SECURITIES  AND  EXCHANGE  COMMISSION
Washington,  DC    20549
________________________

FORM  10-KSB

[X]  ANNUAL  REPORT  UNDER  SECTION  13  OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF  1934
       For  the  fiscal  year  ended  JUNE  30,  1998
[  ]  TRANSITION  REPORT  UNDER  SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT  OF  1934

Commission  file  number  0-12761

BRUSH  CREEK  MINING  AND  DEVELOPMENT  CO.,  INC.
(Name  of  Small  Business  Issuer  in  Its  Charter)

NEVADA
(State  or  Other  Jurisdiction  of  Incorporation  or  Organization)

88-0180496
(I.R.S.  Employer  Identification  Number)

11117  LOWER  CIRCLE  DRIVE,  GRASS  VALLEY,  CALIFORNIA  85949
(Address  of  principal  executive  offices)

 (530)  477-0834
(Issuer's  telephone  number,  including  area  code)

Securities  registered  under  Section  12(b)  of  the  Exchange  Act:  NONE

Securities registered under Section 12(g) of the Exchange Act: COMMON, PAR VALUE
$.0001

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      No      X
             -----

Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B  is  not  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of  Registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [X]

State  Issuer's  revenues  for  its  most  recent  fiscal  year:  $15,390.

As of September 30, 1998, the aggregate market value of the Common Stock held by
non-affiliates  of  the  Issuer (5,143,743 shares) was approximately $1,846,604.
The  number  of shares outstanding of the Common Stock ($.0001 par value) of the
Issuer  as  of  the  close  of  business  on  September  30, 1998 was 5,554,179.

Documents  Incorporated  by  Reference:    Portions  of  the  registrant's proxy
statement  for  the annual meeting of shareholders to be held in fiscal 1998 are
incorporated  by  reference  into  Part  III  of  this  report.

Transitional  Small  Business  Disclosure  Format:          Yes      X   No ____
                                                                 -----
                                   -1-
<PAGE>
PART  I


Certain  statements  contained  in  this  Form  10  Report  are  forward-looking
statements,  including  statement  with  respect  to  the  Company's budgeted or
anticipated  expenses. "Forward-looking statements" can be identified by the use
of  forward-looking  terminology  such  as  "may,"  "will,"  "expect," "intend,"
"anticipate,"  "estimate,""continue,"  "present value," "future," or "reserves,"
or  other  variations thereof or comparable terminology. All of these statements
involve  assumptions  of  future  events  which may not prove to be accurate and
risks  and uncertainties. For these and other reasons, actual results may differ
materially  from  those  projected  or  implied.


Item  1.      DESCRIPTION  OF  BUSINESS.

RISK  FACTORS
-------------

LACK  OF PROFITABILITY; CONTINUING LOSSES; AND DOUBTFUL ABILITY TO CONTINUE AS A
GOING  CONCERN.

The  Company  has incurred losses of $50,059,368 from inception to June 30, 1998
and had not realized economic production as of June 30, 1998. As a result of the
Company's  cumulative  losses from operations, and the fact that the Company has
not  realized  economic  production  from  its mineral properties, the Company's
independent  auditor's  report, dated November 22, 1998, for the year ended June
30,  1998,  states  that  these  conditions  raise  substantial  doubt about the
Company's  ability  to  continue  as  a  going  concern. Management continues to
actively  seek  additional  sources  of  capital  to  fund  current  and  future
operations.  There  is  no  assurance  that  the  Company  will be successful in
continuing  to  raise  additional  capital,  establishing probable or proven ore
reserves,  or  determining  if the mineral properties can be mined economically.
Additionally,  the  Company is in default on the leases of certain of its mining
properties. The lessors have not taken action to foreclose on the leases and the
Company  is  making  every  effort  to fulfill the agreements. The loss of these
leases  would  have  a  material  adverse  effect  on  the  Company.

NEED  FOR  ADDITIONAL  FINANCING;  LACK  OF  LIQUIDITY;  NO  MATERIAL  REVENUES.

The  mining industry is capital intensive. During the fiscal year ended June 30,
1998,  the Company raised $6,369,999 from the sale of 6,371,105 shares of Common
Stock. At June 30, 1998, the Company had a working capital deficit of $1,387,633
and  had  no material revenues from mining operations. Additional financing will
be  required in order for the Company to cover its future mining and development
costs  and  to  engage in full scale mining operation. At this time, the Company
has  no  definitive  plans  regarding additional financing, but believes that it
will  likely  be  obtained  through  equity financing such as stock offerings or
joint  ventures.  No  assurances  can  be given that the Company will be able to
raise  cash  from additional financing efforts and, even if such cash is raised,
that it will be sufficient to satisfy the Company's capital requirements. If the
Company  is  unable  to  obtain  sufficient  funds from future financings and/or
operations,  the  Company may not be able to achieve its business objectives and
may  have to scale back its development plans. In addition, the Company may have
to  sell  its  assets  in order to meet its obligations and may lose some of its
properties  for failure to make lease payments. In fiscal 1997, the Company sold
equipment  in  order  to  meet some of its obligations. In addition, the Company
could  lose  some  of  its properties for failure to make lease payments. In the
event  the  Company  is unable to obtain additional financing the Company may be
required  to  seek  protection  under  the  bankruptcy  laws.

                                   -2-
<PAGE>
POSSIBLE  DELISTING  OF  SECURITIES  FROM  NASDAQ  SYSTEM;  RISKS  RELATING  TO
LOW-PRICED  STOCKS.

The  Company's  Common  Stock is currently listed on the Nasdaq SmallCap Market.
The  Securities and Exchange Commission recently approved substantial changes in
Nasdaq's  SmallCap  Market  maintenance  standards.  The  continued  listing
requirements  will  be  effective  in February 1998. The new minimum maintenance
requirements  will  require  net  tangible  assets  of  $2,000,000,  or  market
capitalization  of  $35,000,000,  or  $500,000 in net income for two of the last
three  years.  In  addition, continued inclusion on Nasdaq will require a public
float  of  500,000  shares,  a $1,000,000 market value for the public float, 300
shareholders, a bid price of $1.00 per share and two market makers. Since August
1996,  the  bid  price for the Company's Common Stock has not been $1.00 or more
per  share.  Accordingly,  unless  the  price  for  the  Company's  Common Stock
improves,  the  Company  has  not  been  in  compliance with the new maintenance
criteria  effect as of February 1998. A company will not be deemed in compliance
with  the  minimum bid price of $1.00 per share when its stock drops below $1.00
for  thirty  days.  The  company has been notified of delisting proceedings. The
failure  to  meet  these maintenance criteria may result in the delisting of the
Company's  securities  from  Nasdaq,  and  trading  if  any,  in  the  Company's
securities  would  thereafter  be  conducted  in the non-Nasdaq over-the-counter
market.  As a result of such delisting, an investor could find it more difficult
to  dispose  of, or to obtain accurate quotations as to the market value of, the
Company's  securities.  In addition, if the Common Stock were to become delisted
from  trading on Nasdaq and the trading price of the Common Stock were to remain
below  $5.00 per share, trading in the Common Stock would also be subject to the
requirements  of  certain rules promulgated under the Securities Exchange Act of
1934,  as  amended,  which  require  additional  disclosure by broker-dealers in
connection  with  any trades involving a stock (generally, any non-Nasdaq equity
security  that  has  a  market  price  of  less than $5.00 per share, subject to
certain  exceptions).  Such rules require the delivery, prior to any penny stock
transaction,  of a disclosure schedule explaining the penny stock market and the
risks  associated  therewith,  and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and  accredited  investors  (generally  institutions).  For  these  types  of
transactions,  the  broker-dealer  must make a special suitability determination
for  the  purchaser  and  have  received  the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon-broker-dealers by
such  requirements  may discourage broker-dealers from effecting transactions in
the  Common Stock, which could severely limit the market liquidity of the Common
Stock.

LACK  OF  PROVEN  OR  PROBABLE ORE RESERVES OF COMMERCIAL QUANTITY AT THE MINES.

Although  the Company has begun preliminary exploration activities on its mining
properties, the Company has not yet established proven or probable ore reserves.
Consequently,  the  Company  has been unable to ascertain with certainty whether
adequate  ore  reserves  sufficient  for profitable operations exist. Management
believes,  however,  that  an evaluation of the Company's mines completed in May
1991  indicates  the existence of sufficient mineralization to warrant continued
exploration. There can be no assurance that proven or probable ore reserves will
be  established.

GOVERNMENT  REGULATION;  ENVIRONMENTAL  MATTERS.

The  Company's  mining  facilities  and  operations  are  subject to substantial
government  regulation,  including federal, state and local laws concerning mine
safety,  land  use  and  environmental  protection. The Company must comply with
local,  state  and federal requirements regarding exploration operations, public
safety,  employee  health  and  safety,  use  of  explosives, air quality, water
pollution,  noxious  odor,  noise  and  dust controls, reclamation, solid waste,
hazardous  waste  and  wildlife  as  well as laws protecting the rights of other
property  owners  and  the  public.  Although the Company believes that it is in
substantial compliance with such regulations, laws and requirements with respect
to  the  mines  currently  in operation, failure to comply could have a material
adverse  effect  on  the  Company,  including  substantial  penalties,  fees and
expenses,  significant  delays  in  the  Company's  operations and the potential
shutdown  of  the  Company's  operations.

The  Company  must also obtain and comply with local, state and federal permits,
including  waste  discharge  requirements,  other  environmental  permits,  use
permits,  plans  of  operation and other authorizations. Obtaining these permits
can  be  very  costly and take significant amounts of time. Although the Company
foresees  no  material  problems  or delays, no assurances can be given that the
Company can obtain the necessary permits or commence mining operations, or that,
if permits are obtained, there will be no delay in the Company operations or the
Company  can  maintain  economic  production  in  compliance  with the necessary
permits.
                                   -3-
<PAGE>
COMPETITION.

The Company operates in an industry that is characterized by intense competition
for  resources,  equipment  and  personnel.  Some  of  the  Company's  principal
competitors  are substantially larger, have substantially greater resources, and
expend  considerably  larger  sums  of capital than the Company for exploration,
rehabilitation  and  development.

RISKS  IN  MINING  OPERATIONS,  INSURANCE  COVERAGE  AND  UNINSURED  LOSSES.

The  Company's  activities  are  subject  to  all  the risk and hazards commonly
associated  with  mining  operations,  including,  but not limited to unforeseen
geological formations, cave-ins, environmental concerns and personal injury. The
Company has insurance covering personal injury, workers' compensation and damage
to property and equipment, although in view of recent trends in damage awards in
personal  injury  lawsuits,  such insurance may be insufficient to satisfy large
losses or judgments against the Company. Furthermore, certain types of insurance
coverage  (generally against losses caused by natural disasters and Acts of God)
are  either  unattainable  or prohibitively expensive. Substantial damage awards
against  the Company or substantial damages not covered by insurance will affect
the  Company's  ability to continue as a going concern and may force the Company
to  seek  protection  under  the  federal  bankruptcy  laws.

VOLATILE  MARKET  PRICES  FOR  GOLD.

The  price  of gold has a material effect on the Company's financial operations.
Following  deregulation,  the  market price for gold has been highly speculative
and  volatile.  Since the end of 1987 the price of gold has declined from a high
of  approximately $500 per ounce to approximately $296 per ounce at November 23,
1998.  Instability  in  the  price  of  gold may affect the profitability of the
Company's  operations.  No  assurances  can  be  given  that the Company's mines
contain  ore  in  commercial  quantities  or, if ore in commercial quantities is
discovered,  that  gold  could  be  produced at a profit given the recent market
price  range  for  gold.

LITIGATION;  ADMINISTRATIVE  PROCEEDINGS.

The Company has been involved in various litigation matters. During fiscal 1996,
the  Company entered into two significant settlement agreements involving two of
such matters. In connection with one of such matters, the Company in fiscal 1997
defaulted under its obligations under the Settlement Agreement relating thereto.
Thereafter,  the Company entered into revised settlement terms which provide for
various significant cash payments to be made. No assurance can be given that the
Company  will be able to meet its obligations thereunder. Any default thereunder
will  have  a materially adverse effect on the Company which could result in the
Company  seeking  protection  under  the  bankruptcy laws. Also, the Company was
notified  in  fiscal  1996  that it was the subject of an informal inquiry being
conducted  by  the staff of the Securities and Exchange Commission in connection
with  the  Company's  financing  activities  pursuant  to Regulation S under the
Securities Act. An adverse determination could have a material adverse effect on
the  Company.  See  "Legal  Proceedings".

DESCRIPTION  OF  BUSINESS
-------------------------

Brush Creek Mining and Development Co., Inc. (the "Company") was incorporated in
1982  and  is  engaged  in  the  exploration and development of gold and diamond
mining properties. From its incorporation until April 1989, the Company operated
as a mining and mineral development company at which time its mining operations,
conducted  through the Brush Creek Joint Venture of which the Company owned 40%,
were  terminated.  Shortly  thereafter,  the  Company became actively engaged in
acquiring  additional  mineral  properties,  raising  capital,  and  preparing
properties  for  resumed  production.  The  Company did not have any significant
operations  or  activities  from April 1989 through June 1989, and suspended all
mining  operations  and  reduced its activities to a care and maintenance level.
Accordingly,  the  Company  is  deemed  to  have reentered the development stage
effective  July  1,  1989.

                                   -4-
<PAGE>
The  Company  currently owns the Brush Creek, Carson, High Commission, Gardner's
Point  and  Pioneer  Mines. The Company also has leases with options to purchase
the  Ruby,  Rising Sun, Kate Hardy and Omega Mines. In addition, in fiscal 1997,
the  Company  acquired  options  to  purchase the New California Placer Mine and
Wilbank's  Placer  and  Loade Mine. All of these mines, except for the Gardner's
Point  and Pioneer Mines, are located in the Allegheny-Forest-Downieville mining
districts  on  the western slope of the Sierra Nevada mountain range in northern
California  and  comprise approximately 6,300 acres. Because of the proximity of
the  mines  to  each  other,  the  Company  believes it can efficiently mine and
operate these properties since it will be able to take advantage of economies of
scale  by  sharing  personnel,  mill  facilities  and  equipment.

Based  on  previous studies completed in December 1990, management believed that
the Company's mines had sufficient mineralization to warrant feasibility studies
and  in  January 1991 engaged Keewatin Engineering to conduct and document those
studies.  The  Company  received  Phase  I  and  Phase  II reports from Keewatin
Engineering, the Phase II report being dated October 1992. The Phase I and Phase
II  reports  were  exploration  and  development  reports  of  the
Allegheny-Forest-Downieville  mining  district  and  mining  properties  of  the
Company, including an evaluation of the underground hard-rock system and surface
geology studies to identify precious metal rock units, and additional structural
geology  studies  within  the district. The Ruby Mine was the Company's original
focus  because  of its rich production history and because permits were in place
for  placer  production  and  hard  rock  exploration.

The  Company  filed its plan of operation for the Ruby and Carson Mines with the
United  States  Forestry  Department, and has obtained all necessary permits for
continued  production and milling at the Ruby Mine of up to 225 tons of material
per  day.  In  order  to continue the underground development of the Carson vein
system,  a  more extensive geologic evaluation using diamond drilling on surface
and  subsurface should be completed. As this was a capital intensive expense the
Company  decided  to  detain  further  development  of the Carson Mine until the
Company  decides  to  integrate this program into its future development budget.

From February 1992 when the Company began limited production at the Ruby Mine to
December  1992  when the Company ceased production due to inclement weather, the
Company  milled  approximately  7,300  tons  of  mineralized placer material and
recovered approximately 200 ounces of gold, an amount which is inconsistent with
historical  production  at  the  Ruby  Mine  in  the  early 1940's. However, the
Company's management believes that these preliminary results are too small to be
a  reliable  representative  sample  of  the  expected  placer  grades.

See  Part  I, Item 2 for a discussion of the mining properties controlled by the
Company,  which  information  is  herein  incorporated  by  reference.

THE  COMPANY'S  CURRENT  FOCUS.

During fiscal 1998 the Company continued its pursuit of a joint -venture partner
which  it  began  in  fiscal  1997.   In November 1997, Brush Creek successfully
concluded a mining agreement with Sterling Mining, LLC which called for payments
totaling  $9,000,000.    Subsequently in February 1998, the lead negotiators for
Sterling  Mining  agreed  to  contribute an additional $6,000,000 to the Company
under  the  name of Volcanic Resources, LLC.  The monies were to be paid in over
several  years.    The  initial  venture  contributions  were primarily used for
exploratory mining which was conducted in the Lower Brush Creek Mine.  Initially
9,000  tons  of  remnant  pillars  surrounding  the  Golden  Gate  Ore Shoot and
approximately  50,000  tons  of  material  also  situated  above track level and
previously identified as prospective were targeted.  Pillar number one, adjacent
to  the  dyke,  yielded high-grade specimen gold until Company miners discovered
that, contrary to maps  in the Company's possession, its top had been previously
mined,  presumably  by  a  lessor.   Pillar number four also proved to have been
mined  more extensively than expected.  The remaining material in the pillar was
below ore grade. At about the same time, Company mining engineers and geologists
concluded  that  stopping on the fifth and sixth levels of the Golden Gate Shaft
to  the  south  of the ore shoot and underhand stopes on the Peavine level might
indicate  the  presence  of an ore shoot.  Extensive exploratory mining produced
several  rounds  of  encouraging high grade gold.  Other rounds were barren, but
many  showed  visible  gold.  Overall  the  effort  was  inconclusive.

                                   -5-
<PAGE>
The Company reopened the Lawry side of the Ruby Mine.  The Lawry Shaft was fully
rehabilitated  and the Company began drifting around the Bell works in an effort
to  find  the  continuation  of  the  Black  Channel.    Plans  were  made  for
rehabilitating the Ruby  side of the mine in an effort t reach the Big Bend area
of  the  Black  Channel  which,  in  the  late 1930's and early 1940's, produced
perhaps  the  most  significant  collection of placer gold ever discovered. Data
available  to  the  Company  indicates  that World War II interrupted mining and
perhaps  a  portion  of  this  significant  area  has  yet  to  be  mined.

During the year the Company planned for and began construction of a new tailings
disposal  pit  on  the  Carson  site.    Finally,  the  Company investigated the
potential  for  mining  silica  at  two  of  its  mine  sites.

DIAMOND  EXPLORATION.

Diamonds  have  been  reported  from gold workings since 1849 in the paleoplacer
gold  deposits  of Butte, Plumas, Sierra, Nevada, El Dorado and Amador counties,
California.  The  principal  district  of  reported diamonds was in the Cherokee
District  of  Butte  County  due  west  of  Gardners  Point.

Diamonds have also been recovered from Brush Creek's Gardners Point property. In
1872  a  diamond  recovered  from the Gardners Point property was cut into a one
carat  stone.  Another  diamond was also recovered at the time from the Gardners
Point  Property but was "lost by the foreman, who did not know its value". These
two  diamonds  were  recovered  from  a  109 square foot area of a 30 foot thick
section  of  the  paleoplacer  gold  deposit. A third diamond was recovered from
hydraulic  tailings  in  Slate Creek which probably came from the Gardners Point
hydraulic  workings.

During  fiscal  1997  the  Company  tested  Gardners Point for diamond indicator
minerals.  Encouraging  results  prompted further evaluation upstream toward the
Poker  Flat  area.  There  the  Company  located diamond indicator minerals in a
hard-rock  breccia  source. The Company is currently looking for a joint venture
partner  to  take  the  project  forward.

CERTAIN  SUBSEQUENT  EVENTS.

The  Company  has  had  a  change in management effective November 19, 1998. Mr.
James  Chapin  resigned as C.E.O., and Mr. Larry Stockett has assumed that role.
New  management is implementing a plan to infuse significant capital and attempt
to  save the NASDAQ small cap listing. NASDAQ has requested a written hearing on
Thursday,  December  10,  1998,  to  discuss  this  subject.  New  management is
submitting  reports  and  plans  for  the  hearing.

EMPLOYEES.

The  Company  has  no  full-time  employees,  and  operates in only one industry
segment.    When  new  management is in place, and operating funds are obtained,
employees  will  be  hired  back.

                                   -6-
<PAGE>
Item  2.      DESCRIPTION  OF  PROPERTY.

The  following  is  a  discussion  of  the  mining  properties controlled by the
Company.  The  Company  began  geological  and engineering studies on all of its
mining  properties  in  January  1991. The Company received Phase I and Phase II
Reports,  the  most  recent  of  which  is  dated  October 1992, following these
studies.  The  Company  has  not  completed sufficient geological activities and
drilling  to  establish proven or probable ore reserves for its mines other than
with  respect  to  Gardner's  Point.    The  Company has no present intention of
conducting  further  geological  exploration and drilling to search for economic
mineralized  material  for  its  mining  properties.

The  Company  has obtained engineering evidence to support probable reserves for
its  Gardner's Point gold placer deposit only.  All other prospects belonging to
the Company are in "exploration stage" which require additional underground work
and/or  drilling  and a comprehensive economical feasible report to qualify as a
commercially  viable  ore  body.

The  Company  began  limited  production  at the Wolf vein and Lawry area placer
gravels  at  the  Ruby Mine during the fiscal year ended June 30, 1996, however,
limited  production  was  suspended  in  October 1996 as the Company focused its
efforts on rehabilitating the lower Brush Creek mine. In early 1997, the Company
began preparing the lower Brush Creek Mine for limited production. In June 1997,
the  Company  received interim approval from the United States Forest Service to
transport thirty tons of mineralized material per day from the lower Brush Creek
Mine  to  the  Ruby mill site. The Company has not commenced economic production
and  is  therefore still considered to be in the development stage. Further work
at  these  mines is subject to the Company receiving additional financing. There
can  be  no assurance that the Company will obtain any required financing or any
part  thereof.  In  the  event  the  Company  is  unable  to  raise the required
financing,  the  Company  will be forced to scale back its operations. See "Risk
Factors--Need  For  Additional  Financing;  Lack  of  Liquidity;  No  Material
Revenues".

BRUSH  CREEK  MINE.

The  Company owns the Brush Creek Mine which the Company acquired in 1982. There
are  no proven or probable reserves at this time and the Company's original cost
was  $408,496.  This  mine is currently fully operational and is currently being
worked  two  shifts  per  day  underground,  five  days per week. All regulatory
requirements  are  up-to-date  and  approved. The Company currently operates the
mine  and  intends to continue to do so. Current cost of repairs and maintenance
to  keep  the  mine  operational  is  approximated  at  $123,000.

The  Brush Creek Mine is an underground lode gold mine located in Sierra County,
California,  approximately  eight  miles  west  of  the  town  of  Downieville,
California. It consists of eight patented mining claims comprising approximately
245  acres  and  45 unpatented mining claims comprising approximately 960 acres.
The  Company's  investment  in  this  property  is  $811,667  at  June 30, 1998,
consisting of $408,496 of land and $811,667 of mining equipment.  All previously
capitalized  development costs have been expensed  in the Consolidated Statement
of  Operations for the fiscal year ended June 30, 1997 as a cumulative effect of
a  change  in accounting principle.  See "Description of Business" under Part I,
Item  1.

All  of  the  unpatented  claims  in  the  mineral  property package are in good
standing  with  assessment work documents for 1997 filed with both the Bureau of
Land  Management  (BLM)  in  Sacramento  and  Sierra  County in Downieville. The
patented  claims of the Brush Creek Mine are not fully permitted for underground
exploration,  development  and  production. A waste discharge permit is required
and  a  plan of operation must be filed with the U.S. Department of Forestry and
Sierra  County before full scale mining may begin. The Company is in the process
of  obtaining  such  permit  or  filing  a  plan.

                                   -7-
<PAGE>
The  Brush Creek Mine was opened in 1868 when the old Brush Creek Shaft was sunk
to  a  depth  of  approximately 600 feet. Reports indicate that between 1868 and
1870  it  produced  approximately  19,632 ounces of gold. Between 1870 and 1944,
operations  at  the Brush Creek Mine were limited. In 1870, it was closed due to
poor ground conditions, flooding of the shaft and a fatal accident. In 1922, the
Ante  Up Mining Company drove a 2,200 foot drift which eventually connected with
the  old  Brush  Creek  tunnel. In 1927, shafts were driven into the Brush Creek
Mine by the Kate Hardy Mining Company. Between 1870 and 1994, production records
are  sparse.  Reports  during  this period indicate that 223 ounces of gold were
produced  in  April of 1929. Between 1944 and 1950, A.L. Merritt made additional
improvements  to  the  Brush Creek Mine including the sinking of the Golden Gate
Shaft  to  a  depth  of approximately 647 feet. Mining activity occurred between
1978 and 1979 when new equipment was installed and a new level was started. This
activity  ended  when the Brush Creek Mine was flooded due to a power failure in
1979.

In  April  of  1982, the Company leased the Brush Creek Mine and, in February of
1984,  it  purchased all patented and unpatented claims of the Brush Creek Mine.
The  Company  continued limited development and production until the end of 1985
when  the  Brush Creek Mine was closed. Until the Brush Creek Mine was closed in
1985,  work  was  carried  out  on an extension of the old Brush Creek Shaft and
mineralized  material pockets were exploited between the 410 and 465 foot level.
A  new  60  tons-per-day  mill  was assembled near the portal of the Brush Creek
tunnel  and  14  holes  totaling  4,950 feet were cored from various underground
locations. Subsequent mining produced approximately 700 to 1,000 ounces of gold.

Both  upper and lower adits are reinforced with concrete and have steel security
doors.  The  Brush Creek Mine has 30-pound rail, and electrical and air lines on
both  levels.  The  rail  is in good condition. There is also a steel corrugated
equipment  building  and a small changing room for miners located on the mineral
property.

Water  normally  accumulates  from  underground sources in the Brush Creek Mine.
This  water  can  be  pumped  in  sufficient  quantity  and  quality  for mining
operations  and  the  Company anticipates that it will be sufficient to meet its
mining and milling needs. In addition to underground water, two streams flow all
year  on  the  mineral  property.

The  Brush  Creek  Mine  is  accessible  by a graveled road maintained by Sierra
County.  Snow  removal is performed during the winter by the Company. Electrical
power  is  supplied  by  Pacific  Gas  and  Electric  Company, a public utility.

GARDNER'S  POINT  AND  PIONEER  MINES.

The Company owns the Gardner's Point and Pioneer Mines which mines were acquired
by the Company in 1985. The Company has obtained engineering evidence to support
probable  reserves  for  the  Gardner's  Point  gold  placer  deposit  only. The
Company's  original  cost  was  $350,625.  The  mine  has  been  in  a  care and
maintenance  status  since  October  1988. There are no permits in place at this
time for this mine other than annual storm water permits. The Company intends to
eventually  operate the mine, potentially with a partner. Current cost of repair
and  maintenance  to  maintain  this  mine  idle  is  approximately $50,000 plus
$180,000  in  additional  reclamation  bonding.

Based  upon  its  feasibility  studies,  the Company believes that the Gardner's
Point gold placer deposit contains a probable reserve of approximately 9,810,000
bank  cubic  yards (bcy) with an estimated average grade of 0.0221 ounce of gold
per  bcy  resulting  in  an  estimated  total  amount  of  approximately 216,000
contained   ounces of gold.  No assurance can be given that such results will be
achieved  or  that  any  gold  will  be  successfully  mined at Gardner's Point.

The  Gardner's  Point  and Pioneer Mines include two placer mines located on the
same  parcel  of  land  comprising  approximately  700  acres.  These  mines are
approximately  10 air miles northwest of Downieville and three air miles east of
La  Porte  in Sierra County, California in the Port Wine Gold Mining Region. The
Gardner's  Point  and  Pioneer  Mines  are approximately 12.5 air miles from the
Company's  other  mines.  These  mines  consist  of  three  patented claims, the
Pioneer,  the Comet, and the Challenge, and two unpatented claims. The Company's
investment  in  this  property  is  $1,084,325  at  June 30, 1998, consisting of
$185,477  of  land,  $770,327  of  development  costs,  and  $128,521  of mining
equipment.

                                   -8-
<PAGE>
All  of  the  unpatented  claims  in  the  mineral  property package are in good
standing  with  assessment  work  documents  for 1997 filed with both the BLM in
Sacramento  and Sierra County in Downieville. A new operating permit and a waste
discharge  permit are required before full scale mining may begin at the Pioneer
Mine.  The  Company  has  no  current  plans  to  obtain  such  a  permit.

Gold  was  first discovered in the area of the Gardner's Point and Pioneer Mines
on  Rabbit  Creek  in 1850 at the approximate location of the present town of La
Porte.  After  1885,  drift  mining  continued  along  portions of the Port Wine
Tertiary Channel, but progressively diminished after the turn of the century. In
1934,  renewed activity occurred as a result of an increase in the price of gold
mandated  by  the  federal  government.  Following the outbreak of World War II,
however,  the  federal  government  brought  a  halt  to gold mining activities.

In  1980,  the  higher  price  of  gold led to the search for and leasing of the
Gardner's  Point  and  pioneer Mines by Mr. L.F. Goodson and the Gardner's Point
Mine,  a  California  Limited  Partnership.  Appealing  characteristics  of  the
Gardner's  Point  and  Pioneer  Mines  were  the  unusually large amount of flat
working  space  and  areas  of  low  overburden.

In  1985, the Brush Creek Joint Venture, consisting of the Company and two other
companies,  purchased  all patented and unpatented claims of the Gardner's Point
and  Pioneer  Mines, and it produced approximately 2,800 ounces of gold from its
operations  before  deciding  in  August  of  1988  to suspend operations at the
Gardner's  Point  and  Pioneer  Mines  and  reduce  operations  to  a  care  and
maintenance  level.  The  Gardner's  Point  and  Pioneer Mines were subsequently
purchased by the Company in connection with the change of control of the Company
in  1989.

The  Gardner's  Point  and Pioneer Mines have a Yuba-Lowe trommel which contains
new  interior  screens  and  a  water  hutch.  Additionally,  the property has a
two-story  gold  recovery  building  which  houses  a  large  Deister  table and
associated equipment for gold recovery. The Company spent approximately $100,000
to  upgrade  and  improve  water  quality  measures  on  these  mines.

The  Gardner's  Point  and  Pioneer  Mines  are  accessible  year round by roads
maintained  by  Sierra  County.  However,  the  Company  is responsible for snow
removal  in the winter. Existing access to the Gardner's Point and Pioneer Mines
is from La Porte, California through the site of Queen City. It is also possible
to  reach  these  mines from Challenge, California through Union Hill. Access to
the  Gardner's  Point  and Pioneer Mines for heavy equipment is by United States
Forest  Service  Roads from Strawberry Valley, California. Power is generated on
the  site  of  the  Gardner's  Point  and  Pioneer  Mines.

Pursuant  to SMARA guidelines, the Company has submitted through its consultant,
Vector Engineering, Inc., a revised reclamation cost estimate on Gardner's Point
and  is entering into a phased program for approval with the lead agency and the
Department  of  Conservation.  Also  during the same procedure, the Company will
address the use permit for the mine as well as an interim management plan for up
to  a  five  year  period.  Additional  reclamation  bonding  will  be  required
subsequent  to  final  approval  of  this  plan.

The  Brush  Creek  Joint Venture submitted applications to Sierra County and the
U.S.  Forest  Service  in  March  of 1987 to initiate production activity at the
Pioneer  Mine.  However, the authorities determined that an Environmental Impact
Report  (EIR)  was necessary before exploration permits could be granted. Sierra
County,  acting  as  the  lead  agency,  contracted  with an engineering firm to
complete  the study. The draft EIR has been completed, distributed to the public
and  interested  agencies,  and comments have been returned and addressed by the
Company.  A  final EIR must be submitted to and approved by Sierra County before
production  at  the  Pioneer  Mine  may begin. The Company has not submitted the
request  to continue the EIR process, and does not intend to do so at this time.
Currently,  the  property  is  in  a  care  and  maintenance  status.

                                   -9-
<PAGE>
RUBY  MINE.

Pursuant  to  a leasehold interest acquired in 1989, the Company leases the Ruby
Mine with an option to purchase for $4,000,000. The Company pays $13,066 monthly
as  a  minimum  lease  payment. There are no proven or probable reserves at this
time.  The  Company's  original  cost  for  the  lease was $200,000. The mine is
currently  not  in  operation, has been idle for approximately 1-1/2 years.  The
Company  intends  to  re-open  the  mine  as  soon as practical. The Company has
requested  a courtesy inspection from California OSHA. The Company believes that
all  other  permits are in place to operate the mine.  The Company fully intends
to  operate  this  mine.  Current cost of repairs and  maintenance to render the
mine  idle  is  $20,000.

In December of 1989, the Company issued 100,000 shares of its Common Stock which
it  used  to purchase an option to lease the Ruby Mine and to purchase equipment
located  on  the  site. In March of 1990, the Company paid $50,000 to extend the
option  period  to  April  30,  1990.  In  April  of 1990, the Company issued an
additional  125,000  shares  of  its  common stock in order to extend the option
period  to  June  30, 1990. The Company exercised the option on June 30, 1990 by
paying  the owner $150,000 cash, which represents lease consideration of $50,000
and  a  $100,000  down payment on the purchase of the equipment. To complete the
equipment  purchase, the Company agreed to pay an additional $100,000 in cash in
three  equal  semi-annual  installments,  which  have  been  paid. The Company's
investment  in this mineral property consists of $1,975,525 of mining equipment.
All previously capitalized development costs and land options have been expensed
in  the  Consolidated Statement of Operations for the fiscal year ended June 30,
1997  as  a  cumulative  effect  of  a  change  in  accounting  principle.  See
"Description  of  Business"  under  Part  I,  Item  1.

Pursuant  to  the  terms of the lease, which was most recently modified on March
27,  1997,  the  Company  must  pay a 7-1/2% net smelter royalty on all minerals
produced  from  lode  deposits and 10% on minerals produced from placer deposits
with a minimum lease payment of $13,066 per month through June 30, 2000, subject
to  an  adjustment  based on the Consumer Price Index. The lease may be extended
for  two  additional  five-year periods or the mineral property may be purchased
for  $4,000,000  subject to adjustment based on the Consumer Price Index payable
by  June  30, 2000. All payments made subsequent to July 1, 1995, to acquire the
lease/option  and  all payments made under the lease subsequent to July 1, 1995,
will  be credited against the option purchase price. Performance under the lease
purchase  agreement  is  secured  by  the Company's equipment used in the mining
operations  on  the  leased  premises.

During  1997,  the  Company negotiated modification agreements for the Ruby Mine
and  the Rising Sun Mine (see below) to pay, in cash, one month lease payment in
arrears,  increase  the  amount  of equipment held as collateral pursuant to the
Ruby  Mine  and  the  Rising Sun Mine lease agreements by filing UCC-1 financing
statements  listing  the  additional equipment, all right, title and interest of
certain  "ore  specimens"  for  which Ruby Development Co., Inc. will credit the
value  against past due minimum royalty payments and grant Ruby Development Co.,
Inc.  an option to purchase up to 50,000 shares of the Company's common stock at
a  price  of  $.25  per  share  until July 1, 1999. The Company has not made any
payments  on  this  lease  since  June  of  1998.    The Company owes the lessor
approximately  $165,000  in past due lease payments and related interest.  There
is  a  question  as  to  whether  the  Company  currently  has  a  lease.

The Ruby Mine is an underground placer and lode mine located between Downieville
and  Forest  City,  California  in  Sierra County. The Ruby Mine consists of two
patented  claims  comprising  approximately  435  acres and 37 unpatented claims
comprising  approximately  1,150  acres.  The  mine  encompasses  four  distinct
underground  river  channels  and  three  known  lode  gold  veins.

All  of  the  unpatented  claims  in  the  mineral  property package are in good
standing  with  assessment  work  documents  for 1997 filed with both the BLM in
Sacramento  and  Sierra  County  in Downieville. The patented claims of the Ruby
Mine  are  fully  permitted for underground exploration, small scale development
and  small scale production. However, a waste discharge permit is required and a
plan  of  operation  must  be  filed with the U.S. Department of Forestry before
operations  can  be  expanded  beyond  the  current  225  tons-per-day.

                                   -10-
<PAGE>
Production  began  at the Ruby Mine in the late 1870's when approximately 50,000
ounces of gold were extracted from what became known as the Old Ruby Channel. In
the  1930's,  the Ruby Mine was purchased by Clarence L. Best, who produced gold
from  the mine until it was closed in 1942 by War Production Board Order L- 208.
High  labor rates and a gold price freeze kept the Ruby Mine from re-opening. In
the 1950's, the Ruby Mine was sold and was subsequently mined by small operators
until the mid-1970's. In 1979, the mine was leased to Alhambra Mines, Inc. After
limited  rehabilitation,  Alhambra Mines, Inc. failed to make lease payments and
the  Ruby  Mine  reverted  to  its  owner.

The  majority  of  the  historical  production  at  the  Ruby Mine has come from
underground placers. Since 1942 virtually no new ground has been opened and most
of  the  attention has been directed at the Wolf lode vein and the Big Bend area
of  the  Black Channel, a famous underground placer. Due to extensive overburden
of  up  to  700  feet on the mineral property, the only way new reserves will be
established  is  from  underground,  utilizing  mapping,  sampling, and drilling
techniques  and  by  opening  new  ground.

The Ruby Mine hosts a gold recovery washing plant with all associated equipment,
a  mill building, and a separate compressor building in good condition. The Ruby
Tunnel has been rehabilitated, retimbered and refitted. The underground workings
include  30-pound  mine  rail and electrical and ventilation equipment. The Ruby
Mine  has  compressors, generators and an electric train with sufficient haulage
capacity to feed a 200 ton per-day-mill. There are 21 mine ore cars and a Mancha
locomotive  in  good  condition  on  the  mineral  property.

The Ruby Mine is accessible via State Highway 49 to Pliocene Road to the Henness
Pass paved road then via five miles of paved and gravel road. Power is generated
on  the  site.

The  Company  filed its plan of operation for the Ruby and Carson Mines with the
United  States  Forestry  Department, and has obtained all necessary permits for
production  and  milling at the Ruby Mine of up to 225 tons of material per day.
The  mine,  if  operated,  however,  has been operating at less than 225 tons of
material  per  day. From February 1992 when the Company began limited production
at  the  Ruby  Mine  to  December 1992 when the Company ceased production due to
inclement  weather,  the  Company milled approximately 7,300 tons of mineralized
material  and  recovered  approximately  200  ounces of gold, an amount which is
inconsistent  with  historical  production at the Ruby Mine in the early 1900's,
and  is insufficient in total quantity to be a reliable representative sample of
the expected grade of the mineralized gravel. Consequently, no assurances can be
given  that  future  production  will  result in grades of similar or historical
amount.  Furthermore,  the  Company  has  not  completed  sufficient  geological
activities and drilling to establish proven or probable ore reserves at the Ruby
Mine.  The  Company  has  no  present intention of conducting further geological
exploration  and  drilling  to  establish  ore reserves at the Ruby Mine at this
time.

From  December  1992  when  the Company ceased production at the Ruby Mine until
July 2, 1993, when the Company recommenced production, the Company rehabilitated
and  re-timbered  approximately  one and one-quarter miles of horizontal haulage
tunnel supports and a 210 foot vertical shaft for mine safety, built underground
roads  for  use by diesel loaders, constructed a new sixty-foot steel head frame
and  installed  a  hoist  over  the  Lawry  Shaft  at the Ruby Mine, installed a
complete  underground  ventilation  system  and  electrical  system at the Lawry
Shaft,  constructed a new waste water treatment system for use at the mill site,
modified  and enlarged the structures and ore bins at the mill site, and removed
two  main  mill  and  warehouse  structures  at  the  Carson  Mine.

The  Company  commenced  production  in  the Lawry Shaft, a new area of the Ruby
Mine,  on  July  2, 1993, and in August 1993 recommenced production in the Black
Channel  of the Ruby Mine where most of the production occurred between February
1992  and  December  1992.  The  Company has completed the sixty foot steel head
frame  at  the  Lawry  Shaft and set-up electrical lines and constructed a hoist
house,  with  associated  hoist  equipment.

    The  Company  recommenced  production  in  the Lawry Shaft on June 26, 1994.
Underground  programs  consisted of driving exploration drifts towards potential
primary  channels.  Sampling  programs  were  undertaken  to allow the mining of
approximately 5,000 tons of material. The Company drove a total of approximately
430 feet downstream and 520 feet upstream in the Lawry Channels. The Lawry shaft
is  currently under care and maintenance as the Company concentrates on its hard
rock  targets.

                                   -11-
<PAGE>
RISING  SUN  MINE.

Pursuant to an interest acquired in 1989, the Company leases the Rising Sun Mine
with  an  option  to purchase for $1,000,000. The Company pays a minimum monthly
lease  payment  of $5,213. There are no proven or probable reserves in this mine
at  this time. The Company's original cost was 10,000 shares of the common stock
and $20,000. The mine is currently idle. Regulatory requirements before the mine
is  operational are: Approved Use Permit from lead agency of Sierra County; Plan
of  Operations  from  US  Forest Service; Waste Discharge Permit from California
Water  Quality  Control  Board; Approval from California Fish and Game; Approval
from  Northern  Sierra  Air Quality Board.  The Company fully intends to operate
this  mine.  Current  costs  of repairs and maintenance to keep the mine idle is
$1,000.

As  stated  above,  in December of 1989, the Company issued 10,000 shares of its
common  stock  for an option to lease the Rising Sun Mine. On June 30, 1990, the
Company  exercised  the  option  upon payment of $20,000 cash and entered into a
five  year lease with an option to purchase. Pursuant to the terms of the lease,
which  was  most  recently modified on November 11, 1994, the Company must pay a
net  smelter  royalty  of  8% on all minerals produced with a minimum royalty of
$4,590  per  month, through June 30, 2000, subject to an adjustment based on the
Consumer  price  index.  The  mineral  property  may be purchased for $1,000,000
payable  on or before June 30, 2000, subject to adjustment based on the Consumer
Price Index. All payments made to acquire the lease/option and all payments made
under  the  lease  will  be  credited against the option purchase price. See the
discussion  of the Ruby Mine above for information on the modification agreement
entered  into in 1997. The Company has not made any payments on this lease since
June  of  1998.    The Company owes the lessor approximately $55,000 in past due
lease  payments  and  related  interest.   There is a question as to whether the
Company  currently  has  a  lease  The Company has no investment in this mineral
property  at  June  30,  1998.  All previously capitalized development costs and
land  options have been expensed in the Consolidated Statement of Operations for
the  fiscal  year  ended  June  30,  1997  as a cumulative effect of a change in
accounting  principle.  See  "Description  of  Business"  under  Part I, Item 1.

The Rising Sun Mine is an underground lode gold mine located approximately three
miles  southeast  of  Allegheny, California. It consists of four patented claims
comprising  approximately  52  acres,  three  unpatented  claims  comprising
approximately  60  acres,  and  one  placer  claim  comprising  10  acres.

All  of  the  unpatented  claims  in  the  mineral  property package are in good
standing  with  assessment  work  documents  for 1997 filed with both the BLM in
Sacramento  and  Sierra  County  in Downieville. There are currently no existing
permits  to  mine  either  the  patented  or  unpatented  claims.

The Rising Sun Mine produced gold as early as 1882. By 1883 two tunnels had been
driven  and  production  is estimated to have exceeded 3,000 ounces of gold. The
Rising Sun Mine closed after an attempt to design and construct a mill failed in
the 1890's. During the early 1960's the mine re-opened and considerable drilling
and  raising  was  conducted  in  an effort to intersect the Rising Sun Vein and
Cedar  Vein.  Mining ceased as custom milling became prohibitively expensive. In
1960, the Rising Sun Mine was acquired by the Rising Sun Development Company. In
1973,  G.R.  Beechel  completed  a  mapping  program  and  compiled  a  list  of
recommendations  for  further  work.

There  is  a  generator,  compressor,  rock drills, and a mucking machine on the
mineral  property.  The  overall ground condition of the mine is good. Since the
early  1960's,  the Rising Sun Mine has operated on a care and maintenance level
only.  Currently,  however,  the Company is driving around a caved in area in an
attempt  to  get  to  the  face  of  the drift where high-grade assays have been
reported.  The  Company  also  is  attempting to find the potentially high grade
intersection  of  the  Belmont  and  Rising  Sun  veins.

The  Rising  Sun  Mine is accessible via Kanaka Creek Road, a graveled road. The
mineral  property  will  require  on-site  generators  to  supply  power.

                                   -12-
<PAGE>
CARSON  MINE.

The  Company  owns the Carson Mine which was acquired in July 1990. There are no
proven  or  probable  reserves at this mine at this time. The Company's original
cost  was  $2,299,000. The mine is currently idle.  The  regulatory requirements
of  this  mine  are under the same Plan of Operations as for the Ruby Mine: i.e.
the  Company  is  waiting  for approval from the US Forest Service Renewal three
year  Plan of Operations. There are no other regulatory permits to make the mine
fully operational. The Company fully intends to operate this mine. Current costs
for  repair and maintenance are $25,000 to remain idle on this mineral property.
The  cost  to  become  operational  is  $100,000.

The Carson Mine is located in Sierra County, California, on the western slope of
the  Sierra  Nevada  Mountain  Range. Access to the Carson Mine is by a two mile
dirt  road, which connects the Henness Pass Road, an all weather paved road. The
nearest  large  population  center  is Grass Valley, about 40 miles south of the
site.  Downieville  is  located  two  miles north of the Carson Mine. Allegheny,
California  is  approximately  four  miles  south of the Carson Mine. The Carson
Mine, also known as the City of Six Mine, is an underground mine and consists of
21  unpatented  lode  claims  and  two  unpatented  placer  claims  comprising
approximately  550  acres.  The Company's investment in this mineral property is
$2,242,693  at  June  30, 1998, consisting of $2,199,858 of land, and $42,835 of
mining  equipment.  All  previously  capitalized  development  costs  have  been
expensed  in  the Consolidated Statement of Operations for the fiscal year ended
June  30,  1997  as a cumulative effect of a change in accounting principle. See
"Description  of  Business"  under  Part  I,  Item  1.

The  City of Six gravel deposit was discovered at the site of the Carson Mine in
the  1850's.  The  mineral  property was operated as a hydraulic pit until 1886,
when  hydraulic  mining was stopped in California by judicial mandate. From 1860
to  1879,  the  gravel was worked underground by drift mining. Reports from 1879
indicate  that  a  channel  had  been  tunneled from the City of Six pit to Rock
Creek,  a  distance  of  about  one  mile.

Work  began  on  the  Carson Mine in the mid 1920's. By 1930, two adits had been
driven on the Carson Mine vein; the upper adit 925 feet and the lower adit about
2,600 feet. The two adits are separated vertically by 460 feet and on the dip by
500  feet.  From  1932  to 1942, a 500 foot raise was constructed from the lower
level  to  the  upper  level.  The  raise  was  used  as  an  ore pass, allowing
mineralized  material  mined on the upper level to be transported from the lower
level.

A  30  foot winze is operable in the same areas as the raise. The winze accesses
the  vein  about 25 feet downdip from the upper level. The vein has been drifted
on  for  60  feet  to the south from the winze. A 14-foot cross cut connects the
main  raise  with  the winze sub level. The main rise is open from the winze sub
level downward, for about 350 feet on the vein. The bottom 125 feet of the raise
above  the  lower level is plugged with mineralized material and muck as is that
above  the  upper  level.  The  underground  portion of the mineral property has
20-pound  mine  rail  in  good  condition.

In the early 1980's, the Carson Mine was sold to Golden Lion Mining Corporation.
Golden  Lion's  work consisted of rehabilitation of the upper adit, construction
of  a 30 foot winze in the upper adit, and limited stopping both above and below
track  level  in the upper workings. In 1986 and 1987, a 50 tons-per-day gravity
circuit  mill  was  constructed  on  the  mineral property. In 1988, Golden Lion
Mining  Corporation  leased  the  Carson Mine to the Ireland Mining Corporation,
which  operated  the  Carson  Mine  to  July of 1990 when it was acquired by the
Company.

On  July  31,  1990,  the  Company  acquired  the Carson Mine, together with the
improvements,  inventory  and  equipment  located  on the mineral property, from
Golden  Lion  Mining  for a total consideration of approximately $2,299,000. The
consideration  paid  to Golden Lion Mining consisted of $50,000 cash, an $89,000
promissory  note  due  August  15,  1990, 502,070 shares of common stock, and an
agreement to deliver 61.3 ounces of gold bullion by August 1, 1992. In addition,
Golden Lion Mining had forward sold 2,000 ounces of gold to four individuals. As
further  consideration,  the  Company  assumed Golden Lion Mining's forward sell
obligation  by  issuing  a total of 781,072 shares of its common stock. Finally,
the  Company issued 976,000 shares of common stock to Ireland Mining Corporation
in consideration for Ireland Mining Corporation terminating its lease and option
to  purchase  the  mineral  property  with  Golden  Lion  Mining.

                                   -13-
<PAGE>
All  of  the  unpatented  claims  in  the  mineral  property package are in good
standing  with  assessment  work  documents  for 1997 filed with both the BLM in
Sacramento  and  Sierra County in Downieville. However, a waste discharge permit
is  required  and  a plan of operation must be filed with the U.S. Department of
Forestry  before  full  scale  mining  may  begin.

The  Carson  Mine  previously  had  a 50 tons-per-day gravity flow mill and mill
housing  which  was  in  need of engineering and structural work to meet current
building  codes.  A  large  seven-bedroom  cabin,  a smaller cabin that has been
improved  and  a  mobile  home  are currently located on the Carson Mine mineral
property. Although not currently planned for production in the next fiscal year,
when the Company does begin production at the Carson Mine it intends to mill the
mineralized material at the Ruby mill site. Power at the Carson Mine is supplied
by  Pacific  Gas  and  Electric  Company,  a  public  utility.

The  upper  level of the Carson Mine is fully supplied and operational for small
scale  operations.  Air  and  water  lines are installed throughout and adequate
natural  ventilation  is  assisted by a 12 foot fan. This level is serviced by a
925  foot  traced  adit,  the entire length of which is open. A raise, which was
once  open to the surface (125 ft.), is present about 600 feet in by the portal.
A  north-south  subdrift  is  present  off  the  raise  for  150  feet.

On  July 24, 1990, the Company obtained from an independent mining laboratory 64
channel  samples  of  mineralized  material  from  the  Carson Mine. Each sample
weighed  approximately  25  pounds  and  had  an average width of over 4.6 feet.
Samples  taken  yielded an overall uncut weighted average of 5.45 ounces of gold
per  ton. These substantial-grade mineralized material shoots were tested in two
levels  with  a  distance  of  400  feet  vertical separation. All of the assays
occurred  within  a  strike  length of 125 feet. On August 29, 1990, the Company
received  confirmation  of  these substantial grades from a separate independent
mining  laboratory.  The  confirmation  report  consisted of nine channel sample
checks  of  mineralized  material  taken  from  the  Carson  Mine.  Although  no
assurances  can be given that these substantial grades will continue through the
length  of the entire vein, the strike length potential of this vein is believed
to  be  4,100  feet  and  is  thought to extend into additional ground currently
controlled  by the Company. In order to determine the magnitude of its discovery
and  to  evaluate  its  findings  further  the Company has completely mapped and
sludge  drilled  the  vein  system  in  the exposed portions of the Carson vein.
Because  the  Company  decided to begin production at the Ruby Mine, the Company
postponed  further  development  at  the  Carson  Mine.

The Company also has 16 lode claims named the BC Claims which are located on the
northern  border  of  the  Carson  Mines. The Company owns this mineral property
subject  to the General Mining Law of 1872. The Company acquired its interest in
1990.  There  are  no proven or probable reserves at this mine at this time. The
Company's  original  cost  was  $4,500.  The  mine is currently idle. Regulatory
requirements  before  the  mine  is operational are: Approved Plan of Operations
from  US  Forest  Service;  Waste Discharge Permit from California Water Quality
Control  Board;  California Dept. of Fish and Game Approval; Northern Sierra Air
Quality Board Approval. The  Company fully intends to operate this mine. Current
costs  to  repair  and  maintain  idle  status  is  $3,000.

HIGH  COMMISSION  MINE.

The Company owns the mineral property subject to the General Mining Law of 1872.
The  company  acquired  its  interest  in September 1990. There are no proven or
probable  reserves  at  this  mine at this time. The Company's original cost was
50,000  shares  of  common  stock  and  $30,000.  The  mine  is  currently idle.
Regulatory  requirements  before  the  mine is operational are: Approved Plan of
Operations  from US Forest Service; Waste Discharge Permit from California Water
Quality  Control  Board;  California  Dept.  of Fish and Game Approval; Northern
Sierra  Air  Quality  Board Approval. The  Company fully intends to operate this
mine.  Current  costs  to  repair  and  maintain  idle  status  is  $3,000.

As  stated above, in September of 1990, the Company entered into an agreement to
purchase  the  High  Commission  Mine  for 50,000 shares of the Company's common
stock  and $30,000 in cash. The Company's investment in this mineral property is
$101,875  at  June  30,  1998,  consisting  of  $101,875 of land. All previously
capitalized  development  costs have been expensed in the Consolidated Statement
of  Operations for the fiscal year ended June 30, 1997 as a cumulative effect of
a  change  in  accounting principle. See "Description of Business" under Part I,
Item  1.

                                   -14-
<PAGE>
The  High  Commission Mine is located in the Allegheny-Forest-Downieville mining
districts  in  Sierra  County,  California,  approximately one-half to two miles
northeast  of  Downieville.  The High Commission Mine is an underground mine and
consists  of  22 unpatented lode claims comprising 440 acres and five unpatented
placer  claims  comprising  500  acres.  The  unpatented  claims  in the mineral
property  package are in good standing with assessment work documents filed with
both  the  BLM  in  Sacramento  and  Sierra  County  in Downieville. Its current
configuration  is  a  consolidation  of  four  past  producing  gold  mines.

The High Commission Mine was discovered in 1888 and produced approximately 1,234
ounces  in  a  bunch  of  arsenopyrite  from the sinking of an 18-foot shaft. In
addition,  approximately  177  ounces  were  produced  about  1914.

Three  veins  were  developed  on the mineral property, the High Commission, Big
Ledge, and Mexican. The High Commission has a 280-foot tunnel with a quartz vein
averaging  4.5  feet and carries free gold and arsenopyrite. The strike was over
three  miles  on  the  surface. The Big Ledge vein is 11 feet wide, carries free
gold  and  no sulphide, and parallels the High Commission vein. The subsequently
developed Mexican vein parallels and is 300 feet in length. Both tunnels were in
pay  shoots,  with open cuts occurring over 900 feet. Quartz fissure veins occur
along a slate foot wall and porphyry hanging wall contact which carry free gold,
arsenopyrite and pyrite mineralized material. The veins vary from two to fifteen
feet  in  width and the parallel vein 40 feet west averages four to five feet in
width.  The  strike  is  north,  dips 70 to 80 degrees east, and has a length on
surface  of  3,000  feet.

The geology of the mineral property consists mainly of the Calaverous Formation,
Carboniferous  Period,  comprised  of  slate, quartzite and porphyry. The quartz
veins  carrying the free gold mineralized material occur along the porphyryslate
contact  within  a 300 to 400-foot shear zone associated with the Melonese Fault
Zone.  The  High  Commission,  Big Ledge and Mexican veins all occur within this
wide  contact  rock formation. The veins vary from a few inches up to 20 feet in
width,  striking  mainly  a  north-south  direction and dipping 70 to 80 degrees
east.  Another  vein  formation strikes northeast and dips 60 degrees northwest.
The  zone  appears  to  be  altered  and  mineralized.

The High Commission Mine is accessible by State Highway 49. The mineral property
will  require on-site generators for power. Because of the Company' focus on the
Ruby  Mine,  the  Company  has put the High Commission on a care and maintenance
program.

KATE  HARDY  MINE.

Pursuant to an interest acquired in 1992, the Company leases the Kate Hardy Mine
with  an  option  to  purchase  it for $1,500,000.  The Company pays $10,500 per
month  as  an  option  payment. There are no proven or probable reserves at this
mine  at  this  time.  The  Company's  cost was 2,330,000 shares of common stock
valued  at  $74,897  and the assumption of $175,193 in liabilities. This mine is
currently  idle.  The regulatory requirements for this mine are: Use Permit with
the  lead  agency, Sierra County; Plan of Operations with the US Forest Service;
Waste  Discharge Permit from California Water Quality Control Board; Approval of
California Department of Fish     and Game; Approval from Air Resources Board of
Northern California. The Company fully intends to operate this mine. Annual cost
of  repairs  and  maintenance  is  approximately  $15,000.

The  Kate Hardy Mine was discovered in 1860 and is an underground lode gold mine
located  in Sierra County, California, and is approximately three miles south of
the  Brush  Creek  Mine.  The  Kate  Hardy  Mine consists of two patented claims
comprising  approximately  42  acres  and  15  unpatented  claims  comprising
approximately  320 acres. The Company has no investment in this mineral property
at June 30, 1997.  All previously capitalized development costs and land options
have  been  expensed  in the Consolidated Statement of Operations for the fiscal
year  ended  June  30,  1997  as  a  cumulative effect of a change in accounting
principle.  See  "Description  of  Business"  under  Part  I,  Item  1.

All  of  the  unpatented  claims  in  the  mineral  property package are in good
standing  with  assessment  work  documents  for 1997 filed with both the BLM in
Sacramento  and Sierra County in Downieville. The Kate Hardy Mine has no permits
for  mining  operations.

                                   -15-
<PAGE>
In 1957, Richmond Flatland, Sr. acquired the Kate Hardy Mine. In the mid to late
1970's,  various attempts were made to rehabilitate the Kate Hardy Mine. On June
30, 1992, the Company entered into a lease effective March 23, 1992, in the form
of  a  mining option agreement for a term of five years expiring March 22, 1997.
The  Company  paid a $50,000 payment (initial option payment) upon the execution
of  the  agreement;  and during the term of the lease, must pay $5,500 per month
for  each  month during the first year; $6,500 per month during the second year;
$7,500 per month during the third year; $8,500 per month during the fourth year;
and  $9,500 per month during the fifth year. In addition, the Company must pay a
6%  net  smelter royalty on all minerals produced. The option purchase price for
the  mine  is $1,500,000 less 75% of all option payments paid up to a maximum of
$750,000.

                                   -16-
<PAGE>
The  Kate  Hardy  Mine  contains  a  quartz vein on a reverse fault. The vein is
traceable  along  the  surface for approximately 1,500 feet and disappears under
tertiary  lava  both to the north and the south. The vein varies in width from a
few  inches  to  over  55  feet.  Dykes  of  gabbro  and serpentine cut the vein
irregularly.  Considerable  slate  has  been replaced by carbonate close to, and
within,  the  vein. Mariposite is erratic in distribution and is not necessarily
confined to the exposed serpentine zones. Historically, the best gold production
has come from the foot wall and hanging wall portions of the vein. The vein core
is  largely  barren  bull  quartz. Sulphide minerals associated with gold in the
vein  include  arsenopyrite,  pyrite,  galena  and  trace  sphalerite.

Development  has  been  carried  out  over  2,700  feet  of strike length on the
Principal  No.  1  North  and  South Drifts. The vein has been developed on five
levels,  two  of  which  are  accessed  by  an internal shaft. Stopping has been
carried  out  with three principal mineralized material over a vertical range of
600  feet.

The  Kate  Hardy  mine  has been in a care and maintenance level since 1975. The
site  has a 100 tons-per-day gravity flow mill which requires some upgrading and
repair.  The  underground  workings in the south adit are in fair condition with
appropriate  20-pound  mine  rail  and  all electrical and ventilation utilities
installed. The north adit is caved-in for approximately 75 feet and will have to
be  rehabilitated  with  new timbering before access to the north section of the
mineral  property  is  permitted.  There  is  a corrugated mill building in fair
condition  and  an equipment building in fair condition on the mineral property.

The  Company has been permitted to dewater the mine. This will allow the Company
access  to approximately 16,000 tons of mineralized material and will enable the
Company  to  explore  the  O'Donnell  winze  and  the  five existing mineralized
material  shafts.

The Kate Hardy Mine is accessible by Mountain House Road, a graveled road. Power
is  supplied  by  Pacific  Gas  and  Electric  Company,  a  public  utility.

On  March  23,  1997,  the  Company's  lease  on  the  Kate  Hardy mine expired.
Subsequently,  the Company entered into an agreement with the owners of the Kate
Hardy  mine to extend the lease through September 18, 1998. The Company owes the
lessor  approximately  $265,000 in past due lease payments and related interest.
The  lessor  has indicated this agreement ended on September 18, 1998, but would
be  available  to  work  with  the  Company after that date if financing becomes
available.

OMEGA  MINE.

The Omega Mine is an underground drift placer mine in Sierra County, California,
and  is  contiguous  with  the  Kate Hardy Mine and is covered by the Kate Hardy
lease  referred  to  above.  The  Omega mine consists of seven unpatented claims
comprising  approximately  440  acres.

All  claims in the mineral property package are in good standing with assessment
work  documents for 1997 filed with both the BLM in Sacramento and Sierra County
in  Downieville.  However,  a  waste  discharge permit is required and a plan of
operation  must  be filed with the U.S. Department of Forestry before full scale
mining  operation  may  begin. The Company has no current plans to obtain such a
permit  or  file  such  a  plan.

The  Omega  Mine  was  active during the 1920's and 1930's when a labyrinth 9 of
tunnels  exceeding  2,000 feet was driven in the underlying serpentine mainly in
pursuit  of  high grade pay streaks. Raises were driven to access stopping areas
in  the  gravel.  In 1957, Richmond Flatland, Sr. acquired the Omega mine. There
was no activity on the claims until 1980, at which time the underground workings
were  completely  remapped. Most of the gravel was found to be of igneous origin
containing  a  small percentage of white quartz cobbles. Cobbles vary from a few
inches  to  twelve inches in diameter and are tightly cemented by sand and silt.

                                   -17- 
<PAGE>
Before any production may begin at the Omega Mine, the underground workings will
have  to  be  retimbered.  There is no equipment at the mine site at the present
time.

The  Omega  Mine is accessible by Mountain House Road, a graveled road. Power is
supplied  by  Pacific  Gas  and  Electric  Company,  a  public  utility.

NEW  CALIFORNIA  PLACER  MINE  -  SIERRA  COUNTY,  CALIFORNIA.

In  February 1997, the Company entered into an exploration license and option to
purchase  the  New California Mine for 20,000 shares of the Company's restricted
stock  and  $10,000 payable annually for up to a three year period. The purchase
price  is  $250,000  should the Company decide to exercise that option under the
agreement.  There  are no proven or probable reserves in this mine at this time.

The  New  California  Mine is an unpatented placer mine containing approximately
800  acres  of  land  and is located between Poker Flat and Gardner's Point. The
unpatented  claims  are  in  good  standing.   While the mine is currently idle,
regulatory  requirements  before  mine  is  operational  are:  Approved  Plan of
Operations  from US Forest Service; Waste Discharge Permit from California Water
Quality  Control  Board;  Northern Sierra Air Quality Board Approval; California
Dept  of Fish and Game Approval. The Company fully intends to operate this mine.
Current  costs  of  repair  and  maintenance  are  $2,000.

WILBANK'S  PLACER  AND  LODE  MINE.

In  March  1997,  the  Company entered into an exploration license and option to
purchase  the  Wilbanks  claims  for a $10,000 cash payment and $1,000 per month
during  the  option  period.  The  purchase price is $200,000 should the Company
exercise  that  option.  The  Company  has, under the terms of the agreement, an
additional  five year term to purchase the mineral property for $300,000 payable
at  $2,000  per  month.  There are no proven or probable reserves on the mineral
property  at  this  time.

The  Company's  original  cost  was  $10,000.  While the mine is currently idle,
regulatory  requirements  before  mine  is  operational  are:  Approved  Plan of
Operations  from US Forest Service; Waste Discharge Permit from California Water
Quality  Control Board; Approval from California Dept of Fish and Game; Approval
from  the  Northern  Sierra  Air  Quality  Board.  The  Company fully intends to
eventually  operate  this  mine.  Current costs to repair and maintain this mine
idle  is  $1,500.

The  mineral  property  contains  approximately  46  acres  of  land  and  is
strategically located in the diamond exploration center of the Poker Flat Mining
District.  There  are  three  unpatented  placer  claims and one unpatented lode
claim,  and  all  are  in  good standing with the Bureau of Land Management. The
Company  is  exploring  for diamonds, and not for gold, in this mining district.

THE  POKER  FLAT  DISTRICT:  (DIAMOND  POTENTIAL).

In  1872,  two diamonds were recovered from Brush Creek's Garner's Point mineral
property and one diamond was cut into a one carat stone. These two diamonds were
recovered  from  a  109  square  foot  area  of  a  30 foot thick section of the
paleoplacer  gold  deposit.  A  diamond was recovered from hydraulic tailings in
Slate  Creek,  adjacent  to  the  west  side  of  Gardner's  Point.

Based  upon  historical data and other relevant information, the Company hired a
consulting  geologist  who sampled the drainage areas around Gardner's Point and
proceeded  to  take  stream  sediment  samples and rock chip samples for diamond
indicator  minerals. Initial results of the samplings were positive. The Company
staked  199  unpatented  lode  mining claims in the old mining district of Poker
Flat.  Over  a  three month period the Company performed additional sampling and
testing  for diamond indicator minerals, and recent results have continued to be
encouraging.

The Company owns the mineral property subject to the General Mining Law of 1872.
The  Company  acquired  its  interest in 1997 when it staked its unpatented lode
mining  claims. There are no proven or probable reserves on the mineral property
at  this  time.

                                   -18-
<PAGE>
The  Company's  original  cost  was  $60,000.  While the mine is currently idle,
regulatory  requirements  before  mine  is  operational  are:  Approved  Plan of
Operations  from US Forest Service; Waste Discharge Permit from California Water
Quality  Control Board; Approval from California Dept of Fish and Game; Approval
from  the  Northern  Sierra  Air  Quality  Board.  The  Company fully intends to
eventually  operate  this  mine.  Current costs to repair and maintain this mine
idle  is  $5,000.

The  Company phase exploration program is complete. The Company is attempting to
negotiate  a joint venture with certain diamond mining companies to continue the
exploration  and  development  of  the  mineral  property.

UNPATENTED  MINERAL  PROPERTY  INTERESTS.

The  Company occasionally acquires rights to explore for and produce minerals on
federally  owned  lands  and  paid  all required fees to maintain the unpatented
claims.  The Company acquires these rights through the acquisition of previously
located  mining  claims  from the claimant or through the location of unpatented
mining  claims  upon  unappropriated  federal  land  pursuant  to  procedures
established  by  the  General  Mining  Law  of 1872, the Federal Land Policy and
Management  Act of 1976, and various state laws. These referenced laws generally
provide  that  a  citizen  of  the  United  States, including a corporation, may
acquire  a  possessory  right to explore for and to develop and produce valuable
mineral  deposits  discovered  upon  unappropriated federal lands, provided that
such  lands have not been withdrawn from mineral location. Withdrawn lands would
include, for example, lands included in national parks and military reservations
and  lands  designated  as  part  of the National Wilderness Preservation System
(NWPS).

The  location of a valid mining claim on federal lands requires the discovery of
a  valuable  mineral deposit, the erection of appropriate monuments, the posting
of a location notice at the point of discovery, the marking of the boundaries of
the  claim  in accordance with federal law and the laws of the state in which it
is located, and the filing of a notice or certificate of location and a map with
the  BLM  and  the  real  property recording official of the county in which the
claim  is  located.  Failure  to  follow  the required procedures may render the
mining  claim void. If the statutes and regulations for the location of a mining
claim are complied with, the locator obtains a valid possessory right to explore
for,  develop  and  produce minerals from the claim. This mineral property right
can  be  freely  transferred  and  is  protected  against  appropriation  by the
government without just compensation. Also, the claim locator acquires the right
to  obtain  a patent (or deed) conveying fee title to his claim from the federal
government  upon  payment  of  fees  and  compliance  with  certain  additional
procedures.

Unpatented  mining  claim  interests  possess certain unique vulnerabilities not
associated  with  other  types  of  property interests. For example, in order to
maintain  each  unpatented  mining claim, the claimant must annually perform not
less  than $100 worth of work or improvements on or for the benefit of the claim
and  must  file with state and federal authorities an affidavit attesting to the
performance  of  such  work.  Although  currently not a requirement, the Company
feels  it  should  continue to file proofs of labor to prevent adverse claimants
from  occupation  of  the  claim  and to have a proper chain of title should the
Company  decide to apply for patents. In addition, the Bureau of Land Management
currently  assesses  a  $100  per  claim  rental fee which, if not paid annually
before  August  31  of  each year, invalidates the unpatented claims. Failure to
perform  such  work will render the claim subject to relocation by third parties
and  constitutes  abandonment  of  the claim. Further, because mining claims are
often  located  with  less  then  sophisticated  surveying  techniques,  great
difficulty  may  arise  in  determining  the  validity and ownership of specific
mining  claims.  Moreover,  under applicable regulations and court decisions, in
order for unpatented mining claims to be valid against a governmental challenge,
the claimant must be able to prove that the mine on which the claim is based can
be  mined  at  a profit. Thus, it is conceivable that, during times of declining
metal  prices,  claims  that were valid when located could be invalidated by the
federal  government.

                                   -19-
<PAGE>
Item  3.      LEGAL  PROCEEDINGS.

During  fiscal  1996,  the  Company  entered  into  two  significant  settlement
agreements  involving claims made by Zuri Invest A.G., et al. and the Royal Bank
of Scotland, et al. which in effect resolved all material litigation against the
Company.  The terms of the settlement with the Royal Bank were amended in fiscal
1997.

THE  ZURI  INVEST  ACTION.

During  the  fiscal  year  ended  June  30,  1997,  the  Company  completed  its
obligations  to  the  Zuri  Plaintiffs  (as  defined  below)  under a settlement
agreement  entered  into  on  December 14, 1995 (the "Zuri Agreement") with Zuri
Invest  A.G.,  Andre  Michaels  and  Peter Woodfield (the "Zuri Plaintiffs"), in
connection  with  an action which had been commenced in December 1991 (the "Zuri
Invest  action"), to partially satisfy the joint and several judgment entered in
the  Zuri  Invest  action  against  the  Company  and  Simone Anderson and James
Anderson  (collectively,  the "Andersons") on October 31, 1995 (the "Judgment").
The  Zuri  Plaintiffs  agreed,  subject  to  the  receipt  of  the consideration
described  below,  not to seek any further recovery directly from the Company on
the  Judgment, and to release the Company from any further liability thereunder.
The  Zuri Plaintiffs also agreed not to pursue recovery against the Andersons on
the  Judgment  if  it  is  judicially  determined  that  the  Andersons  have
indemnification  rights  against  the  Company with respect to the Judgment. The
Company issued and delivered to each of Woodfield and Michaels 250,000 shares of
the  Company's  Common Stock. The Company issued 600,000 shares of the Company's
Common  Stock to Zuri Invest and delivered 200,000 of such shares to Zuri Invest
on  or  about  April 10, 1996, 200,000 shares on or about June 11, 1996, and the
remaining  200,000  shares  on  or  about September 9, 1996. As security for the
Company's  obligations to issue and deliver the above described shares of Common
Stock,  the  Company  issued  a  promissory  note  in the amount of $1.2 million
payable  to  the Zuri Plaintiffs. The note was secured by a deed of trust on all
real  property  and  patented and unpatented mining claims owned by the Company.
Pursuant  to  the  Zuri  Agreement,  the  principal  amount of the note shall be
reduced  as the shares issued to the Zuri Plaintiffs are sold, dollar for dollar
by  the  gross  proceeds  generated  from  such  sales  until such time as sales
collectively  total in gross $1.2 million at which time the note shall be deemed
paid.  Notwithstanding  the  foregoing, the note shall also be deemed paid after
the  passage  of 180 days after the last distribution of shares which, as stated
above,  was  distributed  in  September 1996. As a result thereof, such note has
been  deemed  paid  by  the  Company.

Pursuant to the Zuri Agreement, the Company also assigned to the Zuri Plaintiffs
an  interest  (33% of the Company's 60% interest) in claims asserted against the
Andersons  and  their controlled corporations in the action entitled Brush Creek
Mining  and  Development  v. F. James Anderson, et al., currently pending in the
United  States  District  Court,  Northern  District  of  California.

THE  ROYAL  BANK  ACTION.

On  December  13,  1995,  the Company entered into an agreement (the "Royal Bank
Agreement")  to settle an action commenced by the Royal Bank of Scotland, et al.
by  delivering  to  the  plaintiffs  in  such suit (the "Royal Bank Plaintiffs")
216,667 shares of the Company's Common Stock and cash in the amount of $241,000.
The Company also assigned to the Royal Bank Plaintiffs a portion of its interest
in any total recovery from claims against the law firm formerly known as Bartel,
Eng,  Miller  & Torngren, the Company's formal legal counsel ("Bartel, Eng"). On
December  13,  1996,  the
                                   -20-
<PAGE>
Company was further required to deliver to each of the Royal Bank Plaintiffs, at
his or her option, additional shares of the Company's common stock or additional
cash. The number of shares of Common Stock or the amount of cash each Royal Bank
Plaintiff  would be entitled to receive is based on the amount of his or her pro
rata  interest  in  amounts  paid  by  the  Company  pursuant  to the Royal Bank
Agreement. If all Royal Bank Plaintiffs would elect to receive Common Stock, the
Company  would  be  required to issue and deliver a maximum of 300,000 shares in
the  aggregate  and  if  all  Royal  Bank  Plaintiffs elect to receive cash, the
Company  would  be  required  to deliver cash in the maximum aggregate amount of
$600,000.

Prior  to  December  13,  1996,  the  Royal  Bank  Plaintiffs elected to receive
$600,000  in  cash pursuant to the term of the Royal Bank Agreement. On or about
December  17,  1996,  the Company received notice from the Royal Bank Plaintiffs
that  the  Company  was  in  default  of  its obligation to pay them $600,000 on
December  13,  1996.  Under  the  Royal  Bank Agreement, such default caused the
Company  to  incur an immediate $3.25 million debt to the Royal Bank Plaintiffs.
Subsequently,  in January 1997, the Company entered into a Forbearance Agreement
(the "Forbearance Agreement") with the Royal Bank Plaintiffs which provided that
notwithstanding  the  $3.25  million  obligation, the Royal Bank Plaintiffs will
forbear  from  exercising their rights and remedies against the Company provided
the  Company  makes  a  payment  of  $629,100  on or before March 20, 1997 and a
payment  of  $175,000  on  or before July 1, 1997. The Company has the option to
postpone the second payment ($175,000) by delivering written notice to the Royal
Bank  Plaintiffs  no later than June 25, 1997 whereupon the second payment shall
be  paid  no  later  than December 15, 1997 and the amount shall be increased to
$250,000.  The  Company  also  agreed to reimburse the Royal Bank Plaintiffs for
their  attorney  fees and costs. Thereafter, the Royal Bank Plaintiffs agreed to
extend  the  time  period for paying the $629,100 to them until May 15, 1997. In
addition,  the  second  payment  was increased to $225,000 to be payable July 1,
1997  provided  it  may  be postponed until December 15, 1997 in which event the
amount shall be increased to $300,000. The amount which was due May 15, 1997 was
not  paid by such date. However, as of June 2, 1997, the Company entered into an
Amendment  No.  2  to the Forbearance Agreement ("Amendment No. 2") which, among
other  things, provided that the Royal Bank Plaintiffs shall continue to forbear
from  exercising  its  rights  and  remedies  under the Royal Bank Agreement and
related  Forbearance Agreement, provided the Company performs the following: (a)
pay  $896,000  in  eight  installments  of  $112,000  each  on  May 31, July 31,
September 30 and November 30, 1997 and January 31, March 31, May 31 and July 31,
1998  (the  "Periodic  Payments"),  (b)  pay $250,000 on or before September 30,
1998,  (c)  makes  payments  of  $25,000  within  five  business  days after any
closing(s)  since  March  20,  1997,  of  any single or series of sale-leaseback
transaction(s)  which  the  Company  shall  have received in the aggregate of at
least  $65,000 in proceeds, and (d) makes a final payment on or before September
30,  1998  of the Judgment Amount (as defined in the Forbearance Agreement) less
the  aggregate  amount  of  the  Periodic  Payments  previously  paid, provided,
however,  that  if  the  Company  has timely performed its obligations under its
settlement documents with the Plaintiffs and either (i) Plaintiffs have received
all  of the Periodic Payments, or (ii) the Company makes one final payment in an
amount  set  forth  in Amendment No. 2 which amount ranges from $950,000 if such
final  payment  is  paid  on  or  before  May 31, 1997 to $350,000 if such final
payment  is paid after May 31, 1998 and on or before July 31, 1998 (and assuming
all  Periodic Payments coming due prior to the final payment has been made), and
in  such  event  the  Plaintiffs  shall waive the enforceability of the Judgment
Amount  against  the  Company  and  no further payments shall be required of the
Company.  In addition, the Company has agreed that upon the execution of a Joint
Venture  Agreement, the Company shall pay the final payment within 90 days after
the  earlier  of  the  date  such joint venture is signed or effective date of a
Joint Venture Agreement. The Company has paid all Periodic Payments due to date.

                                   -21-
<PAGE>
The  Company has also agreed to issue 433,334 shares (the "Forbearance Agreement
Shares")  of  its  Common  Stock  to  the Royal Bank Plaintiffs. The Company has
agreed  to  register such shares for resale pursuant to a Registration Statement
to  be  filed with the Securities and Exchange Commission. Also, the Company has
agreed to issue to the Plaintiffs, from time to time until the payments referred
to  above  have  been  completed, .025 shares of its Common Stock for each share
issued  in  excess  of 24,000,000 of the Company's outstanding shares. Amendment
No.  2  also  provides that the Company reimburse Plaintiffs for attorneys' fees
and  costs  incurred  in  connection  with  the  preparation  and negotiation of
Amendment  No.  2.

The  Company's  obligations  under the Royal Bank Agreement are secured by (1) a
deed  of  trust  on all real property and patented and unpatented mineral claims
owned  by  the  Company;  (2)  a  first priority security interest in all of the
Company's  right,  title  and  interest  in  and to any and all goods, products,
yield,  receivables,  inventory (including any gold from any mines), any and all
exploration  and  drilling  information, data, maps, reports or surveys, and any
and  all  income  and  proceeds  derived from the Company's mining operations on
property  which  the  Company  presently  or  subsequently owns or leases; (3) a
first-priority  security  interest in the Company's right, title and interest in
and  to any total recovery by the Company on the claims against Bartel, Eng; and
(4)  a  stipulated  judgment  in  the  amount  of  $3,250,000.

Subsequently,  the  Company, after verbally agreeing with Sterling's negotiators
regarding  the  final  two payments to be made under the Royal Bank Agreement to
occur  in  January  and  July  1998.

In  fiscal  1996, the Company registered the 1,616,667 shares of Common Stock to
be  issued  and  delivered  pursuant  to  the  Zuri Agreement and the Royal Bank
Agreement,  which  included  the  300,000  additional  shares that may have been
issued pursuant to the Royal Bank Agreement as described above. This number does
not  include  the  Forbearance  Agreement  Shares  (as  described  above).

THE  ANDERSON  MATTER.

The  Company  was  plaintiff in the matter of Brush Creek Mining and Development
Co.,  Inc.  v. Anderson, et al., United States District Court, Northern District
of  California,  case  no. C94-3487 CAL, filed on September 24, 1994. The action
was  against  former  officers  and  directors  of  the  Company  and others for
violations  of  federal and state securities laws and common law torts. On April
3, 1998, the Company's counsel, the Hinton & Alfert firm, withdrew as counsel of
record.  Upon  the  Company's  failure  to obtain new counsel as directed by the
Court,  the action was dismissed with prejudice on May 15, 1998. Following entry
of  judgment  of  dismissal, two of the defendants moved as purported prevailing
parties  for an award of attorney's fees and costs incurred in defending against
the  Company's  claims.  The  defendants  sought  by  their  motion  to  recover
$63,782.14.  The  Company retained this firm for the limited purpose of opposing
this  motion.  On  August  21,  1998,  the  Court denied the defendants' motion.
Defendants have appealed this order, but this firm is no longer representing the
Company  in  regard  to  this  matter.

THE  VOLCANIC  MATTER.

Volcanic  Resources,  LLC  filed its complaint against the Company, its past CEO
and  Chairman  of the Board, and two of its Board members on August 12, 1998. On
September  16, 1998, Plaintiff filed its First Amended Complaint alleging breach
of  contract  and  breach  of  express  warranties  against the Company only and
alleging  fraud,  negligent  misrepresentation,  rescission, constructive trust,
declaratory  relief and violation of Business and Professions Code section 17200
against  all  Defendants.  The  underlying  contract  giving  rise  to this suit
involves a written Exploration, Development and Mine Operating Agreement entered
into  November  20,  1997 between Sterling Mining, LLC and the Company. Sterling
Mining,  LLC  assigned  its  rights  under the Exploration, Development and Mine
Operating  Agreement  to  Plaintiff. The responsive pleading is due November 30,
1998.  In  accordance  therewith,  the  individual  Defendants  are filing three
preliminary  "motions":  (1)  Motion  to  Change  Venue;  (2)  Demurrer; and (3)
Petition  to  Compel  Arbitration. These motions are set for hearing on December
30,  1998.

                                   -22-
<PAGE>
OTHER  MATTERS.

In  fiscal  1996  and  1997,  the Company was requested pursuant to a non-public
informal  inquiry  by  the  staff  of the Securities and Exchange Commission, to
provide  information  to  the  staff  of  the Commission regarding the Company's
financing activities in reliance upon Regulation S under the Securities Act. The
Commission  advised  the  Company that the inquiry should not be construed as an
indication  by  the  Commission  or  its  staff  that any violations of law have
occurred,  nor  should  it  be  considered  a  reflection  upon  any  person.

On  October  24,  1994,  the Company filed an amended complaint against F. James
Anderson,  Simone  Anderson,  Edward  M. Lawson, Consolidated Sierra Gold Mines,
Inc. ("CSGM"), Independent Sierra Gold Mines, Inc. ("ISGM"), Bartel, Eng, Miller
&  Torngren,  attorneys,  Robert  Sibthorpe,  Coopers  &  Lybrand  and  Yorkton
Securities  as defendants in an action to recover damages. The suit was filed in
the United States District Court for the Northern District of California as Case
No.  C94-3487  (the  "Federal  Action").  On April 28, 1995, the Company filed a
third  amended complaint which seeks to recover damages against James and Simone
Anderson  for  breach of fiduciary duty, for violations of Rule 10b-5 and 16(b),
and  for violations of California Corporations Code Section 25400(d) and Section
25401.  The  lawsuit  seeks  to recover damages against Edward M. Lawson, Robert
Sibthorpe and Yorkton Securities, Inc. for breach of fiduciary duty. The lawsuit
seeks  to  recover damages against James and Simone Anderson, ISGM, CSGM, Robert
Sibthorpe,  and  Yorkton  Securities,  Inc.  for  intentional  and  negligent
misrepresentation.  The  lawsuit  seeks  to  recover damages against the firm of
Bartel,  Eng,  Miller  &  Torngren  based  upon  breach  of  fiduciary  duty and
negligence  claims.  The  law  firm  of  Bartel,  Eng,  Linn  & Schroder has (as
successor in interest to Bartel, Eng, Miller & Torngren) filed a counterclaim in
this  litigation  seeking  recovery  from  the  Company  of  legal fees totaling
approximately  $95,000.  The  accounting  firm  of  Coopers  &  Lybrand has been
dismissed  as  a  defendant  from  the  litigation  without  prejudice.

As  to  the progress of the case to date, an initial round of discovery has been
completed. On November 15, 1996, the court granted defendants Yorkton Securities
and  Robert  Sibthorpe's  Motion  for  Summary  Judgment. Subsequent to entry of
summary  judgment  in  their favor, Yorkton Securities filed a cost bill for the
sum of $15,752.85 and Mr. Sibthorpe filed a cost bill for $3,842.83. These costs
are  not  payable  until  the  conclusion  of  the  litigation against all other
parties.  The  insurer  for  Bartel,  Eng,  Miller  & Torngren is in liquidation
proceedings  under  the  control  of the California Department of Insurance. The
Company  intends to file a claim in that liquidation proceeding when claim forms
are issued. The court has set a trial date for the remaining parties of November
24,  1997.

On February 8, 1996, the Company filed a complaint against F. James Anderson and
Simone  Anderson  in  Superior  Court of the State of California, in and for the
County  of  Sacramento,  Case  No.  96AS  00513  (the  "Sacramento Action"). The
complaint seeks (a) judicial determination and declarations that the Company (1)
has  no  further  obligations  to advance defense fees and costs incurred by the
Andersons  in  connection  with the Zuri litigation, including on the Andersons'
appeal of that judgment (which fees and costs the Company agreed to pay pursuant
to  a  settlement  in  a  previously resolved matter); (2) is entitled to recoup
defense fees and costs allocable to the Andersons' defense of claims in the Zuri
Invest  litigation  for  which  they  were  found liable; (3) is not required to
indemnify  the  Andersons for their liability in the Zuri Invest litigation; (4)
has  no  duty  or  obligation to the Andersons to account for, replenish, and/or
return  monies  to  or pay interest on the $200,000 provided by the Andersons as
partial  indemnification  to  the  Company  in  connection  with  the Royal Bank
litigation; and (5) is entitled to have all amounts returned to the Company from
the  $200,000  which were disbursed for the purposes other than to indemnify the
Company such that the Company receives the full net benefit of the $200,000, and
(b)  equitable indemnification to collect from the Andersons their proportionate
share  of  the  judgment  in  the  Zuri  Invest  litigation.

On  April  4,  1996,  the  Company  was served with the Andersons' answer to the
Sacramento  Action  and  their  cross-complaint  against the Company. The answer
generally denied the allegations of the Company's complaint and asserted various
affirmative  defenses.  The  cross-complaint  seeks  judicial  determination and
declarations that the Company (1) is obligated to advance the Andersons' defense
costs  (including  costs  of appeal) in the Zuri litigation and defense costs in
the  Federal  Action and (2) is obligated to indemnify them from the judgment in
the  Zuri Invest litigation and any judgment that might be rendered against them
in  the  Federal  Action.

                                   -23-
<PAGE>
Also,  on  April  4, 1996, the Company was served with a motion by the Andersons
for  summary  adjudication  of two of their cross claims which would have forced
the  Company  to  advance the Andersons' defense cost in the Zuri litigation and
the  Federal  Action.  On  May  3,  1996, the Andersons' motion was heard by the
superior  court  and  denied.

The  Company  answered  the  Andersons' cross complaint on May 6, 1996 generally
denying the allegations and asserting various defenses. Although the Company has
not  done so to date, the Company may attempt to amend its original complaint to
assert an additional claim to hold the Andersons liable for the entire amount of
the  Royal  Bank  of  Scotland  settlement.

The  Company  is  a  party to other various claims, legal actions and complaints
arising  in  the  ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on
the  business  or  financial  position  of  the  Company.


Item  4.      SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY-HOLDERS.

No  matter was submitted during the fourth quarter of the fiscal year covered by
this  report  to  a  vote  of  security  holders.

                                   -24-
<PAGE>
PART  II

Item  5.    MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS.

The  Company's  Common  Stock  is  traded  in the over-the-counter market and is
quoted  on  The  Nasdaq  SmallCap  Market  under  the  symbol  BCMD.

The  following table sets forth the range of the high and low bid quotations for
the  Company's  Common  Stock  for each period indicated during the fiscal years
ended  June  30, 1998 and 1997. Prices are adjusted for 10:1 reverse stock split
on  May  8,  1998.
<TABLE>
<CAPTION>

     Bid  Prices
     -----------

                             High     Low
                            -------  ------
<S>                         <C>      <C>
For the Fiscal Period 1998
--------------------------                 

First Quarter. . . . . . .  $ 5.625  $ 2.50
Second Quarter . . . . . .  $15.625  $ 2.81
Third Quarter. . . . . . .  $10.938  $4.375
Fourth Quarter . . . . . .  $10.938  $1.406

For the Fiscal Period 1997
--------------------------                 

First Quarter. . . . . . .  $ 10.06  $ 6.30
Second Quarter . . . . . .  $  6.30  $ 1.30
Third Quarter. . . . . . .  $  3.10  $ 6.00
Fourth Quarter . . . . . .  $  4.40  $ 1.90
</TABLE>


The  foregoing  over-the-counter  market quotations reflect inter-dealer prices,
without  retail  mark-ups,  mark-downs  or  commissions  and may not necessarily
represent  actual  transactions.

As  of  September  30, 1998 there were approximately 1,500 record holders of the
Company's Common Stock. The number of shares outstanding of the Company's Common
Stock  as  of  September  30,  1998,  was  5,554,179.

During  the  last  two  fiscal years of the Company, no cash dividends have been
declared  or  paid  on  the  Company's  Common  Stock.

Other  than  unregistered  sales  of  equity  securities  made  in  reliance  on
Regulation  S,  during the fiscal year ended June 30, 1997, the Company sold the
following equity securities that were not registered under the Securities Act of
1933:  3,600,005  restricted  shares of Common Stock at $.0625 per share wherein
the  Company  received  net  proceeds of $225,000 in  January and February 1997;
6,600,000  restricted  shares  of  Common  Stock  at  $.07 per share wherein the
Company  received  net  proceeds  of  $460,600  in  February  through  May 1997;
1,754,545  restricted  shares  of  Common  Stock  at  $.11 per share wherein the
Company  received  net  proceeds of $193,000 in May and June 1997; and 1,400,000
restricted  shares  of  Common  Stock  at  $.125  per  share wherein the Company
received  net  proceeds of $175,000. All shares were sold under Regulation D and
Section  4(2). Investors who acquired such shares were required to be accredited
investors.  The  Company  has  agreed  to  register  the  shares  pursuant  to a
registration  statement to be filed with the Securities and Exchange Commission.
In  addition,  in March 1997, the Company canceled all previously issued options
to  directors  and  issued in place thereof 960,000 options exercisable at $.225
per  share. Also, in fiscal 1997, the Company issued 20,000 restricted shares of
Common  Stock,  under  Section 4(2) of the Securities Act of 1933, in connection
with  the  acquisition  of  the  New  California  Placer  Mine.

                                   -25-
<PAGE>
In October 1997, the Company sold 405,000 shares of its common stock pursuant to
a private placement at a price of $1.00 per share. The shares were sold pursuant
to  Regulation D and Section 4(2). The Company received a net amount of $405,000
from  the  sale.

In  November  1997,  the  Company  issued  5,042  shares of its Common Stock for
certain  consulting services. The shares were registered with the Securities and
Exchange Commission on Form S-8. The shares are valued at $11.72, the average of
the  bid  and  asked  price  for the Company's Common Stock on November 4, 1997.

Also  in  November  1997,  the  Company  sold  28,000 shares of its Common Stock
pursuant  to  a private placement at a price of $5.00 per share. The shares were
sold  pursuant  to  Regulation  D  and  Section 4(2). The Company received a net
amount  of  $140,000  from  the  sale.

Also  in  November  1997,  the  Company  issued and caused to be released 15,000
shares  of  its  Common  Stock  which  had  been in escrow in connection with an
investment  transaction  pursuant  to  Regulation  S which occurred in September
1996.    The shares are valued at $9.375, the average of the bid and asked price
for  the  Company's  Common  Stock  on  November  28,  1997.

In December 1997, the Company sold 44,000 shares of its Common Stock pursuant to
a private placement at a price of $5.00 per share. The shares were sold pursuant
to  Regulation D and Section 4(2). The Company received a net amount of $220,000
for  the  sale.

Also  in  December 1997, the Company issued 15,667 shares of its Common Stock to
pay  for certain finders fees. The shares were issued pursuant to Section 4 (2).
The shares are valued at $8.59375 the average of the bid and asked price for the
Company's  Common  Stock  on  December  2,  1997.

Also  in  December 1997, the Company issued 15,000 shares of its common stock to
pay  for certain finders fees. The shares were issued pursuant to Section 4 (2).
The  shares  are  valued at $11.5625, the average of the bid and asked price for
the  Company's  Common  Stock  on  December  12,  1997.

Also  in  December 1997, the company issued 43,334 shares of its Common Stock as
part  of  a settlement with the Royal Bank plaintiffs.  The shares are valued at
$10.00  the average of the bid and asked price for the Company's Common Stock on
December  31,  1997.

During  the  quarter ended March 31, 1998, the Company sold the following equity
securities  that  were  not  registered  under the Securities Act of 1933: 5,000
restricted  shares  of  Common  Stock  at  $5.00  per  share wherein the Company
received  net  proceeds of $25,000 in January 1998; 198,750 restricted shares of
Common  Stock  at  $1.84  per share wherein the Company received net proceeds of
$365,700 in February 1998; 41,250 restricted shares of Common Stock at $1.84 per
share  wherein  the  Company received net proceeds of $75,900 in March 1998. All
shares  were  sold  under  Regulation D and Section 4(2). Investors who acquired
such  shares were required to be accredited investors. The Company has agreed to
register  all  the  foregoing  shares  pursuant  to  a  Registration  Statement.

In addition, during the quarter ended March 31, 1998, the Company issued 333,333
restricted  shares  pursuant  to  Regulation  S  and  received  net  proceeds of
$1,000,000.

                                   -26-
<PAGE>
Item  6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION
          INTRODUCTION

During  1997,  the  Securities  and Exchange Commission (SEC) staff reconsidered
existing  accounting  practices fro mineral expenditures by United States junior
mining  companies.  The  SEC now interprets generally accepted accounting policy
for junior mining companies to permit capitalization of acquisition, exploration
and  development costs only after persuasive engineering evidence is obtained to
support  recoverability  of  these  costs  (ideally upon determination of proven
and/or  probable  reserves  by  a recognized independent engineer). Although the
Company  has  performed drilling samples, and an independent engineer has deemed
the  gold  properties  contain  profitable  reserves  in  excess of property and
equipment  costs incurred through June 30, 1997, management has chosen to follow
the  more  conservative  method  of  accounting  by  expending  the  previously
capitalized gold mineral costs, other than with respect to Gardner's Point, as a
cumulative  effect  of  a  change  in  accounting  principal in the consolidated
statement  of  operations  included  in  the  Company's  Consolidated  Financial
Statements.  This  resulted  in  an  impairment  charge  of  $5,39,3115 in 1997.

FISCAL  YEAR  ENDED  JUNE 30, 1998 COMPARED WITH FISCAL YEAR ENDED JUNE 30, 1997

LIQUIDITY  AND  CAPITAL  RESOURCES

At June 30, 1998 the Company had a working capital deficit of $ 1,387,633, which
represents  an increase in working capital of $ 945, 272 from the previous years
working  capital balance  of $2,332,905.  This could be directly attributed to a
cash  timing  variable  in comparison from the previous year, and a reduction in
accounts  payable  and  current  portion of long term debt compared to the prior
year.

Consistent  with  prior  years,  the  mining  industry continues to be a capital
intensive  one.    During the fiscal year ended June 30, 1998 the Company raised
approximately  6  million from the sale of shares of Common Stock and Subscribed
Common  Stock.   During the current year the company continued to have a working
capital  deficit  of  $  1,  387,633  and  had  no material revenues from mining
operations.    Additional financing will be required as of June 30, 1998 for the
Company  to  cover its mining and development cost to continue to engage in full
scale  mining  operations.    At  this  time  the  company has no definite plans
regarding  additional  financing,  but  the Company  is certainly open to equity
financing  via  stock offerings or joint ventures.  There are no assurances that
the  company will be able to raise the type of capital, and even in such capital
is    raised,  there  is  no guarantee that it will be sufficient to satisfy the
Company's  Capital  intensive  requirements.  If the Company is unable to obtain
sufficient  funds  from future financing, the company may not be able to achieve
its  business  objectives and may have to scale back its development plans.   In
addition,  the  Company  may be required to seek protection under the bankruptcy
laws.

During the fiscal year 1998, the company is currently in default with respect to
certain  mining properties, and certain county taxes.  Although the lessors have
not  taken  action to foreclose on the leases the Company is making every effort
to  fulfill these agreements.  The company estimates that mining development and
operating cost to be approximately $ 4 million for the next fiscal year assuming
adequate  financing  becomes  available.  The majority of the funds will be used
for  operations  in  the  lower  Brush Creek mine and Ruby mill, consistent with
prior  year.   There can be no assurance that the Company will be able to obtain
such  financing  or  that  financing  will be obtained on terms favorable to the
Company.

                                   -27-
<PAGE>
FISCAL  YEAR  ENDED  JUNE 30, 1997 COMPARED WITH FISCAL YEAR ENDED JUNE 30, 1996

LIQUIDITY  AND  CAPITAL  RESOURCES

At  June  30, 1997, the Company had working capital deficit of $2,332,905, which
represents  an  increase in working capital deficit of $100,231 as compared to a
working  capital deficit of $2,232,674 at June 30, 1996. The decrease in working
capital  was  primarily  due  to  a  decrease  in available cash, an increase in
accounts  payable  and  accrued  liabilities  partially  offset by a decrease in
current  portion  of  long-term  debt.

The  mining industry is capital intensive. During the fiscal year ended June 30,
1997,  the Company raised $2,111,101 from the sale of shares of Common Stock. At
June  30,  1997, the Company had a working capital deficit of $2,332,905 and had
no  material  revenues  from  mining  operations.  Additional  financing will be
required  in order for the Company to cover its mining and development costs and
to  engage  in  full  scale  mining  operation. At this time, the Company has no
definitive  plans  regarding  additional  financing,  but  believes that it will
likely  be  obtained  through  equity financing such as stock offerings or joint
ventures. No assurances can be given that the Company will be able to raise cash
from additional financing efforts and, even if such cash is raised, that it will
be  sufficient  to satisfy the Company's capital requirements. If the Company is
unable  to obtain sufficient funds from future financings and/or operations, the
Company may not be able to achieve its business objectives and may have to scale
back  its  development  plans.  In addition, the Company may be required to seek
protection  under  the  bankruptcy  laws.

During  fiscal  1997,  the  Company  sold equipment in order to meet some of its
obligations.  In  addition,  the  Company  could lose some of its properties for
failure  to  make  lease payments. On March 23, 1997, the Company's lease on the
Kate  Hardy  mine  expired.  However, the Company paid $10,000 to the Kate Hardy
lessor  to  extend  the lease agreement on the Kate Hardy mine for an additional
three months. The Company is required to pay an additional $10,000 to extend the
lease for another three month period. The Company also negotiated a modification
agreement  with Ruby Development Co., Inc. to pay, in cash, one lease payment in
arrears  for  the  Ruby mine, to pay in cash, one month lease payment in arrears
for the Rising Sun, increase the amount of equipment held as collateral pursuant
to  the  Ruby mine lease agreement by filing a UCC-1 financing statement listing
the  additional  equipment,  all  right,  title  and  interest  of  certain "ore
specimens"  for  which  Ruby Development Co., Inc. will credit the value against
past  due  minimum  royalty  payments,  and grant Ruby Development Co., Inc., an
option to purchase up to 50,000 shares of the Company's common stock at price of
$.25  per  share  until  July  1,  1999.

The  Company  estimates  its  mining  development  and  operating  costs  to  be
approximately  $4 million for the fiscal year ending June 30, 1998. The majority
of  the funds will be used for operations in the lower Brush Creek mine and Ruby
mill.  Additional financing will be required to perform the intended work. There
can  be  no  assurance that the Company will be able to obtain such financing or
that  financing  will  be  obtained  on  terms  favorable  to  the  Company.

                                   -28-
<PAGE>
RESULTS  OF  OPERATIONS

The  Company  had  total  revenues of $22,266 (from interest only) during fiscal
1997  compared  to  total revenues of $42,160 (from interest only) during fiscal
1996.  The  Company had no revenues from operations during fiscal 1997 and 1996.
The  Company  had a $4,288,420 net loss for the fiscal year ended June 30, 1997,
compared  to  a  net loss of $9,270,102 for the fiscal year ended June 30, 1996.
This  change  in  net  loss  is  primarily  due  to  a  reduction in general and
administrative  expenses,  general  mining  and  exploration  and a reduction in
expenses  due  to  litigation  settlement.

Item  7.      FINANCIAL  STATEMENTS.

See  the  Consolidated  Financial  Statements  annexed  to  this  report.

Item  8.      CHANGES  IN  AND  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE.

None.

                                   -29-
<PAGE>
PART  III

Item  9.      DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND CONTROL  PERSONS;
COMPLIANCE  WITH  SECTION  16(A)
               OF  THE  EXCHANGE  ACT.

There is incorporated by reference herein information which will be contained in
the  Company's  definitive  proxy  statement  to be filed within 180 days of the
Company's  year  end in connection with the annual meeting of shareholders to be
held  in  fiscal  1999.

Item  10.      EXECUTIVE  COMPENSATION.

There is incorporated by reference herein information which will be contained in
the  Company's  definitive  proxy  statement  to be filed within 180 days of the
Company's  year  end in connection with the annual meeting of shareholders to be
held  in  fiscal  1999.

Item  11.      SECURITY  OWNERSHIP  OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

There is incorporated by reference herein information which will be contained in
the  Company's  definitive  proxy  statement  to be filed within 180 days of the
Company's  year  end in connection with the annual meeting of shareholders to be
held  in  fiscal  1999.

Item  12.      CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

There is incorporated by reference herein information which will be contained in
the  Company's  definitive  proxy  statement  to be filed within 180 days of the
Company's  year  end in connection with the annual meeting of shareholders to be
held  in  fiscal  1999.

Item  13.      EXHIBITS  AND  REPORTS  ON  FORM  8-K.

(a)      EXHIBITS.
<TABLE>
<CAPTION>


<C>    <S>

  3.1  Articles of Incorporation of the Company with Amendments thereto.(1)
  3.2  Amended and Restated Bylaws of the Company.(1)
  4.1  Specimen Certificate for the Company's common stock.(1)
  4.2  Form of Warrant Agreements.(1)
 10.1  Voting Agreement between the Company, Simone M. Anderson and EuroCanadian
         Securities Limited.(1)
 10.2  Agency Agreement between the Company and Euro Canadian Securities Limited.(1)
 10.3  Stock Purchase Agreement between the Company, Simone M. Anderson and Euro
         Canadian Securities Limited.(1)
 10.4  Merger Agreement and Plan of Reorganization between the Company, Sierra Gold
         Properties, Inc. and California Properties, Ltd.,and Addendum thereto.(1)
 10.5  Lease Purchase Agreement for the Ruby Mine, and Modifications thereto.(1)
 10.6  Modification of Lease Purchase Agreement for the Ruby Mine dated November 1, 1994.(7)
 10.7  Agreement to Lease with Option for the Rising Sun Mine, and Modifications thereto.(1)
 10.8  Agreements to Purchase Carson Mine.(1)
 10.9  Agreement to Purchase High Commission Mine.(1)
10.11  Promissory Note between the Company and Consolidated Sierra Gold Mines, Inc.(1)
10.12  Promissory Note between the Company and Independent Sierra Gold Mines, Inc.(1)
10.13  Consulting Agreement between the Company and Consolidated Sierra gold Mines, Inc.(2)
10.14  Revolving Credit Facility between the Company and Consolidated Sierra Gold Mines, Inc.(1)
10.15  Stock Option Agreements for G. Michael Pickering.(1)
10.17  Credit Facility Agreement between the Company and Epsom Investment Services N.V.(1)
10.18  Settlement Agreement between the Company, Simone Anderson, Euro Canadian Securities
        Limited, and Georges Benarroch.(1)
</TABLE>


                                   -30-
<PAGE>
<TABLE>
<CAPTION>


<C>     <S>

10.19   Agency Agreement between Epsom Investment Services N.V. and the Company.(1)
10.20   Letter Agreement with Grande Portage.(1)
10.21   Letter Agreement with the All-Union Research Institute of Geology of Foreign
          Countries (VZG).(1)
10.22   Contract for Services between the Company and F. James Anderson.(7)
10.23   Stock Option Agreement with Simone Anderson.(7)
10.24   Stock Option Agreement with G. Michael Pickering.(7)
10.25   Stock Option Agreement with Edward Lawson.(7)
10.26   Stock Option Agreement with Susan Miller.(7)
10.27   Stock Option Agreement with Michael Skopos.(7)
10.28   Stock Option Agreement with Dave Trueman.(7)
10.29   Stock Option Agreement with Peter LeCoutier.(7)
10.30   Lease on the Kate Hardy - Omega Mines.(3)
10.31   Letter of Agreement with Morrison Knudsen.(4)
10.32   Joint Venture Agreement with MK Gold Company.(5)
10.33   Modification of Lease Purchase Agreement for Rising Sun Mine dated November 1,
          1994.(7)
10.34   Letter agreements regarding option to lease Dreadnaught Mine.(7)
10.35   Settlement Agreement between the Company, Zuri Invest, A.G., Andre Michaels
          and Peter Woodfield.(7)
10.36   Settlement Agreement between the Company, Werner Aeberhard, Chris Lambrianos,
          Mikis Theodosiou, Andreas Samuel, as Executor of the Estate of Dinos N. Samuel,
          Tania Bruntsfield, Jacques Philippou and the Royal Bank of Scotland, A.G.(7)
 11.1   Computation of per share earnings.
 16.1   Letter regarding change in certifying accountant.(6)
 21.1   List of Subsidiaries of the Company.
 23.1   Consent of Brown Armstrong Randall Reyes Paulden & McCown, CPA's.
   (1)  Incorporated by reference to the Company's Registration Statement on Form S-1,
        File No. 33-39867, and pre-effective amendments thereto which was previously filed
        with the Commission on April 8, 1991.

   (2)  Incorporated by reference to the Company's Registration Statement on Form S-8, File No.
        33-38646, which  was previously field with the Commission on January 23, 1991.

   (3)  Previously filed in connection with the Registration Statement on Form S-3, File
        No. 33-45174, and combined Registration Statement on Form S-3, File No. 33-63374.

   (4)  Previously filed on Form 8-K on September 10, 1992.

   (5)  Previously filed on Form 8-K on June 15, 1994.

   (6)  Previously filed on Form 8-K on July 12, 1994.

   (7)  Previously filed on Form 10-KSB on September 28, 1995.

   (8)  Previously filed in connection with the Registration Statement on Form S-3, File
        No. 333-286.
</TABLE>


(b)      REPORTS  ON  FORM  8-K.

Listed below are reports on Form 8-K filed during the last quarter of the period
covered  by  this  report:    None.

                                   -31-
<PAGE>
      
                                   SIGNATURES


Pursuant  to  the requirements of Section 13 or 15(d) 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.

BRUSH  CREEK  MINING  AND  DEVELOPMENT  CO.,  INC.
(Registrant)


By:      /s/  James  S.  Chapin
         ----------------------
         James  S.  Chapin,
         Chief  Executive  Officer

Dated:   November 24, 1998


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been signed below by the following persons on behalf of the Registrant, and
in  the  capacities  and  on  the  dates  indicated:


Signature:  /s/  James  S.  Chapin
            ----------------------
            James  S.  Chapin
            Chief  Executive  Officer
            Chief  Financial  Officer,
            Chairman  of  the  Board  and  Director
            (Principal Executive Officer and Principal Financial and
             Accounting  Officer)

Date:        November  24,  1998


Signature:
             Howard  I.  Kalodner
             Director

Date:        November  24,  1998


Signature:  /s/  Albert  Miller
            -------------------
            Albert  Miller
            Director

Date:       November 24, 1998


Signature:  /s/  Kenneth  Friedman
            ----------------------
            Kenneth  Friedman
            Director

Date:       November  24,  1998

                                   -32-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


                                                                                Page
                                                                                ----
<S>                                                                             <C>
Item 1. - Financial Statements
  Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . .    34
  Consolidated Balance Sheet as of June 30, 1998 . . . . . . . . . . . . . . .    36
  Consolidated Statements of Operations for the Years Ended June 30, 1998
    and 1997 and for the Period from July 1, 1989 (Date of Resumption of
    Development Stage Enterprise Activities) Through June 30, 1998 . . . . . .    37
  Consolidated Statements of Shareholders' Equity for the Years Ended June 30,
    1998 and 1997 and for the Period from July 1, 1989 (Date of Resumption of
    Development Stage Enterprise Activities) Through June 30, 1998 . . . . . .    39
  Consolidated Statements of Cash Flows for the Years Ended June 30, 1998
    and 1997 and for the Period from July 1, 1989 (Date of Resumption of
    Development Stage Enterprise Activities) Through June 30, 1998 . . . . . .    43
  Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . .    45
</TABLE>



                                   -33-
<PAGE>

INDEPENDENT  AUDITOR'S  REPORT



To  the  Board  of  Directors
Brush  Creek  Mining  and  Development  Company,  Inc.
Grass  Valley,  California


We  have  audited  the  accompanying  consolidated  balance sheet of Brush Creek
Mining  and  Development  Company,  Inc.  and  Subsidiary  (a  development stage
enterprise)  as  of  June  30,  1998, and the related consolidated statements of
operations,  shareholders'  equity,  and cash flows for each of the two years in
the  period  ended June 30, 1998, and for the period from the date of resumption
of  development  stage  activities  (July 1, 1989) through June 30, 1998.  These
consolidated  financial  statements  are  the  responsibility  of  the Company's
management.    Our responsibility is to express an opinion on these consolidated
financial  statements  based  on  our  audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting principles used and the significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audits  provide  a  reasonable  basis  for  our opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Brush Creek Mining
and Development Company, Inc. and Subsidiary (a development stage enterprise) as
of  June 30, 1998, and the results of its operations and its cash flows for each
of the two years in the period ended June 30, 1998, and the period from the date
of  resumption  of  development stage activities (July 1, 1989) through June 30,
1998  in  conformity  with  generally  accepted  accounting  principles.
                                   -34-
<PAGE>
The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company  will  continue  as a going concern.  As discussed in Note 1,
there  are  conditions which raise substantial doubt about the Company's ability
to  continue  as  a  going  concern,  including  the  Company's ability to raise
additional  capital  to  fund  its  operations  and  development programs and to
establish  ore  reserves.    Management's  plans  in regard to these matters are
described  in  Note  1. Additionally, the Company is in default on the leases of
certain of its mining properties. The lessors have not taken action to foreclose
on  the leases. The loss of these leases would have a material adverse effect on
the  Company.  The  consolidated  financial  statements  do  not  include  any
adjustments  relating to the recoverability and classification of reported asset
amounts  and classification of liabilities that might result from the outcome of
these  uncertainties.

                    BROWN  ARMSTRONG  RANDALL
                    REYES  PAULDEN  &  McCOWN
                    ACCOUNTANCY  CORPORATION















Bakersfield,  California
November  22,  1998


                                   -35-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  BALANCE  SHEET
JUNE  30,  1998


<TABLE>
<CAPTION>



<S>                                                        <C>
ASSETS
Current Assets
  Cash. . . . . . . . . . . . . . . . . . . . . . . . . .  $    417,415 
  Advances. . . . . . . . . . . . . . . . . . . . . . . .           500 
  Inventory . . . . . . . . . . . . . . . . . . . . . . .        39,735 
                                                           -------------

Total Current Assets. . . . . . . . . . . . . . . . . . .       457,650 
Office Furniture and Equipment, Net . . . . . . . . . . .        42,074 
Mineral Properties and Mining Equipment, Net. . . . . . .     4,657,421 
Deposits. . . . . . . . . . . . . . . . . . . . . . . . .       272,095 
                                                           -------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . .  $  5,429,240 
                                                           =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Accounts payable and accrued liabilities. . . . . . . .  $  1,479,583 
  Current portion of long-term debt . . . . . . . . . . .       362,000 
  Other . . . . . . . . . . . . . . . . . . . . . . . . .         3,700 
                                                           -------------

Total Current Liabilities . . . . . . . . . . . . . . . .     1,845,283 
                                                           -------------
Shareholders' Equity
  Common stock, $0.0001 par value; authorized 100,000,000
   shares; issued and outstanding, 5,504,179 shares . . .    53,643,325 
Accumulated Deficit . . . . . . . . . . . . . . . . . . .   (11,260,214)
Accumulated Deficit during the Development Stage. . . . .   (38,799,154)
                                                           -------------

Total Shareholders' Equity. . . . . . . . . . . . . . . .     3,583,957 
                                                           -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY. . . . . . . .  $  5,429,240 
                                                           =============
</TABLE>


The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -36-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  OPERATIONS
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR
THE PERIOD FROM JULY 1, 1989 (DATE OF RESUMPTION OF DEVELOPMENT STAGE ENTERPRISE
ACTIVITIES)
THROUGH  JUNE  30,  1998
<TABLE>
<CAPTION>

                                                     Development Stage
                                                     -----------------

                                                                          Period from
                                                                         July 1, 1989
                                                                            Through
                                                1998          1997       June 30, 1998
                                            ------------  ------------  ---------------
<S>                                         <C>           <C>           <C>
Revenues
  Sale of Joint Venture. . . . . . . . . .  $         -   $         -   $    4,232,000 
  Other Income . . . . . . . . . . . . . .        4,701             -          161,145 
  Interest . . . . . . . . . . . . . . . .       10,689        22,266          198,468 
                                            ------------  ------------  ---------------

Total Revenues . . . . . . . . . . . . . .       15,390        22,266        4,591,613 
                                            ------------  ------------  ---------------
Expenses
  General and Administrative Expenses. . .    2,652,211     1,159,156       17,711,132 
  General Mining and Exploration . . . . .    2,487,019     2,140,228       13,541,272 
  Impairment of Development Costs. . . . .            -     5,393,115        5,393,115 
  Loss on Lease Abandonments . . . . . . .            -             -          392,317 
  Depreciation and Amortization. . . . . .      252,791       370,642        1,686,693 
  (Gain) Loss on Sale of Mining Equipment.            -        84,264          171,174 
  Interest Expense . . . . . . . . . . . .        6,200       116,626          498,494 
  Litigation Settlement. . . . . . . . . .        4,000       439,770        4,141,032 
                                            ------------  ------------  ---------------

Total Expenses . . . . . . . . . . . . . .    5,402,221     9,703,801       43,535,226 
                                            ------------  ------------  ---------------
Loss Before Extra-ordinary Item. . . . . .   (5,386,831)   (9,681,535)     (38,943,613)
Extraordinary Item, Net Gain from Debt
  Extinguishment, Net of Tax . . . . . . .            -             -          144,462 
                                            ------------  ------------  ---------------
Net Loss . . . . . . . . . . . . . . . . .  $(5,386,831)  $(9,681,535)  $  (38,799,151)
                                            ============  ============  ===============

Net Loss per Common Share. . . . . . . . .  $      (.12)  $      (.47)
                                            ============  ============                 

Weighted Average Common Shares Outstanding    4,660,433     2,136,576 
                                            ============  ============                 
</TABLE>


The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -37-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR  THE  PERIOD
FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT  STAGE  ENTERPRISE
ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                             Common  Stock
                             -------------
                                                                    Accumulated
                                                                      Deficit
                                                                    During the
                            Number of                Accumulated    Development
                             Shares      Amount        Deficit         Stage         Total
                            ---------  -----------  -------------  -------------  -----------
<S>                         <C>        <C>          <C>            <C>            <C>
Balance, June 30, 1989 . .    123,304  $12,318,877  $(11,260,214)  $          -   $1,058,663 

Issuance of stock for
 options on mining
 properties. . . . . . . .      1,567      117,500             -              -      117,500 
Sales of stock in private
 placement, net of
 offering costs. . . . . .     15,000      434,000             -              -      434,000 
Issuance of stock for
 services. . . . . . . . .      2,350       72,500             -              -       72,500 
Sale of stock in private
 placement, net of
 offering costs. . . . . .     13,173      828,110             -              -      828,110 
Issuance of units for debt
 to affiliates . . . . . .      7,376      553,242             -              -      553,242 
Net loss . . . . . . . . .          -            -             -       (768,436)    (768,436)
                            ---------  -----------  -------------  -------------  -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -38-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR  THE  PERIOD
FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT  STAGE  ENTERPRISE
ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                             Common  Stock
                             -------------
                                                                   Accumulated
                                                                     Deficit
                                                                    During the
                             Number of               Accumulated   Development
                               Shares      Amount      Deficit        Stage         Total
                             ----------  ----------  ------------  ------------  -----------
<S>                          <C>         <C>         <C>           <C>           <C>
Balance, June 30, 1990. . .    162,770   14,324,229  (11,260,214)     (768,436)   2,295,579 

Issuance of stock for
 options on mining
 properties . . . . . . . .     15,474    2,283,020            -             -    2,283,020 
Sale of stock in private
 placement, net of
 offering costs . . . . . .     14,161      910,840            -             -      910,840 
Exercise of warrants. . . .        333       35,000            -             -       35,000 
Issuance of stock for
 services . . . . . . . . .      6,412    1,097,258            -             -    1,097,258 
Issuance of stock for
 debt . . . . . . . . . . .        515      114,560            -             -      114,560 
Cancellation of units
 from CSGM. . . . . . . . .     (7,377)           -            -             -            - 
Issuance of shares to
 CSGM . . . . . . . . . . .     12,000            -            -             -            - 
Issuance of stock for
 litigation settlement, net      3,334       85,000            -             -      875,000 
Net loss. . . . . . . . . .          -            -            -    (2,558,381)  (2,558,381)
                             ----------  ----------  ------------  ------------  -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -39-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR  THE  PERIOD
FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT  STAGE  ENTERPRISE
ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                             Common  Stock
                             -------------
                                                               Accumulated
                                                                 Deficit
                                                                During the
                          Number of              Accumulated   Development
                           Shares      Amount      Deficit        Stage         Total
                          ---------  ----------  ------------  ------------  -----------
<S>                       <C>        <C>         <C>           <C>           <C>
Balance, June 30, 1991 .    207,622  19,639,907  (11,260,214)   (3,326,817)   5,052,876 

Issuance of stock for
 options on mining
 properties. . . . . . .     19,578     564,899            -             -      564,899 
Sale of stock in private
 placement, net of
 offering costs. . . . .     14,210   2,298,451            -             -    2,298,451 
Exercise of warrants
 and options . . . . . .     12,483   1,250,750            -             -    1,250,750 
Issuance of stock
 for services. . . . . .     18,458   1,818,102            -             -    1,818,102 
Issuance of stock
 for debt. . . . . . . .      2,444     336,617            -             -      336,617 
Issuance of shares
 to CSGM . . . . . . . .      8,800     748,750            -             -      748,750 
Capital contributions. .          -     312,805            -             -      312,805 
Net loss . . . . . . . .          -           -            -             -   (3,178,878)
                          ---------  ----------  ------------  ------------  -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -40-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR  THE  PERIOD
FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT  STAGE  ENTERPRISE
ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                             Common  Stock
                             -------------
                                                                  Accumulated
                                                                    Deficit
                                                                   During the
                            Number of               Accumulated   Development
                             Shares      Amount       Deficit        Stage         Total
                            ---------  -----------  ------------  ------------  -----------
<S>                         <C>        <C>          <C>           <C>           <C>
Balance, June 30, 1992 . .    283,595  26,970,281   (11,260,214)   (6,505,695)   9,204,372 

Issuance of stock for
 mining properties and
 equipment . . . . . . . .      3,729     255,238             -             -      255,238 
Sale of stock. . . . . . .      1,066      80,000             -             -       80,000 
Exercise of warrants
 and options . . . . . . .      9,540     707,105             -             -      707,105 
Exchange of options
 for debt, CSGM. . . . . .      3,334     250,000             -             -      250,000 
Issuance of stock
 for services. . . . . . .     18,319   1,616,659             -             -    1,616,659 
Issuance of stock for debt     10,514     713,494             -             -      713,494 
Issuance of shares
 for CSGM. . . . . . . . .     10,026     500,285             -             -      500,285 
Issuance of stock for the
 acquisition of Trans-
 Russian . . . . . . . . .     53,940     (84,176)            -             -      (84,176)
Net loss . . . . . . . . .          -           -             -    (3,420,220)  (3,420,220)
                            ---------  -----------  ------------  ------------  -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -41-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR  THE  PERIOD
FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT  STAGE  ENTERPRISE
ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                             Common  Stock
                             -------------
                                                                 Accumulated
                                                                   Deficit
                                                                  During the
                            Number of              Accumulated   Development
                             Shares      Amount      Deficit        Stage         Total
                            ---------  ----------  ------------  ------------  -----------
<S>                         <C>        <C>         <C>           <C>           <C>
Balance, June 30, 1993 . .    394,063  31,008,886  (11,260,214)   (9,925,915)   9,822,757 

Sale of stock. . . . . . .      8,248     241,139
Exercise of warrants and                                     -             -      241,139 
  options. . . . . . . . .      5,832     608,925            -             -      608,925 
Issuance of stock for
 services. . . . . . . . .     21,510     938,159            -             -      938,159 
Net income . . . . . . . .          -           -            -       136,625      136,625 
                            ---------  ----------  ------------  ------------  -----------
Balance, June 30, 1994 . .    429,653  32,797,109  (11,260,214)   (9,789,290)  11,747,605 

Sale of stock. . . . . . .    256,667   3,696,457            -             -    3,696,457 
Net loss . . . . . . . . .          -           -            -    (4,671,396)  (4,671,396)
                            ---------  ----------  ------------  ------------  -----------
Balance, June 30, 1995 . .    686,320  36,493,566  (11,260,214)  (14,460,686)  10,772,666 

Sale of stock. . . . . . .    678,350   6,875,416            -             -    6,875,416 
Issuance of stock for
 partial settlement of
 Royal Bank agreement. . .     21,667     223,436            -             -      223,436 
Compensation recognized
 on stock options granted.          -     160,021            -             -      160,021 
Issuance of stock, held
 in trust for partial
 settlement of Zuri Invest
 litigation. . . . . . . .    110,000           -            -             -            - 
Net loss . . . . . . . . .          -           -            -             -   (9,270,102)
                            ---------  ----------  ------------  ------------  -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -42-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR  THE  PERIOD
FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT  STAGE  ENTERPRISE
ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                             Common  Stock
                              -------------

                                                                   Accumulated
                                                                     Deficit
                                                                   During the
                           Number of                Accumulated    Development
                            Shares      Amount        Deficit         Stage         Total
                           ---------  -----------  -------------  -------------  ------------
<S>                        <C>        <C>          <C>            <C>            <C>
Balance, June 30, 1996. .  1,496,337   43,752,439   (11,260,214)   (23,730,788)    8,761,437 

Sale of stock . . . . . .  1,638,711    2,111,101             -              -     2,111,101 
Issuance of stock
 for New California
 Placer mine. . . . . . .      2,000        5,200             -              -         5,200 
Zuri Invest Litigation
 Settlement . . . . . . .          -    1,200,000             -              -     1,200,000 
Compensation recognized
 on stock options granted          -       24,000             -              -        24,000 
Net loss. . . . . . . . .          -            -             -     (9,681,535)   (9,681,535)
                           ---------  -----------  -------------  -------------  ------------
Balance, June 30, 1997. .  3,137,048   47,092,740   (11,260,214)   (33,412,323)    2,420,203 

Sale of stock . . . . . .  2,367,131    3,697,585             -              -     3,697,585 
Issuance of common
 stock subscribed . . . .          -    2,673,600             -              -     2,673,600 
Zuri Invest Litigation
 Settlement . . . . . . .          -      179,400             -              -       179,400 
Net loss. . . . . . . . .          -            -             -     (5,386,831)   (5,386,831)
                           ---------  -----------  -------------  -------------  ------------
Balance, June 30, 1998. .  5,504,179  $53,643,325  $(11,260,214)  $(38,799,154)  $ 3,583,957 
                           =========  ===========  =============  =============  ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -43-
<PAGE>

BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR
THE  PERIOD  FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT
STAGE  ENTERPRISE  ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                                                                      Development Stage
                                                                      -----------------

                                                                                      Period from
                                                                                     July 1, 1989
                                                                                        Through
                                                            1998          1997       June 30, 1998
                                                        ------------  ------------  ---------------
<S>                                                     <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss . . . . . . . . . . . . . . . . . . . . . .  $(5,386,831)  $(9,681,535)  $  (38,799,154)
                                                        ------------  ------------  ---------------

  Gain on debt restructuring . . . . . . . . . . . . .            -             -         (144,462)
  Impairment of development costs. . . . . . . . . . .            -     5,393,115        5,393,115 
  Depreciation and amortization. . . . . . . . . . . .      252,791       370,642        1,686,693 
  Loss on lease abandonments . . . . . . . . . . . . .            -             -          444,359 
  Loss on litigation settlement. . . . . . . . . . . .        4,000       439,770        4,111,032 
  (Gain) loss on sale of mining equipment. . . . . . .            -        84,264           49,164 
  Other. . . . . . . . . . . . . . . . . . . . . . . .            -             -           43,576 
  Shareholder payment of services. . . . . . . . . . .            -             -          105,055 
  Stock and debt for services. . . . . . . . . . . . .      176,584             -          879,652 
  Change in stock purchase price adjustment receivable            -             -                - 
  Change in note receivable. . . . . . . . . . . . . .            -        40,462           47,462 
  Change in inventory. . . . . . . . . . . . . . . . .      (36,985)       21,540          (37,445)
  Change in prepaid expenses . . . . . . . . . . . . .            -        51,290          501,736 
  Change in deposits and other current assets. . . . .         (500)            -         (116,461)
  Change in deposits . . . . . . . . . . . . . . . . .            -       105,052          (29,065)
  Change in accounts payable and accrued liabilities .     (291,431)      330,746        4,032,040 
                                                        ------------  ------------  ---------------

  Total adjustments. . . . . . . . . . . . . . . . . .      104,459     6,836,881       16,966,451 
                                                        ------------  ------------  ---------------

NET CASH USED IN OPERATING ACTIVITIES. . . . . . . . .   (5,282,372)   (2,844,654)     (21,832,703)
                                                        ------------  ------------  ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of mineral properties, equipment
   and deferred developments . . . . . . . . . . . . .      (90,388)      (64,370)      (5,164,817)
  Acquisition of office equipment. . . . . . . . . . .      (18,886)            -         (278,987)
  Proceeds from sale of equipment. . . . . . . . . . .            -        90,000          384,356 
  Proceeds from the acquisition of Trans-Russian . . .            -             -           20,060 
                                                        ------------  ------------  ---------------

NET CASH PROVIDED (USED) IN INVESTING
 ACTIVITIES. . . . . . . . . . . . . . . . . . . . . .     (109,274)       25,630       (5,039,388)
                                                        ------------  ------------  ---------------
</TABLE>


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

                                   -44-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
FOR  THE  YEARS  ENDED  JUNE  30,  1998  AND  1997  AND  FOR
THE  PERIOD  FROM  JULY  1,  1989  (DATE  OF  RESUMPTION  OF  DEVELOPMENT
STAGE  ENTERPRISE  ACTIVITIES)  THROUGH  JUNE  30,  1998



<TABLE>
<CAPTION>

                                                                      Development Stage
                                                                      -----------------

                                                                                        Period from
                                                                                       July 1, 1989
                                                                                          Through
                                                              1998          1997       June 30, 1998
                                                           -----------  ------------  ---------------
<S>                                                        <C>          <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Advances from affiliates. . . . . . . . . . . . . . . .           -             -        2,009,127 
  Payments made to affiliates . . . . . . . . . . . . . .           -             -         (343,798)
  Proceeds from issuance of stock . . . . . . . . . . . .   6,370,002     1,840,301       26,336,515 
  Proceeds from warrant extensions. . . . . . . . . . . .           -             -          207,750 
  Proceeds from issuance of notes payable . . . . . . . .           -             -          870,043 
  Payments on long-term debt. . . . . . . . . . . . . . .    (672,000)     (185,631)      (2,093,979)
  Proceeds from convertible debenture . . . . . . . . . .           -             -          300,000 
  Payments on convertible debenture . . . . . . . . . . .           -             -                - 
                                                           -----------  ------------  ---------------

NET CASH PROVIDED BY FINANCING
 ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . .   5,698,002     1,654,670       27,285,658 
                                                           -----------  ------------  ---------------
Net Increase (Decrease) in Cash . . . . . . . . . . . . .     306,356    (1,164,354)         413,567 

Cash at Beginning of Period . . . . . . . . . . . . . . .     111,059     1,275,413            3,848 
                                                           -----------  ------------  ---------------

Cash at End of Period . . . . . . . . . . . . . . . . . .  $  417,415   $   111,059   $      417,415 
                                                           ===========  ============  ===============

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION
Cash paid during the year for interest (net of amounts
  capitalized). . . . . . . . . . . . . . . . . . . . . .  $    6,200   $   116,626   $      343,802 
                                                           ===========  ============  ===============

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES  (See Note 15)
</TABLE>

The accompanying notes are an integral part of these consolidated financial
 statements.
                                   -45-
<PAGE>
BRUSH  CREEK  MINING  AND  DEVELOPMENT  COMPANY,  INC.
AND  SUBSIDIARY
(A  DEVELOPMENT  STAGE  ENTERPRISE)
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS



NOTE  1  -  OPERATIONS  AND  BASIS  OF  PRESENTATION
            ----------------------------------------

Brush  Creek Mining and Development Company, Inc. (the Company) was incorporated
in 1982 and operated as a mining and mineral development company until April 17,
1989,  at  which  time  its  mining  operations, all of which had been conducted
through  the  Brush  Creek  Joint  Venture  (BCJV)  (40% owned) were terminated.
Shortly  thereafter, the Company became actively engaged in acquiring additional
mineral  properties,  raising  capital,  and  preparing  properties  for resumed
production.    The Company did not have any significant operations or activities
from  April  17,  1989 through June 30, 1989 and suspended all mining operations
and  reduced  its  activities to a care and maintenance level.  Accordingly, the
Company  is  deemed  to  have  reentered the development stage effective July 1,
1989.

In  February 1992, the Company began limited production at the Ruby Mine under a
permit  that  limited  mill  capacity  to  225  tons  per  day.   Production was
terminated  due  to  adverse  weather  conditions in December 1992.  The Company
resumed limited production at the Ruby Mine in July 1993 and gradually increased
production  until October 1996 when production was suspended. In early 1997, the
Company  began  preparing  the lower Brush Creek Mine for limited production. In
June  1997,  the Company received interim approval from the United States Forest
Service  to transport thirty tons of ore per day from the lower Brush Creek Mine
to  the Ruby mill site. The Company has not commenced economic production and is
therefore  still  considered  to  be  in  the  development  stage.

The Company's consolidated financial statements have been presented on the basis
that  it  is  a going concern, which contemplates the realization of the mineral
properties  and  other  assets and the satisfaction of liabilities in the normal
course  of  business.  The  Company  has  incurred  losses  of  $50,059,368 from
inception  to  June  30,  1998. The Company has not realized economic production
from  its  mineral  properties  as  of  June  30,  1998.    These  factors raise
substantial  doubt  about  the Company's ability to continue as a going concern.
Management  continues  to  actively  seek  additional sources of capital to fund
current  and  future  operations. There is no assurance that the Company will be
successful  in  continuing to raise additional capital, establishing probable or
proven  ore  reserves,  or  determining  if  the mineral properties can be mined
economically.  Additionally,  the Company is in default on the leases of certain
of  its mining properties. The lessors have not taken action to foreclose on the
leases  and  the  Company  is making every effort to fulfill the agreements. The
loss  of these leases would have a material adverse effect on the Company. These
consolidated  financial  statements  do  not  include any adjustments that might
result  from  the  outcome  of  these  uncertainties.


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
            ----------------------------------------------

Principles  of  Consolidation
-----------------------------

The  consolidated  financial  statements include the accounts of the Company and
its  wholly  owned  subsidiaries,  B.  Creek  Acquisition  Corporation and Alpha
Hardware.  All  material  intercompany  accounts  and  transactions  have  been
eliminated.

Use  of  Estimates
------------------

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

                                   -46-
<PAGE>
NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)
            ----------------------------------------------

Mineral  Properties  and  Mining  Equipment
-------------------------------------------

Mineral  properties  and  mining  equipment  include  land  (and  in prior years
development  costs)  and  mining  equipment  carried  at cost.  Mining equipment
including  mill  facilities  is  depreciated using the straight-line method over
estimated useful lives of 5 to 15 years, or the units-of-production method based
on  estimated  tons  of  ore reserves if the equipment is located at a producing
property  with  a shorter economic life.  Mining equipment not in service is not
depreciated.

In  the  past,  the  Company  deferred  direct costs related to the acquisition,
exploration and development of mineral properties pending determination of their
economic  viability which normally entails performing an in-depth geological and
geophysical study. If no minable ore body was discovered, previously capitalized
costs  were  expensed  in  the  period  the  property was abandoned. Any revenue
generated from pre-production activities was offset against the related deferred
development  and  pre-production costs. When a property was placed in commercial
production,  such  deferred  costs  were  depleted using the units-of-production
method.

During  1997,  the  Securities  and Exchange Commission (SEC) staff reconsidered
existing  accounting  practices for mineral expenditures by United States junior
mining  companies.  They  now interpret generally accepted accounting policy for
junior mining companies to permit capitalization of acquisition, exploration and
development  costs  only  after  persuasive  engineering evidence is obtained to
support  recoverability  of  these  costs  (ideally upon determination of proven
and/or  probable  reserves  based  upon  dense  drilling samples and feasibility
studies  by  a  recognized  independent  engineer).  Although  the  Company  has
performed  drilling  samples,  and  an  independent engineer has deemed the gold
properties contain profitable reserves in excess of property and equipment costs
incurred  through  June  30,  1998,  management  has  chosen  to follow the more
conservative  method  of accounting by expending the previously capitalized gold
mineral  costs,  for  which there is no feasibility study, for the year June 30,
1997.

Land  Options
-------------

In prior years it was the Company's policy to record land options at cost during
the  initial  year  of the lease on the mining properties. As noted above, since
the  Company  interprets  generally  accepted  accounting  policies  to  permit
capitalization of acquisition costs including leases and land options only after
persuasive  engineering  evidence has been obtained to support recoverability of
these  costs,  these  costs  will  now  be  expensed,  effective  July  1, 1996.

Asset  Impairment
-----------------

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be  Disposed of," (SFAS 121), management of the Company reviews the net carrying
value  of  the Northern California mines and development properties on a regular
quarterly  basis.  Estimated future net cash flows from each mine are calculated
using  estimated  future  prices, operating capital, and reclamation costs on an
undescended basis. Reductions in the carrying value of each mine are recorded to
the  extent  the net book value of the investment exceeds the estimate of future
discounted  net  cash  flows.

The  recoverability  of  the carrying value of development projects is evaluated
based  upon  persuasive  engineering evidence of estimated future net cash flows
from  each property, determined as described above, using estimates of contained
mineralization expected to be classified as proven and/or probable reserves upon
completion  of  a  feasibility  study.  Reductions in the carrying value of each
property  are  recorded  to the extent that the Company's carrying value in each
property exceeds management's estimate of future discounted net cash flows. When
mining  equipment is idle, management decides if it will be used productively in
the  future.  For  idle  equipment  that  is  unique to an abandoned or impaired
property,  the  Company  reduces  its  carrying  value  following the impairment
accounting  principle.

                                   -47-
<PAGE>
NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)
            ----------------------------------------------

Asset  Impairment  (Continued)
-----------------

Management's estimates of gold prices, recoverable proven and probable reserves,
operating  capital,  and  reclamation  costs  are  subject  to certain risks and
uncertainties which may affect the recoverability of the Company's investment in
property,  plant,  and equipment. Although management has made its best estimate
of  these  factors  based  on current conditions, it is reasonably possible that
changes  could  occur in the near term which could adversely affect management's
estimate  of  the  net  cash  flow expected to be generated from its operations.

Office  Furniture  and  Equipment
---------------------------------

Office furniture and equipment are recorded at cost. Depreciation is computed by
the straight-line method based upon the estimated useful lives of the respective
assets,  generally  three  to  five  years.

Income  (Loss)  per  Common  Stock
----------------------------------

Income  (loss)  per  share  of  common  stock  is computed based on the weighted
average  number  of  shares  outstanding.    Warrants,  options  and convertible
debentures  have  not  been included in the calculation as their effect would be
anti-dilutive.  All common shares included in the financial statements reflect a
reverse  stock  split  of  10:1,  which  the Board of Directors approved and was
effective  as  of  May  8,  1998.

Reclamation  and  Environmental  Costs
--------------------------------------

Reclamation costs and related accruals are based on the Company's interpretation
of  environmental  and  regulatory  requirements.  Minimum  standards  for  mine
reclamation have been established by various governmental agencies. Reclamation,
site restoration, and closure costs for each producing mine are accrued over the
life  of  the  mine  using  the  units-of-production method. Ongoing reclamation
activities  are  expensed  in  the  period  incurred.

Income  Taxes
-------------

The  Company accounts for income taxes using the liability method which requires
recognition  of  deferred tax liabilities and assets for the expected future tax
consequences  of  events  that have been included in the financial statements or
tax  returns.  Deferred  tax  assets and liabilities are determined based on the
difference  between  the  financial  statements  and  tax  basis  of  assets and
liabilities  using  enacted  tax  rates  in  effect  for  the  year in which the
differences  are  expected  to  reverse.

Inventory
---------

Gold  inventory  is  stated  at  net  realizable  value.

Stock  Based  Compensation
--------------------------

In  October  1995,  the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  123,  "Accounting  for  Stock-Based
Compensation,"  (SFAS  123),  which  is  effective  for  periods beginning after
December  15,  1995.  SFAS  123  requires  that  companies  either  recognize
compensation  expense  for  grants  of  stock,  stock  options, and other equity
instruments  based on fair value or provide proforma disclosure of the effect on
net  income and earnings per share in the Notes to the Financial Statements. The
Company  intends  to  continue to account for its stock-based compensation under
Accounting  Principles  Board  No.  25;  however,  the  Company  has adopted the
disclosure  provisions  of  SFAS  123  for  the fiscal year ended June 30, 1998.

Cash  and  Cash  Equivalents
----------------------------

For  purposes  of reporting cash flows, cash and cash equivalents include highly
liquid  debt  instruments purchased with a maturity of three months or less.  Of
the  $417,419  cash balance at June 30, 1998, $317,419was not covered by Federal
Depository  Insurance.
                                   -48-
<PAGE>
NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)
            ----------------------------------------------

Earnings  Per  Share
--------------------

In  February  1997,  the  Financial  Accounting  Standards  Board  (FASB) issued
Statement  of  Financial  Accounting Standards No. 128 (SFAS 128), "Earnings Per
Share",  which was adopted by the Company for the year ended June 30, 1997. SFAS
128  replaces the presentation of primary earnings per share with a presentation
of  basic  earnings  per  share based upon the weighted average number of common
shares  for  the  period.

Leases
------

The  Company  leases  office space and mining properties under operating leases.
All  of  the Company's leased mining properties contain certain provisions which
provide  the Company with the option to purchase the property at a predetermined
price or to renew the lease at a predetermined price. The Company is required to
pay  all  taxes,  insurance,  and  maintenance  on  leased  mining  properties.

New  Accounting  Pronouncements
-------------------------------

In  June  1997,  the FASB issued Statement of Financial Accounting Standards No.
130  (SFAS  130),  Reporting Comprehensive Income.  This statement requires that
all  items  that  are  required  to  be recognized under accounting standards as
components  of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.  SFAS 130 will
be  adopted  by  the Company for the year ended December 31, 1998.  Prior period
financial  statements provided for comparative purposes will be reclassified, as
required.    Upon  adoption,  the  Company  does  not  expect SFAS 130 to have a
material effect upon the Company's financial condition or results of operations.

In  June  1997, the FASB issued Statements of Financial Accounting Standards No.
131  (SFAS  131),  Disclosures  about  Segments  of  an  Enterprise  and Related
Information.  The statement requires the Company to report income/loss, revenue,
expense  and  assets  by  business  segment  including information regarding the
revenues  derived from specific products and services and about the countries in
which  the  Company  is operating.  The Statement also requires that the Company
report  descriptive  information  about  the  way  that  operating segments were
determined,  the  products  and  services  provided  by  the operating segments,
differences  between  the measurements used in reporting segment information and
those used in the Company's general-purpose financial statements, and changes in
the  measurement  of  segment  amounts from period to period.  SFAS 131 has been
adopted by the Company for the year ended December 31, 1998.  This statement has
no  effect  on  financial statements traditionally presented by the Company, but
increases  required  disclosures.


NOTE  3  -  AFFILIATES  AND  RELATED  PARTIES
            ---------------------------------

Significant relationships with (1) companies affiliated through common ownership
and/or  management,  and  (2)  other  related  parties  are  as  follows:

In  prior  years  the  Company  entered  into  a  number  of  relationships with
California  Properties,  Independent  Sierra  Gold Mines (ISGM) and Consolidated
Sierra  Gold  Mines (CSGM) at times when Ms. Simone Anderson was (i) an officer,
director  and  substantial  shareholder  of  the  Company,  (ii)  an officer and
director  of  California  Properties and its wholly-owned subsidiary Sierra Gold
Properties, Inc., and (iii) the sole shareholder of ISGM and CSGM.   The Company
has  terminated  its  relationships  with  these  entities,  and  the  Company
understands  that  Ms.  Anderson and her affiliates no longer hold 5% or more of
the  Company's  securities.

The  former  chief  executive  officer  and  director  of the Company, Mr. James
Anderson,  who  is  the  spouse  of  the  individual  discussed  in the previous
paragraph,  is a director of California Properties and director and president of
ISGM  and  CSGM.   Mr. James Anderson is also the chief executive officer of the
Moscow  Country  Club.

                                   -49-
<PAGE>
NOTE  3  -  AFFILIATES  AND  RELATED  PARTIES  (Continued)
            ---------------------------------

On  October  18, 1993, the Company entered into a severance agreement with James
Anderson,  the  former  chief executive officer and director of the Company.  In
total  satisfaction  of all amounts owing Anderson, the Company issued 1,500,000
shares  of  its  common  stock to Anderson, 800,000 shares of which have already
been  issued  to  Anderson.    The remaining 700,000 shares are being held in an
escrow  account  until certain conditions are met.  Included in these conditions
is  the  payment  of approximately $80,000 owed to the Company by entities under
the  direct or indirect control by Anderson.  These amounts were not repaid. The
700,000  shares  remain  in  escrow.

Mr.  Georges  Benarroch, who previously served as a director of the Company from
August  1990  to  May 1991 and was an officer of the Company during a portion of
that  period,  has  a  controlling  interest  in  Euro  Canadian,  a  Canadian
corporation.

During  the  year  ended June 30, 1995, the Company borrowed a total of $143,821
from  two  stockholders  and  two  Directors. The loans were used to provide the
Company  with  working  capital.  The  loans  were secured by gold inventory and
equipment.  The loans were repaid in full, including interest at 8.5% per annum.


NOTE  4  -  STOCK  PURCHASE  PRICE  ADJUSTMENTS
            -----------------------------------

During  the  year  ended  June  30,  1996,  the  Company entered into investment
agreements  in  connection  with  offerings  of  its Common Stock in reliance on
Regulation  S under the Securities and Exchange Act of 1933, as amended. Several
of  these  agreements  contained purchase price adjustment clauses which require
that  the initial purchase price be adjusted up or down depending on the average
share  price  of the Company's Common Stock during a stated period, typically 45
days,  subsequent  to  the stock purchase closing date. The valuation period for
one  particular  transaction  ended  on  September 27, 1996, however, the actual
adjustment  was not resolved between the Company and the purchaser. As a result,
695,652 shares of common stock are currently being held in escrow, however, they
have  not  been  included  in  shares  outstanding at June 30, 1998. The Company
expects  to resolve this purchase price adjustment within 180 days from June 30,
1998,  and  will reflect additional shares issued, if any, as shares outstanding
valued  at  its  trading  price  on  the  date  released  to  the  purchaser.

In addition to purchase price adjustments, shares of Common Stock were issued at
various  times  during  1996 and 1997 pursuant to Regulation S of the Securities
and  Exchange Act of 1933 and Regulation D of the Securities and Exchange Act of
1933  at  discounts  of up to 50% from the closing bid price on the day prior to
the  sales.


NOTE  5  -  OFFICE  FURNITURE  AND  EQUIPMENT
            ---------------------------------

Office  furniture  and  equipment  consists  of  the following at June 30, 1998:
<TABLE>
<CAPTION>


<S>                             <C>
Office furniture and equipment  $  84,356 
Vehicles . . . . . . . . . . .    150,124 
                                ----------

                                  234,480 
Less accumulated depreciation.   (192,406)
                                ----------

                                $  42,074 
                                ==========
</TABLE>


Depreciation  expense  at  June  30, 1998, June 30, 1997 and for the period from
July  1,  1989  through  June  30,  1998  was  $22,358,  $40,806  and  $192,406,
respectively.


                                   -50-
<PAGE>
NOTE  6  -  MINERAL  PROPERTIES  AND  MINING  EQUIPMENT
            -------------------------------------------

The  Company's  net  investment in mineral properties and mining equipment as of
June  30,  1998  is  as  follows:
<TABLE>
<CAPTION>


                                               Development      Mining
                                      Land        Costs       Equipment       Total
                                   ----------  ------------  ------------  ------------
<S>                                <C>         <C>           <C>           <C>
Carson Mine . . . . . . . . . . .  $2,199,858  $          -  $    42,835   $ 2,242,693 
Brush Creek Mine. . . . . . . . .     408,496             -      403,171       811,667 
Gardners' Point and Pioneer Mines     185,477       770,327      128,521     1,084,325 
Ruby Mine . . . . . . . . . . . .           -             -    1,589,229     1,589,229 
High Commission Mine. . . . . . .     101,875             -            -       101,875 
                                   ----------  ------------  ------------  ------------

                                    2,895,706       770,327    2,163,756     5,829,789 
Accumulated depreciation. . . . .           -             -   (1,172,549)   (1,172,549)
                                   ----------  ------------  ------------  ------------

                                   $2,895,706  $    770,327  $   991,207   $ 4,657,240 
                                   ==========  ============  ============  ============
</TABLE>


All  of  the Company's mineral properties contain mines which were in production
previously.   All such mines, except for the Gardners's Point and Pioneer Mines,
are  located in the Allegheny-Forest-Downieville mining districts on the western
slope  of  the Sierra Nevada mountain range in Northern California and aggregate
approximately  6,300 acres.  Because of the close proximity of the mines to each
other,  the Company plans to centralize milling operations.  The Gardner's Point
and  Pioneer  Mines  are  located  outside this district and management has been
evaluating  alternatives  to  placing  them  into  current  production.  Current
developments  and  commitments  related  to  certain  properties  follow:

Land  Options
-------------

The  option to purchase the Ruby Mine began July 1, 1995 and terminates June 30,
2000,  purchase  price is $4,000,000. The option to purchase the Kate-Hardy Mine
began  in 1992 and terminates September 18, 1998, purchase price $1,500,000. The
option  to  purchase  the Rising Sun Mine began July 1, 1990 and terminates June
30,  2000,  purchase  price  is  $1,000,000.

Ruby  Mine
----------

During  1992,  the  Company  entered  into  an  option  agreement to  lease this
property in exchange for a total of 225,000 shares of the Company's common stock
with  a  value  of $112,500.  In 1990, the Company entered into a lease purchase
agreement,  for  this  property.  This  lease  was  modified  on March 27, 1997.
Pursuant  to  the terms of this lease, the Company must pay a 7-1/2% net smelter
royalty on all minerals produced from lode deposits and 10% on minerals produced
from  placer  deposits with a minimum lease payment of $13,066 per month through
June  30,  2000, subject to an adjustment based on the Consumer Price Index. The
lease  may  be extended for two additional five-year periods or the property may
be  purchased  for  $4,000,000 subject to adjustment based on the Consumer Price
Index payable by June 30, 2000. All payments made subsequent to July 1, 1995, to
acquire  the  lease/option  and  all payments made under the lease subsequent to
July  1,  1995,  will be credited against the option purchase price. Performance
under the lease purchase agreement is secured by the Company's equipment used in
the  mining  operations  on  these  leased  premises. The net book value of this
equipment  was  approximately  $991,207  at  June  30,  1998.

                                   -51-
<PAGE>
NOTE  6  -  MINERAL  PROPERTIES  AND  MINING  EQUIPMENT  (Continued)
            -------------------------------------------

The  Rising  Sun  Mine
----------------------

In December of 1989, the Company issued 10,000 shares of its common stock for an
option  to  lease  the Rising Sun Mine.  On June 30, 1990, the Company exercised
the  option upon payment of $20,000 cash and entered into a five year lease with
an  option to purchase.  Pursuant to the terms of the lease, which were modified
on  November  11,  1994, the Company must pay a net smelter royalty of 8% on all
minerals  produced  with a minimum royalty of $4,590 per month, through June 30,
2000,  subject to an adjustment based on the Consumer Price Index.  The property
may  be  purchased for $1,000,000 payable on or before June 30, 2000, subject to
adjustment  based on the Consumer Price Index.  All payments made to acquire the
lease/option  and all payments made under the lease will be credited against the
option  purchase  price.

Ruby  Mine  and  Rising  Sun  Mine  -  1997  Modification  Agreement
--------------------------------------------------------------------

During  1997,  the  Company negotiated modification agreements for the Ruby Mine
and  the  Rising  Sun  Mine to pay, in cash, one month lease payment in arrears,
increase  the  amount  of equipment held as collateral pursuant to the Ruby Mine
and  the  Rising  Sun Mine lease agreements by filing UCC-1 financing statements
listing  the  additional equipment (as noted above, this equipment is located on
the  Ruby Mine property and secures the performance of the Ruby Mine lease), all
right,  title and interest of certain "ore specimens" for which Ruby Development
Co.,  Inc.  will  credit the value against past due minimum royalty payments and
grant  Ruby  Development  Co., Inc. an option to purchase up to 50,000 shares of
the  Company's  common  stock  at  a price of $.25 per share until July 1, 1999.

At June 30, 1998, the Company owed approximately $720,000 on the Ruby Mine lease
and  approximately  $25,000 on the Rising Sun lease which constitutes default on
the  agreements.  The  outstanding  balances are included in accounts payable at
June  30,  1998.

A  valuation  allowance  to reduce the carrying balance of capitalized land/land
options  and  development costs associated with these leases was not recorded in
the  past.  As  stated  in Note 1, the Company has expensed all land options and
treated  this  as  a  cumulative  effect  of change in accounting principle. The
Company's general default of the agreements places the Company at risk of losing
its  rights to mine at these locations. The valuation allowance required, should
the  lessor  take  action  to assert its right under the lease agreements, would
approximate  $4,205,854  for the Ruby Mine and $139,091 for the Rising Sun Mine.

Merger  with  Sierra  Gold  Properties,  Inc.  -  Kate-Hardy  Mine
------------------------------------------------------------------

In  January  1992,  the  shareholders of California Properties approved a merger
between  its  wholly  owned  subsidiary,  Sierra  Gold  and B. Creek Acquisition
Corporation,  a wholly owned subsidiary of the Company.  The merger was recorded
effective  March  31, 1992.  The Company issued 2,330,020 shares of common stock
with  a  value  of  $74,807  and  gave  up  certain  assets  and assumed certain
liabilities  totaling $175,193 in exchange for all of the common stock of Sierra
Gold.  Management  determined  the  value  of  Sierra  Gold's  assets  to  be
approximately  $250,000  at  the  time the letter of intent was entered into and
announced  in April 1989. Proforma results of operations for the interim periods
presented  are  not  shown  as  Sierra  Gold conducted no significant activities
during  these  periods.

The  primary  asset  of  Sierra  Gold,  a  lease  with  an option to acquire the
Kate-Hardy  Mine,  expired  on  April  24,  1992,  and  as  a result, during the
nine-months  ended  March  31,  1992,  the  Company  recognized  a  loss  on the
expiration of the lease of $250,000.  On June 30, 1992, the Company entered into
a  new lease, effective March 23, 1992, in the form of a mining option agreement
for  a  term  of  five  years  expiring  March 22, 1997.  During the term of the
option, the Company must pay a $50,000 payment (initial option payment) upon the
execution  of  the  agreement;  $5,500 per month for each month during the first
year; $6,500 per month during the second year; $7,500 per month during the third
year;  $8,500  per month during the fourth year; and $9,500 per month during the
fifth  year.   In addition, the Company must pay a 6% net smelter royalty on all
minerals  produced.    The option purchase price for the mine is $1,500,000 less
75%  of  all  option  payments  paid  up  to  a  maximum  of  $750,000.

                                   -52-
<PAGE>
NOTE  6  -  MINERAL  PROPERTIES  AND  MINING  EQUIPMENT  (Continued)
            -------------------------------------------

Merger  with  Sierra  Gold  Properties,  Inc.  -  Kate-Hardy  Mine  (Continued)
------------------------------------------------------------------

During  1997,  the  Company paid $10,000 to the Kate-Hardy Mine lessor to extend
the  lease agreement for an additional three month period. The extension expired
on  June  27,  1997.  Subsequent  to  this  expiration, the Company negotiated a
modification to the original agreement. Under this modification, the Company was
to  pay  $10,500  a  month in lease payments and had the option to purchase this
property  for  $1,500,000.  This  option  expires  on  September  18,  1998.

At June 30, 1998, the Company owed approximately $140,000 to the Kate-Hardy Mine
lessor.  The  outstanding  balance  is  included in accounts payable at June 30,
1998.

In  prior  years,  a  valuation  allowance  to  reduce  the  carrying balance of
capitalized  land/land  options  and  development  costs  associated  with  the
Kate-Hardy  Mine  lease  was  not recorded in the past. As stated in Note 1, the
Company has expensed all land options and treated this as a cumulative effect of
change  in  accounting  principle.  The Company's general default of the expired
agreement  and  the  lack  of  a current agreement places the Company at risk of
losing  its  rights  to mine at this location. The valuation allowance required,
should  the  lessor  take  action to assert its right under the lease agreement,
would  approximate  $156,456.

New  California  Placer  Mine  -  Sierra  County,  California
-------------------------------------------------------------

In  February 1997, the Company entered into an exploration license and option to
purchase  the  New California Mine for 20,000 shares of the Company's restricted
stock  and  $10,000 payable annually for up to a three year period. The purchase
price  is  $250,000  should the Company decide to exercise that option under the
agreement.

The  New  California  Mine is an unpatented placer mine containing approximately
800  acres  of  land  and  is located between Poker Flat and Gardners Point. The
unpatented claims are in good standing. Subsequent to June 30, 1998, the Company
transferred  this  property  back  to  the  lessor.

Wilbank's  Placer  and  Loade  Mine  -  Poker  Flat  Mining  District
---------------------------------------------------------------------

In  March  1997,  the  Company entered into an exploration license and option to
purchase  the  Wilbank's  claims for a $10,000 cash payment and $1,000 per month
during  the  option  period.  The  purchase price is $200,000 should the Company
exercise  that  option.  The  Company  has, under the terms of the agreement, an
additional  five  year  term  to  purchase  the property for $300,000 payable at
$2,000  per  month.  Subsequent  to  June 30, 1998, the Company transferred this
property  back  to  the  lessor.


NOTE  7  -  ACCOUNTS  PAYABLE  AND  ACCRUED  LIABILITIES
            --------------------------------------------

Accounts  payable  and  accrued liabilities consist of the following at June 30,
1998:
<TABLE>
<CAPTION>


<S>                        <C>
Accounts payable. . . . .  $1,299,836
Related party payables. .       7,826
Accrued payroll and other     172,191
                           ----------

                           $1,479,853
                           ==========
</TABLE>


No  unused  lines  of  credit  exist.

                                   -53-
<PAGE>
NOTE  8  -  INCOME  TAXES
            -------------

At June 30, 1998, the Company had available net operating loss carryforwards for
financial  statement  and  federal  income  tax  purposes  of  approximately
$25,000,000.  These  loss  carryforwards  expire  between  1999  and  2010.

The  Company  has  reported  income tax losses of approximately $35,000 in prior
years.  In  general,  income  tax  losses are carried forward to future years to
reduce  future  income  taxes.

In the case of  a loss corporation which changes more than 50% of its ownership,
Internal  Revenue  Code Section 382 limits the amount carried forward to a small
percentage  of  the  fair  market  value  of the corporation's stock immediately
before  the  ownership  change.  The Company's 1989 ownership change reduced the
amount  of  the  pre-change  loss  carryforward from approximately $6,000,000 to
approximately  $70,000.

A  valuation  allowance  of approximately $8,500,000 has been provided to offset
the  benefit  of  approximately  $8,500,000  from the remaining $25,000,000 loss
carryforwards.  This  valuation allowance is necessary because at June 30, 1998,
the  available  benefits  are  more likely than not to expire before they can be
used.


NOTE  9  -  SHAREHOLDERS'  EQUITY
            ---------------------

During  fiscal  1998,  the  following  major  equity  transactions  occurred:

                                   -54-
<PAGE>
  The  Company effected a 10 for 1 reverse stock split. To effect the split, the
Company's  authorized,  issued,  and  outstanding  no par stock was reduced from
53,705,482  to  5,504,179.

 At  year  end,  the Company shareholders' equity had increased 2,673,600 and is
carried  as  subscribed  common  stock.

 The  Company sold 1,867,131 shares of Common Stock for $2,224,599. These shares
were  sold  pursuant  to  Regulation  S  of  the  Securities  Act  of  1933.

 The  Company  issued 500,000 shares of Common Stock with a value of $3,250,001.
The  shares  were registered with the Securities and Exchange Commission on Form
S-8.

 The  following  shares  were  sold  under  Regulation D and Section 4(2) of the
Securities  Act  of 1933. Investors who acquires such shares were required to be
accredited  investors. The Company has agreed to register the shares pursuant to
a  registration  statement  to  be  filed  with  the  Securities  and  Exchange
Commission.  The Company sold 600,000 restricted shares of Common Stock at $.125
per  share  wherein  the  Company  received  net  proceeds of $75,000; 1,822,221
restricted shares of Common Stock at $.15 per share wherein the Company received
net  proceeds  of  $290,000; 4,300,000 restricted shares of Common Stock at $.07
per  share  wherein  the  Company  received  net proceeds of $301,000; 6,600,000
restricted shares of Common Stock at $.10 per share wherein the Company received
net  proceeds of $660,000; 670,000 restricted shares of Common Stock at $.50 per
share wherein the Company received net proceeds of $335,000; 1,750,00 restricted
shares  of  Common  Stock  at  $.184  per share wherein the Company received net
proceeds of $322,000; 60,000 restricted shares of Common Stock at $.50 per share
wherein  the  Company  received  net  proceeds  of $30,000; 1,150,000 restricted
shares  of  Common  Stock  at  $.184  per share wherein the Company received net
proceeds  of  $211,600.  The Company sold 5,000,001 shares of Common Stock under
Regulation  S  at  $.65  per  share wherein the Company received net proceeds of
$3,250,000.

During  fiscal  1997,  the  following  major  equity  transactions  occurred:

 The  Company  sold  286,756 shares of Common Stock for $1,016,250. These shares
were  sold  pursuant  to  Regulation  S  of  the  Securities  Act  of  1933.

 The  Company  issued  2,000  shares  of  Common Stock with a value of $5,200 in
connection  with  its  acquisition  of  the  New  California  Placer  Mine.

                                   -55-
<PAGE>
NOTE  9  -  SHAREHOLDERS'  EQUITY  (Continued)
            ---------------------

 The  Company  issued 16,500 shares of Common Stock with a value of $41,250. The
shares  were registered with the Securities and Exchange Commission on Form S-8.

 Shareholders' equity increased by $1,200,000 as shares issued in the prior year
were  used to settle the Zuri Invest litigation. See 100,000 shares below issued
in  1996.

 The  Company sold 360,001 restricted shares of Common Stock at $.0625 per share
wherein the Company received net proceeds of $225,000; 660,000 restricted shares
of  Common  Stock at $.07 per share wherein the Company received net proceeds of
$460,600;  175,455  restricted  shares of Common Stock at $.11 per share wherein
the  Company  received  net  proceeds  of $193,000; 140,000 restricted shares of
Common  Stock  at  $.125  per share wherein the Company received net proceeds of
$175,000.  All  shares  were  sold  under  Regulation  D and Section 4(2) of the
Securities  Act  of 1933. Investors who acquired such shares were required to be
accredited  investors. The Company has agreed to register the shares pursuant to
a  registration  statement  to  be  filed  with  the  Securities  and  Exchange
Commission.

During  fiscal  1996,  the  following  major  equity  transactions  occurred:

 The  Company  sold  678,350 shares of Common Stock for $6,875,416. These shares
were  sold  pursuant  to  Regulation  S  of  the  Securities  Act  of  1933.

 The  Company  issued  110,000  shares  as partial settlement of the Zuri Invest
litigation.  These shares were held in trust by the adverse party. The stock was
forfeited  and  was  valued  at  fair market value on the forfeit date, i.e. the
trading  price.

 The  Company  issued  21,667  shares as partial settlement of the Royal Bank of
Scotland  litigation.

During  fiscal  1995,  the  following  major  equity  transactions  occurred:

 The  Company  sold  256,667 shares of Common Stock for $3,696,457. These shares
were  sold  pursuant  to  Regulation  S  of  the  Securities  Act  of  1933.

During  fiscal  1994,  the  following  major  equity  transactions  occurred:

 The Company issued 21,510 shares of Common Stock in exchange for certain legal,
engineering,  consulting,  and  employment  services  rendered  to  the  Company
totaling  $938,159.(*)

 The  Company  issued shares of the Company's Common Stock pursuant to a service
agreement  with  James  Anderson  totaling  $421,875.

 The  Board  of Directors of the Company approved a 15-for-1 reserve stock split
effective  November  29,  1993.

During  fiscal  1993,  the  following  major  equity  transactions  occurred:

 The  Company  issued  53,940  shares  of  Common  Stock  in connection with its
acquisition  of  Trans-Russian.    Total  reduction in equity in relation to the
acquisition  was  $84,176.(*)

 In  connection  with  its mining properties, the Company issued 3,729 shares of
Common Stock for accrued lease payments of $107,710, prepayment of certain lease
expenses  of  $113,153,  and  acquisition  of  mining  equipment  of $34,375.(*)

 The  Company  issued  10,514 shares of Common Stock with a value of $713,494 in
satisfaction  of  outstanding  debt  obligations  amounting  to  $558,592.(*)

                                   -56-
<PAGE>
NOTE  9  -  SHAREHOLDERS'  EQUITY  -  (Continued)
            ---------------------

 The  Company  issued  10,026 shares of Common Stock with a value of $500,285 in
satisfaction  of  the  Company's  obligation  to  CSGM  of  $574,750.(*)

 The Company issued 18,319 shares of Common Stock in exchange for certain legal,
engineering,  consulting,  and  employment  services  rendered  to  the  Company
totaling  $1,616,659.(*)

 The  Company  sold  1,066 shares of stock at $7.50 per share, totaling $80,000.

 The  Company  issued  3,334  shares of Common Stock pursuant to the exercise of
options  in  settlement  of  debt  to  CSGM  of  $250,000.(*)

During  fiscal  1992,  the  following  major  equity  transactions  occurred:

 The  Company  issued  15,534  shares  of  Common  Stock  in connection with its
acquisition  of  Sierra  Gold  and the related options on mineral properties for
$74,807.(*)

 The  Company  issued  1,031  shares  of  Common  Stock  in  connection with its
acquisition  of  the Kate-hardy Mine for $88,667 and prepayment of certain lease
expenses  of  $66,000.(*)

 In  connection with its lease on the Ruby Mine, the Company issued 2,480 shares
of  Common  Stock  for:  accrued  lease payments of $72,502, prepayment of lease
obligation  of  $63,287,  and  modification  and  extension  to  lease  term  of
$154,836.(*)

 In  connection  with  its  lease on the Rising Sun Mine, the Company issued 533
shares  of  Common  Stock  for  accrued lease payments of $22,002, prepayment of
lease  obligation  of  $18,687,  and modification and extension to lease term of
$4,111.(*)

 The  Company issued 2,444 shares of Common Stock in satisfaction of outstanding
debt  obligations  amounting  to  $336,617.(*)

 The  Company  issued  88000  shares of Common Stock with a value of $748,750 to
CSGM  in  satisfaction  of  the  Company's  obligation  to  CSGM of $900,000.(*)

 The Company issued 11,791 shares of Common Stock in exchange for certain legal,
engineering,  and  employment  services  rendered  to  the  Company  totaling
$1,286,852.(*)

 In May 1992, the Company entered into a three-year consulting contract with Mr.
Anderson  in  exchange  for issuing 6,667 shares of Common Stock with a value of
$531,250.(*)

 Ms. Anderson paid expenses on behalf of the Company amounting to $105,055. This
amount  and  the  proceeds  received  from the extension of warrants of $207,750
totaling  $312,805  is  accounted  for  as  a  contribution  of  capital.

 The  Company made several private placements of a total of 14,210 shares of its
Common Stock at prices ranging from $.90 to $1.50 per share totaling $2,298,451,
net  of  offering  costs  of  $177,974.

During  fiscal  1991,  the  following  major  equity  transactions  occurred:

 On  June  29,  1990,  the  Company  sold  13,173  units for $987,955. Each unit
consisted  of  one  share of Common Stock and a warrant to purchase one share of
Common  Stock.  The Company's previous chairman, Mr. Benarroch, is the president
of  the  underwriter,  Euro  Canadian,  in  this  transaction,  which received a
commission  of $98,796. The underwriter also received warrants to purchase 3,334
shares  of  the  Company's Common Stock at $.50 through July 1992. In July 1990,
the Company sold an additional 14,161 units. The Company received $910,840 after
offering  expenses.  Warrants  covering  25,333  shares  are exercisable at $.70
through  June  1992,  and warrants covering 2,000 shares are exercisable at $.90
through  June  1992.
                                   -57-
<PAGE>
NOTE  9  -  SHAREHOLDERS'  EQUITY  -  (Continued)
            ---------------------

 On  June  26,  1990,  the Company's Board of Directors approved the issuance of
7,376  units  to ISGM and CSGM in satisfaction of the Company's debt of $553,242
to these entities. Each unit consists of one share of the Company's Common Stock
and  one  warrant  to purchase one share of stock at $.50 per share, exercisable
through  July  1992. As of December 31, 1990, these units had not been delivered
due to administrative delays. As an inducement to the approval of the consulting
agreement  described below, CSGM and ISGM agreed to cancel the units approved by
the  Board  of  Directors  on  June  26,  1990.

 On  January  23, 1991, the Company entered into an agreement with CSGM and ISGM
whereby CSGM and ISGM are obligated to render consulting services to the Company
to assist the Company in the acquisition of mining properties, identification of
and  negotiation with the Company's creditors, and other day-to-day business and
administrative tasks. In exchange for rendering consulting services, the Company
agreed  to  issue 12,000 shares of its Common Stock to CSGM. As the market value
of  the shares issued was approximately equal to that of the units canceled, the
issuance  of  the  shares  has  been  treated  as a replacement of the units for
accounting  purposes.(*)

 In  January  1991,  an  additional  4,927 shares of Common Stock were issued to
third  parties.  These  shares,  valued  at  fair market value of $630,568, were
issued  for  legal  and consulting services rendered and the repayment of a note
payable  issued  for  services  of  $114,560.(*)

 The  Company agreed to issue 2,000 shares of Common Stock valued at fair market
value  of  $581,250  to  an  engineering  firm  for past and future services.(*)

 The  Company  entered  into a litigation settlement with Mr. Benarroch, whereby
6,667  shares  of  the  Company's  outstanding Common Stock were returned to the
Company  and,  simultaneously,  the  Company issued back to Mr. Benarroch 10,000
shares,  valued at fair market value of $1.75 per share. The settlement resulted
in  a  net  issuance  of  3,333  shares  of  Common Stock valued at $875,000.(*)

 During  fiscal  1990,  the  Company initiated a private placement of its Common
Stock.  In  April  1990,  the  Company  sold  15,000  shares  for  $450,000.

 In  March  1990,  Ms. Anderson sold 6,667 shares of her Common Stock to Sungold
Mining  Corp. (Sungold) for $10,000 as an inducement for an affiliate of Sungold
to  lend  the  Company  $140,000.(*)

 In  March  and  May  1990,  the Company issued 23,500 shares of Common Stock in
exchange  for  legal  services  valued  at  $72,500.(*)

(*)      For each issuance involving noncash consideration, the Company recorded
the  fair  market  value  of  the  shares  issued as the consideration received.

                                   -58-
<PAGE>
NOTE  10  -  STOCK  OPTIONS  AND  WARRANTS
             -----------------------------

The  Company  has  an  incentive stock option plan under which five and ten-year
options  may  be  granted to key employees to purchase up to 3,333 shares of the
Company's  Common  Stock  at the market price on the date of grant.  At June 30,
1998,  no options had been granted under this plan.  A total of 33,333 shares of
the  Company's  unissued  Common  Stock  has  been  reserved  for  this  plan.

The  Company  has  a  nonqualified  stock  option  plan,  under which options to
purchase  a  total  of  1,186,000 shares from $.23 to $4.13 were outstanding and
exercisable  at  June  30,  1998.

The Company applies APB Opinion 25 and related interpretations in accounting for
its  stock  option  plan. The Company also applies principles from the consensus
reached  in  EITF 87-33 on stock option re-pricing transactions. The Company did
cancel certain stock options and grant new stock options during the prior fiscal
year  but  these  transactions were not considered to be stock option re-pricing
transactions  as  defined  by  EITF  87-33.  The consensus reached by EITF 87-33
applies to the cancellation of an existing original option and the granting of a
new  option that contains terms identical to the remaining terms of the original
option  except  that the exercise price is reduced. The terms of the new options
granted by the Company were not identical to the remaining terms of the original
options.  Accordingly,  compensation cost has been recognized for the difference
between  the  market value of the stock at the date of issuance and the exercise
price  of the new stock options granted. Had compensation cost for the Company's
stock-based  compensation  plan  been  determined based on the fair value at the
grant dates for awards under the plan consistent with the provision of SFAS 123,
the  Company's  net income and earnings per share would have been reduced to the
pro  forma  amounts  indicated  below:
<TABLE>
<CAPTION>


                                            1998          1997
                                        ------------  -------------
<S>                        <C>          <C>           <C>
Net Loss. . . . . . . . .  As reported  $(5,386,831)  $ (9,681,535)
                           Pro forma    $(5,386,831)  $(10,609,426)
Net loss per common share  As reported  $      (.12)  $       (.47)
                           Pro forma    $      (.12)  $       (.51)
</TABLE>


The  fair  value of the option grant was estimated on the date of granting using
the  Black-Scholes American option-pricing model with the following assumptions:
risk-free  interest  rate  of 7.5 percent, dividend yield rate of zero, expected
life  of  5.0  years,  and  volatility  of  83.6  percent.

                                   -59-
<PAGE>
NOTE  10  -  STOCK  OPTIONS  AND  WARRANTS  (Continued)
             -----------------------------

A  summary  of the status of the Company's stock option plan as of June 30, 1998
and  1997, and changes during the years ending on those dates is presented below
as  effected  by  1:10  stock  split:

1998
----
<TABLE>
<CAPTION>


                                                                          Weighted
                                                                           Average
                                                                          Exercise
                                                                 Shares     Price
                                                                --------  ---------
<S>                                                             <C>       <C>
Fixed Options
  Outstanding at beginning of year
    Granted. . . . . . . . . . . . . . . . . . . . . . . . . .  186,000 
    Expired. . . . . . . . . . . . . . . . . . . . . . . . . .  (10,000)  $   20.00
    Exercised. . . . . . . . . . . . . . . . . . . . . . . . .        - 
                                                                --------           

  Outstanding at end of year . . . . . . . . . . . . . . . . .  176,000 
                                                                ========           

Options exercisable at year end. . . . . . . . . . . . . . . .  176,000 
                                                                ========           

Weighted-average fair value of options granted during the year  N/A
                                                                ========           
</TABLE>


1997
----
<TABLE>
<CAPTION>


                                                                           Weighted
                                                                           Average
                                                                           Exercise
                                                                 Shares     Price
                                                                ---------  --------
<S>                                                             <C>        <C>
Fixed Options
  Outstanding at beginning of year . . . . . . . . . . . . . .   105,100 
    Granted. . . . . . . . . . . . . . . . . . . . . . . . . .   101,000       2.30
    Canceled . . . . . . . . . . . . . . . . . . . . . . . . .   (87,500)     20.27
    Exercised. . . . . . . . . . . . . . . . . . . . . . . . .         - 
                                                                ---------          

  Outstanding at end of year . . . . . . . . . . . . . . . . .   186,000 
                                                                =========          

Options exercisable at year end. . . . . . . . . . . . . . . .   186,000 
                                                                =========          

Weighted-average fair value of options granted during the year  $   1.80 
                                                                =========          
</TABLE>



                                   -60-
<PAGE>
NOTE  10  -  STOCK  OPTIONS  AND  WARRANTS  (Continued)
             -----------------------------

The following table summarizes information about fixed stock options outstanding
at  June  30,  1998:
<TABLE>
<CAPTION>

                            Options Outstanding               Options Exercisable
                            -------------------               -------------------

                                  Weighted-
                                   Average
                     Number       Remaining      Weighted-         Number        Weighted-
Range of         Outstanding at  Contractual      Average      Outstanding at     Average
Exercise Prices  June 30, 1998   Life (Years)  Exercise Price  June 30, 1998   Exercise Price
---------------  --------------  ------------  --------------  --------------  --------------
<S>              <C>             <C>           <C>             <C>             <C>
2.00-26.30. . .           9,400           .63               -           9,400               -
8.50-41.30. . .           7,200          2.29           20.00           7,200           20.00
2.30. . . . . .           9,600          3.74            2.30           9,600            2.30
2.50. . . . . .           5,000          1.00            2.50           5,000            2.50
</TABLE>



NOTE  11  -  RESTATEMENT  OF  PRIOR  YEAR
             ----------------------------

Change  for  New  Pronouncement
-------------------------------
<TABLE>
<CAPTION>


                                                                    1997
                                                                ------------
<S>                                                             <C>
Accumulated deficit through the development stage July 1, 1997
  As previously reported . . . . . . . . . . . . . . . . . . .  $ 7,813,318 
Adjustment for impairment of development costs under FAS 121 .   (5,393,115)
                                                                ------------
Balance at July 1, 1997. . . . . . . . . . . . . . . . . . . .  $ 2,420,203 
                                                                ============
</TABLE>



NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES
             -------------------------------

Lease  expense  consists  principally  of  an  operating lease for the Company's
office  building  which  calls  for  monthly  payments  of $2,500 from June 1989
through  May  1994.    The  rent  is subject to annual adjustment based upon the
Consumer  Price  Index.  Rent expense for the years ended June 30, 1998 and 1997
was  approximately  $30,000.

See  Note  6  regarding  mineral  property  commitments.

The  Company's  mining and exploration activities are subject to various federal
and  state  laws  and  regulations  governing the protection of the environment.
These  laws  and regulations are continually changing and are generally becoming
more  restrictive.  The  Company  conducts  its  operations so as to protect the
public health and environment and believes its operations are in compliance with
all  applicable  laws and regulations. The Company has made, and expects to make
in  the  future,  expenditures  to  comply  with  such laws and regulations. The
Company  cannot  predict  such  future  expenditures.

                                   -61-
<PAGE>
NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES  (Continued)
             -------------------------------

The Company contracted with an outside consultant to develop a cost estimate for
future  reclamation  costs  on  the  Gardner's  Point  Mine.  This  estimate was
developed  pursuant  to SMARA guidelines and required for submission to the lead
agency  and  the  Department  of Conservation as the Company develops a plan for
future  mining  at  this  site.  Future  reclamation  costs  are estimated to be
$380,000.  Additional  bonding  for  reclamation  will be required subsequent to
final  approval  estimated  to  be completed in May of 1998. At June 30, 1998, a
contingent  liability  for  the  amount  of  the  new estimate which exceeds the
liability  accrued  in  prior  years was not included in the Company's financial
statements.  Consistent  with  the  Company's  policy,  as  discussed in Note 1,
reclamation  costs  are  accrued  over  the  life  of  the  mine  using  the
units-of-production  method.  Once  the mine enters the production stage, should
the  end  of  the  mine's  production life become imminent, the entire estimated
liability  would  be  expensed.

On  April  1, 1997, the Company sold certain pieces of equipment with a net book
value  of  $73,191  for  $60,000  pursuant  to  a  sale-leaseback agreement. The
agreement  required a single $90,000 payment on July 31, 1997 to reacquire title
to  the equipment. The Company did not make the $90,000 payment and defaulted on
the  agreement. Subsequent to the default, the Company made a $10,000 payment to
continue  to use the equipment. No additional agreements or modifications to the
original  agreement have been made. Due to the Company's default, the assets are
not  included  on  the  books  of  the  Company.


NOTE  13  -  LEGAL  PROCEEDINGS
             ------------------

During  fiscal  1996,  the  Company  entered  into  two  significant  settlement
agreements  involving claims made by Zuri Invest A.G., et al. and the Royal Bank
of Scotland, et al. which in effect resolved all material litigation against the
Company.  The terms of the settlement with the Royal Bank were amended in fiscal
1997.

THE  ZURI  INVEST  ACTION.

During  the  fiscal  year  ended  June  30,  1998,    the  Company completed its
obligations  to  the  Zuri  Plaintiffs  (as  defined  below)  under a settlement
agreement  entered  into on December 14,  1995 (the "Zuri Agreement")  with Zuri
Invest  A.G.,  Andre  Michaels  and Peter  Woodfield (the "Zuri Plaintiffs"), in
connection   with an action which had been commenced in December 1991 (the "Zuri
Invest    action"),  to    partially    satisfy  the joint and several  judgment
entered  in  the  Zuri  Invest  action  against  the Company and Simone Anderson
and  James  Anderson  (collectively,  the  "Andersons") on October 31, 1995 (the
"Judgment").  The  Zuri  Plaintiffs  agreed,  subject  to  the  receipt  of  the
consideration   described below,  not to seek any further recovery directly from
the  Company  on  the  Judgment,  and  to  release  the Company from any further
liability  thereunder.  The Zuri  Plaintiffs  also agreed not to pursue recovery
against  the Andersons on the Judgment if it is judicially  determined  that the
Andersons   have  indemnification rights against the Company with respect to the
Judgment.  The Company  issued and  delivered to each of Woodfield  and Michaels
250,000 shares of the Company's  Common Stock. The Company issued 600,000 shares
of  the   Company's Common Stock to Zuri  Invest and  delivered  200,000 of such
shares  to  Zuri  Invest on or about  April 10, 1996, 200,000 shares on or about
June  11,  1996, and the remaining 200,000 shares on or about September 9, 1996.
As  security  for  the    Company's  obligations  to issue and deliver the above
described  shares of Common Stock,  the Company issued a promissory  note in the
amount  of $1.2 million payable to the Zuri Plaintiffs.  The note was secured by
a  deed  of  trust  on  all  real  property and patented and  unpatented  mining
claims  owned  by  the  Company.  Pursuant to the Zuri Agreement,  the principal
amount of the note shall be reduced as the shares issued to the Zuri  Plaintiffs
are  sold,  dollar  for  dollar  by the gross proceeds generated from such sales
until  such time as sales collectively total in gross $1.2 million at which time
the  note  shall  be deemed paid.  Notwithstanding the foregoing, the note shall
also be deemed paid after the passage of 180 days after the last distribution of
shares  which,  as stated above, was distributed in September 1996.  As a result
thereof,  such  note  has  been  deemed  paid  by  the  Company.

Pursuant    to  the  Zuri  Agreement,  the  Company  also  assigned  to the Zuri
Plaintiffs an interest  (33% of the  Company's 60% interest) in claims  asserted
against  the Andersons and their controlled  corporations in the action entitled
Brush  Creek    Mining and  Development  v. F. James Anderson, et al., currently
pending  in  the  United States District Court, Northern District of California.

                                   -62-
<PAGE>
NOTE  13  -  LEGAL  PROCEEDINGS  (Continued)
             ------------------

THE  ROYAL  BANK  ACTION.

On  December  13,  1995, the Company entered into an agreement  (the "Royal Bank
Agreement")   to  settle an action commenced by the Royal  Bank of  Scotland, et
al.  by  delivering to the plaintiffs in such suit (the "Royal Bank Plaintiffs")
216,667  shares  of  the    Company's    Common  Stock and cash in the amount of
$241,000.   The Company also assigned to the Royal Bank  Plaintiffs a portion of
its  interest  in  any  total recovery from claims against the law firm formerly
known  as  Bartel,  Eng,  Miller  & Torngren, the Company's formal legal counsel
("Bartel,    Eng").    On December 13, 1996, the Company was further required to
deliver  to each of the Royal Bank Plaintiffs,  at his or her option, additional
shares of the Company's common stock or  additional  cash.  The number of shares
of  Common  Stock  or  the  amount  of  cash  each Royal Bank Plaintiff would be
entitled  to  receive  is based on the amount of his or her pro rata interest in
amounts  paid by the Company pursuant to the Royal Bank Agreement.  If all Royal
Bank    Plaintiffs  would  elect  to  receive Common Stock, the Company would be
required  to  issue and deliver a maximum of 300,000 shares in the aggregate and
if  all  Royal  Bank  Plaintiffs  elect  to  receive  cash, the Company would be
required  to  deliver  cash  in  the  maximum  aggregate  amount  of  $600,000.

Prior  to  December  13,  1996,  the  Royal  Bank  Plaintiffs elected to receive
$600,000  in cash pursuant to the term of the Royal Bank Agreement.  On or about
December  17,  1996,  the Company received notice from the Royal Bank Plaintiffs
that  the  Company  was  in  default  of  its obligation to pay them $600,000 on
December  13,  1996.    Under  the Royal Bank Agreement, such default caused the
Company  to  incur an immediate $3.25 million debt to the Royal Bank Plaintiffs.
Subsequently,  in January 1997, the Company entered into a Forbearance Agreement
(the "Forbearance Agreement") with the Royal Bank Plaintiffs which provided that
notwithstanding  the  $3.25  million  obligation, the Royal Bank Plaintiffs will
forbear  from  exercising their rights and remedies against the Company provided
the  Company  makes  a  payment  of  $629,100  on or before March 20, 1997 and a
payment  of  $175,000  on or before July 1, 1997.  The Company has the option to
postpone the second payment ($175,000) by delivering written notice to the Royal
Bank  Plaintiffs  no later than June 25, 1997 whereupon the second payment shall
be  paid  no  later  than December 15, 1997 and the amount shall be increased to
$250,000.    The  Company also agreed to reimburse the Royal Bank Plaintiffs for
their  attorney fees and costs.  Thereafter, the Royal Bank Plaintiffs agreed to
extend  the  time period for paying the $629,100 to them until May 15, 1997.  In
addition,  the  second  payment  was increased to $225,000 to be payable July 1,
1997  provided  it  may  be postponed until December 15, 1997 in which event the
amount shall be increased to $300,000. The amount which was due May 15, 1997 was
not paid by such date.  However, as of June 2, 1997, the Company entered into an
Amendment  No.  2  to the Forbearance Agreement ("Amendment No. 2") which, among
other  things, provided that the Royal Bank Plaintiffs shall continue to forbear
from  exercising  its  rights  and  remedies  under the Royal Bank Agreement and
related Forbearance Agreement, provided the Company performs the following:  (a)
pay  $896,000  in  eight  installments  of  $112,000  each  on  May 31, July 31,
September 30 and November 30, 1997 and January 31, March 31, May 31 and July 31,
1998  (the  "Periodic  Payments"),  (b)  pay $250,000 on or before September 30,
1998,  (c)  makes  payments  of  $25,000  within  five  business  days after any
closing(s)  since  March  20,  1997,  of  any single or series of sale-leaseback
transaction(s)  which  the  Company  shall  have received in the aggregate of at
least  $65,000 in proceeds, and (d) makes a final payment on or before September
30,  1998  of the Judgment Amount (as defined in the Forbearance Agreement) less
the  aggregate  amount  of  the  Periodic  Payments  previously  paid, provided,
however,  that  if  the  Company  has timely performed its obligations under its
settlement documents with the Plaintiffs and either (i) Plaintiffs have received
all  of the Periodic Payments, or (ii) the Company makes one final payment in an
amount  set  forth  in Amendment No. 2 which amount ranges from $950,000 if such
final  payment  is  paid  on  or  before  May 31, 1997 to $350,000 if such final
payment  is paid after May 31, 1998 and on or before July 31, 1998 (and assuming
all  Periodic Payments coming due prior to the final payment has been made), and
in  such  event  the  Plaintiffs  shall waive the enforceability of the Judgment
Amount  against  the  Company  and  no further payments shall be required of the
Company.  In addition, the Company has agreed that upon the execution of a Joint
Venture  Agreement, the Company shall pay the final payment within 90 days after
the  earlier  of  the  date  such joint venture is signed or effective date of a
Joint Venture Agreement. The Company has paid all Periodic Payments due to date.

                                   -63-
<PAGE>
NOTE  13  -  LEGAL  PROCEEDINGS  (Continued)
             ------------------

The  Company has also agreed to issue 433,334 shares (the "Forbearance Agreement
Shares")  of  its  Common  Stock  to the Royal Bank Plaintiffs.  The Company has
agreed  to  register such shares for resale pursuant to a Registration Statement
to  be filed with the Securities and Exchange Commission.  Also, the Company has
agreed to issue to the Plaintiffs, from time to time until the payments referred
to  above  have  been  completed, .025 shares of its Common Stock for each share
issued  in  excess of 24,000,000 of the Company's outstanding shares.  Amendment
No.  2  also  provides that the Company reimburse Plaintiffs for attorneys' fees
and  costs  incurred  in  connection  with  the  preparation  and negotiation of
Amendment  No.  2.

The  Company's  obligations  under the Royal Bank Agreement are secured by (1) a
deed  of  trust on all real property and patented and unpatented  mineral claims
owned by the  Company;  (2) a first  priority  security  interest  in all of the
Company's  right,  title and  interest  in and to any and all  goods,  products,
yield,  receivables,  inventory (including any gold from any mines), any and all
exploration  and  drilling    information,  data, maps, reports or surveys,  and
any and all income and proceeds  derived from the  Company's  mining  operations
on property which the Company  presently  or  subsequently  owns or leases;  (3)
a first-priority  security  interest in the Company's right,  title and interest
in  and to any total recovery by the Company on the claims against Bartel,  Eng;
and  (4)  a  stipulated    judgment  in  the  amount  of    $3,250,000.

In  fiscal 1996, the Company registered the 1,616,667  shares of Common Stock to
be  issued  and  delivered    pursuant  to the Zuri Agreement and the Royal Bank
Agreement,  which  included  the  300,000  additional  shares that may have been
issued pursuant to the Royal Bank Agreement as described above. This number does
not  include  the  Forbearance  Agreement    Shares  (as  described  above).

THE  ANDERSON  MATTER.

The  Company  was  plaintiff in the matter of Brush Creek Mining and Development
Co.,  Inc.  v. Anderson, et al., United States District Court, Northern District
of  California,  case  no. C94-3487 CAL, filed on September 24, 1994. The action
was  against  former  officers  and  directors  of  the  Company  and others for
violations  of  federal and state securities laws and common law torts. On April
3, 1998, the Company's counsel, the Hinton & Alfert firm, withdrew as counsel of
record.  Upon  the  Company's  failure  to obtain new counsel as directed by the
Court,  the action was dismissed with prejudice on May 15, 1998. Following entry
of  judgment  of  dismissal, two of the defendants moved as purported prevailing
parties  for an award of attorney's fees and costs incurred in defending against
the  Company's  claims.  The  defendants  sought  by  their  motion  to  recover
$63,782.14.  The  Company retained this firm for the limited purpose of opposing
this  motion.  On  August  21,  1998,  the  Court denied the defendants' motion.
Defendants have appealed this order, but this firm is no longer representing the
Company  in  regard  to  this  matter.

THE  VOLCANIC  MATTER.

Volcanic  Resources,  LLC  filed its complaint against the Company, its past CEO
and  Chairman  of the Board, and two of its Board members on August 12, 1998. On
September  16, 1998, Plaintiff filed its First Amended Complaint alleging breach
of  contract  and  breach  of  express  warranties  against the Company only and
alleging  fraud,  negligent  misrepresentation,  rescission, constructive trust,
declaratory  relief and violation of Business and Professions Code section 17200
against  all  Defendants.  The  underlying  contract  giving  rise  to this suit
involves a written Exploration, Development and Mine Operating Agreement entered
into  November  20,  1997 between Sterling Mining, LLC and the Company. Sterling
Mining,  LLC  assigned  its  rights  under the Exploration, Development and Mine
Operating  Agreement  to  Plaintiff. The responsive pleading is due November 30,
1998.  In  accordance  therewith,  the  individual  Defendants  are filing three
preliminary  "motions":  (1)  Motion  to  Change  Venue;  (2)  Demurrer; and (3)
Petition  to  Compel  Arbitration. These motions are set for hearing on December
30,  1998.

                                   -64-
<PAGE>
NOTE  13  -  LEGAL  PROCEEDINGS  (Continued)
             ------------------

OTHER  MATTERS.

In  fiscal  1996  and  1997,  the Company was requested pursuant to a non-public
informal  inquiry  by  the  staff  of the Securities and Exchange Commission, to
provide  information  to  the  staff  of  the Commission regarding the Company's
financing  activities  in  reliance upon  Regulation S under the Securities Act.
The  Commission  advised the Company that the inquiry should not be construed as
an  indication  by  the  Commission or its staff that any violations of law have
occurred,    nor  should  it  be  considered  a  reflection  upon  any  person.

On  October  24,    1994,   the Company  filed an amended  complaint  against F.
James Anderson,  Simone  Anderson,  Edward M. Lawson,  Consolidated  Sierra Gold
Mines, Inc. ("CSGM"), Independent Sierra Gold Mines, Inc. ("ISGM"), Bartel, Eng,
Miller & Torngren,  attorneys,  Robert Sibthorpe,  Coopers & Lybrand and Yorkton
Securities as defendants in an action to recover damages.  The suit was filed in
the United States District Court for the Northern District of California as Case
No.   C94-3487 (the "Federal  Action").  On April 28, 1995,  the Company filed a
third amended  complaint which seeks to recover damages against James and Simone
Anderson for breach of fiduciary  duty,  for violations of Rule 10b-5 and 16(b),
and  for violations of California Corporations Code Section 25400(d) and Section
25401.    The  lawsuit seeks to recover damages against Edward M. Lawson, Robert
Sibthorpe and Yorkton Securities, Inc. for breach of fiduciary duty. The lawsuit
seeks  to  recover damages against James and Simone Anderson, ISGM, CSGM, Robert
Sibthorpe,  and  Yorkton    Securities,   Inc.  for  intentional  and  negligent
misrepresentation.   The  lawsuit  seeks to recover damages  against the firm of
Bartel,  Eng,  Miller  &  Torngren  based  upon  breach  of  fiduciary  duty and
negligence    claims.

The  law    firm    of    Bartel,   Eng,  Linn &  Schroder  has (as successor in
interest  to  Bartel,  Eng,  Miller  &  Torngren)  filed  a counterclaim in this
litigation    seeking    recovery    from the  Company  of legal  fees  totaling
approximately  $95,000.  The  accounting  firm of  Coopers  &  Lybrand  has been
dismissed  as  a  defendant  from  the  litigation  without  prejudice.

As to the progress of the case to date,  an initial  round of discovery has been
completed. On November 15, 1996, the court granted defendants Yorkton Securities
and  Robert  Sibthorpe's  Motion  for  Summary Judgment.  Subsequent to entry of
summary  judgment  in  their favor, Yorkton Securities filed a cost bill for the
sum  of  $15,752.85  and  Mr.  Sibthorpe filed a cost bill for $3,842.83.  These
costs  are  not payable until the conclusion of the litigation against all other
parties.    The  insurer  for  Bartel,  Eng, Miller & Torngren is in liquidation
proceedings  under  the  control of the California Department of Insurance.  The
Company  intends to file a claim in that liquidation proceeding when claim forms
are  issued.    The  court  has  set  a  trial date for the remaining parties of
November  24,  1997.

On    February    8,   1996,  the  Company  filed a  complaint  against F. James
Anderson and Simone  Anderson in Superior Court of the State of  California,  in
and for the County of Sacramento, Case No. 96AS 00513 (the "Sacramento Action").
The complaint seeks (a) judicial determination and declarations that the Company
(1) has no further obligations to advance defense fees and costs incurred by the
Andersons  in connection with the Zuri  litigation,  including on the Andersons'
appeal    of  that    judgment  (which  fees and costs the Company agreed to pay
pursuant to a settlement in a previously resolved matter);  (2) is  entitled  to
recoup    defense  fees and costs allocable to the Andersons'  defense of claims
in  the  Zuri  Invest  litigation  for  which they were found liable; (3) is not
required  to  indemnify  the  Andersons  for  their liability in the Zuri Invest
litigation;    (4)  has  no  duty or obligation to the Andersons to account for,
replenish,  and/or  return monies to or pay interest on the $200,000 provided by
the   Andersons as partial  indemnification  to the Company in  connection  with
the  Royal  Bank  litigation;  and (5) is entitled to have all amounts  returned
to  the  Company  from  the $200,000 which were disbursed for the purposes other
than  to  indemnify the  Company  such that the  Company  receives  the full net
benefit  of the $200,000, and (b) equitable  indemnification to collect from the
Andersons  their  proportionate  share  of  the  judgment  in  the  Zuri  Invest
litigation.

                                   -65-
<PAGE>
NOTE  13  -  LEGAL  PROCEEDINGS  (Continued)
             ------------------

On  April  4,  1996,  the  Company  was served with the Andersons' answer to the
Sacramento    Action  and their cross-complaint against the Company.  The answer
generally denied the allegations of the Company's complaint and asserted various
affirmative  defenses.  The  cross-complaint  seeks judicial  determination  and
declarations that the Company (1) is obligated to advance the Andersons' defense
costs  (including  costs of appeal) in the Zuri  litigation and defense costs in
the Federal  Action and (2) is obligated to indemnify  them from the judgment in
the Zuri Invest  litigation and any judgment that might be rendered against them
in  the  Federal  Action.

Also,    on  April  4,   1996,  the  Company  was  served  with a motion  by the
Andersons for summary adjudication of two of their cross claims which would have
forced the Company to advance the Andersons' defense cost in the Zuri litigation
and  the Federal Action.  On May 3, 1996, the Andersons' motion was heard by the
superior  court  and  denied.

The    Company    answered   the  Andersons'  cross  complaint  on May  6,  1996
generally  denying  the  allegations and asserting  various  defenses.  Although
the  Company  has  not  done  so  to  date, the Company may attempt to amend its
original    complaint to assert an additional claim to hold the Andersons liable
for  the  entire  amount  of  the  Royal  Bank  of  Scotland  settlement.

The  Company  is  a  party to other various claims, legal actions and complaints
arising  in the  ordinary course of business.  In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on
the  business  or  financial  position  of  the  Company.


NOTE  14  -  AGREEMENT  WITH  MK  GOLD  COMPANY
             ----------------------------------

During  1993,  the  Company  and  MK  Gold Company, a wholly owned subsidiary of
Morrison  Knudsen  Corporation,  entered  into  a nonbinding letter of intent to
jointly  explore  and  develop  mineral  properties  in, among other places, the
Republic  of  Kyrghzstan.    The Company and MK Gold Company also entered into a
Joint  Development  Agreement  to form a new corporation called MKZ Gold Company
(MKZ  Gold)  to  explore,  develop,  and  mine  precious  and base metals in the
Republic  of  Kyrghyzstan.    On  May  10, 1993, MK Gold Company and the Concern
Kyrghyzaltyn  acting  on  behalf  of  the  government of the Kyrghyzian Republic
entered  into  a  general  agreement  to explore, develop, operate, and mine the
Jerooy  Gold  Project located in the Kyrghyzian Republic.  The general agreement
was a binding agreement and called for the preparation of a mining Joint Venture
Foundation  Document  (the  Venture  Agreement)  with  the  Kyrghyzian Republic.

Under  the  terms  of the Joint Development Agreement, MK Gold Company would own
60%  and  the  Company,  through a wholly owned subsidiary, would own 40% of MKZ
Gold.    Further,  the  board  of  directors  of  MKZ Gold would consist of five
members, three nominated by MK Gold Company and two nominated by the Company. MK
Gold Company and the Company intended to capitalize MKZ Gold with $400,000 based
on  their  percentage  of  ownership in MKZ Gold. MK Gold Company was to provide
mining  operations  and  the  Company  was to provide geological services to MKZ
Gold.

On  September  3,  1993,  the  Company  served MK Gold Company with a complaint,
seeking  declaratory relief with regard to the Joint Development Agreement.  The
Company  was  seeking  a  declaration  of its rights under the Joint Development
Agreement,  including  a declaration that the joint venture with MK Gold Company
exists  under  Idaho law, that the Company and MK Gold Company have equal rights
in  the  management  of  the  joint  venture,  and that MK Gold Company owes the
Company  $150,000.  After serving the complaint, the Company and MK Gold Company
had  discussions  about resolving the dispute.  MK Gold Company paid the Company
the  $150,000  owed  under  the  Joint  Development  Agreement.

On  November  10, 1993, the Company amended its complaint seeking dissolution of
the joint venture between the Company and MK Gold Company and alleging fraud and
deceit,  breach  of  fiduciary duty and breach of implied covenant of good faith
and  fair  dealing  by  MK  Gold  Company.

                                   -66-
<PAGE>
NOTE  14  -  AGREEMENT  WITH  MK  GOLD  COMPANY  (Continued)
             ----------------------------------

In  December  1993,  the  Company  settled  the  lawsuit  with  MK  Gold Company
receiving:  (1)  $4,232,000  cash;  (2)  a 4% net smelter return on any interest
which  MK  Gold Company obtains in the Kumtor project; and (3) the assumption of
all the Company's obligations to the International Foundation for Privatization.
The  $4,232,000  is  shown  as  sale  of  joint  venture  in  the  June 30, 1994
consolidated  statement  of  operations.


NOTE  15  -  SUPPLEMENTAL  SCHEDULE  OF  NON  CASH  INVESTING  ANDFINANCING
             --------------------------------------------------------------
             ACTIVITIES
             ----------

Noncash  investing  and  financing  activities  as  of  June 30, are as follows:
<TABLE>
<CAPTION>


                                                            1998      1997
                                                            -----  ----------
<S>                                                         <C>    <C>
Partial settlement of litigation . . . . . . . . . . . . .  $   -  $1,200,000
Compensation recognized on stock options granted . . . . .      -      24,000
Company stock issued to satisfy purchase price adjustments
  agreements . . . . . . . . . . . . . . . . . . . . . . .      -     753,175
 Company stock issued to convert 7% convertible debenture.      -     300,000
 Company stock issued to acquire the New California
  Placer Mine. . . . . . . . . . . . . . . . . . . . . . .      -      20,000
</TABLE>



NOTE  16  -  SEGMENT  INFORMATION
             --------------------

The  Company's activities have been devoted to the acquisition, development, and
production  of mineral properties.  Accordingly, the Company is considered to be
in  a  single  line  of  business.   To date, substantially all of the Company's
identifiable  assets  and  operating  expenditures  are  in  the  United States.


NOTE  17  -  CONVERTIBLE  DEBENTURE  PAYABLE
             -------------------------------

On  April  3,  1996,  the  Company  received  net  proceeds of $400,000 on gross
proceeds  of  $450,000  from  an  offshore;  two  year, $450,000, 7% convertible
debenture.  The  subscriber  has  the  option  of  converting all or part of the
principal  to  the Company's Common Stock forty-five days after the closing date
of  the  transaction.  The  note  is convertible to shares at 70% of the average
share  price  for the five days preceding conversion. On June 17, 1996, $150,000
of  the  note  was  converted  to  161,360  shares.

On  July  8, 1996, the remaining $300,000 of the note was converted into 439,560
shares  of the Company's Common Stock. The convertible debentures outstanding at
June  30,  1996  were  classified  as  current  portion  of  long-term  debt.

                                   -67-
<PAGE>
NOTE  18  -  SUBSEQUENT  EVENTS
             ------------------

Change  in  Management
----------------------

On  November  16,  1998,  Brush  Creek  Mining and Development Inc. received the
resignation  of its chief executive officer (C.E.O.), James Chapin.  Brush Creek
has  accepted  the  proposal  submitted by Mr. Larry Stockett, President of U.S.
Cement  Company and the Board appointed him as the new President and C.E.O.  Mr.
Stockett  has  accepted  these  positions without compensation until the company
reaches  its first quarterly after tax profit.  Upon resolution of Brush Creek's
current  legal  and  financial problems, Mr. Stockett has agreed to transfer his
51%  ownership  in  U.S. Cement Company to Brush Creek.  In return, Mr. Stockett
will  receive  restricted  shares  of  stock of Brush Creek at a price of $5 per
share for the audited book value of U.S. Cement.  In addition, Mr. Stockett will
receive  one  million shares of Brush Creek restricted stock if the BCMDE shares
achieve  a  $5  per  share  closing  price  for  10  consecutive  days.


NOTE  19  -  YEAR  2000
             ----------

The  Company has reviewed its current computer software and hardware systems and
is  currently working to resolve the potential problems associated with the Year
2000  and the processing of date sensitive information by such systems. Based on
preliminary  information, the Company believes that it will be able to implement
successfully  the  systems and programming changes necessary to address the Year
2000  issues,  and  does  not expect the cost of such changes to have a material
impact of the Company's financial position, results of operations or cash f lows
in  future  projects.


                                   -68-
<PAGE>
EXHIBIT  11.1

COMPUTATION  OF  EARNINGS  PER  SHARE

                                   -69-
<PAGE>

Year  Ended
-----------------------
<TABLE>
<CAPTION>


                                             June 30, 1998    June 30, 1997
                                            ---------------  ---------------
<S>                                         <C>              <C>
Net Loss . . . . . . . . . . . . . . . . .  $   (5,386,831)  $   (9,681,535)

Weighted Average Common Shares Outstanding       4,660,433        2,136,576 
                                            ---------------  ---------------

Net Loss per Common Share. . . . . . . . .  $         (.12)  $         (.47)
                                            ===============  ===============
</TABLE>


                                   -70-
<PAGE>
EXHIBIT  21.1

LIST  OF  SUBSIDIARIES

                                   -71-
<PAGE>

1.    B.  Creek  Acquisition  Corporation


2.    Alpha  Hardware