HuntMountain Resources (HNTM) 10-Q 2008 Q1 Quarterly report

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, 2008.

OR

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

From ________________ to ________________

HuntMountain Resources Ltd.

(Exact name of registrant as specified in its charter)

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

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

(509) 892-5287

(Registrant's telephone number, including area code)

_________________________________________________

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

Indicate by check mark  whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 at least the past 90 days.

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  ¨ (Do not check if a smaller reporting company	Smaller reporting Company  x

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date  53,653,665

SEC 2334 (10-04) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

HUNTMOUNTAIN RESOURCES LTD.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

PART I

Item 1. Financial Information

HuntMountain Resources Ltd. and Subsidiaries

(A Development Stage Enterprise)

Consolidated Balance Sheets

	March 31,			December 31,
	2008			2007
	(unaudited)
Assets
CURRENT ASSETS:
Cash and cash equivalents:
Cash	$	336,191		$	273,020
Short term cash investments - domestic		12,897			12,909
Short-term cash investments - Argentina		252,402			367,375
Total cash and cash equivalents		601,491			653,304
Employee receivable		2,407			2,115
Accounts receivable		1,181			40,622
Prepaid expenses		67,197			72,612
Accrued interest receivable		3,955			1,969
Total current assets		676,232			770,621
EQUIPMENT:
Office equipment and vehicle		27,547			11,216
Less accumulated depreciation		9,328			7,014
		18,220			4,203
OTHER ASSETS:
Receivable - V.A. tax, Argentina		375,221			190,719
Land - La Josefina Estancia		710,000			710,000
Performance bond		189,834			214,762
Property deposits		271,500			136,500
Investments		7,331			7,331
Property purchase option		70,000			70,000
		1,623,885			1,329,312
Total assets	$	2,318,337		$	2,104,136
Liabilities and Stockholders’ Equity
CURRENT LIABILITIES:
Trade accounts payable	$	330,886		$	380,118
Accrued wages and related taxes		132,612			120,202
Short term note payable		5,247,000			3,747,000
Debt discount:		(2,751,062	)		(2,664,606	)
Net short term note payable		2,495,938			1,082,394
Accrued interest on note payable		293,253			165,149
Total current liabilities		3,252,689			1,747,864
STOCKHOLDERS’ EQUITY:
Preferred stock – 10,000,000 shares, $0.001 par value, authorized; -0- shares issued and outstanding		-			-
Common stock – 300,000,000 shares, $0.001 par value, authorized; 33,428,285 and 32,266,285 shares issued and outstanding, respectively		32,594			32,491
Additional paid-in capital		18,194,327			12,081,316
Retained earnings - prior to development stage		90,527			90,527
Deficit accumulated during the development stage		(19,166,381	)		(11,794,981	)
Accumulated other comprehensive income (loss)		(85,419	)		(53,081	)
Total stockholders’ equity		(934,352	)		356,272
Total liabilities and stockholders’ equity	$	2,318,337		$	2,104,136

The accompanying notes are an integral part of these consolidated financial statements.

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HuntMountain Resources Ltd. and Subsidiaries

(A Development Stage Enterprise) 

Consolidated Statements of Income 

	Three months ended March 31,						From Inception of Development Stage July 1, 2005 through
	2008			2007			March 31, 2008
	(unaudited)			(unaudited)			(unaudited)
INCOME:
Dividend and interest income	$	2,035		$	265		$	74,317
EXPENSES:
Professional fees		165,224			36,446			852,034
Marketing		6,499			9,300			183,210
Exploration expenses		828,413			399,013			2,944,815
Travel expenses		63,849			17,617			341,625
Administrative and office expenses		52,891			17,643			413,137
Payroll expenses		190,150			124,763			1,107,165
Stock compensation expense		52,500			-			251,100
Comon stock and options issued for services		-			9,000			353,250
Interest expense and bank charges		141,238			14,140			334,156
Financing charge		4,229,946			-			9,485,595
Amortization of debt discount		1,641,212			-			2,968,828
Depreciation expense		2,314			935			9,327
		7,374,236			628,857			19,244,242
LOSS BEFORE OTHER INCOME		(7,372,200	)		(628,592	)		(19,169,924	)
OTHER INCOME:
Income from partnership interest		800			-			3,543
LOSS BEFORE INCOME TAXES:		(7,371,400	)		(628,592	)		(19,166,381	)
Income taxes:		-			-			-
NET LOSS	$	(7,371,400	)	$	(628,592	)	$	(19,166,381	)
BASIC AND DILUTED LOSS PER SHARE, based on weighted-average shares outstanding		33,358,219			32,266,285
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED	$	(0.22	)	$	(0.02	)

The accompanying notes are an integral part of these consolidated financial statements.

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HuntMountain Resources Ltd. and Subsidiaries

(A Development Stage Enterprise)

Consolidated Statements of Cash Flows

	Three months ended March 31,						From Inception of Development Stage July 1, 2005 through
	2008			2007			March 31, 2008
	(unaudited)			(unaudited)			(unaudited)
Increase (Decrease) in Cash and Cash Equivalents
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,371,400	)	$	(628,592	)	$	(19,166,381	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		2,314			935			9,327
Stock option compensation expense		52,500			-			251,100
Common stock and options issued for services		-			9,000			353,250
Financing charge		4,229,946			-			9,485,595
Amortization of debt discount		1,641,212			-			2,968,828
Gain on sale of precious metal investments		-			-			(15,194	)
Increase in long term receivable - V.A. tax		(184,502	)		-			(375,221	)
Increase in employee receivable		(293	)		-			(2,407	)
Increase in accounts receivable		39,441			-			(1,181	)
(Increase) decrease in prepaid expenses		5,415			4,595			(67,197	)
Increase in accounts payable		(49,232	)		-			286,761
Increase in accrued liabilities		12,410			13,340			163,737
Net cash used in operating activities		(1,622,190	)		(600,722	)		(6,108,984	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Land purchases		-			-			(710,000	)
Accrued interest income		(1,986	)		-			(3,955	)
Purchase of performance bond		-			(251,613	)		(247,486	)
Property deposits		(135,000	)		-			(271,500	)
Property purchase option		-			-			(70,000	)
Sale of precious metal investments		-			-			28,913
Acquisition of equipment		(16,331	)		-			(27,547	)
Net cash used in investing activities		(153,317	)		(251,613	)		(1,301,575	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible note financing		1,500,000			807,000			5,247,000
Increase in debt discount		(86,456	)		-			(2,751,062	)
Increase in accrued interest payable		128,104			-			293,253
Proceeds from sales of common stock		189,456			-			4,136,932
Net cash from financing activities		1,731,104			807,000			6,926,123
Effect of currency translation on cash		(7,410	)		-			(21,994	)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS		(51,813	)		(45,335	)		(506,430	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR/PERIOD		653,304			297,191			1,107,921
CASH AND CASH EQUIVALENTS, END OF YEAR/PERIOD	$	601,491		$	251,856		$	601,491
Supplemental Disclosures of Cash Flow Information:
Income taxes, paid net of refunds:		-			-			-
Interest paid:		-			-			-

The accompanying notes are an integral part of these consolidated financial statements.

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HuntMountain Resources Ltd. And Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

Note 1: Basis of Presentation

The unaudited financial statements have been prepared by management of HuntMountain Resources Ltd., pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such SEC rules and regulations.  These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, which was filed with the SEC on April 14, 2008.  In the opinion of management of the Company, the foregoing statements contain all adjustments necessary to present fairly the financial position of the Company as of March 31, 2008, and its results of operations and cash flows for the three month periods ended March 31, 2008 and March 31, 2007.  The interim results reflected in the foregoing financial statements are not considered indicative of the results expected for the full fiscal year.

Note 2: Convertible note

In January 2007, HuntMountain Resources Ltd. obtained an unsecured loan commitment for multiple advances up to $2,000,000 from Hunt Family Limited Partnership (“HFLP”), an entity controlled by Tim Hunt, the Company’s Chairman and CEO, for the specific purpose of providing working capital, surety, bonding and/or indemnification purposes for HuntMountain Resources Ltd. and its subsidiaries.

In August 2007, the Company obtained an amended, unsecured loan commitment for multiple advances up to $5,000,000 from HFLP, effective August 1, 2007, to amend the previous bridge financing note that was effective on January 31, 2007. The simple interest rate on the new bridge financing note was eleven percent (11%) per annum. The aggregate amount of unpaid advances and accrued and unpaid interest under the amended note was convertible into equity securities of the Company at the same price and terms as securities sold by the Company to investors in its next equity financing.  The amended note amends and restates, and does not evidence payment of, the unsecured loan for multiple advances effective January 31, 2007.

In October 2007, the Company obtained an amended and restated convertible unsecured note for multiple advances up to $5,000,000 (“the October Note”) from HFLP to provide working capital for the Company and its subsidiaries.  The amended note was effective on October 23, 2007.  The amended and restated convertible unsecured note was completed to replace the previous bridge financing note that was effective August 1, 2007. The simple interest rate of the October Note is eleven percent (11%) per annum. The aggregate amount of unpaid advances and accrued and unpaid interest under the amended note is convertible, in whole or in part, at the option of the holder into units of the Company’s common stock. Each unit consists of one common share and one common share purchase warrant at a conversion price of $0.25 per unit. The exercise price of the warrants issued pursuant to such conversion is set at $0.40 to acquire one new common share of the Company. The warrants to be issued pursuant to the conversion of the October note are exercisable for a period of five years from the conversion date.

In the first quarter of 2008 the Company drew $1,103,000 from the October Note.

In November 2007 and December 2007, the Company issued 600,000 units pursuant to the conversion of a portion of the October Note. In the first quarter of 2008 the Company issued 412,000 units pursuant to the conversion of a portion of the October Note.

In accordance with EITF 00-27, the Company recognized the beneficial conversion feature associated with the notes convertibility into shares and warrants. The total value of warrants was determined using the Black Scholes Option Price Calculation. In employing this model, we used the actual three month T-Bill rate on the advance dates for the risk-free rate. Similarly, the actual share price on advance dates was used in the calculation. We assumed expected volatility of 82%, no dividends and a five year horizon in all Black Scholes Option Price calculations. In the first quarter of 2008, the total value of warrants from issuances of the October Note was $1,953,793 and the total value of shares was $1,528,821.

In March 2008 the Company received a $500,000 advance from HFLP pursuant to the identical terms of the October Note. At that time, HFLP management determined that it would convert all balances of principal and interest of the October Note into units as outlined above (see also Note 9: Subsequent events below). The $500,000 advance in March of 2008 was therefore considered to be part of the October Note. The total value of warrants from this issuance was $1,360,000 and the total value of shares was $1,140,000.

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Following the guidance provided by EITF 00-27 the Company allocated proceeds first to the warrants issuable upon conversion of the note. The value of the warrants was recorded on the balance sheet as debt discounts and increases to shareholder’s equity. The debt discounts are being amortized over the remaining life of the convertible note. The value of warrants in excess of the actual debt advance amounts were expensed as financing fees.

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

Note 3: Stock option plan

The Company’s 2005 Stock Plan permits the granting of up to 3,000,000 non-qualified stock options, incentive stock options, and restricted shares of common stock to employees, directors, and consultants.  At March 31, 2008, there were 2,290,000 stock options granted to directors, employees, and consultants, of which 1,955,000 are vested as of March 31, 2008.  The fair value of each option is estimated on the vesting date using the Black-Scholes Option Price Calculation.

There were 150,000 options that vested during the quarter ended March 31, 2008; therefore, the Company’s total stock option expense for the quarter was $52,500.  Expenses for the remaining options will be recorded as they vest in the remainder of 2008.

For purposes of calculating the fair value of options, volatility for the two years presented is based on the historical volatility of the Company’s common stock over its public trading life.  The Company currently does not foresee the payment of dividends in the near term.  The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three month periods ended
	March 31, 2008		March 31, 2007
Weighted average risk free rate:		2.09%		4.92%
Weighted average volatility:		82.8%		75%
Expected dividend yield:		0%		0%
Weighted average life (years):		5.0		2.0

 The following table summarizes the terms of the options outstanding at March 31, 2008:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number of Exercisable Options at March 31, 2008
		90,000	$	0.20		3.89		90,000
		700,000	$	0.25		3.31		650,000
		100,000	$	0.30		3.59		100,000
		10,000	$	0.34		2.33		10,000
		10,000	$	0.37		2.01		10,000
		320,000	$	0.38		4.74		160,000
		150,000	$	0.40		4.75		100,000
		650,000	$	0.45		4.28		600,000
		5,000	$	0.55		3.25		5,000
		55,000	$	0.60		4.74		55,000
		200,000	$	0.63		3.89		175,000
TOTALS		2,290,000	$	0.378		3.99		1,955,000

For purposes of calculating the fair value of options, volatility for the two years presented is based on the historical volatility of the Company’s common stock over its public trading life.  The Company currently does not foresee the payment of dividends in the near term.  The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

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Note 4: Performance bond

During the quarter ended March 31, 2007, Cerro Cazador S.A. was required to purchase a performance bond as a condition of the exploration agreement on the La Josefina property in Argentina.  The bond was originally purchased for $251,613. As of the quarter ended March 31, 2008, the value of the bond decreased to $189,834.  The decline in value is presented on our balance sheet as Other Comprehensive Loss. The bond has a face value of $600,000, or 10% of our required investment under the terms of the agreement.

Note 5: Commitments

DUN GLEN PROPERTY – PERSHING COUNTY, NEVADA

The Company has a lease for the Dun Glen property with an option to purchase a 100% interest in the claims.  Lease payments began in 2006 and are considered advance royalty payments.  The term of the lease is 10 years, renewable at the Company’s option for an additional ten years.  The Company paid $37,500 in advance royalty payments during the quarter ended March 31, 2007, for this property.  Future annual advance royalty payments begin at $45,000 per year in 2008 and escalate to $72,500 per year at the end of the fifth year of the lease and for every year beyond that, until the lease is terminated or the purchase option is exercised. During the first quarter of 2008 the Company paid $45,000 in advance royalty payments for the Dun Glen property. The Company has also agreed to keep the claims in good standing until the lease is terminated or the purchase option is exercised.

BAJO POBRE PROPERTY – SANTA CRUZ PROVINCE, ARGENTINA

On March 27, 2007, the Company, through its Argentine subsidiary, CCSA, signed a definitive lease purchase agreement with FK Minera S.A. to acquire a 100% interest in the Bajo Pobré gold property located in Santa Cruz Province, Argentina.  The Company may earn up to a 100% equity interest in the Bajo Pobré property by making cash payments and exploration expenditures over a five-year earn-in period.  The required expenditures and ownership levels upon meeting those requirements are:

Year of the Agreement	Payment to FK Minera S.A.		Exploration Expenditure Requirement		Ownership
First year	$	50,000	$	250,000		0	%
Second year		50,000		250,000		0	%
Third year		75,000		0		51	%
Fourth year		75,000		0		60	%
Fifth year		75,000		0		100	%

After the fifth year, the Company is obligated to pay FK Minera S.A. the greater of a 1% net smelter royalty (“NSR”) on commercial production or $100,000 per year.  The Company has the option to purchase the NSR for a lump-sum payment of $1,000,000 less the sum of all royalty payments made to FK Minera S.A. to that point.

LA JOSEFINA PROPERTY - SANTA CRUZ PROVINCE, ARGENTINA

During the second quarter of 2007, the Company, through its Argentine subsidiary, Cerro Cazador S.A., was selected as the winning bidder for the La Josefina gold property in Santa Cruz Province, Argentina.  Through a public bidding process carried out by Fomento Minero de Santa Cruz Sociedad del Estado (Fomicruz S.E.), Cerro Cazador S.A. was awarded the right to explore and develop mineral deposits on La Josefina.  A definitive Exploration Agreement was executed by the parties in July 2007.  According to the terms of the Exploration Agreement, the Company will be required to expend $6,000,000 on the property over a four-year term, including $1,500,000 before July 2008.  The agreement also defines the possible terms for a joint venture company to be set up between Cerro Cazador S.A. and Fomicruz S.E. in the event that a positive feasibility study is completed on the La Josefina property during the exploration period.

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ABITIBI PROPERTIES – QUEBEC, CANADA

During 2006, the Company entered into a definitive Option Agreement for the acquisition of a 100% interest in two properties in the Abitibi region of Quebec.  Pursuant to the terms of the Option Agreement, the Company paid $70,000 ($35,000 for each of the two properties) in cash to the property owner.  The Company has also agreed to explore these properties and drill at least three exploration drill holes in each.  The payments and drilling of exploration drill holes will earn the Company a 100% interest in each of these properties and give the Company the option to acquire additional properties from the same property owner at similar terms.  The Company has also agreed to keep the claims in good standing until the agreement is terminated.

FACILITY LEASES:

The Company has lease commitments on office space and storage space in Liberty Lake, Washington. The total annual lease obligation for this facility is $54,792.

Note 6: Investments

The Company holds an interest in two units of Pondera Partners, Ltd., a producing oil project located in Teton County, Montana. This investment was valued at cost on the Company’s balance sheet at $7,331 on March 31, 2008.

Note 7: Property purchase option

On June 19, 2006, the Company entered into an agreement with Diagnos, Inc., (Diagnos) obtaining an exclusive option to acquire a 100% interest in two prospective gold properties located in the Abitibi region of Québec, Canada.  The properties consist of 46 claims covering approximately 6,500 acres.

The Company will acquire a 100% interest in the properties by paying Diagnos a sum of $70,000 and by conducting an initial exploration program comprised of at least three drill holes on each property.  During the year ended December 31, 2006, the Company paid the $70,000 fee, which is shown as property purchase option on the consolidated balance sheets.  Upon completion of the initial drilling programs, the Company will have the option to select up to an additional seven properties in which it may acquire a 100% interest by paying Diagnos a sum of $40,000 and completing three-hole exploration drilling programs for each property.  The option will expire if the initial two properties are not drilled within 48 months from the effective date of the agreement.

For each economic discovery made on any of the acquired properties, the Company will pay Diagnos a bonus of $500,000.  The Company will also grant Diagnos a 2% Net Smelter Royalty (NSR) for economic discoveries made on the initial or additional properties, but will retain the option to acquire 1% of the NSR upon payment of $1 million to Diagnos within five (5) years of making the economic discovery.  An economic discovery is defined in the agreement as being the production of a positive feasibility study for a given project in compliance with Canada’s National Instrument 43-101.

Note 8: Subsequent events

Subsequent to March 31, 2008 HFLP converted $5,060,014 of principal and interest owing pursuant to the October Note into 20,240,056 units consisting of one share and one warrant per unit.

Subsequent to March 31, 2008 the Company drew an additional $950,000 from the October Note.

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

Forward Looking Statements

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

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Overview

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

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

Results of Operations

Three month period ended March 31, 2008 compared to March 31, 2007

We had no revenues from operations during the recently completed quarter. Our only income has been derived from interest and dividends on our cash and cash investments. Interest and dividend income for the three-month period ended March 31, 2008 increased to $2,035 from $265 for the same period ended March 31, 2007. This increase was due to the receipt of a dividend payment during the quarter ended March 31, 2008. In the quarter ended March 31, 2007 the Company did not receive a similar dividend payment.

We had a net loss of $7,371,400 during the three-month period ended March 31, 2008.  This compares to a net loss of $628,592 during the three-month period ended March 31, 2007. The increase in our net loss was due to beneficial conversion feature accounting for the Company’s convertible notes, significantly higher exploration expenditures, higher professional fees, higher payroll expenses and higher interest expense associated with the company’s convertible notes.

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

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

Working Capital, Cash and Cash Equivalents

The Company’s working capital deficit for the three month period ending March 31, 2008 was $(2,576,457) compared to $(615,486) during that same period in 2007. The ratio of current assets to current liabilities was 0.21 to 1 at March 31, 2008 compared to 0.30 to 1 at March 31, 2007. Working capital decreased during the three month period ended March 31, 2008 compared to the same period in 2007 due to the Company’s increased exploration activity and the Company’s short-term convertible debt financing incurred in 2007 and 2008.

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Net cash used in operating activities was $1,622,190 for the three month period in 2008 compared with $600,722 used in operating activities in the same period during 2007.  The increase is the result of the increased net loss from operations.

During the period ending March 31, 2008, investing activities used $153,317 compared with $251,613 during that same period in 2007.  The decrease is primarily due to our purchase of a performance bond relating to our La Josefina project in the first quarter of 2007.

Cash flow from financing activities was $1,731,104 during the three month period ended March 31, 2008 compared to $807,000 during that same period in 2007. The increase is primarily the result of the Company’s convertible debt financing.

As a result, cash and cash equivalents decreased by $51,813 during the three month period ended March 31, 2008. This compares to a decrease in cash and cash equivalents of $45,335 in the three month period ended March 31, 2007. The Company has cash and cash equivalents of $601,491 as of March 31, 2008. It will be necessary for the Company to raise additional capital to continue it business activities in 2008.

It is anticipated that expenditures will continue to increase as we move forward with our exploration programs on our current properties and seek additional opportunities with other properties.  We have sufficient resources, including a convertible note due to Hunt Family Limited Partnership, an entity controlled by the Company’s Chairman and CEO, to meet our financial obligations until July 31, 2008. We anticipate that this note will be replaced with a similar note from the same entity if the Company has not secured additional financing arrangements before that time. The Company intends to pursue financing opportunities in the Canadian capital markets before July 31, 2008.

Item 3. Controls and Procedures

Tim Hunt, the Company’s President and CEO, and Bryn Harman, the Company’s Chief Financial Officer, have evaluated the Company’s disclosure controls and procedures as of March 31, 2008. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2008 to give reasonable assurance that the information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is also accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

During the quarter ended March 31, 2008 there were no changes in the Company’s internal controls or, to the knowledge of the management of the Company, any other changes that materially affect, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ending December 31, 2007.

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

During the Quarter ended March 31, 2008 the Company issued 412,000 units of Common Stock to partners of Hunt Family Limited Partnership. Each unit consisted of one common share and one common stock purchase warrant, pursuant to the conversion of a convertible note. The warrants issued have a $0.40 per share exercise price and an expiration date of five years from the date of issuance. The private placement was made pursuant to section 4(2) and Regulation D Rule 506 exemptions from registration under the Act.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

Not applicable

ITEM 5. OTHER INFORMATION

None.

Item 6. Exhibits

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

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SIGNATURES

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

HUNTMOUNTAIN RESOURCES LTD.
BY:	/s/ Tim Hunt	DATE:  May 19, 2008
	TIM HUNT, CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
BY:	/s/ Bryn Harman	DATE: May 19, 2008
	BRYN HARMAN, CHIEF FINANCIAL OFFICER

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