the feasibility of the initial production module.

We have budgeted $9,100,000 for our work program on the Clarkdale Slag Project over the next twelve months, which includes assembling and operating the production module, performing the feasibility study as well as Phase II expansion preparations. In the first quarter of 2008, we expended approximately $1,000,000 to immediately address Phase II long lead-time items such as grading 12 acres of land, drilling a well and preparing the architecture and engineering drawings for the proposed full-scale production facility. A decision on allocating approximately $6,000,000 of additional funds for the Phase II expansion will be made once the first production module is operational and its results are analyzed.

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

Searchlight Gold Project

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

The Searchlight Claim owners had previously obtained a BLM approved Plan of Operations, which included permission to drill 18 holes on the 3,200 acre project area and to mine a 36 acre pit on the RR304 claim. Although the Plan of Operations was accepted and registered in the name of a Searchlight Claim owner, which is an affiliate of K. Ian Matheson, one of our principal stockholders and a former officer and director, in September 2007, we learned that the BLM had issued an "Immediate Suspension of All Activities" notice on May 12, 2006 against Mr. Matheson and certain of his affiliates (Pass Minerals, Inc., Kiminco, Inc. and Pilot Plant Inc., which also were prior Searchlight Claim owners and are our stockholders) with respect to a dispute with the BLM on a project unrelated to the Searchlight Gold Project. The dispute between the BLM and Mr. Matheson arose due to the BLM's determination that Mr. Matheson and his affiliates had engaged in willful mineral trespass for the unauthorized removal of sand and gravel from public lands on an association placer mining claim located by Mr. Matheson and his affiliates or their predecessors. The BLM had demanded payment of approximately $2,530,000 for the willful trespass. On May 12, 2006, after failure by Mr. Matheson and his affiliates to pay the amount, the BLM issued an order for "Immediate Suspension of All Activities." An appeal of the BLM's order with the Interior Board of Land Appeals affirmed the BLM's decision, keeping the order for "Immediate Suspension of All Activities" in effect. The order effectively covered all projects tied to Mr. Matheson, including the Searchlight Gold Project Plan of Operations, our planned drilling operations and our ability to fulfill our plan of operation with respect to the Searchlight Gold Project.

In late December 2007, we were verbally informed by the BLM that if we obtained title to the claims (without Mr. Matheson as a claim owner) and we applied for a new Plan of Operations under our name, the BLM would cooperate with us in granting approval of the new Plan of Operations. During the second quarter of 2008, the Searchlight Claim owners transferred title to the Searchlight Claims to us in consideration of our agreement to issue to the Searchlight Claim owners by June 30, 2008 the balance of the 1,400,000 shares of common stock issuable under the 2005 agreement pursuant to which we had obtained an option to acquire the Searchlight Claims. On June 25, 2008, we issued the balance of the 1,400,000 shares of common stock to the Searchlight Claim owners.

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

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

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

In the third quarter of 2008, we submitted a new Plan of Operations to the BLM substantially similar to the original Plan of Operations, which includes a request to drill 18 holes on the project area and to mine a 36 acre mining pit. On August 27, 2008, the BLM notified us that they had certain questions and needed some clarifications to the Plan of Operations that we submitted. These issues included clarifying the equipment to be used in the operations, any chemicals that may be used, location of and total amount of mined material as well as intention of crushed rock that will be hauled off-site. The BLM also requested clarification on any differences between our new Plan of Operations and the one previously obtained by Mr. Matheson's affiliate. The BLM also advised that the previous bond that we posted of $180,500 for the previous Plan of Operations would not be transferrable to the new one and that a new bond would have to be posted. Hence, the recovery of the reclamation bond is uncertain and therefore we have established a full allowance against the reclamation bond with the offsetting expense to project exploration costs.

On September 24, 2008, we amended the Plan of Operations to only include 18 500-foot drill holes on the project area and removed the 36 acre mining pit from consideration. We believe this amendment will help us obtain the desired drilling permits in a more timely manner. On October 10, 2008, we received a comment letter from the BLM regarding the revised Plan of Operations, which included a request to clarify the exact depth of each drill hole, whether the drill holes will be cased to prevent internal caving, the length of time each drill hole will remain open, a revised reclamation cost estimation and a minor revision to one of the maps. We addressed these comments and submitted our latest amendment to the Plan of Operations to the BLM on October 22, 2008 and we are now currently waiting for their response. If we obtain the necessary permission from the BLM, we intend to commence our drilling program in the first quarter of 2009. If the BLM has additional questions regarding our Plan of Operations, we intend to respond to them quickly in order to maintain our goal of commencing the drilling program in the first quarter of 2009. Should we be granted permission to drill under the Plan of Operations, we will be required to post a reclamation bond of approximately $16,000 with the BLM.

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

If our Plan of Operations is approved by the BLM, our work on the project site will be limited to the scope within the Plan of Operations. If we would like 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 these additional activities. There is no assurance of the timeline for approval by the BLM or that the BLM will grant approval. Our drilling and mining program on this project is dependent on obtaining the necessary approval from the BLM, therefore, if approval is not obtained, we may have to scale back or abandon exploration efforts on the project.

Anticipated Cash Requirements

Over the next twelve months, our management anticipates that the minimum cash requirements for funding our proposed exploration and development program and our continued operations will be approximately $9,200,000. At September 30, 2008, we had cash reserves in the amount of $9,809,302. Our cash position at September 30, 2008 exceeds our anticipated minimum 12 month budget of $9,200,000 by approximately $609,302.

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

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

    EXPENSE                                                          COST
    Administrative Expenses                                      $  2,000,000
    Legal and Accounting Expenses                                $  1,100,000
    Consulting Services                                          $  2,000,000

    SUBTOTAL                                                     $  5,100,000

    Clarkdale Slag Project
    Building Rehabilitation                                      $    400,000

    Production Module Assembly                                   $  1,000,000
    Production Module Operation                                  $  1,200,000
    Feasibility Study                                            $    500,000
    Phase II - Preparation for expansion to 2,000 tons per day   $  6,000,000

    SUBTOTAL                                                     $  9,100,000

    Searchlight Gold Project
    Metallurgical Testing Program                                $    600,000
    Drilling and Pre-Feasibility Program                         $    400,000

    SUBTOTAL                                                     $  1,000,000

    TOTAL                                                        $ 15,200,000

Critical Accounting Policies

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

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

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

Exploration costs - Mineral exploration costs are expensed as incurred.

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

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

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

Restatement of 2007 and Prior Financial Statements

Overview

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

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

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

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

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

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

Clarkdale Slag Project

Acquisition of Transylvania International, Inc. During the second quarter of 2008, we determined that the acquisition accounting method used in prior periods . . .