10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2016

¨ 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.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	98-0232244 (I.R.S. Employer Identification No.)
#100 - 2360 West Horizon Ridge Pkwy. Henderson, Nevada (Address of principal executive offices)	89052 (Zip code)

(702) 939-5247
(Registrant’s telephone number, including area code)

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

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

Large accelerated filer ¨	Accelerated 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

As of June 30, 2016, the registrant had 345,600,029 outstanding shares of common stock.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SEARCHLIGHT MINERALS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31, 2016			December 31, 2015
ASSETS
Current assets
Cash	$	1,541,540		$	453,744
Prepaid expenses		69,638			87,325
Total current assets		1,611,178			541,069
Property and equipment, net		6,015,287			6,301,953
Restricted cash		128,238			227,345
Slag project		121,881,203			121,874,102
Land - smelter site and slag pile		5,916,150			5,916,150
Land		1,696,242			1,696,242
Reclamation bond and deposits, net		14,566			14,566
Total non-current assets		135,651,686			136,030,358
Total assets	$	137,262,864		$	136,571,427
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	1,418,939		$	1,151,183
Accounts payable - related party		410,108			348,916
VRIC payable, current portion - related party		698,144			657,295
Convertible debt, net of discount		870,556			3,252,212
Derivative liability - convertible debt		1,392,665			590,536
Derivative warrant liability		-			53,141
Total current liabilities		4,790,412			6,053,283
Long-term liabilities
VRIC payable, net of current portion - related party		-			40,849
Deferred tax liability		48,224,926			48,224,926
Total long-term liabilities		48,224,926			48,265,775
Total liabilities		53,015,338			54,319,058
Commitments and contingencies - Note 15
Stockholders' equity
Common stock, $0.001 par value; 400,000,000 shares authorized, 286,310,744 and 154,306,537 shares, respectively, issued and outstanding		286,310			154,306
Additional paid-in capital		177,198,014			164,590,647
Accumulated deficit		(93,236,798	)		(82,492,584	)
Total stockholders' equity		84,247,526			82,252,369
Total liabilities and stockholders' equity	$	137,262,864		$	136,571,427

See Accompanying Notes to these Condensed Consolidated Financial Statements

F-1

SEARCHLIGHT MINERALS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

	For the three months ended
	March 31, 2016			March 31, 2015
Revenue	$	-		$	-
Operating expenses
Mineral exploration and evaluation expenses		442,428			481,629
Mineral exploration and evaluation expenses - related party		45,000			75,000
Administrative - Clarkdale site		-			32,445
General and administrative		400,631			615,012
General and administrative - related party		17,515			68,064
(Gain) on asset disposition		-			(2,548	)
Depreciation		286,666			358,383
Total operating expenses		1,192,240			1,627,985
Loss from operations		(1,192,240	)		(1,627,985	)
Other income (expense)
Rental revenue		5,100			5,100
Loss on conversion of notes payable		(8,112,962	)		-
Change in fair value of derivative liabilities		(748,988	)		(252,593	)
Interest expense		(695,379	)		(136,372	)
Interest and dividend income		255			41
Total other income (expense)		(9,551,974	)		(383,824	)
Loss before income taxes		(10,744,214	)		(2,011,809	)
Income tax (expense) benefit		-			642,238
Net loss	$	(10,744,214	)	$	(1,369,571	)
Comprehensive loss	$	(10,744,214	)	$	(1,369,571	)
Loss per common share - basic and diluted Net loss	$	(0.06	)	$	(0.01	)
Weighted average common shares outstanding -
Basic		173,371,103			144,606,126
Diluted		173,371,103			144,606,126

See Accompanying Notes to these Condensed Consolidated Financial Statements

F-2

SEARCHLIGHT MINERALS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	March 31, 2016			March 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,744,214	)	$	(1,369,571	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		286,666			358,383
Stock based compensation		6,922			42,088
(Gain) on asset dispositions and impairment		-			(2,548	)
Loss incurred in connection with conversion of notes payable and accrued interest		8,112,962			-
Amortization of prepaid expense		-			74,480
Amortization of debt financing fees and debt discount		632,343			63,708
Deferred income taxes		-			(642,238	)
Change in fair value of derivative liabilities		748,988			252,593
Changes in operating assets and liabilities:
Restricted cash		-			(227,345	)
Prepaid expenses		17,687			(91,952	)
Accounts payable and accrued liabilities		427,335			553,997
Net cash used in operating activities		(511,311	)		(988,405	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from property and equipment dispositions		-			457,548
Purchase of property and equipment		-			(1,937	)
Net cash provided by investing activities		-			455,611
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuance		1,500,000			1,500,000
Cash restricted for debt collateral		99,107			-
Net cash provided by financing activities		1,599,107			1,500,000
NET CHANGE IN CASH		1,087,796			967,206
CASH AT BEGINNING OF PERIOD		453,744			584,976
CASH AT END OF PERIOD	$	1,541,540		$	1,552,182
SUPPLEMENTAL INFORMATION
Interest paid, net of capitalized amounts	$	-		$	14,773
Income taxes paid	$	-		$	-
Non-cash investing and financing activities:
Common stock issued in satisfaction of accrued interest	$	-		$	129,115
Common stock issued in satisfaction of accrued interest and convertible notes payable	$	11,232,450		$	-
Conversion of notes payable and accrued interest	$	3,119,491		$	-

See Accompanying Notes to these Condensed Consolidated Financial Statements

F-3

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

Description of business - Searchlight Minerals Corp. (the “Company”) is an exploration stage company engaged in a slag reprocessing project and the acquisition and exploration of mineral properties. The Company is presently focused on 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.

Since the Company’s involvement in the Clarkdale Slag Project began, the goal has been to demonstrate the economic feasibility of the project by determining a commercially viable method to extract precious and base metals from the slag material.

The Company has not yet realized any revenues from its planned operations. 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. 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.” (“Phage”).

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 and its Board of Directors approved a change in its name from Phage to "Searchlight Minerals Corp.” effective June 23, 2005.

Going concern - The accompanying condensed consolidated financial statements were prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The going concern basis of presentation assumes that the Company will continue in operation for the next twelve months and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the Company’s inability to continue as a going concern. The Company’s history of losses, working capital deficit, minimal liquidity and other factors raise substantial doubt about the Company’s ability to continue as a going concern. In order for the Company to continue operations beyond the next twelve months and be able to discharge its liabilities and commitments in the normal course of business it must raise additional equity or debt capital and continue cost cutting measures. There can be no assurance that the Company will be able to achieve sustainable profitable operations or obtain additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to management.

If the Company continues to incur operating losses and does not raise sufficient additional capital, material adverse events may occur including, but not limited to: a reduction in the nature and scope of the Company’s operations; and the Company’s inability to fully implement its current business plan. There can be no assurance that the Company will successfully improve its liquidity position. The accompanying consolidated financial statements do not reflect any adjustments that might be required resulting from the adverse outcome relating to this uncertainty.

As of March 31, 2016, the Company had cumulative net losses of $93,236,798 from operations and had not commenced commercial mining and mineral processing operations; rather it is still in the exploration stage. For the three months ended March 31, 2016, the Company incurred a net loss of $10,744,214, had negative cash flows from operating activities of $511,311 and will incur additional future losses due to planned continued exploration expenses. In addition, the Company had a working capital deficit totaling $3,179,234 at March 31, 2016.

To address ongoing liquidity constraints, the Company continues to seek additional sources of capital through the issuance of equity, debt financing or a combination of both. The Company has reduced general and administrative expenses and elected to defer payment of certain obligations. Cash conservation measures include, but are not limited to, the deferred payment where available of outsourced consulting fees, current and future board fees, certain officer salaries, certain monthly professional fees, and the Verde River Iron Company, LLC (“VRIC”) monthly payable. These activities have reduced the required cash outlay of the Company’s business significantly. The Company is focused on continuing to reduce costs and obtaining additional funding. There is no assurance that such funding will be available on terms acceptable to the Company, or at all. If the Company raises additional funds by selling additional shares of capital stock, securities convertible into shares of capital stock or the issuance of convertible debt, the ownership interest of the Company’s existing common stock holders will be diluted.

F-4

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Basis of presentation - The accompanying financial statements have been prepared in accordance with U.S. GAAP. The Company’s fiscal year-end is December 31.

These condensed consolidated financial statements have been prepared without audit in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. All such adjustments are, in the opinion of management, of a normal recurring nature with the exception of recording a full valuation allowance on certain deferred tax assets as discussed in Note 14. The results reported in these interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on April 5, 2016.

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 U.S. 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 liabilities, impairment analysis of long-lived assets, and realizability of deferred tax assets. Actual results could differ from those estimates.

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.

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. Once mineral reserves are established, 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 will be 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 expense.

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 15 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 operating expenses.

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 tests for long-lived assets in the exploration, development or production 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 cash flows expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts.

F-5

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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.

Deferred financing fees – Deferred financing fees represent fees paid in connection with obtaining debt financing. These fees are amortized using the effective interest method over the term of the financing.

Convertible notes – derivative liabilities – The Company evaluates the embedded features of convertible notes to determine if they are required to be bifurcated and recorded as a derivative liability. If more than one feature is required to be bifurcated, the features are accounted for as a single compound derivative. The fair value of the compound derivative is recorded as a derivative liability and a debt discount. The carrying value of the convertible notes is recorded on the date of issuance at its original value less the fair value of the compound derivative.

The derivative liability is measured at fair value on a recurring basis with changes reported in other income (expense). Fair value is determined using a model which incorporates estimated probabilities and inputs calculated by both the Binomial Lattice model and present values. The debt discount is amortized to non-cash interest expense using the effective interest method over the life of the notes. If a conversion of the underlying note occurs, a proportionate share of the unamortized amount is immediately expensed.

Reclamation and remediation costs - For its exploration stage properties, the Company accrues the estimated costs associated with environmental remediation obligations in the period in which the liability is incurred or becomes determinable. Until such time that a project life is established, the Company records the corresponding cost as an exploration stage expense. The costs of future expenditures for environmental remediation are not discounted to their present value unless subject to a contractually obligated fixed payment schedule.

Future reclamation and environmental-related expenditures are difficult to estimate in many circumstances due to the early stage nature of the exploration project, the uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such reclamation and remediation costs as evidence indicating that the liabilities have potentially changed becomes available. Changes in estimates are reflected in the consolidated statement of operations in the period an estimate is revised.

The Company is in the exploration stage and is unable to determine the estimated timing of expenditures relating to reclamation accruals. It is reasonably possible that the ultimate cost of reclamation and remediation could change in the future and that changes to these estimates could have a material effect on future operating results as new information becomes known.

Fair value of financial instruments - The Company’s financial instruments consist principally of derivative liabilities and the VRIC payable. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels defined as follows:

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 the VRIC payable (described in Note 9), derivative liabilities (described in Notes 6 and 8) and convertible notes (described in Note 7). The VRIC payable and the convertible notes are classified within Level 2 of the fair value hierarchy. The fair value of the VRIC payable approximates carrying value as the imputed interest rate is considered to approximate a market interest rate. The fair value of the convertible notes approximates carrying value as the interest rate is considered to approximate a market interest rate.

F-6

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company calculates the fair value of its derivative liabilities using various models which are all Level 3 inputs. The fair value of the derivative warrant liability (described in Note 6) is calculated using the Binomial Lattice model, and the fair value of the derivative liability - convertible notes (described in Note 8) is calculated using a model which incorporates estimated probabilities and inputs calculated by both the Binomial Lattice model and present values. The change in fair value of the derivative liabilities is classified in other income (expense) in the condensed consolidated statement of operations. The Company generally does not use derivative financial instruments to hedge exposures to cash flow, market or foreign currency risks.

There have been no changes in the valuation techniques used for the derivative liabilities. The Company does not have any non-financial assets or liabilities that it measures at fair value. During the three months ended March 31, 2016 and 2015, there were no transfers of assets or liabilities between levels.

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. Potentially dilutive shares, such as stock options and warrants, are excluded from the calculation when their inclusion would be anti-dilutive, such as when the exercise price of the instrument exceeds the fair market value of the Company’s common stock and when a net loss is reported. The dilutive effect of convertible debt securities is reflected in the diluted earnings (loss) per share calculation using the if-converted method. Conversion of the debt securities is not assumed for purposes of calculating diluted earnings (loss) per share if the effect is anti-dilutive. 100,112,693 and 65,420,053 stock options, warrants and common shares issuable upon the conversion of notes were outstanding as of March 31, 2016 and March 31, 2015, respectively, but were not considered in the computation of diluted earnings per share as their inclusion would be anti-dilutive.

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 - For interim reporting periods, the Company uses the annualized effective tax rate (“AETR”) method to calculate its income tax provision. Under this method, the AETR is applied to the interim year-to-date pre-tax losses to determine the income tax benefit or expense for the year-to-date period. The income tax benefit or expense for a quarter represents the difference between the year-to-date income tax benefit or expense for the current year-to-date period less such amount for the immediately preceding year-to-date period. Management considers the impact of all known events in its estimation of the Company’s annual operating results and AETR.

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.

F-7

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recent accounting standards - From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “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 March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, “Improvements on Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for annual periods beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2017. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for annual periods beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2019. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies income tax accounting. The update requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. Adoption of the new guidance is not expected to have an impact on the condensed consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs”, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption was permitted. We adopted the provisions of ASU 2015-03 on a retrospective basis for our annual period ended December 31, 2015. The retrospective adoption of this standard resulted in the reclassification of approximately $0.1 million of current assets as a direct reduction against the balance of our current debt in the accompanying condensed consolidated balance sheet at December 31, 2015, but had no effect on our condensed consolidated net loss or stockholders’ equity.

In November 2014, the FASB issued ASU 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or Equity”. This update clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015. Adoption and implementation of this new guidance did not have any impact on our condensed consolidated statements of financial position, results of operations and liquidity.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about and Entity’s Ability to Continue as a Going Concern”. This update requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. The Company is currently evaluating the impact to its condensed consolidated financial statements.

F-8

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2 – RESTRICTED CASH

At March 31, 2016 and December 31, 2015, restricted cash amounted to $128,238 and $227,345, respectively, and consisted of funds designated for debt collateral. During the three months ended March 31, 2016, the Company reduced the restricted cash requirement by approximately $100,000, in connection with the conversion of a portion of the Company’s convertible notes payable (as described in Note 7).

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	March 31, 2016							December 31, 2015
	Cost		Accumulated Depreciation			Net Book Value		Cost		Accumulated Depreciation			Net Book Value
Furniture and fixtures	$	38,255	$	(38,047	)	$	208	$	38,255	$	(37,963	)	$	292
Lab equipment		249,061		(249,061	)		-		249,061		(249,061	)		-
Computers and equipment		71,407		(63,140	)		8,267		71,407		(61,644	)		9,763
Vehicles		47,675		(46,333	)		1,342		47,675		(46,158	)		1,517
Slag conveyance  equipment		300,916		(300,916	)		-		300,916		(300,916	)		-
Demo module building		6,630,063		(4,692,619	)		1,937,444		6,630,063		(4,526,867	)		2,103,196
Grinding circuit		913,679		(24,167	)		889,512		913,679		(21,667	)		892,012
Extraction circuit		938,352		(509,585	)		428,767		938,352		(462,668	)		475,684
Leaching and filtration		1,300,618		(1,300,618	)		-		1,300,618		(1,300,618	)		-
Fero-silicate storage		4,326		(2,271	)		2,055		4,326		(2,163	)		2,163
Electrowinning building		1,492,853		(783,748	)		709,105		1,492,853		(746,426	)		746,427
Site improvements		1,677,844		(746,901	)		930,943		1,677,844		(715,775	)		962,069
Site equipment		360,454		(354,824	)		5,630		360,454		(353,638	)		6,816
Construction in progress		1,102,014		-			1,102,014		1,102,014		-			1,102,014
	$	15,127,517	$	(9,112,230	)	$	6,015,287	$	15,127,517	$	(8,825,564	)	$	6,301,953

Depreciation expense was $286,666 and $358,383 for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016 and December 31, 2015, construction in progress included the gold, copper, and zinc extraction circuits and electrowinning equipment at the Clarkdale Slag Project.

NOTE 4 – 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 VRIC. One of the Company’s late former directors was an affiliate of VRIC. The former director joined the Company’s board subsequent to the acquisition.

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

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 Emerging Issues Task Force (“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.

F-9

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 SEC, 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 4 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 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 asset will be amortized using the unit-of-production method over the life of the Clarkdale Slag Project.

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

a) The Company paid $200,000 in cash to VRIC on the execution of a letter agreement;

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

c) 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 price 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:

d) 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. To address liquidity constraints, the Company has deferred payment of the VRIC payable effective May 1, 2014. On December 18, 2014, VRIC relinquished $255,000 of payments due to them. The relinquishment was recorded as a contribution of capital (Note 9);

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

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

f) 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

g) 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 an advance royalty payment of $15,000 per month effective January 1, 2011. The advance royalty payment is more fully discussed in Note 15.

F-10

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 allocation of purchase price to 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

The Company agreed to continue to pay VRIC $30,000 per month until the earlier of the Project Funding Date or the tenth anniversary of the date of the execution of the letter agreement. During the fourth quarter of the fiscal year ended December 31, 2015, the Company deferred monthly payments to VRIC as described in Note 9. As of March 31, 2016 and December 31, 2015, the cumulative interest cost capitalized and included in the Clarkdale Slag Project was $1,114,327 and $1,107,226 respectively.

The following table sets forth the changes to the Clarkdale Slag Project components for the three months and year ended March 31, 2016 and December 31, 2015, respectively:

	March 31, 2016		December 31, 2015
Slag Pile, beginning balance	$	121,874,102	$	121,829,655
Capitalized interest costs		7,101		44,447
Slag Pile, ending balance	$	121,881,203	$	121,874,102

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following at March 31, 2016 and December 31, 2015:

	March 31, 2016		December 31, 2015
Trade accounts payable	$	828,409	$	589,657
Accrued compensation and related taxes		510,975		435,469
Accrued interest		79,555		126,057
	$	1,418,939	$	1,151,183

Amounts due to related parties are discussed in Note 18.

F-11

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 6 – DERIVATIVE WARRANT LIABILITY

Related to a private placement completed on November 12, 2009, the Company issued 6,341,263 warrants to purchase shares of common stock. The warrants had an initial expiration date of November 12, 2012 and an initial exercise price of $1.85 per share. 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 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.

On various dates commencing in November since 2012, the latest being March 18, 2016, the Company’s Board of Directors unilaterally determined, without any negotiations with the warrant holders to amend these private placement warrants. The expiration date of the warrants was extended for approximately one year at each extension. The current expiration date is November 30, 2017. In all other respects, the terms and conditions of the warrants remained the same.

With respect to the March 18, 2016 extension, the Company did not recognize any additional expense as the fair values of the warrants were calculated at zero using the Binomial Lattice model with the following assumptions:

	March 31, 2016
Risk-free interest rate		0.64% - 0.87%
Expected volatility		122.95% - 176.27%
Expected life (years)		1.75

As of March 31, 2016, the cumulative adjustment to the warrants was as follows: (i) the exercise price was adjusted from $1.85 per share to $0.71 per share for warrants held by Luxor Capital Partners, L.P. and its affiliates (“Luxor”) and to $0.70 per share for all other warrant holders (“all others”), and (ii) the number of warrants was increased by a total of 7,463,223, being 4,686,112 warrants for Luxor and its affiliates and 2,777,111 warrants for all others. In connection with the financing completed with Luxor on June 7, 2012, Luxor waived its right to the anti-dilution adjustments on 4,252,883 warrants it holds from the 2009 private placement. Future anti-dilution adjustments were not waived. The adjusted exercise price of those warrants is $0.71 per share. During the three months ended March 31, 2016, the warrants increased by 993,332 as a result of dilutive issuances.

The total warrants accounted for as a derivative liability were 16,610,253 and 9,147,029 as of March 31, 2016 and December 31, 2015, respectively.

The following table sets forth the changes in the fair value of derivative liability for the three months ended March 31, 2016 and the year ended December 31 2015:

	March 31, 2016			December 31, 2015
Beginning balance	$	(53,141	)	$	-
Adjustment to warrants		(104,075	)		-
Change in fair value		157,216			(53,141	)
Ending balance	$	-		$	(53,141	)

The Company estimates the fair value of the derivative liabilities by using the Binomial Lattice pricing-model, with the following assumptions used for the three months ended March 31, 2016 and the year ended December 31, 2015:

	March 31, 2016		December 31, 2015
Expected volatility		122.95% - 176.27%		30.46% - 141.15%
Risk-free interest rate		0.64% - 0.84%		0.00% - 0.65%
Expected life (years)		0.75 – 1.75		0.10 - 0.90
Suboptimal exercise factor		2.0		2.5

F-12

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 is impacted by all of the underlying assumptions and calibration of the Company’s model. Significant increases or decreases in inputs would result in a significantly lower or higher fair value measurement.

NOTE 7 – CONVERTIBLE NOTES

On September 18, 2013, the Company completed a private placement of secured convertible notes (the “Notes”) resulting in gross proceeds of $4,000,000. At issuance, the Notes were convertible into shares of common stock at $0.40 per share, subject to certain adjustments. The term of the Notes was five years, but the Notes can be demanded by the holders. The Notes bear interest at 7% which is payable semi-annually. The Notes have customary provisions relating to events of default including an increase in the interest rate to 9%. The Notes are secured by a first priority lien on all of the assets of the Company including its subsidiaries. At March 31, 2016, the first priority lien included $128,238 of restricted cash specifically dedicated to debt collateral.

The Company may not incur additional secured indebtedness or other indebtedness with a maturity prior to that of the Notes without the written consent of the holders of the majority-in-interest of the Notes. In the event of a change of control of the Company, the Notes will become due and payable at 120% of the principal balance. The holders of the Notes had the right to purchase, pro rata, up to $600,000 of additional separate notes by September 18, 2014 on the same general terms and conditions as the original Notes. In September 2014, $69,000 of additional notes were purchased and issued.

At December 31, 2015, the Notes were convertible into 10,433,333 shares of common stock at $0.39 per share, as adjusted for anti-dilutive provisions and the if-converted value equaled the principal amount of the Notes. Certain embedded features in the Notes were required to be bifurcated and accounted for as a single compound derivative and reported at fair value as discussed in Note 8.

During the three months ended March 31, 2016, Luxor, on behalf of itself and certain of its affiliates (collectively, the “Luxor Group”), demanded repayment from the Company, of all of the outstanding principal and interest owing on the Luxor Group’s Secured Convertible Promissory Notes, each dated September 18, 2013 (the “Luxor Notes”). Lacking sufficient funds to make such repayments, on March 18, 2016 the Company agreed, pursuant to an Amendment to Secured Convertible Promissory Note, dated September 18, 2013, to allow the Luxor Group to convert all of the outstanding principal amount and accrued but unpaid interest owing on the Luxor Notes into shares of the Company’s common stock, at a rate of $0.035 per share. In the aggregate, the Luxor Group converted $2,600,000 of principal owing on the Luxor Notes and $91,000 of interest owing on the Luxor Notes in exchange for 76,885,714 shares of the Company’s common stock. As a condition of the Private Placement Offering on March 18, 2016, as discussed in Notes 10 and Note 12, the Luxor Group agreed that all of its 12,128,708 currently owned warrants would not be exercised until at least September 18, 2016. The Company has subsequently cancelled the Luxor Notes. In connection with the conversion of the Luxor Notes the Company has recognized a loss on conversion of $6,998,571.

On March 18, 2016, Martin Oring, one of our directors and our Chief Executive Officer, and members of his family, pursuant to Amendments to Convertible Promissory Notes, dated March 18, 2016, provided us with Conversion Notices whereby they elected to convert all of the principal and accrued but unpaid interest owing on their Secured Convertible Promissory Notes (“Oring Notes”), each dated September 18, 2013, into shares of the Company’s common stock at a rate of $0.035 per share. In the aggregate, Mr. Oring and his family members converted $414,000 in principal and $14,491 in accrued interest owing on such notes in exchange for 12,242,600 shares of the Company’s common stock. The Company has subsequently cancelled the Oring Notes. In connection with the conversion of the Oring Notes the Company has recognized a loss on conversion of $1,114,391.

On March 17, 2016 the Board of Directors of the Company approved an offer to the remaining holders of the Secured Convertible Promissory Notes. The offer, effective March 18, 2016, included the conversion of principal and interest outstanding as of March 18, 2016 at a rate of $0.035 per share. At March 31, 2016, the remaining outstanding Notes had a principal balance of $1,055,000 and accrued interest of $31,125 and were convertible into 31,037,855 shares of common stock at $0.035 per share, as adjusted for the March 18, 2016 conversion offer. The Company anticipates that a loss of approximately $1.7 million will be recorded in connection with the conversion during the quarter ended June 30, 2016.

F-13

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

At issuance, the fair value of the compound derivative was $1,261,285 and was recorded as both a derivative liability and a debt discount. The debt discount is being amortized to interest expense over the term of the Notes and the derivative liability is carried at fair value until conversion or maturity. The Company incurred $126,446 of financing fees related to the Notes. Such amounts were capitalized and are being amortized to interest expense over the term of the Notes. The carrying value of the convertible debt, net of discount was comprised of the following:

	March 31, 2016			December 31, 2015
Convertible notes at face value	$	4,069,000		$	4,069,000
Conversion of notes at face value		(3,014,000	)		-
Unamortized discount and deferred financing fees		(184,444	)		(816,788	)
Convertible notes, net of discount	$	870,556		$	3,252,212

Interest expense related to the Notes included the following for the three months ended March 31, 2016 and March 31, 2015:

	March 31, 2016		March 31, 2015
Interest rate at 7%	$	63,036	$	71,191
Amortization of debt discount		575,952		57,714
Amortization of deferred financing fees		56,391		5,994
Total interest expense on convertible notes	$	695,379	$	134,899

Included in amortization of debt discount for the three months ended March 31, 2016 is expense of $570,642 related to the conversion of $3,014,000 of notes payable on March 18, 2016. This amount has been recorded as interest expense on our condensed consolidated income statement.

NOTE 8 – DERIVATIVE LIABILITY – CONVERTIBLE NOTES

As further discussed in Note 7, the Company had issued $4,069,000 of secured convertible notes between September, 2013 and September, 2014. The Notes were convertible at any time into shares of common stock at $0.39 per share. As discussed in Note 7, on April 27, 2016 all of the notes were converted and cancelled. In connection with the April 27, 2016 conversion, the Company anticipates that it will record an approximate loss on conversion of $1.7 million.

The Notes have several embedded conversion and redemption features. The Company determined that two of the features were required to be bifurcated and accounted for under derivative accounting as follows:

1. The embedded conversion feature includes a provision for the adjustment to the conversion price if the Company issues common stock or common stock equivalents at a price less than the exercise price. Derivative accounting was required for this feature due to this anti-dilution provision.

2. One embedded redemption feature requires the Company to pay 120% of the principal balance due upon a change of control. Derivative accounting was required for this feature as the debt involves a substantial discount, the option is only contingently exercisable and its exercise is not indexed to either an interest rate or credit risk.

These two embedded features have been accounted for together as a single compound derivative. The Company estimated the fair value of the compound derivative using a model with estimated probabilities and inputs calculated by the Binomial Lattice model and present values. The assumptions included in the calculations are highly subjective and subject to interpretation. Assumptions used for the three months ended March 31, 2016 and the year ended December 31, 2015 included redemption and conversion estimates/behaviors, estimates regarding future anti-dilutive financing agreements and the following other significant estimates:

F-14

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	March 31, 2016		December 31, 2015
Expected volatility		20.57% – 222.29%		101.46 – 139.57%
Risk-free interest rate		0.29% – 1.04%		0.92 - 1.31%
Expected life (years)		1.0 – 2.51		2.0 – 2.75
Suboptimal exercise factor		1.0 – 2.0		2.5

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 is impacted by all of the underlying assumptions and calibration of the Company’s model. Significant increases or decreases in inputs would result in a significantly lower or higher fair value measurement.

The following table sets forth the changes in the fair value of the derivative liability for the three months ended March 31, 2016 and the year ended December 31, 2015:

	March 31,   2016			December 31, 2015
Beginning balance	$	590,536		$	1,218,619
Issuance of convertible debt		-			-
Conversion of convertible debt		(302,029	)		-
Change in fair value		1,104,158			(628,083	)
Ending balance	$	1,392,665		$	590,536

NOTE 9 – 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.

The Company has recorded a liability for this commitment using imputed interest based on its best estimate of its incremental borrowing rate. The effective interest rate used was 8.00%, resulting in an initial present value of $2,501,187 and a debt discount of $1,128,813. The discount is being amortized over the expected term of the debt using the effective interest method. 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.

Interest costs related to this obligation were $7,101 and $13,454 for the three months ended March 31, 2016 and 2015, respectively. Interest costs incurred have been capitalized and included in the Clarkdale Slag Project. To address liquidity constraints, the Company has deferred payment of the VRIC payable effective May 1, 2014. On December 18, 2014, VRIC relinquished $255,000 of payments due to them. The relinquishment was recorded as a contribution of capital.

The following table represents future minimum payments on the VRIC payable for each of the twelve month periods ending March 31:

2016	$	720,000
2017		41,195
Total minimum payments		761,195
Less: amount representing interest		(63,051	)
Present value of minimum payments		698,144
VRIC payable, current portion		(698,144	)
VRIC payable, net of current portion	$	-

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 4 and 15.

F-15

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 10 – STOCKHOLDERS’ EQUITY

During the three months ended March 31, 2016, the Company’s stockholders’ equity activity consisted of the following:

a) On March 18, 2016, the Company issued 76,885,714 shares of common stock at $0.035 per share to the Luxor noteholders as consideration for the conversion of $2,600,000 in principal and $91,000 in accrued interest. In connection with the conversion of the notes payable, a loss on conversion of $6,998,571 has been recognized as discussed in Note 7.

b) On March 18, 2016, the Company issued 12,242,600 shares of common stock at $0.035 per share to the Oring noteholders as consideration for the conversion of $414,000 in principal and $14,491 in accrued interest. In connection with the conversion of the notes payable, a loss on conversion of $1,114,391 has been recognized as discussed in Note 7.

c) On March 18, 2016 the Company completed a private placement offering with the Luxor Group for proceeds of $1,500,000. A total of 42,857,143 shares of common stock at $0.035 were issued in connection with this offering. As a condition of the Private Placement Offering on March 18, 2016, as discussed in Note 7 and Note 12, the Luxor Group agreed that all of its 12,128,708 currently owned warrants would not be exercised until at least September 18, 2016.

d) On March 17, 2016, the Board of Directors has also authorized, subject to stockholder approval, certain amendments to our Articles of Incorporation and Amended and Restated Bylaws that, would increase the number of authorized shares of our capital stock.

e) On March 31, 2016 the Company issued 18,750 shares of common stock at $0.08 per share to the estate of the late Robert McDougal. Mr. McDougal had been a director of the Company through January 15, 2016, the date that Mr. McDougal passed away. The shares were issued as consideration for his services a director of the Company.

During the three-month period ended March 31, 2015, the Company’s stockholders’ equity activity consisted of the following:

a) On March 23, 2015, the Company’s Board of Directors approved a private placement offering for gross proceeds of $1,500,000 with Luxor. A total of 4,250,000 units were issued at a price of $0.3529 per unit. Each unit consisted of one share of the Company’s common stock and one share purchase warrant exercisable at $0.50 per share. Such warrants will expire five years from the date of issuance and are considered to be indexed to the Company’s common stock. The financing was completed on March 25, 2015.

b) On March 18, 2015, the Company issued 516,460 shares of common stock at a price of $0.25 per share to certain convertible note holders as consideration for cancellation of an aggregate of $129,115 for interest payments due on the convertible notes as of March 18, 2015. The remaining note holders received interest payments in cash.

The following summarizes the exercise price per share and expiration date of the Company’s outstanding warrants issued to investors and vendors to purchase common stock at March 31, 2016:

Shares Underlying Outstanding Warrants		Exercise Price		Expiration Date
	1,000,000	$	0.375	June 2016
	3,410,526		0.70	November 2017
	5,736,501		0.71	November 2017
	7,042,387		1.85	November 2017
	3,000,000		0.375	June 2017
	316,752		0.30	September 2019
	2,197,496		0.30	October 2019
	1,000,000		0.30	November 2019
	1,498,750		0.30	December 2019
	3,981,000		0.50	December 2019
	4,250,000		0.50	March 2020
	2,843,000		0.50	May 2020
	2,215,429		0.50	July 2020
	327,900		0.50	September 2020
	27,067		0.70	November 2017
	44,816		0.71	November 2017
	2,750,045		0.70	November 2017
	4,641,296		0.71	November 2017
	46,282,965

F-16

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 11 – 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 March 31, 2016, the Company had 5,335,576 of its common shares available for issuance for stock option awards under the Company’s stock option plans.

At March 31, 2016, the Company had the following stock option plans available:

· 2009 Incentive Plan – The terms of the 2009 Incentive Plan, as amended, allow for up to 7,250,000 options to be issued 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. No participants shall receive more than 500,000 options under this plan in any one calendar year. 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 plan was approved by the Company’s stockholders on December 15, 2009 and the amendment was approved by the Company’s stockholders on May 8, 2012. As of March 31, 2016, the Company had granted 3,437,500 options under the 2009 Incentive Plan with a weighted average exercise price of $0.68 per share, of which, 3,397,500 were outstanding. At March 31, 2016, options available for issuance under this plan amounted to 3,812,500.

· 2009 Directors Plan - The terms of the 2009 Directors Plan, as amended, allow for up to 2,750,000 options to be issued to eligible participants. 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 participant shall receive more than 250,000 options under this plan in any one calendar year. The plan was approved by the Company’s stockholders on December 15, 2009 and the amendment was approved by the Company’s stockholders on May 8, 2012. As of March 31, 2016, the Company had granted 2,274,877 options under the 2009 Directors Plan with a weighted average exercise price of $0.67 per share, of which 2,163,627 were outstanding. As of March 31, 2016, options available for issuance under this plan amounted to 475,123.

· 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 March 31, 2016, the Company had granted 2,952,047 options under the 2007 Plan with a weighted average exercise price of $0.61 per share, of which 2,715,027 were outstanding. As of March 31, 2016, options available for issuance under this plan amounted to 1,047,953.

As of March 31, 2016, the Company had granted 15,610,714 options and warrants outside of the aforementioned stock option plans with a weighted average exercise price of $0.48 per share. As of March 31, 2016, 15,410,714 options and warrants granted were outstanding.

Amendment to Certain Outstanding Stock Options – On March 17, 2016, the Company’s Board of Directors unilaterally determined to amend: 570,000 options issued under the 2009 Incentive Plan; 188,469 options issued under the 2009 Directors Plan; 470,280 stock options issued under the 2007 plan; and 200,000 options issued outside all plans, by extending their expiration dates. The options were granted at various dates between October 6, 2008 and December 31, 2011 and have a weighted average exercise price of $0.98 per share. The expiration dates of all of the options were extended by twelve months. In all other respects, the terms and conditions of the extended options remain the same. With respect to the extensions, the Company did not recognize any additional expense as the fair values of the warrants were calculated at zero using the Binomial Lattice model.

F-17

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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, limited to 18,000, 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.

Stock warrants – Upon approval of the Board of Directors, the Company may grant stock warrants to consultants for services performed.

Valuation of awards – At March 31, 2016, the Company had options outstanding that vest on two different types of vesting schedules, service-based and performance-based. For both service-based and performance-based stock option grants, 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 the 3 month periods ended March 31, 2016 and March 31, 2015 respectively:

	March 31, 2016		March 31, 2015
Risk-free interest rate		1.21%		0.24% - 1.37%
Dividend yield		-		-
Expected volatility		252.08%		91.23% - 105.19%
Suboptimal exercise factor		2.00		2.00
Expected life (years)		3.0		1.00 - 4.25

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.

Stock-based compensation activity – During the three months ended March 31, 2016, the Company granted stock-based awards as follows:

a) On March 31, 2016, the Company granted stock options under the 2009 Directors Plan for the purchase of 36,000 shares of common stock at $0.08 per share. The options were granted to two of the Company’s non-management directors for directors’ compensation, are fully vested and expire on March 31, 2021. The exercise price of the stock options equaled the closing price of the Company’s common stock for the grant date.

b) On March 17, 2016, the Company’s Board of Directors unilaterally determined, without any negotiations with the warrant holders, to amend the expiration dates of certain outstanding warrants to purchase up to an aggregate of 16,189,414 shares of the Company’s common stock. The expiration date of the warrants was extended from November 30, 2016 to November 30, 2017. In all other respects, the terms and conditions of the warrants remain the same. The warrants were originally issued in connection with the Company’s February 23, 2007, March 22, 2007, December 26, 2007, February 7, 2008 and November 12, 2009 private placements. The Company calculated the fair value of the warrants at zero.

Expenses related to the vesting, modifying and granting of stock-based compensation awards were $6,922 and $42,088 for the three months ended March 31, 2016 and 2015, respectively. Such expenses have been included in general and administrative expense.

The following table summarizes the Company’s stock-based compensation activity for the three-month period ended March 31, 2016:

F-18

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Number of Shares			Weighted   Average  Grant    Date Fair  Value		Weighted   Average   Exercise Price		Weighted Average  Remaining   Contractual Life (Years)		Aggregate   Intrinsic   Value
Outstanding, December 31, 2015		23,936,162		$	0.21	$	0.53		3.88	$	-
Exercisable, December 31, 2015		23,636,162		$	0.20	$	0.52		3.89	$	-
Options/warrants granted		36,000			0.10		0.08		5.00
Options/warrants expired		(285,294	)		0.87		1.04		-
Options/warrants exercised		-			-		-		-
Outstanding, March 31, 2016		23,686,868		$	0.20	$	0.52		3.74	$	-
Exercisable, March 31, 2016		23,386,868		$	0.19	$	0.52		3.76	$	-

Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the quarter ended March 31, 2016, in excess of the weighted-average exercise price multiplied by the number of options outstanding or exercisable.

Unvested awards -The following table summarizes the changes of the Company’s stock-based compensation awards subject to vesting for the three-month period ended March 31, 2016

	Number of Shares Subject to Vesting		Weighted Average Grant Date Fair Value
Unvested, December 31, 2015		300,000	$	0.99
Options/warrants granted		-		-
Options/warrants vested		-		-
Unvested, March 31, 2016		300,000	$	0.99

No shares vested during the three-month period ended March 31, 2016. As of March 31, 2016, there was $1,731 of total unrecognized compensation cost related to unvested stock-based compensation awards. The weighted average period over which this cost will be recognized was 0.67 years as of March 31, 2016. Included in the total of unvested stock options at March 31, 2016, was 250,000 performance-based stock options. At March 31, 2016, management determined that achievement of the performance targets was probable. The weighted average period over which the related expense will be recognized is 0.75 years as of March 31, 2016.

NOTE 12 – STOCKHOLDER RIGHTS AGREEMENT

The Company adopted a Stockholder Rights Agreement (the “Rights Agreement”) 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 Rights Agreement, 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 Company’s Board of Directors had previously waived the 15% limitation in the Rights Agreement with respect to Luxor, to allow Luxor to become the beneficial owner of up to 26% of the shares of our Common Stock, without being deemed to be an “acquiring person” under the Rights Agreement. In connection with the Offering, completed on March 18, 2016 the Company agreed to further waive all of the existing limitations under the Rights Agreement so that Luxor would not be considered an “acquiring person” under the Rights Agreement under any circumstance. Following the Offering, Luxor is the beneficial owner (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, the “Exchange Act”) of approximately 49.83% of our Common Stock. The Rights Agreement 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. 

F-19

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 13 – PROPERTY RENTAL AGREEMENTS AND LEASES

The Company, through its subsidiary CML, has the following rental agreement as lessor:

· Clarkdale Arizona Central Railroad – rental – CML rents land to Clarkdale Arizona Central Railroad on month-to-month terms at $1,700 per month.

NOTE 14 – INCOME TAXES

The Company is a Nevada corporation and is subject to federal and Arizona income taxes. Nevada does not impose a corporate income tax. The Company recognized no income tax expense for the period ended March 31, 2016 as compared to March 31, 2015. The Company has recorded a full valuation allowance for any income tax benefits recognized in the current period. The effective tax rate for the period ended March 31, 2016 was 0% as compared to 38% for the 2015 period. The overall effective income tax rate for the year could be different from the effective tax rate for the three months ended March 31, 2016. A summary of our deferred tax assets and liabilities as well as the Company’s federal and state net operating loss carryforwards are included in Note 14 “Income Taxes” in our Annual Report on Form 10-K for the year ended December 31, 2015.

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 has losses from inception to date, and thus all years remain open for examination. 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 does not have any tax returns currently under examination by the Internal Revenue Service. 

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Severance agreements – The Company has severance agreements with two executive officers that provide for various payments if the officer’s employment agreement is terminated by the Company, other than for cause. At March 31, 2016, the total potential liability for severance agreements was $112,500. Subsequent to March 31, 2016, Melvin Williams, the Company’s Chief Financial Officer, resigned. Accordingly, the potential severance liability will be reduced to $80,000.

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 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.

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:

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

b) The Company has agreed to pay VRIC a minimum annual royalty of $500,000, commencing on the Project Funding Date (the “Advance Royalty”), and an additional royalty consisting of 2.5% of the 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,

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

The Advance Royalty shall continue for a period of ten 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.

F-20

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 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 fees were $45,000 for the three months ended March 31, 2016 and 2015 respectively. Advance Royalty fees have been included in mineral exploration and evaluation expenses – related party on the statements of operations.

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 Town Council, (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 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. As of the date of this filing, these contingencies had not changed.

Registration Rights Agreement - In connection with the June 7, 2012 private placement, the Company entered into a Registration Rights Agreement (“RRA”) with the purchasers. Pursuant to the RRA, the Company agreed to certain demand registration rights. These rights include the requirement that the Company file certain registration statements within a specified time period and to have these registration statements declared effective within a specified time period. The Company also agreed to file and keep continuously effective such additional registration statements until all of the shares of common stock registered thereunder have been sold or may be sold without volume restrictions. If the Company is not able to comply with these registration requirements, the Company will be required to pay cash penalties equal to 1.0% of the aggregate purchase price paid by the investors for each 30-day period in which a registration default, as defined by the RRA, exists. The maximum penalty is equal to 3.0% of the purchase price which amounts to $121,500. As of the date of this filing, the Company does not believe the penalty to be probable and accordingly, no liability has been accrued.

NOTE 16 – CONCENTRATION OF CREDIT RISK

The Company maintains its cash accounts in 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. 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 March 31, 2016 and December 31, 2015, the Company had $1,262,167 and $91,355, respectively, of deposits in excess of FDIC insured limits.

NOTE 17 – 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-21

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 18 – 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. One of the Company’s executive officers, Mr. Ager, is affiliated with NMC. In 2011, the Company and NMC agreed to an advance royalty of $15,000 per month and to reimburse NMC for actual expenses incurred and consulting services provided. In 2016, the Company incurred no expense for consulting services.

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 Slag Project. The royalty agreement and Advance Royalty payments are more fully discussed in Note 15.

The following table provides details of transactions between the Company and NMC for the three months ended;

	March 31, 2016		March 31, 2015
Reimbursement of expenses	$	-	$	-
Consulting services provided		-		30,000
Advance royalty payments		45,000		45,000
Mineral and exploration expense – related party	$	45,000	$	45,000

The Company had outstanding balances due to NMC of $233,725 and $188,725 at March 31, 2016 and December 31, 2015, respectively.

On December 23, 2014, the Company granted warrants for the purchase of 1,940,000 shares of common stock at $0.50 per share to NMC. The warrants were granted in part to incentivize their continued efforts and support of the Company. The warrants expire on December 23, 2019. The fair value of the warrants was calculated by the binomial lattice model and amounted to $351,276.

On November 11, 2014, the Company granted warrants for the purchase of 1,000,000 shares of common stock at $0.30 per share to NMC. The warrants were granted for investor relations. The warrants are fully vested and expire on November 11, 2019. The fair value of the warrants was calculated by the binomial lattice model and amounted to $108,877.

Cupit, Milligan, Ogden & Williams, CPAs – The Company utilized CMOW to provide accounting support services through April 8, 2016. CMOW is an affiliate of the Company’s former CFO, Mr. Williams. Fees for services provided by CMOW do not include any charges that had been incurred for Mr. Williams’ time. Mr. Williams was compensated for his time under his employment agreement.

The following table provides details of transactions between the Company and CMOW and the direct benefit to Mr. Williams for the three months ended:

	March 31, 2016		March 31, 2015
Accounting support services	$	17,926	$	63,064
Direct benefit to CFO	$	6,095	$	18,289

The Company had an outstanding balance due to CMOW of $176,383 and $158,457 as of March 31, 2016 and December 31, 2015, respectively.

Financial Consulting Services – Beginning in October of 2014, the Company utilized five individuals to provide financial consulting services. During the third quarter of 2015, the Company entered into consulting agreements with three of these individuals, all of the consultants provided similar services. One of these individuals is the son of the Company’s CEO. In consideration for his services, the Company issued to him 2,063,143 warrants to purchase common stock at an exercise price of $0.50 per share, which the Company has valued at an aggregate of $258,553. The warrants are fully vested and expire five years from the date of grant.

F-22

SEARCHLIGHT MINERALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Ireland Inc. – The Company leases corporate office space on month-to-month terms from Ireland Inc. (“Ireland”). NMC is a shareholder in both the Company and Ireland. Additionally, one of the Company’s late directors was the former CFO, Treasurer and a director of Ireland and the Company’s CEO provides consulting services to Ireland.

Total rent expense incurred to Ireland was $5,202 and $5,001 for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016, no amounts were due to Ireland. At December 31, 2015, $1,734 was due to Ireland.

Luxor – As of March 31, 2016 Luxor owned an aggregate of 142,665,754 shares of common stock and warrants to purchase up to an additional 16,532,789 shares of common stock. All 16,532,789 warrants, however, are not exercisable until September 18, 2016.

As of March 31, 2016 no amounts were payable to Luxor.

During the three months ended March 31, 2016 the Company recognized a loss on conversion of $6,998,571 related to the conversion $2,691,000 in convertible notes payable and accrued interest owing to the Luxor Group. In connection with this conversion the Company issued to the Luxor Group 76,885,714 shares of common stock, as discussed in Note 7.

During the three months ended March 31, 2016 The Luxor Group purchased from the Company 42,857,143 shares of common stock at $0.035 per share in exchange for $1,500,000 cash, as discussed in Note 10.

NOTE 19 – SUBSEQUENT EVENTS

On April 8, 2016, Melvin Williams resigned as the Chief Financial Officer of the Company, effective immediately. Concurrent with Mr. Williams’ resignation, CMOW resigned as our primary accounting resource. CMOW is an affiliate of Mr. Williams (Note 18).

On April 27, 2016, all 9 remaining outstanding holders of the Company’s secured convertible notes converted their notes into shares of common stock at a rate of $0.035 per share. In the aggregate, the holders of such notes converted, $1,086,325 in principal and interest owing on such Notes in exchange for 31,037,855 shares of the Company’s Common Stock. The Company subsequently canceled the Notes, and there are currently no further Notes outstanding from the September 18, 2013 Secured Convertible Promissory Note offering. The Company anticipates that a loss of approximately $1.7 million will be recorded in connection with the conversion during the quarter ended June 30, 2016.

On May 23, 2016, the Company completed a private placement of our common stock to 29 accredited investors. The securities were issued and sold in reliance on exemptions from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D thereunder. In the Offering, the Company sold 28,251,430 shares of common stock at $0.035 per share for gross proceeds of $988,800.

F-23

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

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, (the “SEC”) , 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-K for the year ended December 31, 2015.

The following discussion and analysis summarizes our plan of operation for the next twelve months, our results of operations for the three-month period ended March 31, 2016 and changes in our financial condition from our year ended December 31, 2015. 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-K for the year ended December 31, 2015.

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 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.

Since our involvement in the Clarkdale Slag Project, our goal has been to demonstrate the economic feasibility of the project by determining a commercially viable method to extract precious and base metals from the slag material. We believe that in order to demonstrate this, we must successfully operate four major steps of our production process: crushing and grinding, leaching, continuous process operation, and extraction of gold from solution.

Our Production Process

1. Crushing and Grinding. The first step of our production process involves grinding the slag material from rock-size chunks into sand-size grains (minus-20 mesh size). Because of the high iron content and the glassy/siliceous nature of the slag material, grinding the slag material creates significant wear on grinding equipment. Batch testing with various grinders produced significant wear on the equipment to render them unviable for a continuous production facility.

High pressure grinding rolls (“HPGR”) are commonly used in the mining industry to crush ore and have shown an ability to withstand very hard and abrasive ores. Tests using HPGRs on our slag material showed that grinding our slag material on a continuous basis did not produce wear on the equipment beyond the expected levels.

When we tested the HPGR-ground slag in our autoclave process, results showed liberation of gold, which our technical team believes is due to the micro-fractures imparted to the slag during the HPGR grinding process.  The technical team also believes that the high pressures that exist in the autoclave (see autoclave discussion in 2. below) environment are able to drive the leach solution into the micro-fracture cracks created in the slag material by the HPGR crusher, thereby dissolving the gold without having to employ a more expensive process to grind the slag material to a much finer particle size.

We believe that the HPGR is a viable grinder for our production process because it appears to have solved our grinding equipment wear issue and the HPGR produces ground slag from which gold can be leached into solution in an autoclave process.

2

2. Leaching. The second step of our production process involves leaching gold from the ground slag material using the autoclave process. 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 the slag material. Our independent consultant, Arrakis Inc. (“Arrakis”) has performed over 200 batch autoclave tests under various leach protocols and grind sizes as well as numerous pilot-scale autoclave tests in our 900-liter autoclave. Arrakis’ test results have consistently leached approximately 0.5 ounces per ton (opt) of gold into solution. In addition, these results indicate that autoclaving does not dissolve significant levels of iron and silica into solution, will improve our ability to recover gold from solution and thus improve process technical feasibility. The operating conditions identified by Arrakis thus far are mild to moderate compared with most current autoclaves and are anticipated to result in lower capital, operating and maintenance costs.

3. Continuous Operation. The third step in our production process involves being able to perform the leaching step in a larger continuous operation. While lab and bench-scale testing provides critical data for the overall development of a process, economic feasibility can only be achieved if the process can be performed in a continuous operation.

During the second quarter of 2012, we received the results of tests conducted by an independent Australian metallurgical testing firm whereby they conducted autoclave tests under various conditions, using the pressure oxidative leach (“POL”) method in a four-compartment, 25-liter autoclave. The completion of a continuous 14-hour test with 100% mechanical availability (i.e. no “down time”) demonstrates the ability of a pilot autoclave to process the Clarkdale slag material on a continuous basis. The pilot multi-compartment autoclave is routinely used to simulate operating performance in a full-scale commercial autoclave as part of a bankable feasibility study.

In addition, the pregnant leach solution (“PLS”) that was produced from the 14-hour continuous run was analyzed by the Australian testing firm. Analysis using the AAS/ICP-OES method resulted in approximately 0.2 - 0.6 opt of gold extracted into solution. The 0.2 opt was achieved during the startup of the test run. After making adjustments to the pH, volume of the leach solution and other process parameters, the higher 0.6 opt was obtained toward the completion of the test. Our independent technical consultants believe we can replicate these higher test results in future test runs.

We believe that the POL autoclave method in a large multi-compartment autoclave has shown to be viable for our production process because it can operate on a continuous basis and leaches higher levels of gold and much lower levels of iron and silica into solution than other methods. The results from POL autoclaving testing were comparable to bench-scale and pilot-scale autoclave tests performed.

Extraction. The fourth and final step in our production process involves being able to extract and recover metallic gold from PLS. Economic feasibility can only be achieved if a commercially viable method of metallic gold recovery is determined. In addition, the recovery of metallic gold will not only define the most cost-effective method of such recovery, but will also provide a better definition to the total process system mass balance and help reduce any discrepancy in analytical tests. Recovery of gold beads provides the ability to determine more accurately the amount of gold that was recovered from leach solution. Simple weighing of the gold bead and having the weight of the initial slag sample used to provide the bead gives a more accurate determination of an extractable gold grade in the slag sample. In this effort, we and our consultants are continuing to perform tests to recover gold from solution, using carbon, ion exchange resin technologies, or other commonly used methods of extracting gold from solution.

To provide additional PLS which is necessary to expedite the gold recovery tests and commercial viability of the project, we acquired and have been operating a large batch titanium autoclave (approximately 900-liter capacity). Numerous tests have been conducted in this autoclave in an effort to optimize the process parameters in order to maximize gold extraction from the slag material. Such tests have resulted in gold metal recovery of 0.38 opt, with a back-calculated average slag head grade of 0.46 opt, resulting in an average 84% recovery of the gold in the slag material.

We have been performing tests whereby the slag material is pretreated prior to processing it in the autoclave. These tests indicate that pretreatment, by melting the slag at high temperature, aids in the recovery of the gold from solution derived from the autoclave.  We believe that the high temperature process aids in breaking down the refractory coating on the gold particles that are subsequently put into solution after the autoclaving of the slag material and also separates out the iron that makes up approximately one third of the untreated slag material.

The heat treated slag material, after the removal of the iron is, for ease of reference, hereinafter referred to as glass.  This processed glass material contains the gold and, because of the heat treatment process, is now easily and readily assayed by standard fire assay techniques. It is anticipated that incorporating this additional step into our flow chart renders process optimization testing much easier and will allow this phase of the development program to be concluded more quickly.

3

Significant Technical Achievements

In 2014, the precise nature of the gold contained in the Clarkdale slag was determined. Test work done with high resolution microscopes – a Scanning Electron Microscope and a Transmission Electron Microscope have photographed and measured the gold contained within sulfides and further encapsulated by a highly refractory silicate very resistant to thermal and chemical attack. This explains the difficulty in fire assaying the gold or using ambient temperature strong reagent leaching. Further, the gold is present as colloids (very small particles) less than 100 nm in size which is 1,000 times less than the width of a human hair. (This microscopic size is in the range of most of the gold contained within the Carlin Trend in Nevada – one of North America’s richest gold deposits that went undetected for decades due to the small “invisible” gold particles. The Carlin Trend material was also very difficult to assay and process until the true nature and deportment of the gold was determined.) The temperature required to break the silicate coating of the Clarkdale slag material exceeds standard fire assay temperature which is why the gold is not captured in the lead collector used in a standard fire assay. Specialized grinding using HPGR and high temperature leaching used in the current proposed process flow diagram aid in breaking this coating, oxidizing the sulfide, and converting the gold from a colloid to a charged ionic form in solution.

Testing using this process thus far has verified the prior test results achieved and reported by us of gold grades between 0.4 to 0.6 ounces per ton (average).  The processed material being derived from the heat treated slag is also much easier to be analyzed using standard analytical techniques.  Small autoclave tests conducted on the glass from the heat treatment have produced up to an 85% extraction of gold into the PLS solution.

Other Positive Developments

In addition to the breakthrough discussed above, as a byproduct of this new process, the high temperature pre-treatment produces a high quality iron product grading over 95% iron content in a pelletized form. The high quality of the iron and its pellet size form make it a readily marketable product for sale to the China, Korea, or India markets. We believe that this high grade iron product will secure a premium price selling either into the scrap iron or pig iron market. Test work is continuing in an effort to maximize iron content while maintaining gold recovery.

The existing railroad spur on the Clarkdale Project Site connects to a major railroad for low cost transportation to a seaport or domestic market. It is believed that this pre-treatment process may pay for itself or provide a net cash flow from the sale of the iron. To examine the efficacy of this concept, we engaged Samuel Engineering of Denver, Colorado to perform a preliminary assessment and marketing study. This study suggests that a marketable high grade iron product could be made and sold as a byproduct to generate net cash flow or reduce the overall costs of producing gold. Toward this end we have commenced contacting commercial iron producers for expressions of interest.

Pilot Autoclave Test Results

In the fourth quarter of 2014, three successful pilot autoclave tests, which consisted of heat treating the Clarkdale slag material prior to autoclave processing, confirmed feed grades of 0.3 to 0.6 opt gold contained in the slag material and gold recoveries of 0.25 to 0.50 ounces per ton. The percentage recoveries ranged from 79% to 94%, with an 84% average recovery. The first two tests (the highest recovered gold values) were conducted from fresher ground slag material that was pulverized using high pressure grinding rolls (HPGR). A third test was conducted from older HPGR-pulverized material and resulted in the lowest recovered gold value referred to above. We believe the third test was negatively affected by oxide layers that commonly form on the surface of older (aged) ground slag material. A fourth pilot autoclave test was unable to be completed due to a mechanical problem with the autoclave. Even though it was pronounced a failed test and not included in the above results, the fourth test nonetheless produced a gold grade of 0.2 opt.

Two of the successful tests included processing the pre-treated slag through the autoclave twice. This simulates, to a degree, what is commonly done in large commercial multi-compartment autoclaves to achieve optimum extraction. One of the tests involved a single autoclave run. Therefore, a total of five pilot-scale autoclave tests were successfully conducted with the high temperature pre-treatment. These tests resulted in the processing of over 1,200 kg of raw slag and the production of over 3,800 liters of gold-bearing solutions. The gold contained in these solutions is now being recovered as metallic gold.

4

High temperature pre-treatment allows the refractory material from the Clarkdale Slag Project to be fire assayed, resulting in the recovery of gold beads, and all results have been reported by fire assay.

Whereas previously reported slag material gold grade results were similar to those reported above, the most recent tests resulted in higher percentage recoveries of the gold from solution (as gold beads) using a variety of standard processes (i.e., electro-winning, direct precipitation, activated carbon, and ion exchange resins). All of these commonly used processes represent “off the shelf” technologies utilized globally in base and precious metals processing.

The methodology that consistently provided the highest percentage recovery of metal from solution in the most recent tests was an ion exchange resin process, which was originally used in our plant in Clarkdale, Arizona.

An additional benefit of utilizing the large-capacity heat treating unit prior to the large-capacity pilot autoclave is that high grade ‘pig iron’ has been produced, containing a greater than 95% iron content, whereas previously reported results at bench-scale levels resulted in 75% - 85% iron extraction. The 95%-plus iron product commands a much higher price, and we believe that it may be able to profitably sell such pig iron into the domestic scrap iron market. If such sales of pig iron can be realized, we can eliminate the cost of overseas transport while simultaneously obtaining a much higher price per ton. In addition, the original railroad line to the Clarkdale Slag Project site is intact and has been well maintained. The cost of upgrading the line for pig iron transport would be minimal relative to the cost of new railroad construction. It is currently anticipated that this additional byproduct, if buyers are found, will further enhance the commercial profitability of the Clarkdale Slag Project by improving recoverable gold grades and generating an additional revenue stream.

Current Work Program

We are currently working on the following key steps in an effort to move expeditiously towards commercial operation:

1. Thermal Pre-treatment Testing and Iron Production: Previous testing on slag material conducted by us on material from our Clarkdale Slag Project indicated that a high quality iron product could be produced from the slag material by using a thermal pre-treatment step prior to the autoclave process, which is designed to extract the gold. We conducted such tests to determine whether high quality iron could be produced from the slag material with the goal that the resulting iron may be sold at a price, which could at a minimum, pay for the cost of producing it and perhaps produce an additional cash flow above and beyond the revenue that we may receive from the extraction of gold from the slag pile. We also believe that the iron-removing pre-treatment of the slag material in this manner results in greater gold extraction from the autoclave process.

In 2015, we contracted Midrex Technologies, Inc. (“Midrex”) to run bench scale testing in their test facility in Charlotte, N.C. to determine if their technology could produce a high quality iron product from the Company’s slag material. Midrex reported that their technology was successful in producing “up to 97.8% iron metallization in bench scale box furnace testing, exceeding the goal of 90.0% iron metallization.”

5

In a continuing effort to produce high quality iron in a cost effective manner, we are in the process of engaging additional firms to determine if their equipment and technology can be used on our slag material. In the coming months, we intend to continue this pursuit and perform the necessary tests to make this determination.

2. Autoclave Optimization: We have installed certain required components to switch from using chlorine reagents to chlorine gas for the autoclave process. We believe that this will not only significantly lower supply costs on the commercial unit but will eliminate the potential problems of salt formation in the autoclave. We anticipate that this will also simplify and increase recovery of gold from the pregnant leach solution (PLS) derived from the autoclave process.

Initial test work conducted with the chlorine gas system has indicated that this system, used in lieu of the previous chlorine chemical system, provides a much higher oxidizing capability at a much lower total reagent cost, reduces the salt load in solution and therefore, eliminates the piping plugging problems encountered in previous autoclave test runs.Once additional bench autoclave tests have been completed to finalize the chemical and operating conditions, the 900-liter pilot autoclave will be operated to verify results to date at a larger scale.

3. Third Party Review and Verification: We have hired an independent team of well qualified and experienced experts to complete a technical review of the project. It is anticipated that a favorable report from this review would be used to facilitate the financing of the bankable feasibility study and commercial production facility.

Critical Accounting Policies

Use of estimates - The preparation of financial statements in conformity with U.S. 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 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 15 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 operating expenses.

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.

6

The tests for long-lived assets in the exploration, development or production 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.

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. We believe 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.

We account for stock options issued to non-employees based on the estimated fair value of the awards using the Binomial Lattice option pricing model. The measurement of stock-based compensation to non-employees is subject to periodic adjustments as the underlying equity instruments vest, and the resulting change in value, if any, is recognized in our consolidated statements of operations during the period the related services are rendered.

Derivative warrant liability - We have certain warrants with anti-dilution provisions, including provisions for the adjustment to the exercise price and to the number of warrants granted if we issue common stock or common stock equivalents at a price less than the exercise price. We determined that these warrants were not afforded equity classification because they embody risks not clearly and closely related to the host contract. Accordingly, the warrants are treated as a derivative liability and are carried at fair value.

We calculate the fair value of the derivative liability 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 consolidated statement of operations. We generally do not use derivative financial instruments to hedge exposures to cash flow, market or foreign currency risks. We are not exposed to significant interest or credit risk arising from these financial instruments.

Convertible notes – derivative liabilities - We evaluate the embedded features of convertible notes to determine if they are required to be bifurcated and recorded as a derivative liability. If more than one feature is required to be bifurcated, the features are accounted for as a single compound derivative. The fair value of the compound derivative is recorded as a derivative liability and a debt discount. The carrying value of the convertible notes was recorded on the issuance date at its original value less the fair value of the compound derivative.

The derivative liability is measured at fair value on a recurring basis with changes reported in other income (expense). Fair value is determined using a model which incorporates estimated probabilities and inputs calculated by both the Binomial Lattice model and present values. The debt discount is amortized to non-cash interest expense using the effective interest method over the life of the notes. If a conversion of the underlying note occurs, a proportionate share of the unamortized amount is immediately expensed.

7

Income taxes – We follow 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. We record a valuation allowance against any portion of those deferred income tax assets when we believe, 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 U.S. 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 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.

Results of Operations

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

	Three Months Ended March 31,
	2016			2015			Percent Increase/ (Decrease)
Revenue	$	-		$	-			n/a
Operating expenses		(1,192,240	)		(1,627,985	)		(26.8	)%
Other income (expense)		(9,551,974	)		(383,824	)		(2,388.6	)%
Income tax benefit		-			642,238			(100.0	)%
Net loss	$	(10,744,214	)	$	(1,369,571	)		(684.5	)%

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 three months ended March 31, 2016. 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 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:

	Three Months Ended March 31,
	2016		2015			Percent Increase/ (Decrease)
Mineral exploration and evaluation expenses	$	442,428	$	481,629			(8.1	)%
Mineral exploration and evaluation expenses – related party		45,000		75,000			(40.0	)%
Administrative – Clarkdale site		-		32,445			(100.0	)%
General and administrative		400,631		615,012			(34.9	)%
General and administrative – related party		17,515		68,064			(74.3	)%
Gain on asset disposition		-		(2,548	)		(100.0	)%
Depreciation		286,666		358,383			(20.0	)%
Total operating expenses	$	1,192,240	$	1,627,985			(26.8	)%

Three-month period ended March 31, 2016 and 2015. Operating expenses decreased to $1,192,240 during the three-month period ended March 31, 2016 from $1,627,985 during the three-month period ended March 31, 2015 as further discussed below.

8

Mineral exploration and evaluation expenses decreased to $442,428 during the three-month period ended March 31, 2016 from $481,629 during the three-month period ended March 31, 2015. The decrease is attributed to a reduction in engineering consulting and property taxes.

Mineral exploration and evaluation expenses – related party decreased to $45,000 during the three-month period ended March 31, 2016 from $75,000 during the three-month period ended March 31, 2015. The decrease is due to a decrease in expenditures associated with metallurgical consulting services in 2016. These expenses include fees paid to NMC for technical assistance and financing related activities. One of our officers, Mr. Ager, is affiliated with NMC.

General and administrative expenses decreased to $400,631 during the three-month period ended March 31, 2016 from $615,012 during the three-month period ended March 31, 2015. The decrease was primarily due to a decrease in legal costs related to retainer fees in the 2015 period, in addition to lower stock based compensation expense, and lower salaries and wages.

General and administrative expenses – related party decreased to $17,515 during the three-month period ended March 31, 2016 from $68,064 during the three-month period ended March 31, 2015. The 2015 expenses include accounting support services related to the filing of the 2014 Form 10K and rent expense. The accounting support services were performed by Cupit, Milligan, Ogden & Williams, CPAs, an affiliate of Melvin L. Williams, our former Chief Financial Officer through April 8, 2016. Rent payments are made to Ireland Inc. for corporate office space. NMC is a shareholder in both Searchlight and Ireland. Additionally, one of our late directors was the CFO, Treasurer and a director of Ireland and our CEO provides consulting services to Ireland.

· Accounting expenses – related party decreased to $17,925 during the three months ended March 31, 2016 from $63,064 for the three months ended March 31, 2015. These fees did 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 $6,095 and $18,289 of the above fees for the three months ended March 31, 2016 and 2015, respectively. The decrease in fees resulted from a decrease in the volume and complexity of equity transactions in 2016.

· Rent expense – related party increased to $5,202 from $5,001 for the three-month periods ended March 31, 2016 and 2015, respectively. The increase is due to an increase in the monthly rent paid under the terms of the lease agreement.

Depreciation expense decreased to $286,666 during the three-month period ended March 31, 2016 from $358,383 during the three-month period ended March 31, 2015. The decrease was due to the slag conveyance equipment (leaching and filtering) becoming fully depreciated in the fourth quarter of 2015.

Other Income and Expenses. Total other income (expense) amounted to expense of $9,551,974 during the three-month period ended March 31, 2016, as compared to income of $383,824 during the three-month period ended March 31, 2015. The increase was due the loss on conversion of convertible notes payable and related accrued interest expense of $8,112,962 and $695,379, respectively, and a change in the fair value of our derivative liabilities, resulting in a loss of $748,988 for the three-month period ending March 31, 2016.

Income Tax Benefit. Income tax benefit decreased to $0 for the three-month period ended March 31, 2016 from $642,238 during the three-month period ended March 31, 2015. The decrease in benefit was due to an increase in valuation allowance recorded during the quarter ended March 31, 2016.

Net Loss. The aforementioned factors resulted in a net loss of $10,744,214, or $0.06 per common share, for the three-month period ended March 31, 2016, as compared to a net loss of $1,369,571, or $0.01 per common share, for the three-month period ended March 31, 2015. The increase in our net loss for the 2016 period results primarily from losses incurred in connection with the conversion of notes payable and related accrued interest of $8,112,962.

Liquidity and Capital Resources

Historically, we have financed our operations primarily through the sale of common stock and other convertible equity securities.

During the three-month period ended March 31, 2016, we completed the following offerings:

9

Completion of Private Placement

On March 18, 2016, we completed a private placement of our securities to Luxor. Luxor and certain of its affiliates are principal stockholders of the Company. The securities were issued in reliance on exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D thereunder. In the private placement, we sold 42,857,143 shares of the Company’s common stock at a purchase price of $0.035 per share, resulting in aggregate gross proceeds to us of $1,500,000. We intend to use the net proceeds from the private placement for general working capital purposes.

In connection with the private placement, we entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) and a Registration Rights Agreement, each dated March 18, 2016, with Luxor. The Common Stock Purchase Agreement contains representations and warranties of the Company and Luxor that are customary for transactions of the type contemplated in connection with the Offering. Pursuant to the Registration Rights Agreement, we have agreed to file a Form S-3 registration statement with the SEC within 90 calendar days after the Company is permitted under the Securities Act and any SEC guidance to file such registration statement and we will use our commercial best efforts to cause such registration statement to become effective as promptly as possible. The registration statement shall cover the resale of the shares of common stock issued to Luxor in the Offering, as well as any shares issuable upon the exercise of the warrants (assuming that on the date of determination the warrants are exercised in full).

We also have agreed to file and keep continuously effective such additional registration statements until all of the shares of common stock registered thereunder have been sold or may be sold without volume restrictions pursuant to Rule 144 of the Securities Act. Luxor will also be granted piggyback registration rights with respect to such shares.

In connection with the private placement, our Board of Directors agreed to waive certain provisions of our Rights Agreement, dated August 24, 2009, with respect to accounts managed by Luxor. In connection with the Rights Agreement, the Board of Directors previously declared a dividend of one common share purchase right for each outstanding share of our common stock. The rights become exercisable, under certain circumstances, in the event that a person or group of affiliated or associated persons has acquired beneficial ownership of 15% or more of the outstanding shares of our common stock (an “acquiring person”). The Company’s Board of Directors had previously waived the 15% limitation in the Rights Agreement with respect to Luxor, to allow Luxor to become the beneficial owner of up to 26% of the shares of our Common Stock, without being deemed to be an “acquiring person” under the Rights Agreement. In connection with the Offering, completed on March 18, 2016 the Company agreed to further waive all of the existing limitations under the Rights Agreement so that Luxor would not be considered an “acquiring person” under the Rights Agreement under any circumstance. Following the Offering, Luxor is the beneficial owner (as defined in Rule 13d-3 of the Securities Exchange Act) of approximately 49.83% of our Common Stock. (Including giving effect to any warrants or other rights to purchase share of our common stock).

Conversion of Notes Payable

During the three months ended March 31, 2016, the Luxor Group, demanded repayment from the Company, of all of the outstanding principal and interest owing on the Luxor Group’s Secured Convertible Promissory Notes, each dated September 18, 2013. Lacking sufficient funds to make such repayments, on March 18, 2016 the Company agreed, pursuant to an Amendment to Secured Convertible Promissory Note, dated September 18, 2013, to allow the Luxor Group to convert all of the outstanding principal amount and accrued but unpaid interest owing on the Luxor Notes into shares of the Company’s common stock, at a rate of $0.035 per share. In the aggregate, the Luxor Group converted $2,600,000 of principal owing on the Luxor Notes and $91,000 of interest owing on the Luxor Notes in exchange for 76,885,714 shares of the Company’s common stock. The Company has subsequently cancelled the Luxor Notes. In connection with the conversion of the Luxor Notes the Company has recognized a loss on conversion of $6,998,571.

On March 18, 2016, Martin Oring, one of our directors and our Chief Executive Officer, and members of his family, pursuant to Amendments to Convertible Promissory Notes, dated March 18, 2016, provided us with Conversion Notices whereby they elected to convert all of the principal and accrued but unpaid interest owing on their Secured Convertible Promissory Notes, each dated September 18, 2013, into shares of the Company’s common stock at a rate of $0.035 per share. In the aggregate, Mr. Oring and his family members converted $414,000 in principal and $14,491 in accrued interest owing on such notes in exchange for 12,242,600 shares of the Company’s common stock. The Company has subsequently cancelled the Oring Notes. In connection with the conversion of the Oring Notes the Company has recognized a loss on conversion of $1,114,391.

In connection with the issuance of such shares, we entered a Registration Rights Agreement, dated March 18, 2016, with the holders of the Notes.

10

Pursuant to the Registration Rights Agreement, we have agreed to file a Form S-3 registration statement with the SEC within 90 calendar days after the Company is permitted under the Securities Act and any SEC guidance to file such registration statement and we will use our commercial best efforts to cause such registration statement to become effective as promptly as possible. The registration statement shall cover the resale of the shares of common stock issued to holders of the Notes in exchange for the cancellation of the March Interest Payment.

We also have agreed to file and keep continuously effective such additional registration statements until all of the shares of common stock registered thereunder have been sold or may be sold without volume restrictions pursuant to Rule 144 of the Securities Act. The holders of the Notes will also be granted piggyback registration rights with respect to such shares.

Working Capital Deficit

The following is a summary of our working capital deficit at March 31, 2016 and December 31, 2015:

	March 31, 2016			December 31, 2015			Percent Increase/(Decrease)
Current Assets	$	1,611,178		$	541,069			197.8	%
Current Liabilities		(4,790,412	)		(6,053,283	)		(21.9	)%
Working Capital Deficit	$	(3,179,234	)	$	(5,512,214	)		(42.3	)%

The decrease in our working capital deficit was primarily attributable to conversion of $2,438,047 of convertible notes (net of discount) and an increase in the related derivative liability of $802,129. In addition to the decrease in liabilities above, the Company’s cash balance increased $1,087,796 from March 31, 2015 to March 2016, due to the unused proceeds from the March 18, 2016 private placement. Unrestricted cash was $1,541,540 as of March 31, 2016, as compared to $453,744 as of December 31, 2015.

Cash Flows

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

	Three Months Ended March 31,
	2016			2015			Percent Increase/(Decrease)
Cash Flow Used in Operating Activities	$	(511,311	)	$	(988,405	)		(48.3	)%
Cash Flow Provided by Investing Activities		-			455,611			(100.0	)%
Cash Flow Provided by Financing Activities		1,599,107			1,500,000			6.6	%
Net Change in Cash During Period	$	1,087,796		$	967,206			12.5	%

Net Cash Used in Operating Activities. Net cash used in operating activities decreased to $511,311 during the three-month period ended March 31, 2016 from $988,405 during the three-month period ended March 31, 2015. The decrease after non-cash adjustments related to our conversion of notes payable and accrued interest in March, 2016 and the change in fair value of our derivative liability was due primarily to decreased depreciation expense and decreased changes to our operating liabilities in 2016 as compared to the 2015 period, and a reclassification in 2015 of $227,345 to restricted cash which consisted of funds designated for debt collateral.

Net Cash Provided by Investing Activities. Net cash provided by investing activities was $0 during the three-month period ended March 31, 2016, as compared to net cash used in investing activities of $455,611 during the three-month period ended March 31, 2015. The decrease was due to proceeds received from the sale of land in the first quarter of 2015.

11

Net Cash Provided by Financing Activities. Net cash provided by financing activities was $1,599,107 during the three-month period ended March 31, 2016, as compared to net cash provided by financing activities of $1,500,000 during the three-month period ended March 31, 2015. The increase was due to reclassification in 2016 of $99,107 to restricted cash, which consisted of funds designated for debt collateral.

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

· our ability to locate a profitable mineral property;

· positive results from our feasibility studies on the 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 revenue from our proposed business plan in the future to achieve profitable operations. As of March 31, 2016, we had an accumulated deficit of $93,236,798. As of March 31, 2016, we had a working capital deficit of $3,179,234, compared to a working capital deficit of $5,512,214 as of December 31, 2015. If we are not able to achieve profitable operations at some point in the future, we eventually will 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. For the next twelve 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 May 31, 2016, we had operating cash reserves in the amount of approximately $1,900,000. Our current financial resources are not sufficient to allow us to meet the anticipated costs of our testing and feasibility programs and operating overhead during the next twelve months and we will require additional financing in order to fund these activities. As of March 31, 2016, our financial statements and this Report do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should we be unable to continue as a going concern.

A decision on allocating additional funds for the Clarkdale Slag Project will be forthcoming if and once the feasibility study is completed and analyzed. The Clarkdale Slag Project 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 the feasibility study is completed and analyzed and we may require the necessary funding to fulfill this anticipated work program.

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 2016, we will need to obtain additional financing. There are no assurances that we will be able to obtain additional financing in an amount sufficient to meet our needs or on terms that are acceptable to us.

Obtaining additional financing is subject to a number of factors, including the market prices for 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 financing would have a material, adverse effect on our business, results of operations and financial condition.

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

12

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

Off-Balance Sheet Arrangements

None.

Recent Accounting Pronouncements

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 March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, “Improvements on Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for annual periods beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2017. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for annual periods beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2019. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies income tax accounting. The update requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. Adoption of the new guidance is not expected to have an impact on the condensed consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs”, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption was permitted. We adopted the provisions of ASU 2015-03 on a retrospective basis for our annual period ended December 31, 2015. The retrospective adoption of this standards resulted in the reclassification of approximately $0.1 million of current assets as a direct reduction against the balance of our current debt in the accompanying condensed consolidated balance sheet at December 31, 2015, but had no effect on our condensed consolidated net loss or stockholders’ equity.

In November 2014, the FASB issued ASU 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or Equity”. This update clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015. Adoption and implementation of this new guidance did not have any impact on our condensed consolidated statements of financial position, results of operations and liquidity.

13

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about and Entity’s Ability to Continue as a Going Concern”. This update requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Adoption of the new guidance will affect only the presentation and disclosures of the Company’s condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We had unrestricted cash totaling $1,541,540 at March 31, 2016 and $453,744 at December 31, 2015. Our cash is held primarily in an interest bearing bank account, a savings account and non-interest bearing checking accounts and is 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 cash holdings, 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 interest income.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, the phrase “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.  We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2016.  This evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer.  Based on this evaluation, our Chief Executive Officer concluded that, as of March 31, 2016 our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

On April 8, 2016 our CFO Melvin Williams resigned pursuant to which we no longer utilize the services of Cupit, Milligan, Ogden and Williams an affiliate of our former CFO. We believe that with the transition inherently there are changes in our internal controls over financial reporting during the quarter ended March 31, 2016. We have continued to utilize the system of internal controls in place prior to the resignation of our CFO and primary accounting resource. We have engaged an independent consulting, and financial accounting resource while we continue to pursue a permanent replacement for our former CFO.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

We believe that there are no material litigation matters against us at the current time.

Item 1A. Risk Factors

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which to our knowledge have not materially changed. Those risks, which could materially affect our business, financial condition or future results, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

14

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

On March 31, 2016 we issued 18,750 shares of common stock at $0.08 per share to the estate of our late director Robert McDougal.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

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 quarter ended March 31, 2016 is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

Item 5. Other Information

None.

Item 6. Exhibits

EXHIBIT TABLE

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

Reference Number	Item
31.1	Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
32.1	Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
95.1	Mine Safety Disclosures
101	101.INS	XBRL Instance
	101.SCH	XBRL Taxonomy Extension Schema
	101.CAL	XBRL Taxonomy Extension Calculation
	101.LAB	XBRL Taxonomy Extension Labels
	101.PRE	XBRL Taxonomy Extension Presentation
	101.DEF	XBRL Taxonomy Extension Definition

15

SIGNATURES

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

	SEARCHLIGHT MINERALS CORP.
	a Nevada corporation
Date: June 30, 2016	By:	/s/ Martin B. Oring
		Martin B. Oring Chief Executive Officer, President and Director (Principal Executive Officer and Principal Financial Officer)

16

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Martin B. Oring, hereby certify that:

1. I have reviewed this quarterly report on Form 10-Q of Searchlight Minerals Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. As the registrant’s sole certifying officer I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. As the registrant’s sole certifying officer I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	SEARCHLIGHT MINERALS CORP.
Date: June 30, 2016	By:	/s/ Martin B. Oring
		Martin B. Oring
		Chief Executive Officer, President and Director (Principal Executive Officer and Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Searchlight Minerals Corp. (the “Company”) for the quarter ended March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	SEARCHLIGHT MINERALS CORP.
Date: June 30, 2016	By:	/s/ Martin B. Oring
		Martin B. Oring
		Chief Executive Officer, President and Director (Principal Executive Officer and Principal Financial Officer)

EX-95.1

EXHIBIT 95.1

MINE SAFETY DISCLOSURE

Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) and Item 104 of Regulation S-K require certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934, as amended, that operate coal or other mines regulated under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). The following disclosures are provided pursuant to the Act and Item 104 of Regulation S-K; provided, however, that such disclosure is not intended as an admission by us that we are subject to the provisions of the Mine Act and, provided, further, that we reserve the right to challenge the applicability of the Mine Act and the jurisdiction of the U.S. Department of Labor’s Mine Safety and Health Administration (“MSHA”) with respect to our activities. The following disclosures are reported for the quarter ended March 31, 2016 for our subsidiaries and us.

Project

Section 104 S&S Citations (#) (1)

Section 104(b) Orders (#) (2)

Section 104(d) Citations and Orders (#) (3)

Section 110(b)(2) Violations (#) (4)

Section 107(a) Orders (#) (5)

Total Dollar Value of MSHA Assessments Proposed ($)

Total Number of Mining Related Fatalities (#)

Received Notice of Pattern of Violations Under Section 104(e) (yes/no) (6)

Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no)

Legal Actions Pending as of Last Day of Period (#) (7)

Legal Actions Initiated During Period (#) (7)

Legal Actions Resolved During Period (#) (7)

Clarkdale Slag Project

0

0

0

0

0

0

0

No

No

0

0

0

(1) Mine Act section 104(a) citations are for alleged violations of mandatory health or safety standards, rules, orders or regulations.

(2) Mine Act section 104(b) orders are for alleged failures to totally abate a citation within the period of time specified in the citation.

(3) Mine Act section 104(d) citations and orders are for alleged violations of mandatory health or safety standards where such violation is caused by an unwarrantable failure on the part of the operator to comply with such standards.

(4) Mine Act section 110(b)(2) violations are for “flagrant” violations of mandatory health or safety standards, i.e. a reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory safety or health standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury.

(5) Mine Act section 107(a) orders are for alleged conditions or practices which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated and result in orders of immediate withdrawal from the area of the mine affected by the condition.

(6) Mine Act section 104(e) violations and notices are for when an operator is alleged to have a pattern or potential to have a pattern of violations of mandatory health or safety standards.

(7) Legal actions before the Federal Mine Safety and Health Review Commission involving a coal or other mine owned and operated by our subsidiaries or us.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Jun. 30, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Registrant Name	Searchlight Minerals Corp.
Entity Central Index Key	0001084226
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	SRCH
Entity Common Stock, Shares Outstanding		345,600,029

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Current assets
Cash	$ 1,541,540	$ 453,744
Prepaid expenses	69,638	87,325
Total current assets	1,611,178	541,069
Property and equipment, net	6,015,287	6,301,953
Restricted cash	128,238	227,345
Reclamation bond and deposits, net	14,566	14,566
Total non-current assets	135,651,686	136,030,358
Total assets	137,262,864	136,571,427
Current liabilities
Accounts payable and accrued liabilities	1,418,939	1,151,183
Accounts payable - related party	410,108	348,916
VRIC payable, current portion - related party	698,144	657,295
Convertible debt, net of discount	870,556	3,252,212
Derivative liability - convertible debt	1,392,665	590,536
Derivative warrant liability	0	53,141
Total current liabilities	4,790,412	6,053,283
Long-term liabilities
VRIC payable, net of current portion - related party	0	40,849
Deferred tax liability	48,224,926	48,224,926
Total long-term liabilities	48,224,926	48,265,775
Total liabilities	$ 53,015,338	$ 54,319,058
Commitments and contingencies - Note 15
Stockholders' equity
Common stock, $0.001 par value; 400,000,000 shares authorized, 286,310,744 and 154,306,537 shares, respectively, issued and outstanding	$ 286,310	$ 154,306
Additional paid-in capital	177,198,014	164,590,647
Accumulated deficit	(93,236,798)	(82,492,584)
Total stockholders' equity	84,247,526	82,252,369
Total liabilities and stockholders' equity	137,262,864	136,571,427
Slag Project [Member]
Current assets
Slag project	121,881,203	121,874,102
Smelter Site and Slag Pile [Member]
Current assets
Land	5,916,150	5,916,150
Remaining Amount [Member]
Current assets
Land	$ 1,696,242	$ 1,696,242

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	286,310,744	154,306,537
Common stock, shares outstanding	286,310,744	154,306,537

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue	$ 0	$ 0
Operating expenses
Administrative - Clarkdale site	0	32,445
(Gain) on asset disposition	0	(2,548)
Depreciation	286,666	358,383
Total operating expenses	1,192,240	1,627,985
Loss from operations	(1,192,240)	(1,627,985)
Other income (expense)
Rental revenue	5,100	5,100
Loss On Conversion Of Notes Payable	(8,112,962)	0
Change in fair value of derivative liabilities	(748,988)	(252,593)
Interest expense	(695,379)	(136,372)
Interest and dividend income	255	41
Total other income (expense)	(9,551,974)	(383,824)
Loss before income taxes	(10,744,214)	(2,011,809)
Income tax (expense) benefit	0	642,238
Net loss	(10,744,214)	(1,369,571)
Comprehensive loss	$ (10,744,214)	$ (1,369,571)
Loss per common share - basic and diluted
Net loss	$ (0.06)	$ (0.01)
Weighted average common shares outstanding -
Basic	173,371,103	144,606,126
Diluted	173,371,103	144,606,126
All Other [Member]
Operating expenses
Mineral exploration and evaluation expenses	$ 442,428	$ 481,629
General and administrative	400,631	615,012
Related Party Transactions [Member]
Operating expenses
Mineral exploration and evaluation expenses	45,000	75,000
General and administrative	$ 17,515	$ 68,064

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (10,744,214)	$ (1,369,571)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	286,666	358,383
Stock based compensation	6,922	42,088
(Gain) on asset dispositions and impairment	0	2,548
Loss incurred in connection with conversion of notes payable and accrued interest	8,112,962	0
Amortization of prepaid expense	0	74,480
Amortization of debt financing fees and debt discount	632,343	63,708
Deferred income taxes	0	(642,238)
Change in fair value of derivative liabilities	748,988	252,593
Changes in operating assets and liabilities:
Restricted cash	0	(227,345)
Prepaid expenses	17,687	(91,952)
Accounts payable and accrued liabilities	427,335	553,997
Net cash used in operating activities	(511,311)	(988,405)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from property and equipment dispositions	0	457,548
Purchase of property and equipment	0	(1,937)
Net cash provided by investing activities	0	455,611
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuance	1,500,000	1,500,000
Cash restricted for debt collateral	99,107	0
Net cash provided by financing activities	1,599,107	1,500,000
NET CHANGE IN CASH	1,087,796	967,206
CASH AT BEGINNING OF PERIOD	453,744	584,976
CASH AT END OF PERIOD	1,541,540	1,552,182
SUPPLEMENTAL INFORMATION
Interest paid, net of capitalized amounts	0	14,773
Income taxes paid	0	0
Non-cash investing and financing activities:
Common stock issued in satisfaction of accrued interest and convertible notes payable	11,232,450	0
Conversion of notes payable and accrued interest	3,119,491	0
Accrued Liabilities [Member]
Non-cash investing and financing activities:
Common stock issued in satisfaction of accrued interest	$ 0	$ 129,115

XML

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

NOTE 1 – DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

Description of business - Searchlight Minerals Corp. (the “Company”) is an exploration stage company engaged in a slag reprocessing project and the acquisition and exploration of mineral properties. The Company is presently focused on 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.

Since the Company’s involvement in the Clarkdale Slag Project began, the goal has been to demonstrate the economic feasibility of the project by determining a commercially viable method to extract precious and base metals from the slag material.

The Company has not yet realized any revenues from its planned operations. 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. 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.” (“Phage”).

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 and its Board of Directors approved a change in its name from Phage to "Searchlight Minerals Corp.” effective June 23, 2005.

Going concern - The accompanying condensed consolidated financial statements were prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The going concern basis of presentation assumes that the Company will continue in operation for the next twelve months and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the Company’s inability to continue as a going concern. The Company’s history of losses, working capital deficit, minimal liquidity and other factors raise substantial doubt about the Company’s ability to continue as a going concern. In order for the Company to continue operations beyond the next twelve months and be able to discharge its liabilities and commitments in the normal course of business it must raise additional equity or debt capital and continue cost cutting measures. There can be no assurance that the Company will be able to achieve sustainable profitable operations or obtain additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to management.

If the Company continues to incur operating losses and does not raise sufficient additional capital, material adverse events may occur including, but not limited to: a reduction in the nature and scope of the Company’s operations; and the Company’s inability to fully implement its current business plan. There can be no assurance that the Company will successfully improve its liquidity position. The accompanying consolidated financial statements do not reflect any adjustments that might be required resulting from the adverse outcome relating to this uncertainty.

As of March 31, 2016, the Company had cumulative net losses of $93,236,798 from operations and had not commenced commercial mining and mineral processing operations; rather it is still in the exploration stage. For the three months ended March 31, 2016, the Company incurred a net loss of $10,744,214, had negative cash flows from operating activities of $511,311 and will incur additional future losses due to planned continued exploration expenses. In addition, the Company had a working capital deficit totaling $3,179,234 at March 31, 2016.

To address ongoing liquidity constraints, the Company continues to seek additional sources of capital through the issuance of equity, debt financing or a combination of both. The Company has reduced general and administrative expenses and elected to defer payment of certain obligations. Cash conservation measures include, but are not limited to, the deferred payment where available of outsourced consulting fees, current and future board fees, certain officer salaries, certain monthly professional fees, and the Verde River Iron Company, LLC (“VRIC”) monthly payable. These activities have reduced the required cash outlay of the Company’s business significantly. The Company is focused on continuing to reduce costs and obtaining additional funding. There is no assurance that such funding will be available on terms acceptable to the Company, or at all. If the Company raises additional funds by selling additional shares of capital stock, securities convertible into shares of capital stock or the issuance of convertible debt, the ownership interest of the Company’s existing common stock holders will be diluted.

Basis of presentation - The accompanying financial statements have been prepared in accordance with U.S. GAAP. The Company’s fiscal year-end is December 31.

These condensed consolidated financial statements have been prepared without audit in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. All such adjustments are, in the opinion of management, of a normal recurring nature with the exception of recording a full valuation allowance on certain deferred tax assets as discussed in Note 14. The results reported in these interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on April 5, 2016.

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 U.S. 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 liabilities, impairment analysis of long-lived assets, and realizability of deferred tax assets. Actual results could differ from those estimates.

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.

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. Once mineral reserves are established, 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 will be 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 expense.

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 15 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 operating expenses.

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 tests for long-lived assets in the exploration, development or production 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 cash flows expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts.

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.

Deferred financing fees – Deferred financing fees represent fees paid in connection with obtaining debt financing. These fees are amortized using the effective interest method over the term of the financing.

Convertible notes – derivative liabilities – The Company evaluates the embedded features of convertible notes to determine if they are required to be bifurcated and recorded as a derivative liability. If more than one feature is required to be bifurcated, the features are accounted for as a single compound derivative. The fair value of the compound derivative is recorded as a derivative liability and a debt discount. The carrying value of the convertible notes is recorded on the date of issuance at its original value less the fair value of the compound derivative.

The derivative liability is measured at fair value on a recurring basis with changes reported in other income (expense). Fair value is determined using a model which incorporates estimated probabilities and inputs calculated by both the Binomial Lattice model and present values. The debt discount is amortized to non-cash interest expense using the effective interest method over the life of the notes. If a conversion of the underlying note occurs, a proportionate share of the unamortized amount is immediately expensed.

Reclamation and remediation costs - For its exploration stage properties, the Company accrues the estimated costs associated with environmental remediation obligations in the period in which the liability is incurred or becomes determinable. Until such time that a project life is established, the Company records the corresponding cost as an exploration stage expense. The costs of future expenditures for environmental remediation are not discounted to their present value unless subject to a contractually obligated fixed payment schedule.

Future reclamation and environmental-related expenditures are difficult to estimate in many circumstances due to the early stage nature of the exploration project, the uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such reclamation and remediation costs as evidence indicating that the liabilities have potentially changed becomes available. Changes in estimates are reflected in the consolidated statement of operations in the period an estimate is revised.

The Company is in the exploration stage and is unable to determine the estimated timing of expenditures relating to reclamation accruals. It is reasonably possible that the ultimate cost of reclamation and remediation could change in the future and that changes to these estimates could have a material effect on future operating results as new information becomes known.

Fair value of financial instruments - The Company’s financial instruments consist principally of derivative liabilities and the VRIC payable. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels defined as follows:

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 the VRIC payable (described in Note 9), derivative liabilities (described in Notes 6 and 8) and convertible notes (described in Note 7). The VRIC payable and the convertible notes are classified within Level 2 of the fair value hierarchy. The fair value of the VRIC payable approximates carrying value as the imputed interest rate is considered to approximate a market interest rate. The fair value of the convertible notes approximates carrying value as the interest rate is considered to approximate a market interest rate.

The Company calculates the fair value of its derivative liabilities using various models which are all Level 3 inputs. The fair value of the derivative warrant liability (described in Note 6) is calculated using the Binomial Lattice model, and the fair value of the derivative liability - convertible notes (described in Note 8) is calculated using a model which incorporates estimated probabilities and inputs calculated by both the Binomial Lattice model and present values. The change in fair value of the derivative liabilities is classified in other income (expense) in the condensed consolidated statement of operations. The Company generally does not use derivative financial instruments to hedge exposures to cash flow, market or foreign currency risks.

There have been no changes in the valuation techniques used for the derivative liabilities. The Company does not have any non-financial assets or liabilities that it measures at fair value. During the three months ended March 31, 2016 and 2015, there were no transfers of assets or liabilities between levels.

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. Potentially dilutive shares, such as stock options and warrants, are excluded from the calculation when their inclusion would be anti-dilutive, such as when the exercise price of the instrument exceeds the fair market value of the Company’s common stock and when a net loss is reported. The dilutive effect of convertible debt securities is reflected in the diluted earnings (loss) per share calculation using the if-converted method. Conversion of the debt securities is not assumed for purposes of calculating diluted earnings (loss) per share if the effect is anti-dilutive. 100,112,693 and 65,420,053 stock options, warrants and common shares issuable upon the conversion of notes were outstanding as of March 31, 2016 and March 31, 2015, respectively, but were not considered in the computation of diluted earnings per share as their inclusion would be anti-dilutive.

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 - For interim reporting periods, the Company uses the annualized effective tax rate (“AETR”) method to calculate its income tax provision. Under this method, the AETR is applied to the interim year-to-date pre-tax losses to determine the income tax benefit or expense for the year-to-date period. The income tax benefit or expense for a quarter represents the difference between the year-to-date income tax benefit or expense for the current year-to-date period less such amount for the immediately preceding year-to-date period. Management considers the impact of all known events in its estimation of the Company’s annual operating results and AETR.

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 (the “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 March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, “Improvements on Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for annual periods beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2017. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for annual periods beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2019. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies income tax accounting. The update requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. Adoption of the new guidance is not expected to have an impact on the condensed consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs”, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption was permitted. We adopted the provisions of ASU 2015-03 on a retrospective basis for our annual period ended December 31, 2015. The retrospective adoption of this standard resulted in the reclassification of approximately $0.1 million of current assets as a direct reduction against the balance of our current debt in the accompanying condensed consolidated balance sheet at December 31, 2015, but had no effect on our condensed consolidated net loss or stockholders’ equity.

In November 2014, the FASB issued ASU 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or Equity”. This update clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015. Adoption and implementation of this new guidance did not have any impact on our condensed consolidated statements of financial position, results of operations and liquidity.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about and Entity’s Ability to Continue as a Going Concern”. This update requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. The Company is currently evaluating the impact to its condensed consolidated financial statements.

XML

RESTRICTED CASH

3 Months Ended

Mar. 31, 2016

Receivables [Abstract]

RESTRICTED CASH

NOTE 2 – RESTRICTED CASH

At March 31, 2016 and December 31, 2015, restricted cash amounted to $128,238 and $227,345, respectively, and consisted of funds designated for debt collateral. During the three months ended March 31, 2016, the Company reduced the restricted cash requirement by approximately $100,000, in connection with the conversion of a portion of the Company’s convertible notes payable (as described in Note 7).

XML

PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2016

PROPERTY AND EQUIPMENT [Abstract]

PROPERTY AND EQUIPMENT

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	March 31, 2016						December 31, 2015
			Accumulated						Accumulated
	Cost		Depreciation		Net Book Value		Cost		Depreciation		Net Book Value
Furniture and fixtures	$	38,255	$	(38,047)	$	208	$	38,255	$	(37,963)	$	292
Lab equipment		249,061		(249,061)		-		249,061		(249,061)		-
Computers and equipment		71,407		(63,140)		8,267		71,407		(61,644)		9,763
Vehicles		47,675		(46,333)		1,342		47,675		(46,158)		1,517
Slag conveyance equipment		300,916		(300,916)		-		300,916		(300,916)		-
Demo module building		6,630,063		(4,692,619)		1,937,444		6,630,063		(4,526,867)		2,103,196
Grinding circuit		913,679		(24,167)		889,512		913,679		(21,667)		892,012
Extraction circuit		938,352		(509,585)		428,767		938,352		(462,668)		475,684
Leaching and filtration		1,300,618		(1,300,618)		-		1,300,618		(1,300,618)		-
Fero-silicate storage		4,326		(2,271)		2,055		4,326		(2,163)		2,163
Electrowinning building		1,492,853		(783,748)		709,105		1,492,853		(746,426)		746,427
Site improvements		1,677,844		(746,901)		930,943		1,677,844		(715,775)		962,069
Site equipment		360,454		(354,824)		5,630		360,454		(353,638)		6,816
Construction in progress		1,102,014		-		1,102,014		1,102,014		-		1,102,014
	$	15,127,517	$	(9,112,230)	$	6,015,287	$	15,127,517	$	(8,825,564)	$	6,301,953

Depreciation expense was $286,666 and $358,383 for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016 and December 31, 2015, construction in progress included the gold, copper, and zinc extraction circuits and electrowinning equipment at the Clarkdale Slag Project.

XML

CLARKDALE SLAG PROJECT

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

CLARKDALE SLAG PROJECT

NOTE 4 – 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 VRIC. One of the Company’s late former directors was an affiliate of VRIC. The former director joined the Company’s board subsequent to the acquisition.

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

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 Emerging Issues Task Force (“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 $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 SEC, 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 4 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 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 asset will be amortized using the unit-of-production method over the life of the Clarkdale Slag Project.

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

a) The Company paid $200,000 in cash to VRIC on the execution of a letter agreement;

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

c) 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 price 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:

d) 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. To address liquidity constraints, the Company has deferred payment of the VRIC payable effective May 1, 2014. On December 18, 2014, VRIC relinquished $255,000 of payments due to them. The relinquishment was recorded as a contribution of capital (Note 9);

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

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

f) 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

g) 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 an advance royalty payment of $15,000 per month effective January 1, 2011. The advance royalty payment is more fully discussed in Note 15.

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 allocation of purchase price to 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

The Company agreed to continue to pay VRIC $30,000 per month until the earlier of the Project Funding Date or the tenth anniversary of the date of the execution of the letter agreement. During the fourth quarter of the fiscal year ended December 31, 2015, the Company deferred monthly payments to VRIC as described in Note 9. As of March 31, 2016 and December 31, 2015, the cumulative interest cost capitalized and included in the Clarkdale Slag Project was $1,114,327 and $1,107,226 respectively.

The following table sets forth the changes to the Clarkdale Slag Project components for the three months and year ended March 31, 2016 and December 31, 2015, respectively:

	March 31,		December 31,
	2016		2015
Slag Pile, beginning balance	$	121,874,102	$	121,829,655
Capitalized interest costs		7,101		44,447
Slag Pile, ending balance	$	121,881,203	$	121,874,102

XML

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2016

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES [Abstract]

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following at March 31, 2016 and December 31, 2015:

	March 31,		December 31,
	2016		2015
Trade accounts payable	$	828,409	$	589,657
Accrued compensation and related taxes		510,975		435,469
Accrued interest		79,555		126,057
	$	1,418,939	$	1,151,183

Amounts due to related parties are discussed in Note 18.

XML

DERIVATIVE WARRANT LIABILITY

3 Months Ended

Mar. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE WARRANT LIABILITY

NOTE 6 – DERIVATIVE WARRANT LIABILITY

Related to a private placement completed on November 12, 2009, the Company issued 6,341,263 warrants to purchase shares of common stock. The warrants had an initial expiration date of November 12, 2012 and an initial exercise price of $1.85 per share. 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 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.

On various dates commencing in November since 2012, the latest being March 18, 2016, the Company’s Board of Directors unilaterally determined, without any negotiations with the warrant holders to amend these private placement warrants. The expiration date of the warrants was extended for approximately one year at each extension. The current expiration date is November 30, 2017. In all other respects, the terms and conditions of the warrants remained the same.

With respect to the March 18, 2016 extension, the Company did not recognize any additional expense as the fair values of the warrants were calculated at zero using the Binomial Lattice model with the following assumptions:

	March 31,
	2016
Risk-free interest rate		0.64% - 0.87%
Expected volatility		122.95% - 176.27%
Expected life (years)		1.75

As of March 31, 2016, the cumulative adjustment to the warrants was as follows: (i) the exercise price was adjusted from $1.85 per share to $0.71 per share for warrants held by Luxor Capital Partners, L.P. and its affiliates (“Luxor”) and to $0.70 per share for all other warrant holders (“all others”), and (ii) the number of warrants was increased by a total of 7,463,223, being 4,686,112 warrants for Luxor and its affiliates and 2,777,111 warrants for all others. In connection with the financing completed with Luxor on June 7, 2012, Luxor waived its right to the anti-dilution adjustments on 4,252,883 warrants it holds from the 2009 private placement. Future anti-dilution adjustments were not waived. The adjusted exercise price of those warrants is $0.71 per share. During the three months ended March 31, 2016, the warrants increased by 993,332 as a result of dilutive issuances.

The total warrants accounted for as a derivative liability were 16,610,253 and 9,147,029 as of March 31, 2016 and December 31, 2015, respectively.

The following table sets forth the changes in the fair value of derivative liability for the three months ended March 31, 2016 and the year ended December 31 2015:

	March 31,		December 31,
	2016		2015
Beginning balance	$	(53,141)	$	-
Adjustment to warrants		(104,075)		-
Change in fair value		157,216		(53,141)
Ending balance	$	-	$	(53,141)

The Company estimates the fair value of the derivative liabilities by using the Binomial Lattice pricing-model, with the following assumptions used for the three months ended March 31, 2016 and the year ended December 31, 2015:

	March 31,		December 31,
	2016		2015
Expected volatility		122.95% - 176.27%		30.46% - 141.15%
Risk-free interest rate		0.64% - 0.84%		0.00% - 0.65%
Expected life (years)		0.75 – 1.75		0.10 - 0.90
Suboptimal exercise factor		2.0		2.5

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 is impacted by all of the underlying assumptions and calibration of the Company’s model. Significant increases or decreases in inputs would result in a significantly lower or higher fair value measurement.

XML

CONVERTIBLE NOTES

3 Months Ended

Mar. 31, 2016

Convertible Debt [Abstract]

CONVERTIBLE NOTES

NOTE 7 – CONVERTIBLE NOTES

On September 18, 2013, the Company completed a private placement of secured convertible notes (the “Notes”) resulting in gross proceeds of $4,000,000. At issuance, the Notes were convertible into shares of common stock at $0.40 per share, subject to certain adjustments. The term of the Notes was five years, but the Notes can be demanded by the holders. The Notes bear interest at 7% which is payable semi-annually. The Notes have customary provisions relating to events of default including an increase in the interest rate to 9%. The Notes are secured by a first priority lien on all of the assets of the Company including its subsidiaries. At March 31, 2016, the first priority lien included $128,238 of restricted cash specifically dedicated to debt collateral.

The Company may not incur additional secured indebtedness or other indebtedness with a maturity prior to that of the Notes without the written consent of the holders of the majority-in-interest of the Notes. In the event of a change of control of the Company, the Notes will become due and payable at 120% of the principal balance. The holders of the Notes had the right to purchase, pro rata, up to $600,000 of additional separate notes by September 18, 2014 on the same general terms and conditions as the original Notes. In September 2014, $69,000 of additional notes were purchased and issued.

At December 31, 2015, the Notes were convertible into 10,433,333 shares of common stock at $0.39 per share, as adjusted for anti-dilutive provisions and the if-converted value equaled the principal amount of the Notes. Certain embedded features in the Notes were required to be bifurcated and accounted for as a single compound derivative and reported at fair value as discussed in Note 8.

During the three months ended March 31, 2016, Luxor, on behalf of itself and certain of its affiliates (collectively, the “Luxor Group”), demanded repayment from the Company, of all of the outstanding principal and interest owing on the Luxor Group’s Secured Convertible Promissory Notes, each dated September 18, 2013 (the “Luxor Notes”). Lacking sufficient funds to make such repayments, on March 18, 2016 the Company agreed, pursuant to an Amendment to Secured Convertible Promissory Note, dated September 18, 2013, to allow the Luxor Group to convert all of the outstanding principal amount and accrued but unpaid interest owing on the Luxor Notes into shares of the Company’s common stock, at a rate of $0.035 per share. In the aggregate, the Luxor Group converted $2,600,000 of principal owing on the Luxor Notes and $91,000 of interest owing on the Luxor Notes in exchange for 76,885,714 shares of the Company’s common stock. As a condition of the Private Placement Offering on March 18, 2016, as discussed in Notes 10 and Note 12, the Luxor Group agreed that all of its 12,128,708 currently owned warrants would not be exercised until at least September 18, 2016. The Company has subsequently cancelled the Luxor Notes. In connection with the conversion of the Luxor Notes the Company has recognized a loss on conversion of $6,998,571.

On March 18, 2016, Martin Oring, one of our directors and our Chief Executive Officer, and members of his family, pursuant to Amendments to Convertible Promissory Notes, dated March 18, 2016, provided us with Conversion Notices whereby they elected to convert all of the principal and accrued but unpaid interest owing on their Secured Convertible Promissory Notes (“Oring Notes”), each dated September 18, 2013, into shares of the Company’s common stock at a rate of $0.035 per share. In the aggregate, Mr. Oring and his family members converted $414,000 in principal and $14,491 in accrued interest owing on such notes in exchange for 12,242,600 shares of the Company’s common stock. The Company has subsequently cancelled the Oring Notes. In connection with the conversion of the Oring Notes the Company has recognized a loss on conversion of $1,114,391.

On March 17, 2016 the Board of Directors of the Company approved an offer to the remaining holders of the Secured Convertible Promissory Notes. The offer, effective March 18, 2016, included the conversion of principal and interest outstanding as of March 18, 2016 at a rate of $0.035 per share. At March 31, 2016, the remaining outstanding Notes had a principal balance of $1,055,000 and accrued interest of $31,125 and were convertible into 31,037,855 shares of common stock at $0.035 per share, as adjusted for the March 18, 2016 conversion offer. The Company anticipates that a loss of approximately $1.7 million will be recorded in connection with the conversion during the quarter ended June 30, 2016.

At issuance, the fair value of the compound derivative was $1,261,285 and was recorded as both a derivative liability and a debt discount. The debt discount is being amortized to interest expense over the term of the Notes and the derivative liability is carried at fair value until conversion or maturity. The Company incurred $126,446 of financing fees related to the Notes. Such amounts were capitalized and are being amortized to interest expense over the term of the Notes. The carrying value of the convertible debt, net of discount was comprised of the following:

	March 31,		December 31,
	2016		2015
Convertible notes at face value	$	4,069,000	$	4,069,000
Conversion of notes at face value		(3,014,000)		-
Unamortized discount and deferred financing fees		(184,444)		(816,788)
Convertible notes, net of discount	$	870,556	$	3,252,212

Interest expense related to the Notes included the following for the three months ended March 31, 2016 and March 31, 2015:

	March 31,		March 31,
	2016		2015
Interest rate at 7%	$	63,036	$	71,191
Amortization of debt discount		575,952		57,714
Amortization of deferred financing fees		56,391		5,994
Total interest expense on convertible notes	$	695,379	$	134,899

Included in amortization of debt discount for the three months ended March 31, 2016 is expense of $570,642 related to the conversion of $3,014,000 of notes payable on March 18, 2016. This amount has been recorded as interest expense on our condensed consolidated income statement.

XML

DERIVATIVE LIABILITY - CONVERTIBLE NOTES

3 Months Ended

Mar. 31, 2016

Derivative Liability And Convertible Debt [Abstract]

DERIVATIVE LIABILITY - CONVERTIBLE NOTES

NOTE 8 – DERIVATIVE LIABILITY – CONVERTIBLE NOTES

As further discussed in Note 7, the Company had issued $4,069,000 of secured convertible notes between September, 2013 and September, 2014. The Notes were convertible at any time into shares of common stock at $0.39 per share. As discussed in Note 7, on April 27, 2016 all of the notes were converted and cancelled. In connection with the April 27, 2016 conversion, the Company anticipates that it will record an approximate loss on conversion of $1.7 million.

The Notes have several embedded conversion and redemption features. The Company determined that two of the features were required to be bifurcated and accounted for under derivative accounting as follows:

1. The embedded conversion feature includes a provision for the adjustment to the conversion price if the Company issues common stock or common stock equivalents at a price less than the exercise price. Derivative accounting was required for this feature due to this anti-dilution provision.

2. One embedded redemption feature requires the Company to pay 120% of the principal balance due upon a change of control. Derivative accounting was required for this feature as the debt involves a substantial discount, the option is only contingently exercisable and its exercise is not indexed to either an interest rate or credit risk.

These two embedded features have been accounted for together as a single compound derivative. The Company estimated the fair value of the compound derivative using a model with estimated probabilities and inputs calculated by the Binomial Lattice model and present values. The assumptions included in the calculations are highly subjective and subject to interpretation. Assumptions used for the three months ended March 31, 2016 and the year ended December 31, 2015 included redemption and conversion estimates/behaviors, estimates regarding future anti-dilutive financing agreements and the following other significant estimates:

	March 31,		December 31,
	2016		2015
Expected volatility		20.57% – 222.29%		101.46 – 139.57%
Risk-free interest rate		0.29% – 1.04%		0.92 - 1.31%
Expected life (years)		1.0 – 2.51		2.0 – 2.75
Suboptimal exercise factor		1.0 – 2.0		2.5

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 is impacted by all of the underlying assumptions and calibration of the Company’s model. Significant increases or decreases in inputs would result in a significantly lower or higher fair value measurement.

The following table sets forth the changes in the fair value of the derivative liability for the three months ended March 31, 2016 and the year ended December 31, 2015:

	March 31,		December 31,
	2016		2015
Beginning balance	$	590,536	$	1,218,619
Issuance of convertible debt		-		-
Conversion of convertible debt		(302,029)		-
Change in fair value		1,104,158		(628,083)
Ending balance	$	1,392,665	$	590,536

XML

VRIC PAYABLE - RELATED PARTY

3 Months Ended

Mar. 31, 2016

Other Liabilities Disclosure [Abstract]

VRIC PAYABLE - RELATED PARTY

NOTE 9 – 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.

The Company has recorded a liability for this commitment using imputed interest based on its best estimate of its incremental borrowing rate. The effective interest rate used was 8.00%, resulting in an initial present value of $2,501,187 and a debt discount of $1,128,813. The discount is being amortized over the expected term of the debt using the effective interest method. 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.

Interest costs related to this obligation were $7,101 and $13,454 for the three months ended March 31, 2016 and 2015, respectively. Interest costs incurred have been capitalized and included in the Clarkdale Slag Project. To address liquidity constraints, the Company has deferred payment of the VRIC payable effective May 1, 2014. On December 18, 2014, VRIC relinquished $255,000 of payments due to them. The relinquishment was recorded as a contribution of capital.

The following table represents future minimum payments on the VRIC payable for each of the twelve month periods ending March 31:

2016	$	720,000
2017		41,195
Total minimum payments		761,195
Less: amount representing interest		(63,051)
Present value of minimum payments		698,144
VRIC payable, current portion		(698,144)
VRIC payable, net of current portion	$	-

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 4 and 15.

XML

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2016

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

NOTE 10 – STOCKHOLDERS’ EQUITY

During the three months ended March 31, 2016, the Company’s stockholders’ equity activity consisted of the following:

a) On March 18, 2016, the Company issued 76,885,714 shares of common stock at $0.035 per share to the Luxor noteholders as consideration for the conversion of $2,600,000 in principal and $91,000 in accrued interest. In connection with the conversion of the notes payable, a loss on conversion of $6,998,571 has been recognized as discussed in Note 7.

b) On March 18, 2016, the Company issued 12,242,600 shares of common stock at $0.035 per share to the Oring noteholders as consideration for the conversion of $414,000 in principal and $14,491 in accrued interest. In connection with the conversion of the notes payable, a loss on conversion of $1,114,391 has been recognized as discussed in Note 7.

c) On March 18, 2016 the Company completed a private placement offering with the Luxor Group for proceeds of $1,500,000. A total of 42,857,143 shares of common stock at $0.035 were issued in connection with this offering. As a condition of the Private Placement Offering on March 18, 2016, as discussed in Note 7 and Note 12, the Luxor Group agreed that all of its 12,128,708 currently owned warrants would not be exercised until at least September 18, 2016.

d) On March 17, 2016, the Board of Directors has also authorized, subject to stockholder approval, certain amendments to our Articles of Incorporation and Amended and Restated Bylaws that, would increase the number of authorized shares of our capital stock.

e) On March 31, 2016 the Company issued 18,750 shares of common stock at $0.08 per share to the estate of the late Robert McDougal. Mr. McDougal had been a director of the Company through January 15, 2016, the date that Mr. McDougal passed away. The shares were issued as consideration for his services a director of the Company.

During the three-month period ended March 31, 2015, the Company’s stockholders’ equity activity consisted of the following:

a) On March 23, 2015, the Company’s Board of Directors approved a private placement offering for gross proceeds of $1,500,000 with Luxor. A total of 4,250,000 units were issued at a price of $0.3529 per unit. Each unit consisted of one share of the Company’s common stock and one share purchase warrant exercisable at $0.50 per share. Such warrants will expire five years from the date of issuance and are considered to be indexed to the Company’s common stock. The financing was completed on March 25, 2015.

b) On March 18, 2015, the Company issued 516,460 shares of common stock at a price of $0.25 per share to certain convertible note holders as consideration for cancellation of an aggregate of $129,115 for interest payments due on the convertible notes as of March 18, 2015. The remaining note holders received interest payments in cash.

The following summarizes the exercise price per share and expiration date of the Company’s outstanding warrants issued to investors and vendors to purchase common stock at March 31, 2016:

Shares Underlying
Outstanding Warrants		Exercise Price		Expiration Date
	1,000,000	$	0.375	June 2016
	3,410,526		0.70	November 2017
	5,736,501		0.71	November 2017
	7,042,387		1.85	November 2017
	3,000,000		0.375	June 2017
	316,752		0.30	September 2019
	2,197,496		0.30	October 2019
	1,000,000		0.30	November 2019
	1,498,750		0.30	December 2019
	3,981,000		0.50	December 2019
	4,250,000		0.50	March 2020
	2,843,000		0.50	May 2020
	2,215,429		0.50	July 2020
	327,900		0.50	September 2020
	27,067		0.70	November 2017
	44,816		0.71	November 2017
	2,750,045		0.70	November 2017
	4,641,296		0.71	November 2017
	46,282,965

XML

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

NOTE 11 – 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 March 31, 2016, the Company had 5,335,576 of its common shares available for issuance for stock option awards under the Company’s stock option plans.

At March 31, 2016, the Company had the following stock option plans available:

· 2009 Incentive Plan – The terms of the 2009 Incentive Plan, as amended, allow for up to 7,250,000 options to be issued 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. No participants shall receive more than 500,000 options under this plan in any one calendar year. 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 plan was approved by the Company’s stockholders on December 15, 2009 and the amendment was approved by the Company’s stockholders on May 8, 2012. As of March 31, 2016, the Company had granted 3,437,500 options under the 2009 Incentive Plan with a weighted average exercise price of $0.68 per share, of which, 3,397,500 were outstanding. At March 31, 2016, options available for issuance under this plan amounted to 3,812,500.

· 2009 Directors Plan - The terms of the 2009 Directors Plan, as amended, allow for up to 2,750,000 options to be issued to eligible participants. 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 participant shall receive more than 250,000 options under this plan in any one calendar year. The plan was approved by the Company’s stockholders on December 15, 2009 and the amendment was approved by the Company’s stockholders on May 8, 2012. As of March 31, 2016, the Company had granted 2,274,877 options under the 2009 Directors Plan with a weighted average exercise price of $0.67 per share, of which 2,163,627 were outstanding. As of March 31, 2016, options available for issuance under this plan amounted to 475,123.

· 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 March 31, 2016, the Company had granted 2,952,047 options under the 2007 Plan with a weighted average exercise price of $0.61 per share, of which 2,715,027 were outstanding. As of March 31, 2016, options available for issuance under this plan amounted to 1,047,953.

As of March 31, 2016, the Company had granted 15,610,714 options and warrants outside of the aforementioned stock option plans with a weighted average exercise price of $0.48 per share. As of March 31, 2016, 15,410,714 options and warrants granted were outstanding.

Amendment to Certain Outstanding Stock Options – On March 17, 2016, the Company’s Board of Directors unilaterally determined to amend: 570,000 options issued under the 2009 Incentive Plan; 188,469 options issued under the 2009 Directors Plan; 470,280 stock options issued under the 2007 plan; and 200,000 options issued outside all plans, by extending their expiration dates. The options were granted at various dates between October 6, 2008 and December 31, 2011 and have a weighted average exercise price of $0.98 per share. The expiration dates of all of the options were extended by twelve months. In all other respects, the terms and conditions of the extended options remain the same. With respect to the extensions, the Company did not recognize any additional expense as the fair values of the warrants were calculated at zero using the Binomial Lattice model.

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, limited to 18,000, 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.

Stock warrants – Upon approval of the Board of Directors, the Company may grant stock warrants to consultants for services performed.

Valuation of awards – At March 31, 2016, the Company had options outstanding that vest on two different types of vesting schedules, service-based and performance-based. For both service-based and performance-based stock option grants, 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 the 3 month periods ended March 31, 2016 and March 31, 2015 respectively:

	March 31,		March 31,
	2016		2015
Risk-free interest rate		1.21%		0.24% - 1.37%
Dividend yield		-		-
Expected volatility		252.08%		91.23% - 105.19%
Suboptimal exercise factor		2.00		2.00
Expected life (years)		3.0		1.00 - 4.25

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.

Stock-based compensation activity – During the three months ended March 31, 2016, the Company granted stock-based awards as follows:

a) On March 31, 2016, the Company granted stock options under the 2009 Directors Plan for the purchase of 36,000 shares of common stock at $0.08 per share. The options were granted to two of the Company’s non-management directors for directors’ compensation, are fully vested and expire on March 31, 2021. The exercise price of the stock options equaled the closing price of the Company’s common stock for the grant date.

b) On March 17, 2016, the Company’s Board of Directors unilaterally determined, without any negotiations with the warrant holders, to amend the expiration dates of certain outstanding warrants to purchase up to an aggregate of 16,189,414 shares of the Company’s common stock. The expiration date of the warrants was extended from November 30, 2016 to November 30, 2017. In all other respects, the terms and conditions of the warrants remain the same. The warrants were originally issued in connection with the Company’s February 23, 2007, March 22, 2007, December 26, 2007, February 7, 2008 and November 12, 2009 private placements. The Company calculated the fair value of the warrants at zero.

Expenses related to the vesting, modifying and granting of stock-based compensation awards were $6,922 and $42,088 for the three months ended March 31, 2016 and 2015, respectively. Such expenses have been included in general and administrative expense.

The following table summarizes the Company’s stock-based compensation activity for the three-month period ended March 31, 2016:

							Weighted
			Weighted				Average
			Average				Remaining
			Grant		Weighted		Contractual		Aggregate
	Number of		Date Fair		Average		Life		Intrinsic
	Shares		Value		Exercise Price		(Years)		Value
Outstanding, December 31, 2015		23,936,162	$	0.21	$	0.53		3.88	$	-
Exercisable, December 31, 2015		23,636,162	$	0.20	$	0.52		3.89	$	-
Options/warrants granted		36,000		0.10		0.08		5.00
Options/warrants expired		(285,294)		0.87		1.04		-
Options/warrants exercised		-		-		-		-
Outstanding, March 31, 2016		23,686,868	$	0.20	$	0.52		3.74	$	-
Exercisable, March 31, 2016		23,386,868	$	0.19	$	0.52		3.76	$	-

Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the quarter ended March 31, 2016, in excess of the weighted-average exercise price multiplied by the number of options outstanding or exercisable.

Unvested awards -The following table summarizes the changes of the Company’s stock-based compensation awards subject to vesting for the three-month period ended March 31, 2016

			Weighted
	Number of		Average
	Shares Subject to		Grant Date
	Vesting		Fair Value
Unvested, December 31, 2015		300,000	$	0.99
Options/warrants granted		-		-
Options/warrants vested		-		-
Unvested, March 31, 2016		300,000	$	0.99

No shares vested during the three-month period ended March 31, 2016. As of March 31, 2016, there was $1,731 of total unrecognized compensation cost related to unvested stock-based compensation awards. The weighted average period over which this cost will be recognized was 0.67 years as of March 31, 2016. Included in the total of unvested stock options at March 31, 2016, was 250,000 performance-based stock options. At March 31, 2016, management determined that achievement of the performance targets was probable. The weighted average period over which the related expense will be recognized is 0.75 years as of March 31, 2016.

XML

STOCKHOLDER RIGHTS AGREEMENT

3 Months Ended

Mar. 31, 2016

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDER RIGHTS AGREEMENT

NOTE 12 – STOCKHOLDER RIGHTS AGREEMENT

The Company adopted a Stockholder Rights Agreement (the “Rights Agreement”) 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 Rights Agreement, 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 Company’s Board of Directors had previously waived the 15% limitation in the Rights Agreement with respect to Luxor, to allow Luxor to become the beneficial owner of up to 26% of the shares of our Common Stock, without being deemed to be an “acquiring person” under the Rights Agreement. In connection with the Offering, completed on March 18, 2016 the Company agreed to further waive all of the existing limitations under the Rights Agreement so that Luxor would not be considered an “acquiring person” under the Rights Agreement under any circumstance. Following the Offering, Luxor is the beneficial owner (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, the “Exchange Act”) of approximately 49.83% of our Common Stock. The Rights Agreement 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. 

XML

PROPERTY RENTAL AGREEMENTS AND LEASES

3 Months Ended

Mar. 31, 2016

PROPERTY RENTAL AGREEMENTS AND LEASES [Abstract]

PROPERTY RENTAL AGREEMENTS AND LEASES

NOTE 13 – PROPERTY RENTAL AGREEMENTS AND LEASES

The Company, through its subsidiary CML, has the following rental agreement as lessor:

· Clarkdale Arizona Central Railroad – rental – CML rents land to Clarkdale Arizona Central Railroad on month-to-month terms at $1,700 per month.

XML

INCOME TAXES

3 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 14 – INCOME TAXES

The Company is a Nevada corporation and is subject to federal and Arizona income taxes. Nevada does not impose a corporate income tax. The Company recognized no income tax expense for the period ended March 31, 2016 as compared to March 31, 2015. The Company has recorded a full valuation allowance for any income tax benefits recognized in the current period. The effective tax rate for the period ended March 31, 2016 was 0% as compared to 38% for the 2015 period. The overall effective income tax rate for the year could be different from the effective tax rate for the three months ended March 31, 2016. A summary of our deferred tax assets and liabilities as well as the Company’s federal and state net operating loss carryforwards are included in Note 14 “Income Taxes” in our Annual Report on Form 10-K for the year ended December 31, 2015.

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 has losses from inception to date, and thus all years remain open for examination. 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 does not have any tax returns currently under examination by the Internal Revenue Service. 

XML

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Severance agreements – The Company has severance agreements with two executive officers that provide for various payments if the officer’s employment agreement is terminated by the Company, other than for cause. At March 31, 2016, the total potential liability for severance agreements was $112,500. Subsequent to March 31, 2016, Melvin Williams, the Company’s Chief Financial Officer, resigned. Accordingly, the potential severance liability will be reduced to $80,000.

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 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.

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:

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

b) The Company has agreed to pay VRIC a minimum annual royalty of $500,000, commencing on the Project Funding Date (the “Advance Royalty”), and an additional royalty consisting of 2.5% of the 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,

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

The Advance Royalty shall continue for a period of ten 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.

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 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 fees were $45,000 for the three months ended March 31, 2016 and 2015 respectively. Advance Royalty fees have been included in mineral exploration and evaluation expenses – related party on the statements of operations.

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 Town Council, (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 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. As of the date of this filing, these contingencies had not changed.

Registration Rights Agreement - In connection with the June 7, 2012 private placement, the Company entered into a Registration Rights Agreement (“RRA”) with the purchasers. Pursuant to the RRA, the Company agreed to certain demand registration rights. These rights include the requirement that the Company file certain registration statements within a specified time period and to have these registration statements declared effective within a specified time period. The Company also agreed to file and keep continuously effective such additional registration statements until all of the shares of common stock registered thereunder have been sold or may be sold without volume restrictions. If the Company is not able to comply with these registration requirements, the Company will be required to pay cash penalties equal to 1.0% of the aggregate purchase price paid by the investors for each 30-day period in which a registration default, as defined by the RRA, exists. The maximum penalty is equal to 3.0% of the purchase price which amounts to $121,500. As of the date of this filing, the Company does not believe the penalty to be probable and accordingly, no liability has been accrued.

XML

CONCENTRATION OF CREDIT RISK

3 Months Ended

Mar. 31, 2016

CONCENTRATION OF CREDIT RISK [Abstract]

CONCENTRATION OF CREDIT RISK

NOTE 16 – CONCENTRATION OF CREDIT RISK

The Company maintains its cash accounts in 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. 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 March 31, 2016 and December 31, 2015, the Company had $1,262,167 and $91,355, respectively, of deposits in excess of FDIC insured limits.

XML

CONCENTRATION OF ACTIVITY

3 Months Ended

Mar. 31, 2016

Concentration Of Activity [Abstract]

CONCENTRATION OF ACTIVITY

NOTE 17 – 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.

XML

RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 18 – 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. One of the Company’s executive officers, Mr. Ager, is affiliated with NMC. In 2011, the Company and NMC agreed to an advance royalty of $15,000 per month and to reimburse NMC for actual expenses incurred and consulting services provided. In 2016, the Company incurred no expense for consulting services.

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 Slag Project. The royalty agreement and Advance Royalty payments are more fully discussed in Note 15.

The following table provides details of transactions between the Company and NMC for the three months ended;

	March 31,		March 31,
	2016		2015
Reimbursement of expenses	$	-	$	-
Consulting services provided		-		30,000
Advance royalty payments		45,000		45,000
Mineral and exploration expense – related party	$	45,000	$	45,000

The Company had outstanding balances due to NMC of $233,725 and $188,725 at March 31, 2016 and December 31, 2015, respectively.

On December 23, 2014, the Company granted warrants for the purchase of 1,940,000 shares of common stock at $0.50 per share to NMC. The warrants were granted in part to incentivize their continued efforts and support of the Company. The warrants expire on December 23, 2019. The fair value of the warrants was calculated by the binomial lattice model and amounted to $351,276.

On November 11, 2014, the Company granted warrants for the purchase of 1,000,000 shares of common stock at $0.30 per share to NMC. The warrants were granted for investor relations. The warrants are fully vested and expire on November 11, 2019. The fair value of the warrants was calculated by the binomial lattice model and amounted to $108,877.

Cupit, Milligan, Ogden & Williams, CPAs – The Company utilized CMOW to provide accounting support services through April 8, 2016. CMOW is an affiliate of the Company’s former CFO, Mr. Williams. Fees for services provided by CMOW do not include any charges that had been incurred for Mr. Williams’ time. Mr. Williams was compensated for his time under his employment agreement.

The following table provides details of transactions between the Company and CMOW and the direct benefit to Mr. Williams for the three months ended:

	March 31,		March 31,
	2016		2015
Accounting support services	$	17,926	$	63,064
Direct benefit to CFO	$	6,095	$	18,289

The Company had an outstanding balance due to CMOW of $176,383 and $158,457 as of March 31, 2016 and December 31, 2015, respectively.

Financial Consulting Services – Beginning in October of 2014, the Company utilized five individuals to provide financial consulting services. During the third quarter of 2015, the Company entered into consulting agreements with three of these individuals, all of the consultants provided similar services. One of these individuals is the son of the Company’s CEO. In consideration for his services, the Company issued to him 2,063,143 warrants to purchase common stock at an exercise price of $0.50 per share, which the Company has valued at an aggregate of $258,553. The warrants are fully vested and expire five years from the date of grant.

Ireland Inc. – The Company leases corporate office space on month-to-month terms from Ireland Inc. (“Ireland”). NMC is a shareholder in both the Company and Ireland. Additionally, one of the Company’s late directors was the former CFO, Treasurer and a director of Ireland and the Company’s CEO provides consulting services to Ireland.

Total rent expense incurred to Ireland was $5,202 and $5,001 for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016, no amounts were due to Ireland. At December 31, 2015, $1,734 was due to Ireland.

Luxor– As of March 31, 2016 Luxor owned an aggregate of 142,665,754 shares of common stock and warrants to purchase up to an additional 16,532,789 shares of common stock. All 16,532,789 warrants, however, are not exercisable until September 18, 2016.

As of March 31, 2016 no amounts were payable to Luxor.

During the three months ended March 31, 2016 the Company recognized a loss on conversion of $6,998,571 related to the conversion $2,691,000 in convertible notes payable and accrued interest owing to the Luxor Group. In connection with this conversion the Company issued to the Luxor Group 76,885,714 shares of common stock, as discussed in Note 7.

During the three months ended March 31, 2016 The Luxor Group purchased from the Company 42,857,143 shares of common stock at $0.035 per share in exchange for $1,500,000 cash, as discussed in Note 10.

XML

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 19 – SUBSEQUENT EVENTS

On April 8, 2016, Melvin Williams resigned as the Chief Financial Officer of the Company, effective immediately. Concurrent with Mr. Williams’ resignation, CMOW resigned as our primary accounting resource. CMOW is an affiliate of Mr. Williams (Note 18).

On April 27, 2016, all 9 remaining outstanding holders of the Company’s secured convertible notes converted their notes into shares of common stock at a rate of $0.035 per share. In the aggregate, the holders of such notes converted, $1,086,325 in principal and interest owing on such Notes in exchange for 31,037,855 shares of the Company’s Common Stock. The Company subsequently canceled the Notes, and there are currently no further Notes outstanding from the September 18, 2013 Secured Convertible Promissory Note offering. The Company anticipates that a loss of approximately $1.7 million will be recorded in connection with the conversion during the quarter ended June 30, 2016.

On May 23, 2016, the Company completed a private placement of our common stock to 29 accredited investors. The securities were issued and sold in reliance on exemptions from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D thereunder. In the Offering, the Company sold 28,251,430 shares of common stock at $0.035 per share for gross proceeds of $988,800.

XML

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

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Description of business

Description of business - Searchlight Minerals Corp. (the “Company”) is an exploration stage company engaged in a slag reprocessing project and the acquisition and exploration of mineral properties. The Company is presently focused on 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.

Since the Company’s involvement in the Clarkdale Slag Project began, the goal has been to demonstrate the economic feasibility of the project by determining a commercially viable method to extract precious and base metals from the slag material.

The Company has not yet realized any revenues from its planned operations. Upon the location of commercially minable reserves, the Company plans to prepare for mineral extraction and enter the development stage.

History

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. 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.” (“Phage”).

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 and its Board of Directors approved a change in its name from Phage to "Searchlight Minerals Corp.” effective June 23, 2005.

Going concern

Going concern - The accompanying condensed consolidated financial statements were prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The going concern basis of presentation assumes that the Company will continue in operation for the next twelve months and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the Company’s inability to continue as a going concern. The Company’s history of losses, working capital deficit, minimal liquidity and other factors raise substantial doubt about the Company’s ability to continue as a going concern. In order for the Company to continue operations beyond the next twelve months and be able to discharge its liabilities and commitments in the normal course of business it must raise additional equity or debt capital and continue cost cutting measures. There can be no assurance that the Company will be able to achieve sustainable profitable operations or obtain additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to management.

If the Company continues to incur operating losses and does not raise sufficient additional capital, material adverse events may occur including, but not limited to: a reduction in the nature and scope of the Company’s operations; and the Company’s inability to fully implement its current business plan. There can be no assurance that the Company will successfully improve its liquidity position. The accompanying consolidated financial statements do not reflect any adjustments that might be required resulting from the adverse outcome relating to this uncertainty.

As of March 31, 2016, the Company had cumulative net losses of $93,236,798 from operations and had not commenced commercial mining and mineral processing operations; rather it is still in the exploration stage. For the three months ended March 31, 2016, the Company incurred a net loss of $10,744,214, had negative cash flows from operating activities of $511,311 and will incur additional future losses due to planned continued exploration expenses. In addition, the Company had a working capital deficit totaling $3,179,234 at March 31, 2016.

To address ongoing liquidity constraints, the Company continues to seek additional sources of capital through the issuance of equity, debt financing or a combination of both. The Company has reduced general and administrative expenses and elected to defer payment of certain obligations. Cash conservation measures include, but are not limited to, the deferred payment where available of outsourced consulting fees, current and future board fees, certain officer salaries, certain monthly professional fees, and the Verde River Iron Company, LLC (“VRIC”) monthly payable. These activities have reduced the required cash outlay of the Company’s business significantly. The Company is focused on continuing to reduce costs and obtaining additional funding. There is no assurance that such funding will be available on terms acceptable to the Company, or at all. If the Company raises additional funds by selling additional shares of capital stock, securities convertible into shares of capital stock or the issuance of convertible debt, the ownership interest of the Company’s existing common stock holders will be diluted.

Basis of presentation

Basis of presentation - The accompanying financial statements have been prepared in accordance with U.S. GAAP. The Company’s fiscal year-end is December 31.

These condensed consolidated financial statements have been prepared without audit in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. All such adjustments are, in the opinion of management, of a normal recurring nature with the exception of recording a full valuation allowance on certain deferred tax assets as discussed in Note 14. The results reported in these interim condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on April 5, 2016.

Principles of consolidation

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

Use of estimates - The preparation of financial statements in conformity with U.S. 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 liabilities, impairment analysis of long-lived assets, and realizability of deferred tax assets. Actual results could differ from those estimates.

Capitalized interest cost

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.

Mineral properties

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. Once mineral reserves are established, 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 will be amortized using the units-of-production method over the proven and probable reserves.

Mineral exploration and development costs

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

Property and equipment

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 15 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 operating expenses.

Impairment of long-lived assets

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 tests for long-lived assets in the exploration, development or production 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 cash flows expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts.

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.

Deferred financing fees

Deferred financing fees – Deferred financing fees represent fees paid in connection with obtaining debt financing. These fees are amortized using the effective interest method over the term of the financing.

Convertible notes - derivative liabilities

Convertible notes – derivative liabilities – The Company evaluates the embedded features of convertible notes to determine if they are required to be bifurcated and recorded as a derivative liability. If more than one feature is required to be bifurcated, the features are accounted for as a single compound derivative. The fair value of the compound derivative is recorded as a derivative liability and a debt discount. The carrying value of the convertible notes is recorded on the date of issuance at its original value less the fair value of the compound derivative.

The derivative liability is measured at fair value on a recurring basis with changes reported in other income (expense). Fair value is determined using a model which incorporates estimated probabilities and inputs calculated by both the Binomial Lattice model and present values. The debt discount is amortized to non-cash interest expense using the effective interest method over the life of the notes. If a conversion of the underlying note occurs, a proportionate share of the unamortized amount is immediately expensed.

Reclamation and remediation costs

Reclamation and remediation costs - For its exploration stage properties, the Company accrues the estimated costs associated with environmental remediation obligations in the period in which the liability is incurred or becomes determinable. Until such time that a project life is established, the Company records the corresponding cost as an exploration stage expense. The costs of future expenditures for environmental remediation are not discounted to their present value unless subject to a contractually obligated fixed payment schedule.

Future reclamation and environmental-related expenditures are difficult to estimate in many circumstances due to the early stage nature of the exploration project, the uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such reclamation and remediation costs as evidence indicating that the liabilities have potentially changed becomes available. Changes in estimates are reflected in the consolidated statement of operations in the period an estimate is revised.

The Company is in the exploration stage and is unable to determine the estimated timing of expenditures relating to reclamation accruals. It is reasonably possible that the ultimate cost of reclamation and remediation could change in the future and that changes to these estimates could have a material effect on future operating results as new information becomes known.

Fair value of financial instruments

Fair value of financial instruments - The Company’s financial instruments consist principally of derivative liabilities and the VRIC payable. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels defined as follows:

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 the VRIC payable (described in Note 9), derivative liabilities (described in Notes 6 and 8) and convertible notes (described in Note 7). The VRIC payable and the convertible notes are classified within Level 2 of the fair value hierarchy. The fair value of the VRIC payable approximates carrying value as the imputed interest rate is considered to approximate a market interest rate. The fair value of the convertible notes approximates carrying value as the interest rate is considered to approximate a market interest rate.

The Company calculates the fair value of its derivative liabilities using various models which are all Level 3 inputs. The fair value of the derivative warrant liability (described in Note 6) is calculated using the Binomial Lattice model, and the fair value of the derivative liability - convertible notes (described in Note 8) is calculated using a model which incorporates estimated probabilities and inputs calculated by both the Binomial Lattice model and present values. The change in fair value of the derivative liabilities is classified in other income (expense) in the condensed consolidated statement of operations. The Company generally does not use derivative financial instruments to hedge exposures to cash flow, market or foreign currency risks.

There have been no changes in the valuation techniques used for the derivative liabilities. The Company does not have any non-financial assets or liabilities that it measures at fair value. During the three months ended March 31, 2016 and 2015, there were no transfers of assets or liabilities between levels.

Per share amounts

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. Potentially dilutive shares, such as stock options and warrants, are excluded from the calculation when their inclusion would be anti-dilutive, such as when the exercise price of the instrument exceeds the fair market value of the Company’s common stock and when a net loss is reported. The dilutive effect of convertible debt securities is reflected in the diluted earnings (loss) per share calculation using the if-converted method. Conversion of the debt securities is not assumed for purposes of calculating diluted earnings (loss) per share if the effect is anti-dilutive. 100,112,693 and 65,420,053 stock options, warrants and common shares issuable upon the conversion of notes were outstanding as of March 31, 2016 and March 31, 2015, respectively, but were not considered in the computation of diluted earnings per share as their inclusion would be anti-dilutive.

Stock-based compensation

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

Income taxes - For interim reporting periods, the Company uses the annualized effective tax rate (“AETR”) method to calculate its income tax provision. Under this method, the AETR is applied to the interim year-to-date pre-tax losses to determine the income tax benefit or expense for the year-to-date period. The income tax benefit or expense for a quarter represents the difference between the year-to-date income tax benefit or expense for the current year-to-date period less such amount for the immediately preceding year-to-date period. Management considers the impact of all known events in its estimation of the Company’s annual operating results and AETR.

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

Recent accounting standards - From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “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 March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, “Improvements on Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for annual periods beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2017. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for annual periods beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. The standard will be effective for the Company beginning January 1, 2019. The Company is currently evaluating the impact to its condensed consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies income tax accounting. The update requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. Adoption of the new guidance is not expected to have an impact on the condensed consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs”, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The update is effective in fiscal years, including interim periods, beginning after December 15, 2015, and early adoption was permitted. We adopted the provisions of ASU 2015-03 on a retrospective basis for our annual period ended December 31, 2015. The retrospective adoption of this standard resulted in the reclassification of approximately $0.1 million of current assets as a direct reduction against the balance of our current debt in the accompanying condensed consolidated balance sheet at December 31, 2015, but had no effect on our condensed consolidated net loss or stockholders’ equity.

In November 2014, the FASB issued ASU 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or Equity”. This update clarifies how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December 15, 2015. Adoption and implementation of this new guidance did not have any impact on our condensed consolidated statements of financial position, results of operations and liquidity.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about and Entity’s Ability to Continue as a Going Concern”. This update requires management of public and private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. The Company is currently evaluating the impact to its condensed consolidated financial statements.

XML

PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2016

PROPERTY AND EQUIPMENT [Abstract]

Schedule of Property and Equipment

Property and equipment consisted of the following:

	March 31, 2016						December 31, 2015
			Accumulated						Accumulated
	Cost		Depreciation		Net Book Value		Cost		Depreciation		Net Book Value
Furniture and fixtures	$	38,255	$	(38,047)	$	208	$	38,255	$	(37,963)	$	292
Lab equipment		249,061		(249,061)		-		249,061		(249,061)		-
Computers and equipment		71,407		(63,140)		8,267		71,407		(61,644)		9,763
Vehicles		47,675		(46,333)		1,342		47,675		(46,158)		1,517
Slag conveyance equipment		300,916		(300,916)		-		300,916		(300,916)		-
Demo module building		6,630,063		(4,692,619)		1,937,444		6,630,063		(4,526,867)		2,103,196
Grinding circuit		913,679		(24,167)		889,512		913,679		(21,667)		892,012
Extraction circuit		938,352		(509,585)		428,767		938,352		(462,668)		475,684
Leaching and filtration		1,300,618		(1,300,618)		-		1,300,618		(1,300,618)		-
Fero-silicate storage		4,326		(2,271)		2,055		4,326		(2,163)		2,163
Electrowinning building		1,492,853		(783,748)		709,105		1,492,853		(746,426)		746,427
Site improvements		1,677,844		(746,901)		930,943		1,677,844		(715,775)		962,069
Site equipment		360,454		(354,824)		5,630		360,454		(353,638)		6,816
Construction in progress		1,102,014		-		1,102,014		1,102,014		-		1,102,014
	$	15,127,517	$	(9,112,230)	$	6,015,287	$	15,127,517	$	(8,825,564)	$	6,301,953

XML

CLARKDALE SLAG PROJECT (Tables)

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Schedule of Clarkdale Slag Project

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 allocation of purchase price to 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

The following table sets forth the changes to the Clarkdale Slag Project components for the three months and year ended March 31, 2016 and December 31, 2015, respectively:

	March 31,		December 31,
	2016		2015
Slag Pile, beginning balance	$	121,874,102	$	121,829,655
Capitalized interest costs		7,101		44,447
Slag Pile, ending balance	$	121,881,203	$	121,874,102

XML

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2016

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following at March 31, 2016 and December 31, 2015:

	March 31,		December 31,
	2016		2015
Trade accounts payable	$	828,409	$	589,657
Accrued compensation and related taxes		510,975		435,469
Accrued interest		79,555		126,057
	$	1,418,939	$	1,151,183

XML

DERIVATIVE WARRANT LIABILITY (Tables)

3 Months Ended

Mar. 31, 2016

Derivative [Line Items]

Schedule Of Fair Value Assumptions Warrants

With respect to the March 18, 2016 extension, the Company did not recognize any additional expense as the fair values of the warrants were calculated at zero using the Binomial Lattice model with the following assumptions:

	March 31,
	2016
Risk-free interest rate		0.64% - 0.87%
Expected volatility		122.95% - 176.27%
Expected life (years)		1.75

Schedule of Assumptions used to Establish Valuation of Warrants

The Company estimates the fair value of the derivative liabilities by using the Binomial Lattice pricing-model, with the following assumptions used for the three months ended March 31, 2016 and the year ended December 31, 2015:

	March 31,		December 31,
	2016		2015
Expected volatility		122.95% - 176.27%		30.46% - 141.15%
Risk-free interest rate		0.64% - 0.84%		0.00% - 0.65%
Expected life (years)		0.75 – 1.75		0.10 - 0.90
Suboptimal exercise factor		2.0		2.5

Warrant [Member]

Derivative [Line Items]

Schedule of Changes in Fair Value of Derivative Liabilities

The following table sets forth the changes in the fair value of derivative liability for the three months ended March 31, 2016 and the year ended December 31 2015:

	March 31,		December 31,
	2016		2015
Beginning balance	$	(53,141)	$	-
Adjustment to warrants		(104,075)		-
Change in fair value		157,216		(53,141)
Ending balance	$	-	$	(53,141)

XML

CONVERTIBLE NOTES (Tables)

3 Months Ended

Mar. 31, 2016

Convertible Debt [Abstract]

Convertible Debt

The carrying value of the convertible debt, net of discount was comprised of the following:

	March 31,		December 31,
	2016		2015
Convertible notes at face value	$	4,069,000	$	4,069,000
Conversion of notes at face value		(3,014,000)		-
Unamortized discount and deferred financing fees		(184,444)		(816,788)
Convertible notes, net of discount	$	870,556	$	3,252,212

Schedule Of Notes Payable

Interest expense related to the Notes included the following for the three months ended March 31, 2016 and March 31, 2015:

	March 31,		March 31,
	2016		2015
Interest rate at 7%	$	63,036	$	71,191
Amortization of debt discount		575,952		57,714
Amortization of deferred financing fees		56,391		5,994
Total interest expense on convertible notes	$	695,379	$	134,899

XML

DERIVATIVE LIABILITY - CONVERTIBLE NOTES (Tables)

3 Months Ended

Mar. 31, 2016

Derivative Instruments, Gain (Loss) [Line Items]

Schedule Of Fair Value Assumptions

Assumptions used for the three months ended March 31, 2016 and the year ended December 31, 2015 included redemption and conversion estimates/behaviors, estimates regarding future anti-dilutive financing agreements and the following other significant estimates:

	March 31,		December 31,
	2016		2015
Expected volatility		20.57% – 222.29%		101.46 – 139.57%
Risk-free interest rate		0.29% – 1.04%		0.92 - 1.31%
Expected life (years)		1.0 – 2.51		2.0 – 2.75
Suboptimal exercise factor		1.0 – 2.0		2.5

Convertible Notes Payable [Member]

Derivative Instruments, Gain (Loss) [Line Items]

Schedule Of Derivative Liabilities At Fair Value

The following table sets forth the changes in the fair value of the derivative liability for the three months ended March 31, 2016 and the year ended December 31, 2015:

	March 31,		December 31,
	2016		2015
Beginning balance	$	590,536	$	1,218,619
Issuance of convertible debt		-		-
Conversion of convertible debt		(302,029)		-
Change in fair value		1,104,158		(628,083)
Ending balance	$	1,392,665	$	590,536

XML

VRIC PAYABLE - RELATED PARTY (Tables)

3 Months Ended

Mar. 31, 2016

Other Liabilities Disclosure [Abstract]

Schedule of Future Principal Payments on VRIC Payable

The following table represents future minimum payments on the VRIC payable for each of the twelve month periods ending March 31:

2016	$	720,000
2017		41,195
Total minimum payments		761,195
Less: amount representing interest		(63,051)
Present value of minimum payments		698,144
VRIC payable, current portion		(698,144)
VRIC payable, net of current portion	$	-

XML

STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2016

STOCKHOLDERS' EQUITY [Abstract]

Schedule Of Outstanding Warrants Issued To Investors To Purchase Common Stock

The following summarizes the exercise price per share and expiration date of the Company’s outstanding warrants issued to investors and vendors to purchase common stock at March 31, 2016:

Shares Underlying
Outstanding Warrants		Exercise Price		Expiration Date
	1,000,000	$	0.375	June 2016
	3,410,526		0.70	November 2017
	5,736,501		0.71	November 2017
	7,042,387		1.85	November 2017
	3,000,000		0.375	June 2017
	316,752		0.30	September 2019
	2,197,496		0.30	October 2019
	1,000,000		0.30	November 2019
	1,498,750		0.30	December 2019
	3,981,000		0.50	December 2019
	4,250,000		0.50	March 2020
	2,843,000		0.50	May 2020
	2,215,429		0.50	July 2020
	327,900		0.50	September 2020
	27,067		0.70	November 2017
	44,816		0.71	November 2017
	2,750,045		0.70	November 2017
	4,641,296		0.71	November 2017
	46,282,965

XML

STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Assumptions Used to Estimate Fair Value of Stock Based Compensation Awards

For both service-based and performance-based stock option grants, 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 the 3 month periods ended March 31, 2016 and March 31, 2015 respectively:

	March 31,		March 31,
	2016		2015
Risk-free interest rate		1.21%		0.24% - 1.37%
Dividend yield		-		-
Expected volatility		252.08%		91.23% - 105.19%
Suboptimal exercise factor		2.00		2.00
Expected life (years)		3.0		1.00 - 4.25

Summary of Stock-based Compensation Activity

The following table summarizes the Company’s stock-based compensation activity for the three-month period ended March 31, 2016:

							Weighted
			Weighted				Average
			Average				Remaining
			Grant		Weighted		Contractual		Aggregate
	Number of		Date Fair		Average		Life		Intrinsic
	Shares		Value		Exercise Price		(Years)		Value
Outstanding, December 31, 2015		23,936,162	$	0.21	$	0.53		3.88	$	-
Exercisable, December 31, 2015		23,636,162	$	0.20	$	0.52		3.89	$	-
Options/warrants granted		36,000		0.10		0.08		5.00
Options/warrants expired		(285,294)		0.87		1.04		-
Options/warrants exercised		-		-		-		-
Outstanding, March 31, 2016		23,686,868	$	0.20	$	0.52		3.74	$	-
Exercisable, March 31, 2016		23,386,868	$	0.19	$	0.52		3.76	$	-

Schedule of Changes to Stock Based Compensation Awards Subject to Vesting

The following table summarizes the changes of the Company’s stock-based compensation awards subject to vesting for the three-month period ended March 31, 2016

			Weighted
	Number of		Average
	Shares Subject to		Grant Date
	Vesting		Fair Value
Unvested, December 31, 2015		300,000	$	0.99
Options/warrants granted		-		-
Options/warrants vested		-		-
Unvested, March 31, 2016		300,000	$	0.99

XML

RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2016

Nanominerals Corporation [Member]

Related Party Transaction [Line Items]

Schedule of Related Party Transactions

The following table provides details of transactions between the Company and NMC for the three months ended;

	March 31,		March 31,
	2016		2015
Reimbursement of expenses	$	-	$	-
Consulting services provided		-		30,000
Advance royalty payments		45,000		45,000
Mineral and exploration expense – related party	$	45,000	$	45,000

Cupit Milligan Ogden Williams Certified Public Accountants [Member]

Related Party Transaction [Line Items]

Schedule of Related Party Transactions

The following table provides details of transactions between the Company and CMOW and the direct benefit to Mr. Williams for the three months ended:

	March 31,		March 31,
	2016		2015
Accounting support services	$	17,926	$	63,064
Direct benefit to CFO	$	6,095	$	18,289

XML

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (Additional Information) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Organization And Summary Of Significant Accounting Policies [Line Items]
Retained Earnings (Accumulated Deficit)	$ (93,236,798)		$ (82,492,584)
Net loss	(10,744,214)	$ (1,369,571)
Cash flows from operating activities	(511,311)	$ (988,405)
Working Capital Deficit	$ 3,179,234
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	100,112,693	65,420,053
Accounting Standards Update 2015-03 [Member]
Organization And Summary Of Significant Accounting Policies [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets			$ 100,000
Minimum [Member]
Organization And Summary Of Significant Accounting Policies [Line Items]
Property and equipment, estimated useful lives	3 years
Maximum [Member]
Organization And Summary Of Significant Accounting Policies [Line Items]
Property and equipment, estimated useful lives	15 years

XML

RESTRICTED CASH (Additional Information) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted Cash and Cash Equivalents	$ 128,238		$ 227,345
Increase (Decrease) in Restricted Cash	0	$ 227,345
Convertible Notes Payable [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Increase (Decrease) in Restricted Cash	$ 100,000

XML

PROPERTY AND EQUIPMENT (Additional Information) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 286,666	$ 358,383

XML

PROPERTY AND EQUIPMENT (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Cost	$ 15,127,517	$ 15,127,517
Accumulated Depreciation	(9,112,230)	(8,825,564)
Net Book Value	6,015,287	6,301,953
Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Cost	38,255	38,255
Accumulated Depreciation	(38,047)	(37,963)
Net Book Value	208	292
Lab equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	249,061	249,061
Accumulated Depreciation	(249,061)	(249,061)
Net Book Value	0	0
Computers and equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	71,407	71,407
Accumulated Depreciation	(63,140)	(61,644)
Net Book Value	8,267	9,763
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Cost	47,675	47,675
Accumulated Depreciation	(46,333)	(46,158)
Net Book Value	1,342	1,517
Slag conveyance equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	300,916	300,916
Accumulated Depreciation	(300,916)	(300,916)
Net Book Value	0	0
Demo module building [Member]
Property, Plant and Equipment [Line Items]
Cost	6,630,063	6,630,063
Accumulated Depreciation	(4,692,619)	(4,526,867)
Net Book Value	1,937,444	2,103,196
Grinding circuit [Member]
Property, Plant and Equipment [Line Items]
Cost	913,679	913,679
Accumulated Depreciation	(24,167)	(21,667)
Net Book Value	889,512	892,012
Extraction circuit [Member]
Property, Plant and Equipment [Line Items]
Cost	938,352	938,352
Accumulated Depreciation	(509,585)	(462,668)
Net Book Value	428,767	475,684
Leaching and filtration [Member]
Property, Plant and Equipment [Line Items]
Cost	1,300,618	1,300,618
Accumulated Depreciation	(1,300,618)	(1,300,618)
Net Book Value	0	0
Fero-silicate storage [Member]
Property, Plant and Equipment [Line Items]
Cost	4,326	4,326
Accumulated Depreciation	(2,271)	(2,163)
Net Book Value	2,055	2,163
Electrowinning building [Member]
Property, Plant and Equipment [Line Items]
Cost	1,492,853	1,492,853
Accumulated Depreciation	(783,748)	(746,426)
Net Book Value	709,105	746,427
Site improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	1,677,844	1,677,844
Accumulated Depreciation	(746,901)	(715,775)
Net Book Value	930,943	962,069
Site equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	360,454	360,454
Accumulated Depreciation	(354,824)	(353,638)
Net Book Value	5,630	6,816
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Cost	1,102,014	1,102,014
Accumulated Depreciation	0	0
Net Book Value	$ 1,102,014	$ 1,102,014

XML

CLARKDALE SLAG PROJECT (Additional Information) (Details) - USD ($)	1 Months Ended	3 Months Ended
	Feb. 15, 2007	Mar. 31, 2016	Dec. 31, 2015	Dec. 23, 2014	Dec. 18, 2014	Nov. 11, 2014	Jul. 25, 2011	Dec. 31, 2010	May 20, 2005
Noncash or Part Noncash Acquisitions [Line Items]
Accumulated Capitalized Interest Costs		$ 1,114,327	$ 1,107,226
Additional Paid in Capital					$ 255,000
Nanominerals Corporation [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Shares Issued, Price Per Share				$ 0.50		$ 0.30
Advance royalty payment amount							$ 15,000	$ 660,000
Royalty payment percentage		2.50%
Clarkdale Slag Project [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Purchase of assets, ownership interest acquired	100.00%
Allocation of acquisition cost	$ 120,766,877
Monthly payments, current portion	167,827
Purchase of assets, purchase price	130,292,777
Net deferred income tax liability assumed - Clarkdale Slag Project	48,076,734
Clarkdale Slag Project [Member] | Land Smelter Site And Slag Pile [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Allocation of acquisition cost	5,916,150
Clarkdale Slag Project [Member] | Land [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Allocation of acquisition cost	3,300,000
Clarkdale Slag Project [Member] | Building and Building Improvements [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Allocation of acquisition cost	$ 309,750
Clarkdale Slag Project [Member] | Nanominerals Corporation [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Joint venture ownership interest									50.00%
Additional contingent payment								$ 1,320,000
Royalty payment percentage		2.50%
Clarkdale Slag Project [Member] | Nanominerals Corporation [Member] | Scenario, Previously Reported [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Joint venture ownership interest	50.00%	50.00%
Royalty payment percentage		5.00%
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Common stock issued	16,825,000
Shares Issued, Price Per Share	$ 3.975
Monthly payments, current portion	$ 30,000	$ 30,000
Monthly payment Period	90 days
Additional contingent payment	$ 6,400,000
Advance royalty payment amount	$ 500,000
Royalty payment percentage	2.50%
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member] | Minimum [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Advance royalty payment amount	$ 500,000
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member] | Royalty Payments [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Monthly payments, current portion	30,000
Additional contingent payment	500,000
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member] | Cash Flow [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Additional contingent payment	3,500,000
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member] | On Execution Of Letter Agreement [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Monthly payments, current portion	200,000
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member] | On Closing Date [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Monthly payments, current portion	$ 9,900,000
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member] | Scenario, Previously Reported [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Joint venture ownership interest	50.00%	50.00%
Royalty payment percentage	5.00%
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member] | Nanominerals Corporation [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Royalty payment percentage	2.50%

XML

CLARKDALE SLAG PROJECT (Purchase Consideration for Clarkdale Slag Project) (Details) - Clarkdale Slag Project [Member]	1 Months Ended
	Feb. 15, 2007 USD ($)
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

XML

CLARKDALE SLAG PROJECT (Components of Clarkdale Slag Project) (Details) - Clarkdale Slag Project [Member]	1 Months Ended
	Feb. 15, 2007 USD ($)
Purchase price:
Allocation of acquisition cost	$ 120,766,877
Total	130,292,777
Land - smelter site and slag pile [Member]
Purchase price:
Allocation of acquisition cost	5,916,150
Land [Member]
Purchase price:
Allocation of acquisition cost	3,300,000
Income property and improvements [Member]
Purchase price:
Allocation of acquisition cost	$ 309,750

XML

CLARKDALE SLAG PROJECT (Changes in the Slag Project) (Details) - Slag Project [Member] - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Noncash or Part Noncash Acquisitions [Line Items]
Slag Pile, beginning balance	$ 121,874,102	$ 121,829,655
Capitalized interest costs	7,101	44,447
Slag Pile, ending balance	$ 121,881,203	$ 121,874,102

XML

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Accounts Payable And Accrued Liabilities [Line Items]
Trade accounts payable	$ 828,409	$ 589,657
Accrued compensation and related taxes	510,975	435,469
Accrued interest	79,555	126,057
Accounts payable and accrued liabilities	$ 1,418,939	$ 1,151,183

XML

DERIVATIVE WARRANT LIABILITY (Additional Information) (Details)		3 Months Ended	12 Months Ended
	Nov. 12, 2009 $ / shares shares	Mar. 31, 2016 $ / shares shares	Dec. 31, 2015	Mar. 25, 2015 $ / shares	Jun. 07, 2012 $ / shares shares
Derivative [Line Items]
Exercise price of warrant | $ / shares		$ 1.85
Private Placement [Member]
Derivative [Line Items]
Shares of common stock that can be purchased by the warrants	6,341,263
Exercise price of warrant | $ / shares	$ 1.85	$ 0.71		$ 0.50
Warrants expiration date	Nov. 12, 2012
Warrants issued		993,332
Private Placement [Member] | All Other Warrants [Member]
Derivative [Line Items]
Exercise price of warrant | $ / shares		$ 0.70
Warrant [Member]
Derivative [Line Items]
Warrants expiration date			Nov. 30, 2017
Derivative Liability, Number of Instruments Held		16,610,253	9,147,029
Luxor Capital Partners LP [Member] | Private Placement [Member]
Derivative [Line Items]
Total number of warrants that anti dilution rights were waived on					4,252,883
Exercise price of warrant | $ / shares					$ 0.71
Scenario Cumulative Adjustment [Member] | Private Placement [Member]
Derivative [Line Items]
Shares of common stock that can be purchased by the warrants		7,463,223
Scenario Cumulative Adjustment [Member] | Private Placement [Member] | All Other Warrants [Member]
Derivative [Line Items]
Shares of common stock that can be purchased by the warrants		2,777,111
Scenario Cumulative Adjustment [Member] | Luxor Capital Partners LP [Member] | Private Placement [Member]
Derivative [Line Items]
Shares of common stock that can be purchased by the warrants		4,686,112

XML

DERIVATIVE WARRANT LIABILITY (Schedule of Fair Value of Warrants) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Minimum [Member]
Derivative [Line Items]
Risk-free interest rate	0.29%	0.92%
Expected volatility	20.57%	101.46%
Expected life (years)	1 year	2 years
Maximum [Member]
Derivative [Line Items]
Risk-free interest rate	1.04%	1.31%
Expected volatility	222.29%	139.57%
Expected life (years)	2 years 6 months 4 days	2 years 9 months
Warrant [Member]
Derivative [Line Items]
Expected life (years)	1 year 9 months
Warrant [Member] | Minimum [Member]
Derivative [Line Items]
Risk-free interest rate	0.64%
Expected volatility	122.95%
Warrant [Member] | Maximum [Member]
Derivative [Line Items]
Risk-free interest rate	0.87%
Expected volatility	176.27%

XML

DERIVATIVE WARRANT LIABILITY (Changes in Fair Value of Derivative Liabilities) (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
Beginning balance	$ (53,141)	$ 0
Adjustment to warrants	(104,075)	0
Change in fair value	157,216	(53,141)
Ending balance	$ 0	$ (53,141)

XML

DERIVATIVE WARRANT LIABILITY (Assumptions Used to Estimates Fair Value of Derivative Liabilities) (Details) - Warrant [Member] - Factor	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
Suboptimal exercise factor	2.0	2.5
Minimum [Member]
Derivative [Line Items]
Expected volatility	122.95%	30.46%
Risk-free interest rate	0.64%	0.00%
Expected life (years)	9 months	1 month 6 days
Maximum [Member]
Derivative [Line Items]
Expected volatility	176.27%	141.15%
Risk-free interest rate	0.84%	0.65%
Expected life (years)	1 year 9 months	10 months 24 days

XML

CONVERTIBLE NOTES (Additional Information) (Details)	1 Months Ended				3 Months Ended			12 Months Ended
	Mar. 18, 2016 USD ($) $ / shares shares	Mar. 17, 2016 USD ($) $ / shares	Sep. 18, 2014 USD ($)	Sep. 18, 2013 USD ($) $ / shares	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($) $ / shares shares	Mar. 31, 2015 USD ($)	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($)
Debt Conversion [Line Items]
Debt Conversion, Converted Instrument, Shares Issued | shares						76,885,714
Notes Payable Additional Issuance			$ 69,000			$ (3,014,000)		$ 0
Derivative Liability						1,392,665		590,536	$ 1,218,619
Restricted Cash and Cash Equivalents						128,238		227,345
Debt Conversion, Converted Instrument, Amount						$ 11,232,450	$ 0
Class of Warrant or Right, Outstanding | shares						46,282,965
Conversion of notes payable and accrued interest						$ 3,119,491	$ 0
Convertible Notes Payable						870,556		3,252,212
Interest Payable						79,555		$ 126,057
Management [Member]
Debt Conversion [Line Items]
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 0.035
Debt Conversion, Converted Instrument, Shares Issued | shares	12,242,600
Induced Conversion of Convertible Debt Expense	$ 1,114,391
Luxor Capital Partner Lp [Member]
Debt Conversion [Line Items]
Debt Conversion, Converted Instrument, Amount						$ 91,000
Class of Warrant or Right, Outstanding | shares						12,128,708
Convertible Notes Payable [Member]
Debt Conversion [Line Items]
Proceeds from Convertible Debt				$ 4,000,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate				7.00%
Debt Instrument, Debt Default, Percentage Of Interest				9.00%
Percentage Of Principal Balance Payable Upon Change Of Control			120.00%
Additional Secured Indebtedness Amount			$ 600,000
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 0.035		$ 0.40		$ 0.035		$ 0.39
Debt Conversion, Converted Instrument, Shares Issued | shares								10,433,333
Deferred Finance Costs, Noncurrent, Net						$ 126,446
Derivative Liability						1,261,285
Debt Conversion, Converted Instrument, Amount						2,600,000
Conversion of notes payable and accrued interest						3,014,000
Convertible Notes Payable		$ 1,055,000
Interest Payable		$ 31,125
Debt Instrument, Convertible, Number of Equity Instruments		31,037,855
Convertible Notes Payable [Member] | Scenario, Forecast [Member]
Debt Conversion [Line Items]
Induced Conversion of Convertible Debt Expense					$ 1,700,000
Convertible Notes Payable [Member] | Interest Expense [Member]
Debt Conversion [Line Items]
Amortization of Debt Discount (Premium)						570,642
Convertible Notes Payable [Member] | Luxor Capital Partner Lp [Member]
Debt Conversion [Line Items]
Induced Conversion of Convertible Debt Expense						$ 6,998,571
Convertible Promissory Notes, Principal [Member] | Management [Member]
Debt Conversion [Line Items]
Conversion of notes payable and accrued interest	414,000
Convertible Promissory Notes, Interest [Member] | Management [Member]
Debt Conversion [Line Items]
Conversion of notes payable and accrued interest	$ 14,491

XML

CONVERTIBLE NOTES (Schedule of Carrying value of the Convertible debt) (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015	Sep. 18, 2014
Debt Conversion [Line Items]
Convertible notes at face value	$ 4,069,000	$ 4,069,000
Conversion of notes at face value	(3,014,000)	0	$ 69,000
Unamortized discount and deferred financing fees	(184,444)	(816,788)
Convertible notes, net of discount	$ 870,556	$ 3,252,212

XML

CONVERTIBLE NOTES (Schedule of Components and amounts of effective interest rate) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Debt Conversion [Line Items]
Amortization of deferred financing fees	$ 632,343	$ 63,708
Notes Payable, Other Payables [Member]
Debt Conversion [Line Items]
Interest rate at 7%	63,036	71,191
Amortization of debt discount	575,952	57,714
Amortization of deferred financing fees	56,391	5,994
Total interest expense on convertible notes	$ 695,379	$ 134,899

XML

DERIVATIVE LIABILITY - CONVERTIBLE NOTES (Additional Information) (Details) - USD ($)	1 Months Ended	3 Months Ended
	Apr. 27, 2016	Mar. 31, 2016	Mar. 31, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Restructuring of Debt		$ (8,112,962)	$ 0
Luxor Capital Partners LP [Member] | Subsequent Event [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gains (Losses) on Restructuring of Debt	$ 1,700,000
Private Placement [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Proceeds from Issuance of Long-term Debt, Total		$ 4,069,000
Debt Instrument, Convertible, Conversion Price		$ 0.39
Percentage Of Principal Balance Payable Upon Change Of Control		120.00%

XML

DERIVATIVE LIABILITY - CONVERTIBLE NOTES (Schedule of Other significant estimates) (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Suboptimal exercise factor		$ 2.5
Maximum [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Expected volatility	222.29%	139.57%
Risk-free interest rate	1.04%	1.31%
Suboptimal exercise factor	$ 2.0
Expected life (years)	2 years 6 months 4 days	2 years 9 months
Minimum [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Expected volatility	20.57%	101.46%
Risk-free interest rate	0.29%	0.92%
Suboptimal exercise factor	$ 1.0
Expected life (years)	1 year	2 years

XML

DERIVATIVE LIABILITY - CONVERTIBLE NOTES (Schedule of fair value of the derivative liability) (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Derivative Liability And Convertible Debt [Line Items]
Beginning balance	$ 590,536	$ 1,218,619
Issuance of convertible debt	0	0
Conversion of convertible debt	(302,029)	0
Change in fair value	1,104,158	(628,083)
Ending balance	$ 1,392,665	$ 590,536

XML

VRIC PAYABLE - RELATED PARTY (Additional Information) (Details) - USD ($)	1 Months Ended	3 Months Ended
	Feb. 15, 2007	Mar. 31, 2016	Mar. 31, 2015	Dec. 18, 2014
Recorded Unconditional Purchase Obligation [Line Items]
Additional Paid in Capital				$ 255,000
Clarkdale Slag Project [Member]
Recorded Unconditional Purchase Obligation [Line Items]
Monthly payments	$ 167,827
Capitalized Interest Costs, Including Allowance for Funds Used During Construction, Total		$ 7,101	$ 13,454
Clarkdale Slag Project [Member] | Verde River Iron Company Limited Liability Company [Member]
Recorded Unconditional Purchase Obligation [Line Items]
Monthly payments	$ 30,000	$ 30,000
Effective interest rate used for present value of monthly payment		8.00%
Purchase of assets, Present value of monthly payment commitment		$ 2,501,187
Purchase of assets, imputed interest on the monthly payment commitment		$ 1,128,813
Expected term used for present value of monthly payment		10 years

XML

VRIC PAYABLE - RELATED PARTY (Future Principal Payments on VRIC Payable) (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Related Party Transaction [Line Items]
2016	$ 720,000
2017	41,195
Total minimum payments	761,195
Less: amount representing interest	(63,051)
Present value of minimum payments	698,144
VRIC payable, current portion	698,144	$ 657,295
VRIC payable, net of current portion	$ 0	$ 40,849

XML

STOCKHOLDERS' EQUITY (Additional Information) (Details) - USD ($)	1 Months Ended		3 Months Ended
	Mar. 18, 2016	Mar. 25, 2015	Mar. 31, 2016	Mar. 31, 2015	Mar. 18, 2015	Jun. 07, 2012	Nov. 12, 2009
Stockholders Equity Note [Line Items]
Class of Warrant or Right, Outstanding			46,282,965
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 1.85
Conversion of notes payable and accrued interest			$ 3,119,491	$ 0
Debt Conversion, Converted Instrument, Amount			11,232,450	0
Loss On Conversion Of Notes Payable			$ 8,112,962	$ 0
Director [Member]
Stockholders Equity Note [Line Items]
Stock Issued During Period, Shares, New Issues			18,750
Share Price			$ 0.08
Luxor Capital Partners LP [Member]
Stockholders Equity Note [Line Items]
Class of Warrant or Right, Outstanding	12,128,708
Debt Conversion, Converted Instrument, Amount	$ 2,600,000
Loss On Conversion Of Notes Payable	6,998,571
Luxor Capital Partners LP [Member] | Accrued Interest [Member]
Stockholders Equity Note [Line Items]
Debt Conversion, Converted Instrument, Amount	91,000
Oring note holders [Member]
Stockholders Equity Note [Line Items]
Debt Conversion, Converted Instrument, Amount	414,000
Loss On Conversion Of Notes Payable	1,114,391
Oring note holders [Member] | Accrued Interest [Member]
Stockholders Equity Note [Line Items]
Debt Conversion, Converted Instrument, Amount	$ 14,491
Common Stock [Member]
Stockholders Equity Note [Line Items]
Shares Issued, Price Per Share					$ 0.25
Shares, Issued					516,460
Common Stock [Member] | Convertible Debt [Member]
Stockholders Equity Note [Line Items]
Shares Issued, Price Per Share	$ 0.035
Shares, Issued	76,885,714
Common Stock [Member] | Convertible Debt [Member] | Management [Member]
Stockholders Equity Note [Line Items]
Shares Issued, Price Per Share	$ 0.035
Shares, Issued	12,242,600
Private Placement [Member]
Stockholders Equity Note [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.50	$ 0.71				$ 1.85
Proceeds from Issuance of Private Placement		$ 1,500,000
Common Stock Units Issued During Period		4,250,000
Common Stock Unit Price Per Share		$ 0.3529
Private Placement [Member] | Luxor Capital Partners LP [Member]
Stockholders Equity Note [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.71
Shares Issued, Price Per Share	$ 0.035
Stock Issued During Period, Shares, New Issues	42,857,143
Stock Issued During Period, Value, New Issues	$ 1,500,000

XML

STOCKHOLDERS' EQUITY (Schedule Of Outstanding Warrants Issued To Investors To Purchase Common Stock) (Details)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	46,282,965
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.85
Class Of Warrant Or Right One [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.375
Class of Warrant or Right, Expiration Date of Warrants or Rights	June 2016
Class Of Warrant Or Right Two [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	3,410,526
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.70
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2017
Class Of Warrant Or Right Three [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	5,736,501
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.71
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2017
Class Of Warrant Or Right Four [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	7,042,387
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.85
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2017
Class Of Warrant Or Right Five [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	3,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.375
Class of Warrant or Right, Expiration Date of Warrants or Rights	June 2017
Class Of Warrant Or Right Six [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	316,752
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.30
Class of Warrant or Right, Expiration Date of Warrants or Rights	September 2019
Class Of Warrant Or Right Seven [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	2,197,496
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.30
Class of Warrant or Right, Expiration Date of Warrants or Rights	October 2019
Class Of Warrant Or Right Eight [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.30
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2019
Class Of Warrant Or Right Nine [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	1,498,750
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.30
Class of Warrant or Right, Expiration Date of Warrants or Rights	December 2019
Class Of Warrant Or Right Ten [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	3,981,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.50
Class of Warrant or Right, Expiration Date of Warrants or Rights	December 2019
Class Of Warrant Or Right Eleven [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	4,250,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.50
Class of Warrant or Right, Expiration Date of Warrants or Rights	March 2020
Class Of Warrant Or Right Twelve [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	2,843,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.50
Class of Warrant or Right, Expiration Date of Warrants or Rights	May 2020
Class Of Warrant Or Right Thirteen [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	2,215,429
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.50
Class of Warrant or Right, Expiration Date of Warrants or Rights	July 2020
Class Of Warrant Or Right Fourteen [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	327,900
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.50
Class of Warrant or Right, Expiration Date of Warrants or Rights	September 2020
Class Of Warrant Or Right Fifteen [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	27,067
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.70
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2017
Class Of Warrant Or Right sixteen [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	44,816
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.71
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2017
Class Of Warrant Or Right Seventeen [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	2,750,045
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.70
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2017
Class Of Warrant Or Right Eighteen [Member]
Class of Warrant or Right [Line Items]
Class of Warrant or Right, Outstanding | shares	4,641,296
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.71
Class of Warrant or Right, Expiration Date of Warrants or Rights	November 2017

XML

STOCK-BASED COMPENSATION (Additional Information) (Details) - USD ($)	1 Months Ended	3 Months Ended
	Mar. 17, 2016	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares available for issuance for stock option awards		5,335,576
Expenses related to vesting and granting of stock-based compensation awards		$ 6,922	$ 42,088
Stock option granted, weighted average exercise price		$ 0.08
Stock option outstanding		23,686,868		23,936,162
Unrecognized compensation cost related to unvested stock-based compensation awards		$ 1,731
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares, Ending Balance		300,000		300,000
Weighted Average Period For Recognized Costs		8 months 1 day
Weighted Average Period For Recognized Expenses		9 months
Class of Warrant or Right, Outstanding		46,282,965
Private Placement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option granted, weighted average exercise price	$ 0.98
Non Employee Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee		18,000
Value of common stock per quarter directors can choice to receive		$ 9,000
Board of Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class of Warrant or Right, Outstanding	16,189,414
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares, Ending Balance		250,000
Stock Option Plan 2007 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares available for issuance for stock option awards		1,047,953
Stock option plan, maximum options to purchase shares of common stock that may be granted		4,000,000
Stock option granted, shares		2,952,047
Stock option granted, weighted average exercise price		$ 0.61
Stock option outstanding		2,715,027
Stock Option Plan 2007 [Member] | Minimum [Member] | Nonqualified Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option plan, exercise price as a percentage of fair market value		85.00%
Stock Option Plan 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares available for issuance for stock option awards		3,812,500
Stock option plan, maximum options to purchase shares of common stock that may be granted		7,250,000
Stock option granted, shares		3,437,500
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee		500,000
Stock option granted, weighted average exercise price		$ 0.68
Stock option outstanding		3,397,500
Stock Option Plan 2009 [Member] | Non-Management Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option granted, shares		36,000
Stock option, expiration date		Mar. 31, 2021
Stock option granted, weighted average exercise price		$ 0.08
Stock Option Plan 2009 [Member] | Directors Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option plan, maximum options to purchase shares of common stock that may be granted		2,750,000
Stock option granted, shares		2,274,877
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee		250,000
Stock option granted, weighted average exercise price		$ 0.67
Stock option outstanding		2,163,627
Stock Option Plan 2009 [Member] | Directors Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option plan, exercise price as a percentage of fair market value		100.00%
Stock Option Plan 2009 [Member] | For grantees who own more than 10% of the Company's common stock on the grant date [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option plan, exercise price as a percentage of fair market value		110.00%
Out of Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option granted, shares		15,610,714
Stock option granted, weighted average exercise price		$ 0.48
Stock option outstanding		15,410,714
Incentive Plan 2009 [Member] | Private Placement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option outstanding	570,000
Incentive Plan 2009 [Member] | Directors Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares available for issuance for stock option awards		475,123
The 2007 Plan [Member] | Private Placement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option outstanding	470,280
The 2009 Directors Plan [Member] | Private Placement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option outstanding	188,469
All Other Plan [Member] | Private Placement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option outstanding	200,000

XML

STOCK-BASED COMPENSATION (Assumptions Used to Estimate Fair Value of Stock-Based Compensation Awards) (Details) - Factor	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.21%
Dividend yield	0.00%	0.00%
Expected volatility	252.08%
Suboptimal exercise factor	2.00	2.00
Expected life (years)	3 years
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate		0.24%
Expected volatility		91.23%
Expected life (years)		1 year
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate		1.37%
Expected volatility		105.19%
Expected life (years)		4 years 3 months

XML

STOCK-BASED COMPENSATION (Stock-Based Compensation Activity) (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Number of Shares
Outstanding	23,936,162
Exercisable	23,636,162
Options/warrants granted	36,000
Options/warrants expired	(285,294)
Options/warrants exercised	0
Outstanding	23,686,868	23,936,162
Exercisable	23,386,868	23,636,162
Weighted Average Grant Date Fair Value
Outstanding	$ 0.21
Exercisable	0.20
Options/warrants granted	0.10
Options/warrants expired	0.87
Options/warrants exercised	0
Outstanding	0.20	$ 0.21
Exercisable	0.19	0.20
Weighted Average Exercise Price
Outstanding	0.53
Exercisable	0.52
Options/warrants granted	0.08
Options/warrants expired	1.04
Options/warrants exercised	0
Outstanding	0.52	0.53
Exercisable	$ 0.52	$ 0.52
Weighted Average Remaining Contractual Life (Years)
Outstanding	3 years 8 months 26 days	3 years 10 months 17 days
Options/warrants granted	5 years
Exercisable	3 years 9 months 4 days	3 years 10 months 20 days
Aggregate Intrinsic Value
Outstanding	$ 0	$ 0
Exercisable	$ 0	$ 0

XML

STOCK-BASED COMPENSATION (Changes of Stock-Based Compensation Awards Subject to Vesting) (Details)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Number of Shares Subject to Vesting
Unvested | shares	300,000
Options/warrants granted | shares	0
Options/warrants vested | shares	0
Unvested | shares	300,000
Weighted Average Grant Date Fair Value
Unvested | $ / shares	$ 0.99
Options/warrants granted | $ / shares	0
Options/warrants vested | $ / shares	0
Unvested | $ / shares	$ 0.99

XML

STOCKHOLDER RIGHTS AGREEMENT (Additional Information) (Details)	Mar. 31, 2016	Mar. 18, 2016
Stockholder Rights Agreement [Line Items]
Minimum Percentage Of Ownership Acquired Or To Be Acquired Upon Which Purchase Rights Become Exercisable	15.00%
Minimum [Member]
Stockholder Rights Agreement [Line Items]
Percentage Of Ownership Interests		15.00%
Luxor Capital Partners LP [Member]
Stockholder Rights Agreement [Line Items]
Percentage Of Ownership Interests		49.83%
Luxor Capital Partners LP [Member] | Maximum [Member]
Stockholder Rights Agreement [Line Items]
Percentage Of Ownership Interests	26.00%

XML

PROPERTY RENTAL AGREEMENTS AND LEASES (Additional Information) (Details)	3 Months Ended
	Mar. 31, 2016 USD ($)
Operating Leased Assets [Line Items]
Operating Leases, Income Statement, Minimum Lease Revenue	$ 1,700

XML

INCOME TAXES (Additional Information) (Details)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating Loss Carryforwards [Line Items]
Effective Income Tax Rate Reconciliation, Percent, Total	0.00%	38.00%

XML

COMMITMENTS AND CONTINGENCIES (Additional Information) (Details) - USD ($)		1 Months Ended	3 Months Ended
	Jun. 07, 2012	Feb. 15, 2007	Mar. 31, 2016	Mar. 31, 2015	Jul. 25, 2011	Dec. 31, 2010	May 20, 2005
Commitments and Contingencies Disclosure [Line Items]
Cash penalties as a percentage of purchase price paid by investors	1.00%
Potential Liability for Severance Agreements			$ 112,500
Long-term Construction Loan			3,500,000
Long-term Construction Loan, Current			1,200,000
Payments for Royalties			45,000	$ 45,000
Employee Severance [Member]
Commitments and Contingencies Disclosure [Line Items]
Restructuring Reserve			$ 80,000
Maximum [Member]
Commitments and Contingencies Disclosure [Line Items]
Cash penalties as a percentage of purchase price paid by investors	3.00%
Payment, Period	$ 121,500
Nanominerals Corporation [Member]
Commitments and Contingencies Disclosure [Line Items]
Advance royalty payment amount					$ 15,000	$ 660,000
Royalty payment percentage			2.50%
Clarkdale Slag Project [Member] | Nanominerals Corporation [Member]
Commitments and Contingencies Disclosure [Line Items]
Additional contingent payment						$ 1,320,000
Royalty payment percentage			2.50%
Joint venture ownership interest							50.00%
Clarkdale Slag Project [Member] | Nanominerals Corporation [Member] | Scenario, Previously Reported [Member]
Commitments and Contingencies Disclosure [Line Items]
Royalty payment percentage			5.00%
Joint venture ownership interest		50.00%	50.00%
Verde River Iron Company Limited Liability Company [Member] | Clarkdale Slag Project [Member]
Commitments and Contingencies Disclosure [Line Items]
Additional contingent payment		$ 6,400,000
Advance royalty payment amount		500,000
The Minimum project royalty payments that should be made for the advance royalty not to remains payable		$ 500,000
Royalty payment percentage		2.50%
Verde River Iron Company Limited Liability Company [Member] | Clarkdale Slag Project [Member] | Scenario, Previously Reported [Member]
Commitments and Contingencies Disclosure [Line Items]
Royalty payment percentage		5.00%
Joint venture ownership interest		50.00%	50.00%
Verde River Iron Company Limited Liability Company [Member] | Clarkdale Slag Project [Member] | Minimum [Member]
Commitments and Contingencies Disclosure [Line Items]
Advance royalty payment amount		$ 500,000
Verde River Iron Company Limited Liability Company [Member] | Clarkdale Slag Project [Member] | Royalty Payments [Member]
Commitments and Contingencies Disclosure [Line Items]
Additional contingent payment		500,000
Verde River Iron Company Limited Liability Company [Member] | Clarkdale Slag Project [Member] | Cash Flow [Member]
Commitments and Contingencies Disclosure [Line Items]
Additional contingent payment		$ 3,500,000
Verde River Iron Company Limited Liability Company [Member] | Clarkdale Slag Project [Member] | Nanominerals Corporation [Member]
Commitments and Contingencies Disclosure [Line Items]
Royalty payment percentage		2.50%

XML

CONCENTRATION OF CREDIT RISK (Additional Information) (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Concentration Risk [Line Items]
Deposits In Excess Of Insured Limits	$ 1,262,167	$ 91,355
Maximum [Member]
Concentration Risk [Line Items]
Insurance Available For Cash At Each Bank	$ 250,000

XML

RELATED PARTY TRANSACTIONS (Additional Information) (Details) - USD ($)		1 Months Ended	3 Months Ended
	Nov. 11, 2014	Dec. 23, 2014	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 1.85
Common Stock, Shares, Outstanding			286,310,744		154,306,537
Debt Conversion, Converted Instrument, Shares Issued			76,885,714
Gains (Losses) on Restructuring of Debt			$ (8,112,962)	$ 0
Debt Conversion, Original Debt, Amount			$ 3,119,491	$ 0
Financial Consulting Services [Member]
Related Party Transaction [Line Items]
Class Of Warrant Or Right Grants In Period				2,063,143
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.50
Warrants and Rights Outstanding			$ 258,553
Warrants Expiration Period			5 years
Luxor Capital Partners LP [Member]
Related Party Transaction [Line Items]
Shares Issued, Price Per Share			$ 0.035
Common Stock, Shares, Outstanding			142,665,754
Stock Issued During Period, Value, New Issues			$ 1,500,000
Stock Issued During Period, Shares, New Issues			42,857,143
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			16,532,789
Luxor Capital Partners LP [Member] | Convertible Promissory Notes [Member]
Related Party Transaction [Line Items]
Debt Conversion, Converted Instrument, Shares Issued			76,885,714
Gains (Losses) on Restructuring of Debt			$ 6,998,571
Debt Conversion, Original Debt, Amount			2,691,000
Nanominerals Corporation [Member]
Related Party Transaction [Line Items]
Fee and expenses incurred to related party			$ 15,000
Royalty payment percentage			2.50%
Due to Related Parties			$ 233,725		$ 188,725
Class Of Warrant Or Right Grants In Period	1,000,000	1,940,000
Shares Issued, Price Per Share	$ 0.30	$ 0.50
Warrant Expiration Date	Nov. 11, 2019	Dec. 23, 2019
Fair Value Adjustment of Warrants	$ 108,877	$ 351,276
Cupit Milligan Ogden Williams Certified Public Accountants [Member]
Related Party Transaction [Line Items]
Fee and expenses incurred to related party			17,926	$ 63,064
Outstanding balance due to related party			176,383		158,457
Ireland Inc [Member]
Related Party Transaction [Line Items]
Outstanding balance due to related party					$ 1,734
Operating Leases, Rent Expense, Sublease Rentals			$ 5,202	$ 5,001

XML

RELATED PARTY TRANSACTIONS (Company and NMC) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Related Party Transactions [Member]
Related Party Transaction [Line Items]
Mineral and exploration expense - related party	$ 45,000	$ 75,000
Nanominerals Corporation [Member] | Reimbursements [Member]
Related Party Transaction [Line Items]
Fee and expenses incurred to related party	0	0
Nanominerals Corporation [Member] | Consulting Services Provided [Member]
Related Party Transaction [Line Items]
Fee and expenses incurred to related party	0	30,000
Nanominerals Corporation [Member] | Advance Royalty Payments [Member]
Related Party Transaction [Line Items]
Advance royalty payments	$ 45,000	$ 45,000

XML

RELATED PARTY TRANSACTIONS (Company and CMOW) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cupit Milligan Ogden Williams Certified Public Accountants [Member]
Related Party Transaction [Line Items]
Fee and expenses incurred to related party	$ 17,926	$ 63,064
Chief Financial Officer [Member]
Related Party Transaction [Line Items]
Fee and expenses incurred to related party	$ 6,095	$ 18,289

XML

SUBSEQUENT EVENTS (Additional Information) (Details) - USD ($)	1 Months Ended		3 Months Ended
	May 23, 2016	Apr. 27, 2016	Jun. 30, 2016	Mar. 31, 2016	Mar. 31, 2015
Subsequent Event [Line Items]
Debt Conversion, Converted Instrument, Shares Issued				76,885,714
Conversion of notes payable and accrued interest				$ 3,119,491	$ 0
Gains (Losses) on Restructuring of Debt				$ (8,112,962)	$ 0
Convertible Promissory Notes [Member] | Remaining Convertible Notes Holder [Member] | Scenario, Forecast [Member]
Subsequent Event [Line Items]
Gains (Losses) on Restructuring of Debt			$ 1,700,000
Private Placement [Member]
Subsequent Event [Line Items]
Debt Instrument, Convertible, Conversion Price				$ 0.39
Subsequent Event [Member] | Convertible Promissory Notes [Member] | Remaining Convertible Notes Holder [Member]
Subsequent Event [Line Items]
Debt Conversion, Converted Instrument, Shares Issued		31,037,855
Conversion of notes payable and accrued interest		$ 1,086,325
Debt Instrument, Convertible, Conversion Price		$ 0.035
Subsequent Event [Member] | Private Placement [Member] | Investor [Member]
Subsequent Event [Line Items]
Stock Issued During Period, Value, New Issues	$ 988,800
Stock Issued During Period, Shares, New Issues	28,251,430
Sale of Stock, Price Per Share	$ 0.035