- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

S	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2008.

£	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 £ No S

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 S

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

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

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 September 30, 2008

PART I

Item 1. Financial Information

HuntMountain Resources Ltd. and Subsidiaries

(An Exploration Stage Enterprise)

Consolidated Balance Sheets

	September 30,			December 31,
	2008			2007
	(unaudited)
Assets

CURRENT ASSETS:
Cash and cash equivalents:
Cash	$	125,165		$	273,020
Short term cash investments - domestic		14,137			12,909
Short-term cash investments - Argentina		97,853			367,375
Total cash and cash equivalents		237,155			653,304

Receivables		24,410			44,706
Prepaid expenses		62,476			72,612
Total current assets		324,041			770,621

EQUIPMENT:
Equipment		424,798			11,216
Less accumulated depreciation		34,901			7,014
		389,897			4,203

OTHER ASSETS:
Receivable - V.A. tax, Argentina		1,099,983			190,719
Land - La Josefina Estancia		710,000			710,000
Performance bond		163,179			214,762
Property option and deposits		341,500			206,500
Investments		7,331			7,331
		2,321,993			1,329,312

Total assets	$	3,035,932		$	2,104,136


Liabilities and Stockholders’ Equity

CURRENT LIABILITIES:
Trade accounts payable	$	1,163,826		$	380,118
Accrued wages and related taxes		98,606			120,202

Short term note payable net of discount		-			1,082,394

Accrued interest on note payable		-			165,149
Total current liabilities		1,262,432			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; 76,251,362 and 33,016,285 shares issued and outstanding, respectively		76,251			32,491
Additional paid-in capital		50,368,666			12,081,316
Retained earnings - prior to development stage		90,527			90,527
Deficit accumulated during the development stage		(48,362,491	)		(11,794,981	)
Accumulated other comprehensive income (loss)		(399,453	)		(53,081	)
Total stockholders’ equity		1,773,500			356,272

Total liabilities and stockholders’ equity	$	3,035,932		$	2,104,136


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

HuntMountain Resources Ltd. and Subsidiaries

(An Exploration Stage Enterprise)

Consolidated Statements of Income

	Three months ended September 30,						Nine months ended September 30,						From Inception of Development Stage July 1, 2005 through
	2008			2007			2008			2007			September 30, 2008
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)

INCOME:
Dividend and interest income	$	2,071		$	4,124		$	6,071		$	4,922		$	78,353

EXPENSES:
Professional fees		242,207			55,198			669,279			135,011			1,356,089
Marketing		15,453			26,581			36,106			56,731			212,816
Exploration expenses		2,041,123			362,651			4,304,688			1,026,295			6,421,090
Travel expenses		81,608			16,692			214,667			68,817			492,444
Administrative and office expenses		118,103			29,503			296,264			67,470			656,510
Payroll expenses		241,893			146,274			660,181			403,874			1,577,196
Stock compensation expense		86,900			12,600			193,400			12,600			392,000
Comon stock and options issued for services		52,000			122,500			127,000			131,500			480,250
Interest expense and bank charges		58,057			42,568			291,845			84,928			484,763
Financing charge		6,396,670			-			22,870,956			39,176			28,126,605
Amortization of debt discount		2,962,173			418,002			6,857,457			1,184,215			8,185,073
Depreciation expense		12,754			935			27,887			2,804			34,900
		12,308,940			1,233,504			36,549,730			3,213,421			48,419,736

LOSS BEFORE OTHER INCOME		(12,306,868	)		(1,229,380	)		(36,543,659	)		(3,208,499	)		(48,341,383	)

NET OTHER INCOME/LOSS:		(17,710	)		-			(23,852	)		320			(21,109	)

LOSS BEFORE INCOME TAXES:		(12,324,579	)		(1,229,380	)		(36,567,510	)		(3,208,179	)		(48,362,491	)
Income taxes:		-			-			-			-			-

NET LOSS	$	(12,324,579	)	$	(1,229,380	)	$	(36,567,510	)	$	(3,208,179	)	$	(48,362,491	)


BASIC AND DILUTED LOSS PER SHARE, based on weighted-average shares outstanding		69,139,541			32,266,285			41,562,999			32,266,285


WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED	$	(0.18	)	$	(0.04	)	$	(0.88	)	$	(0.10	)


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

HuntMountain Resources Ltd. and Subsidiaries

(An Exploration Stage Enterprise)

Consolidated Statements of Cash Flows

	Nine months ended September 30,						From Inception of Development Stage July 1, 2005 through
	2008			2007			September 30, 2008
	(unaudited)			(unaudited)			(unaudited)

Increase (Decrease) in Cash and Cash Equivalents

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(36,567,510	)	$	(3,208,179	)	$	(48,362,491	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		27,887			2,804			34,900
Stock option compensation expense		193,400			12,600			392,000
Common stock and options issued for services		127,000			131,500			480,250
Financing charge		22,870,956			39,176			28,126,605
Amortization of debt discount		6,857,457			1,184,215			8,185,073
Gain on sale of precious metal investments		-			-			(15,194	)
(Increase) decrease in receivables		(888,969	)		(3,990	)		(1,124,393	)
(Increase) decrease in prepaid expenses		10,136			15,818			(62,476	)
Increase in accounts payable		783,708			-			1,119,701
Increase in accrued liabilities		(21,596	)		128,169			129,731
Net cash used in operating activities		(6,607,531	)		(1,697,887	)		(11,096,294	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Land purchases		-			-			(710,000	)
Purchase of performance bond		-			(251,613	)		(247,486	)
Property deposits and purchase options		(135,000	)		(67,000	)		(341,500	)
Sale of precious metal investments		-			-			28,913
Acquisition of equipment		(413,582	)		-			(424,798	)
Net cash used in investing activities		(548,582	)		(318,613	)		(1,694,871	)

CASH FLOWS FROM FINANCING ACTIVITIES:					-

Convertible note financing		7,034,754			1,857,000			8,282,298
Proceeds from sale of common stock		-			-			3,947,475
Net cash from financing activities		7,034,754			1,857,000			12,229,773

Effect of currency translation on cash		(294,790	)		-			(309,374	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(416,148	)		(159,500	)		(870,766	)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR/PERIOD		653,304			297,191			1,107,921

CASH AND CASH EQUIVALENTS, END OF YEAR/PERIOD	$	237,155		$	137,691		$	237,155


NON-CASH FINANCING ACTIVITIES:
Conversion of note into equity		10,350,000			-			10,762,000
Cashless exercise of options		189			-			207
Accrued interest		246,413			84,926			411,562
Conversion of accrued interest into equity		411,562			-			411,562

Supplemental Disclosures of Cash Flow Information:

Income taxes, paid net of refunds:		-			-			-
Interest paid:		-			-			-

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

HuntMountain Resources Ltd. And Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

Note 1: Basis of Presentation

The Company, a Washington corporation, was formed in 2005. Metaline Mining and Leasing Company, a Washington corporation since 1927, merged with and into the Company in August 2005. The Company’s business plan is to acquire, explore, and develop mineral exploration properties in North and South America. As of the end of 2007, the Company had acquired interest in one exploration property in Nevada, seven properties in the province of Santa Cruz in Argentina, and two properties in Quebec. In addition, the Company is in the process of finalizing an agreement to acquire an exploration property near Chinipas, Chihuahua, Mexico. The Company continues to actively evaluate additional properties in North and South America.

The unaudited financial statements have been prepared by management of the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such SEC rules and regulations. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 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 September 30, 2008 and its results of operations and cash flows for the three and nine month periods ended September 30, 2008 and September 30, 2007. The interim results reflected in the foregoing financial statements are not considered indicative of the results expected for the full fiscal year.

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

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

Note 2: Summary of Significant Accounting Policies

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

Accounting Method

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

Accounts Receivable

The Company carries its accounts receivable at net realizable value. On a periodic basis, the Company evaluates its accounts receivable and determines if an allowance for doubtful accounts is necessary, based on a history of past write-offs and collections and current credit conditions. At September 30, 2008, and December 31, 2007, the Company’s accounts receivable balance includes an allowance for doubtful accounts of $0.

Use of Estimates

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

Cash and Cash Equivalents

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

Principles of Consolidation

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

Marketable Securities

The Company accounts for marketable securities in accordance with the provisions of Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 115”). Under SFAS No. 115, debt securities and equity securities that have readily determinable fair values are to be classified in three categories:

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

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

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

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

Mineral Development Costs

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

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

Long-lived Assets

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

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

Earnings Per Share

The Company has adopted Statement of Financial Accounting Standards No. 128, which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Although there were common stock equivalents outstanding on September 30, 2008, they were not included in the calculation of earnings per share because they would have been considered anti-dilutive.

Basic earnings per share are computed using the weighted average number of shares outstanding during the years (69,139,541in the third quarter of 2008 and 32,266,285 in the third quarter of 2007).

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

Deferred Income Tax

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

Fair Value of Financial Instruments

Our financial instruments as defined by Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments,” include cash, short term investments, a performance bond and accrued liabilities. All instruments except the performance bond are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2008 and December 31, 2007. The performance bond was marked to market on September 30, 2008 and December 31, 2007.

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (hereinafter “SFAS No. 109”). Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against the deferred tax asset if management does not believe the Company has met the “more likely than not” standard imposed by SFAS No. 109 to allow recognition of such an asset.

Reclamation and Remediation

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

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

Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 ("SFAS 160"), Noncontrolling interests in Consolidated Financial Statements, which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. Management has not determined yet the effect that adoption of SFAS 160 may have on our results of operations or financial position.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141R ("SFAS 141R"), Business Combinations, which establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, goodwill acquired in the business combination, or a gain from a bargain purchase. SFAS 141R is effective for financial statements issued for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Management has not determined yet the effect that adoption of SFAS 141R may have on our results of operations or financial position.

Effective November 1, 2007, the Company adopted the Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The adoption of FIN 48 did not have a material impact on the Company’s financial position, results of operation or liquidity.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, which permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains on items for which the fair value option has been elected are to be reported in earnings. SFAS 159 will become effective as of the beginning of the first fiscal year that begins after November 15, 2007. As such, the Company adopted SFAS 159 effective January 1, 2008. However, the Company has not elected the fair value option for any financial instruments, and adoption has not impacted the Company’s financial statements.

Fair Value Measurements

Effective January 1, 2008, the Company adopted Financial Accounting Standards Board (FASB) SFAS No. 157, Fair Value Measurements (SFAS 157). The provisions of SFAS 157 are applicable to all of the Company’s assets and liabilities that are measured and recorded at fair value. SFAS 157 establishes a new framework for measuring fair value and expands related disclosures. SFAS 157 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. SFAS 157 establishes a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy defined by SFAS 157 are described below.

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

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

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

As required by SFAS No. 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table discloses by level within the fair value hierarchy the Company’s assets and liabilities measured and reported on the Consolidated Balance Sheets as of September 30, 2008, at fair value on a recurring basis:

	Total		Level I		Level II		Level III
Assets:
Performance bond	$	163,179	$	163,179	$	0	$	0
Total:	$	163,179	$	163,179	$	0	$	0

The performance bond, required to secure the Company’s rights to explore the La Josefina property, is a step-up coupon US dollar bond issued by the Government of Argentina with a face value of $600,000. The bond was originally purchased for $251,613 and had a value of $214,762 at December 31, 2007. As of the quarter ended September 30, 2008, the value of the bond decreased $163,179.

Concentration of Credit Risk

The Company maintains its cash and cash equivalents in multiple financial institutions. Balances in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per institution. Balances on deposit may occasionally exceed FDIC insured amounts. All of the Company’s cash in U.S. bank accounts was FDIC insured at September 30, 2008. The Company also maintains cash in an Argentine bank. The Argentine accounts, which had a U.S. dollar balance of $72,497 at September 30, 2008, are considered uninsured.

Beneficial Conversion Feature of Convertible Notes

The Company has determined that the Convertible Note (discussed in Note 3) contains a beneficial conversion feature. Following the guidance provided by EITF 00-27 the Company allocated proceeds of convertible debt first to the warrants issuable upon conversion of the note. The value of the warrants was recorded on the balance sheet as debt discount 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.

Foreign Currency Translation

Our international operations use their local currency as their functional currency. The financial statements of international subsidiaries are translated to their U.S. dollar equivalents at end-of-period currency exchange rates for assets and liabilities and at average currency exchange rates for revenues and expenses. Translation adjustments for international subsidiaries whose local currency is their functional currency are recorded as a component of accumulated other comprehensive income (loss) within shareholders' equity. Transaction gains and losses resulting from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized as incurred in the accompanying Consolidated Statements of Income, except for certain inter-company balances designated as long-term investments.

Other Comprehensive Income

The Company has adopted SFAS 130, “Reporting of Comprehensive Income,” which establishes guidelines for the reporting and display of comprehensive income (loss) and its components in financial statements. Comprehensive income (loss) includes foreign currency translation adjustments and accrued gain or loss on the performance bond (discussed in Note 5).

Note 3: 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 the Company’s Chairman and CEO, for the 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 January 2007 note. 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.

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 March 2008 the Company received an additional $500,000 advance from HFLP pursuant to the identical terms of the October Note. Because, at or prior to receipt of the advance, HFLP management had notified the Company that it would convert all balances of principal and interest of the October Note into units as outlined above, the Company and HFLP agreed that the $500,000 advance in March 2008 would be deemed an advance under the October Note. This advance created an event of default under the terms of the note; however, HFLP waived the default and interest penalties stated in the default provision of the October Note.

In April of 2008 holders of the October Note converted into units, at the conversion price of $0.25 per share outstanding principal of $4,747,000, plus accrued interest of $313,014, of the October Note. As a result the Company issued a total of 20,240,056 shares and 20,240,056 warrants.

During the second quarter the Company drew an additional $3,025,000 on the October Note, resulting in a balance of $3,525,000 at June 30, 2008.

Between July 1, 2008 and July 30, 2008 the Company drew an additional $1,475,000 on the October Note, resulting in a balance of $5,000,000 on July 30, 2008. On July 30, 2008 holders of the October Note Converted the entire $5,000,000 of October Note principal into 20,000,000 units at a conversion price of $0.25 per unit.

On July 31, 2008 the Company drew an additional $500,000 on the October Note, resulting in a balance of $500,000 on that date. Subsequently, on July 31, 2008, holders of the October Note converted the entire $500,000 balance and $98,548 in accrued interest payable relating to the October Note into units at a conversion price of $0.25 per unit.

In accordance with EITF 00-27, the Company recognized the beneficial conversion feature associated with the October Note’s convertibility into shares and warrants. The total value of warrants was determined using the Black Scholes option pricing model. In employing this model, the Company used the actual three month T-Bill rate on the advance dates for the risk-free rate. Similarly, the actual share price on advance dates was used in the calculation. The Company assumed expected volatility of 83%, no dividends and a five year horizon in all Black Scholes option pricing calculations. In the third quarter of 2008, the total value of warrants from issuances of the October Note was $3,877,294 and the total value of shares was $3,911,294.

Note 4: Stock option plan

The Company’s 2005 Stock Plan permits the granting of up to 3,000,000 non-qualified stock options, incentive stock options, and restricted shares of common stock to employees, directors, and consultants. At September 30, 2008, there were 2,555,000 stock options granted to directors, employees, and consultants, of which 2,230,000 were vested as of September 30, 2008. The fair value of each option is estimated on the vesting date using the Black-Scholes option pricing model.

There were 260,000 options that vested during the quarter ended September 30, 2008; therefore, the Company’s total stock option expense for the quarter was $138,900. Expenses for the remaining options will be recorded as they vest through 2012.

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
	September 30, 2008	September 30, 2007
Weighted average risk free rate:	1.68%	3.62%
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 September 30, 2008:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number of Exercisable Options at September 30, 2008
		90,000	$	0.20		3.39		90,000
		700,000	$	0.25		2.84		650,000
		100,000	$	0.30		3.08		100,000
		10,000	$	0.34		1.83		10,000
		10,000	$	0.37		1.51		10,000
		150,000	$	0.38		4.79		100,000
		650,000	$	0.45		3.81		650,000
		5,000	$	0.55		2.75		5,000
		55,000	$	0.60		4.23		55,000
		200,000	$	0.63		3.45		175,000
		100,000	$	0.64		4.95		100,000
		100,000	$	0.67		5.0		0
		385,000	$	0.76		4.71		285,000
TOTALS		2,555,000	$	0.456		3.55		2,230,000

Note 5: Performance bond

During the quarter ended March 31, 2007, the Company's wholly-owned subsidiary, Cerro Cazador S.A., was required to purchase a performance bond as a condition of the exploration agreement on the La Josefina property in Argentina. The bond was originally purchased for $251,613 and had a value of $214,762 at December 31, 2007. As of the quarter ended September 30, 2008, the value of the bond decreased further to $163,179. The decline in value is presented on our balance sheet as Other Comprehensive Income (Loss). The bond has a face value of $600,000, or 10% of our required investment under the terms of the agreement.

Note 6: Investments

The Company holds an interest in two units of Pondera Partners, Ltd., a producing oil project located in Teton County, Montana. This investment was valued at cost on the Company’s balance sheet at $7,331 on September 30, 2008.

Note 7: Subsequent events

Subsequent to September 30, 2008 the Company’s CEO loaned $705,000 to the Company with no specific repayment terms. The loan is not interest bearing.

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.

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 September 30, 2008 compared to September 30, 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 September 30, 2008 decreased to $2,071 from $4,124 for the same period ended September 30, 2007. This decrease was due to lower interest income during the quarter ended September 30, 2008 relative to the quarter ended September 30, 2007.

We had a net loss of $12,324,579 during the three-month period ended September 30, 2008. This compares to a net loss of $1,229,380 during the three-month period ended September 30, 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. Exploration expenses, professional fees and payroll expenses were significantly higher in the third quarter of 2008 relative to the third quarter of 2007 due to our drilling campaign on the La Josefina property.

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 September 30, 2008 was $(938,391) compared to $(977,243) during that same period in 2007. The ratio of current assets to current liabilities was 0.26 to 1 at September 30, 2008 compared to 0.44 to 1 at September 30, 2007. Working capital decreased during the three month period ended September 30, 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.

Net cash used in operating activities was $6,607,531 for the nine month period in 2008 compared with $1,693,897 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 September 30, 2008, investing activities used $548,582 compared with $318,613 during that same period in 2007.

Cash flow from financing activities was $7,034,754 during the nine month period ended September 30, 2008 compared to $1,853,010 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 $416,148 during the nine month period ended September 30, 2008. This compares to a decrease in cash and cash equivalents of $159,500 in the nine month period ended September 30, 2007. The Company has cash and cash equivalents of $237,155 as of September 30, 2008. It will be necessary for the Company to raise additional capital to continue the Company's business activities during the last quarter of 2008.

Trade accounts payable increased to $1,163,826 from $380,118 on December 31, 2007 as a result of increased exploration activity in Argentina.

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 recently received conditional listing approval from the Toronto Stock Exchange and we believe that this will provide improved access to mining and exploration-related capital markets in the near future. We are also presently involved in an effort to raise up to $4 million in new equity through a private placement transaction. The Company’s Toronto Stock Exchange approval is conditional upon a $4 million equity infusion. Current stock market conditions, especially in the junior precious metals exploration sector, may make any potential equity financing difficult to complete.

Item 3. Quantitative & Qualitative Disclosures about Market Risk

Not Applicable.

Item 4. 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 defined in Rules 13a – 15(e) and 15(d) – 15(e)) as of September 30, 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 September 30, 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 September 30, 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.

Changes in Internal Control over Financial Reporting

We have not made any changes to our internal control over financial reporting (as defined in 13a – 15(f) and 15(d) – 15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2008, that have materially affected or reasonably likely to materially affect, our 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.

RECENT SALES OF UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the Quarter ended September 30, 2008 the Company issued 22,394,192 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. 20,000,000 shares were issued for the $5,000,000 convertible note on July 30, 2008. The remaining 2,394,192 shares were issued on July 31, 2008 for an additional loan of $500,000 (converted on the same day) and the interest of $98,548 on the convertible note in total. 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.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable

ITEM 5.

OTHER INFORMATION

As previously reported on Form 8-K, the chief financial officer of the Company concluded that our previously reported consolidated financial statements included in our quarterly reports for the periods listed below should no longer be relied upon:

Our quarterly report for the period ended March 31, 2007 filed with the Securities and Exchange Commission ("SEC") on May 15, 2007.

Our quarterly report for the period ended June 30, 2007 filed with the SEC on August 14, 2007.

Our quarterly report for the period ended September 30, 2007 filed with the SEC on December 11, 2007.

In the review, it was determined that the above-referenced reports contained errors relating to the accounting for the beneficial conversion feature of convertible notes which will result in a restatement of the above-mentioned reports. The Company recently filed amendments on Form 10 Q/A relating to all of the aforementioned reports to correct and amend accounting for the beneficial conversion features of convertible notes. The comparative amounts reported in this Form 10 Q for the periods ended September 30, 2007 conform with the related presentation in the amended 10Q for September 30, 2007.

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

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.

	/s/ Tim Hunt

BY:		DATE: November 14, 2008
	TIM HUNT, CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER


	/s/ Bryn Harman
BY:		DATE: November 14, 2008
	BRYN HARMAN, CHIEF FINANCIAL OFFICER