SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ------------------

                                   FORM 10-QSB

(Mark One)
[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO
         --------------

Commission file number:  1-355

                            DRAGON MINING CORPORATION
        (Exact name of small business issuer as specified in its charter)

                UTAH                                            87-0128639
(State of other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


         107 WEST WADE, SUITE 7, P.O. BOX 9, PAYSON, ARIZONA 85547-0009
               (Address of principal executive offices) (Zip Code)

                                 (520) 474-9151
                           (Issuer's telephone number)

                                       N/A
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check  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 the past 90 days. Yes _X_ No ____

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

    4,423,983 SHARES OF COMMON STOCK, $.001 PAR VALUE, AS OF AUGUST 10, 1998

Traditional Small Business Disclosure Format (Check one): YES ___ NO _X_

Exhibit index on page 3                                              Page 1 of 5







<PAGE>



                         PART I - FINANCIAL INFORMATION

                   Omitted pursuant to Rule 240.13a-13(c)(2).

                           PART II - OTHER INFORMATION

Item 1.           LEGAL PROCEEDINGS.
                  Not applicable.

Item 2.           CHANGES IN SECURITIES.

                  Not applicable.

Item 3.           DEFAULTS UPON SENIOR SECURITIES.
                  Not applicable.

Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
                  Subsequent  to June  30,  1998,  the  Company  held an  Annual
                  Meeting of  shareholders  on July 31, 1998.  During the Annual
                  Meeting,  the  Company's  shareholders  approved the following
                  actions:

                  1)       Elected four directors:  Thomas J. Ian  Wright, Larry
                           N. Lorenz, Aubrey McGinnis and Thomas L. Crom:

                  2)       Amended the articles of Incorporation to increase the
                           number  of  authorized   shares  from  25,000,000  to
                           50,000,000;

                  3)       Ratified the issuance of 15,000,000  shares (prior to
                           the reverse-split) to Marbella Capital Corp.;

                  4)       Approved the issuance of 21,000,000  shares (prior to
                           the reverse-split) to Marbella Capital Corp to retire
                           debt of $2,100,000;

                  5)       Approved a 1-for-10 reverse stock split;

                  6)       Approved   an    amendment   to   the   Articles   of
                           Incorporation  to change the name of the Company from
                           "Dragon  Mining   Corporation"   to  "Dragon  Diamond
                           Corporation";

                  7)       Approved the Company's 1998 Stock Option Plan; and

                  8)       Approved the Company's 1998 Restricted Stock Plan.

Item 5.           OTHER INFORMATION.
                  Not applicable.


                                        2

<PAGE>



Item 6.           EXHIBITS AND REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>

         REGULATION S-B                                                                     CONSECUTIVE
              NUMBER                        EXHIBIT                                        PAGE NUMBER
                  <S>      <C>                                                                    <C>
                  27       Financial Data Schedule                                                4
</TABLE>


         B)       REPORTS ON FORM 8-K:  None


                                   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.



                                     DRAGON MINING CORPORATION
                                     (Registrant)
 




AUGUST 10, 1998                      BY:      /s/THOMAS L. CROM
---------------                               -----------------------------
                                              Thomas L. Crom,
                                              Chief Financial Officer
                                              (Principal Financial
                                              and Accounting Officer)

                                        3

<PAGE>


                                   EXHIBIT 27

                             FINANCIAL DATA SCHEDULE

                                        4

<PAGE>