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, 1997

            [ ] 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                                                        88-0180496
(State  or  other  jurisdiction                         I.R.S.  Employer
of  incorporation  or                                     Identification
organization)                                                    Number)

970  E.  MAIN  STREET,  SUITE  200
GRASS  VALLEY,  CALIFORNIA                                         95945
(Address  of  principal                                      (Zip  Code)
executive  offices)

Issuer's  telephone  number,  including  area  code:    (916)  477-5961

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      X      No
     -----

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:  $22,266.

As  of September 30, 1997, the aggregate market value of the Common Stock held
by  non-affiliates  of  the  Issuer  (38,849,552  shares)  was  approximately
$13,364,246.  The number of shares outstanding of the Common Stock ($.0001 par
value)  of  the  Issuer  as of the close of business on September 30, 1997 was
41,949,483.

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    
                                                                  ---      ---


<PAGE>
                                    PART I

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 $39,279,422 from inception to June 30,
1997 and had not realized economic production as of June 30, 1997. 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 August 29, 1997, for the year
ended  June  30,  1997,  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,  1997,  the  Company  raised  $2,111,101 from the sale of 16,387,113
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
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.  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-l  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 a price of $.25 per share
until  July  1,  1999. In the event the Company is unable to obtain additional
financing  the Company may be required to seek protection under the bankruptcy
laws.


<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  may  not be in compliance with the new
maintenance  criteria  once such criteria are in 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 will
be  notified of delisting proceedings unless the stock closes at $1.00 or more
for  ten  consecutive  days,  within 90 days of falling out of compliance. The
failure  to  meet  these  maintenance criteria in the future 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.


<PAGE>
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.

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 $332 per ounce at
September  30,  1997.  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.


<PAGE>
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.

     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.


<PAGE>
     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 1997, the Company decided that, under the right conditions,
it  would  be  in  the best interest of shareholders to secure a joint venture
partner  to  aid  in  developing  the  Company's  properties. Accordingly, the
Company  engaged  an investment banker to approach qualified mining companies.
At  the  same  time, the Company began rehabilitating and permitting the lower
Brush  Creek  Mine  in  an  effort to access 9,000 tons of remnant pillars and
50,000  tons  of  potential  ore  blocks.  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
historical grade of the lower Brush Creek Mine is approximately one ounce gold
per  ton  of ore milled. Keewatin Engineering stated in its 1991 report on the
mines  that Nealon and Associates sampled one of the ore blocks, taking twelve
six-foot  chip  samples which assayed from .002 to 273 ounces per ton gold. By
combining  the  assays  with  records  of production from 1958 to 1962, Nealon
estimated  that  the  ore  blocks  would yield approximately .5 ounces per ton
milled.  As  the  Company continues to pursue joint ventures, it is hoped that
production  of  ore from the lower Brush Creek will contribute meaningfully to
cash  flow.

     The  Company  intends  also  to  explore  in  the lower Brush Creek for a
parallel  ore  shoot  which may exist to the south of the known ore shoot on a
flatter  trajectory  and for the potential continuation of the known ore-shoot
offset  to  the north of the post mineral dyke. However, the real potential in
the  lower Brush Creek is the down-dip extension of the Golden Gate ore shoot.
The  vein  was mined to a distance of six hundred feet below current workings.
There,  it  began  to  pinch  and steepen. When funds are available, or with a
partner,  the  Company  intends  to  follow  its  established plan to drill at
intervals  up  to  1,000 feet beneath the old workings in an effort to block a
resource  of  129,000  ounces  of  gold.

     In  an  effort  to strengthen the Company's mining staff to better enable
the Company to successfully extract ore on its own or with the assistance of a
strategic  investor,  the  Company  has  hired a new mine superintendent, mine
geologist,  mining engineer and mill superintendent. Although no assurance can
be given, management is confident that, to the extent funds are available, the
newly  added personnel will successfully pursue the Company's plan to steadily
increase  production  and  block  new  reserves.


<PAGE>
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.

     Subsequent to the fiscal year ended June 30, 1997, the Company has sold a
total  of  10,203,333  restricted shares of the Company's Common Stock and has
received  a  net  amount  of  $1,021,000.  All  shares  have  been  sold under
Regulation  D  and  Section  4(2)  of  the Securities Act of 1933, as amended.

     Also,  subsequent to the fiscal year ended June 30, 1997, the Company has
issued  375,668  shares  of  its Common Stock for certain consulting services.
Such  shares  have been registered with the Securities and Exchange Commission
on  Form  S-8.

EMPLOYEES.

     The Company has 25 full-time employees, and operates in only one industry
segment.


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. The
Company  has no present intention of conducting further geological exploration
and  drilling  to  establish  ore  reserves  for  its  mining  properties.


<PAGE>
     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 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.  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  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
$2,144,555  at June 30, 1997, consisting of $408,496 of land and land options,
$1,460,669  of  development  costs,  and  $275,390  of  mining  equipment.

     All of the unpatented claims in the 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.

     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 ore 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.


<PAGE>
     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  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  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 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, 1997,
consisting  of  $185,477  of  land  and  land options, $770,327 of development
costs,  and  $128,521  of  mining  equipment.

     All of the unpatented claims in the 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.


<PAGE>
     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  estimated  to be
completed  in  May  1998.

     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.

RUBY  MINE.

     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 property is $4,554,575 at
June  30, 1997, consisting of $327,336 of land and land options, $2,251,714 of
development  costs,  and  $1,975,525  of  mining  equipment.


<PAGE>
     Pursuant  to  the terms of the lease, which was most recently modified on
November  1,  1994,  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 $10,000 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  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  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 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.

     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 property, the only way new reserves will
be  established is from underground, utilizing mapping, sampling, and drilling
techniques  and  by  opening  new  ground.


<PAGE>
     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  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.


<PAGE>
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
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 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's investment in this property is
$139,091  at  June 30, 1997, consisting of $9,111 of land and land options and
$129,980  of  development  costs.

     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 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  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  property  will  require  on-site  generators  to  supply  power.


<PAGE>
CARSON  MINE.

     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 property
is  $3,294,424  at  June  30,  1997, consisting of $2,199,858 of land and land
options,  $1,051,731  of  development  costs, and $42,835 of mining equipment.

     The  City  of Six gravel deposit was discovered at the site of the Carson
Mine  in  the 1850's. The 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  ore 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 ore and muck as is
that  above  the  upper  level.  The  underground  portion of the 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 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 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 property with Golden Lion
Mining.


<PAGE>
     All of the unpatented claims in the 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
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  ore  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 ore 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  ore  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
ore 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.

HIGH  COMMISSION  MINE.

     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 property is $107,993 at June
30,  1997,  consisting  of  $101,875  of  land and land options, and $6,118 of
development  costs.

     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
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.


<PAGE>
THE  HIGH  COMMISSION,  THE  BIG  LEDGE,  THE  MEXICAN,  AND  THE GOLDEN STAR.

     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 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 mineralization. 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 property consists mainly of the Calaverous Formation,
Carboniferous  Period,  comprised of slate, quartzite and porphyry. The quartz
veins  carrying  the  free  gold  mineralization 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 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.

     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's investment in this property
is  $156,456 at June 30, 1997, consisting of $58,667 of land and land options,
and  $97,789  of  development  costs.

     All of the unpatented claims in the 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.

     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.

<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 blocks 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 property is permitted. There is a corrugated mill
building  in fair condition and an equipment building in fair condition on the
property.

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

     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.  No other  extensions and/or agreements had been
negotiated  to  date.

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 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.

<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.

     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.

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  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 property for $300,000
payable  at  $2,000  per  month.

     The 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 the Placer Flat Mining District.

THE  POKER  FLAT  DISTRICT:  (DIAMOND  POTENTIAL).

     In  1872,  two  diamonds were recovered from Brush Creek's Garner's Point
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 Gardners
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  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  property.


<PAGE>
Unpatented  Property  Interests.

     The  Company  has  acquired rights to explore for and produce minerals on
federally  owned  lands  and paid all required fees to maintain the unpatented
claims.  The  Company  acquired  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 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. In the fiscal year ended June 30, 1996, the Company paid approximately
$16,000  of  rental  fees  to  the  Bureau of Land Management to validate said
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 mineral
deposit  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.


<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

<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.


<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.

     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).

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

<PAGE>
&  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.

     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.


<PAGE>
     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.


<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,  1996  and  1997.
<TABLE>
<CAPTION>


Period          Bid Prices
--------------  -----------    
<S>             <C>          <C>

Fiscal 1996     High         Low
--------------  -----------  -----
First Quarter   $      4.31  $2.37
Second Quarter  $      2.88  $0.25
Third Quarter   $      1.00  $0.75
Fourth Quarter  $      1.94  $0.81


Period          Bid Prices
--------------  -----------       

Fiscal 1997     High         Low
--------------  -----------  -----
First Quarter   $      1.06  $0.63
Second Quarter  $      0.63  $0.13
Third Quarter   $      0.31  $0.06
Fourth Quarter  $      0.44  $0.19
</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, 1997 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, 1997, was 41,949,483. The foregoing does not
include  433,334 shares and any additional shares of Common Stock to be issued
to  the Royal Bank Plaintiffs under the Forbearance Agreement, as amended (see
Part  I,  Item  3  for  a  discussion  thereof).

     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 cancelled 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.


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

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.


<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.

FISCAL  YEAR ENDED JUNE 30, 1996 COMPARED WITH FISCAL YEAR ENDED JUNE 30, 1995

LIQUIDITY  AND  CAPITAL  RESOURCES

     At  June 30, 1996, the Company had working capital deficit of $2,328,674,
a  decrease in working capital of $2,475,597 as compared to working capital of
$146,923  at  June  30,  1995.  The decrease in working capital was due to the
expenses  associated  with  opening  several  new  areas  of the Ruby Mine for
hard-rock mining, litigation fees and expenses, and a litigation settlement of
$2,389,668.

     The  Company  estimated  its mining development and operating costs to be
approximately  $4  million  for  the  fiscal  year ended June 30, 1996. Actual
development and operating costs were $9,270,102. The Company raised $6,875,416
from the sale of securities pursuant to Regulation S under the Securities Act.
The  majority  of the funds were used for the operations in the Ruby Mine, and
at the Lawry, Irene and Wolf sites. The Company expected revenues from current
operations  to  increase.  Revenues  from  operations were not sufficient. The
Company  was  able to fund continued operations from sales of Common Stock, so
it  met its long-term liquidity requirements and kept its mining properties in
operation.

     During  the  fiscal  year  ended  June  30,  1996, the Board of Directors
approved  options  to  purchase  747,000 shares of the Company's Common Stock,
ratified  the  settlement  for  the Zuri-Invest and the Royal Bank of Scotland
matters,  and  raised $6,875,416 from the sale of 6,783,503 shares pursuant to
Regulations  S.  Such shares were sold at a discount of between 35% and 50% of
the  closing  bid  price  of  the  Common  Stock  on  the day before the sale.

RESULTS  OF  OPERATIONS

     The  Company had a $9,270,102 net loss for the fiscal year ended June 30,
1996,  compared to a net loss of $4,671,396 for the fiscal year ended June 30,
1995.  This  loss  was  due  to an increase in mining expenses, legal fees and
expenses  and  a  litigation  settlement  of  $2,389,668.

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.


<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 120
days  of  the  Company's  year  end  in  connection with the annual meeting of
shareholders  to  be  held  in  fiscal  1998.

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 120
days  of  the  Company's  year  end  in  connection with the annual meeting of
shareholders  to  be  held  in  fiscal  1998.

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 120
days  of  the  Company's  year  end  in  connection with the annual meeting of
shareholders  to  be  held  in  fiscal  1998.

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 120
days  of  the  Company's  year  end  in  connection with the annual meeting of
shareholders  to  be  held  in  fiscal  1998.

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

     (a)          EXHIBITS.

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)

<PAGE>
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)

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)


<PAGE>
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,  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.

(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.


<PAGE>

<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: 10/13/97      


     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                    Title                                 Date
---------                    -----                                 ----

/s/ James S. Chapin          Chief  Executive  Officer             10/13/97
James  S.  Chapin            Chief  Financial  Officer,
                             Chairman  of  the  Board
                             and  Director
                             (Principal  Executive  Officer
                             and  Principal  Financial  and
                             Accounting  Officer)


/s/ Howard I. Kalodner       Director                              10/13/97
Howard  I.  Kalodner


/s/ Albert Miller            Director                              10/13/97
Albert  Miller


/s/ Kenneth Friedman         Director                              10/13/97 
Kenneth  Friedman



\dmk\brus5050

<PAGE>

<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, 1997, and the related consolidated statements of
operations,  shareholders' equity, and cash flows for each of the two years in
the period ended June 30, 1997, and for the period from the date of resumption
of  development  stage activities (July 1, 1989) through June 30, 1997.  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, 1997, and the results of its operations and its
cash  flows  for  each of the two years in the period ended June 30, 1997, and
the  period  from the date of resumption of development stage activities (July
1,  1989)  through  June  30,  1997  in  conformity  with  generally  accepted
accounting  principles.


<PAGE>

<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
                    ACCOUNTANCY  CORPORATION










Bakersfield,  California

<PAGE>
August  29,  1997

<PAGE>

<PAGE>

               BRUSH CREEK MINING AND DEVELOPMENT COMPANY, INC.
                                AND SUBSIDIARY
                       (A DEVELOPMENT STAGE ENTERPRISE)
                          CONSOLIDATED BALANCE SHEET
                                 JUNE 30, 1997



                                    ASSETS
<TABLE>
<CAPTION>



<S>                                             <C>

Current Assets
  Cash                                          $    111,059 
  Inventory                                            2,750 
                                                -------------

    Total Current Assets                             113,809 

Office Furniture and Equipment, Net                   45,547 

Mineral Properties and Mining Equipment, Net      10,190,581 

Deposits                                             272,095 
                                                -------------

    Total Assets                                $ 10,622,032 
                                                =============


LIABILITIES AND SHAREHOLDERS' EQUITY


Current Liabilities
  Accounts payable and accrued liabilities         1,771,014 
  Current portion of long-term debt                  672,000 
  Other                                                3,700 
                                                -------------

    Total Current Liabilities                      2,446,714 

Long-term debt, net of current portion               362,000 
                                                -------------

    Total Liabilities                              2,808,714 
                                                -------------

Shareholders' Equity
  Common stock, no par value; authorized
   100,000,000 shares; issued and
   Outstanding, 31,370,482 shares                 47,092,740 
Accumulated Deficit                              (11,260,214)
Accumulated Deficit during the Development
  Stage                                          (28,019,208)
                                                -------------

    Total Shareholders' Equity                     7,813,318 
                                                -------------

    Total Liabilities and Shareholders' Equity  $ 10,622,032 
                                                =============

</TABLE>
                 The accompanying notes are an integral part
                        of these financial statements


<PAGE>
               BRUSH CREEK MINING AND DEVELOPMENT COMPANY, INC.
                                AND SUBSIDIARY
                       (A DEVELOPMENT STAGE ENTERPRISE)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND FOR
        THE PERIOD FROM JULY 1, 1989 (DATE OF RESUMPTION OF DEVELOPMENT
              STAGE ENTERPRISE ACTIVITIES) THROUGH JUNE 30, 1997

<TABLE>
<CAPTION>

                                         Development  Stage
                         --------------------------------------------------
                                                              Period  from
                                                             July  1,  1989
                                                                 Through
                                 1997              1996       June 30, 1997
                         --------------------  ------------  ---------------        
<S>                      <C>                   <C>           <C>              

Revenues
  Sale of Joint
    Venture              $                 -   $         -   $    4,232,000 
  Other Income                             -             -          156,444 
  Interest                            22,266        42,160          187,779 
                         --------------------  ------------  ---------------              

   Total Revenues                     22,266        42,160         4,576,223 
                         --------------------  ------------  ---------------

Expenses
  General and
    Administrative
    Expenses                       1,159,156     2,471,067       15,058,921 
  General Mining
    and Exploration                2,140,228     4,010,966       11,054,253 
  Loss on Lease
    Abandonments                           -             -          392,317 
  Depreciation and
    Amortization                     370,642       373,443        1,433,902 
  (Gain) Loss on
    Sale of Mining
    Equipment                         84,264          (116)         171,174 
  Interest Expense                   116,626        67,234          492,294 
  Litigation
    Settlement                       439,770     2,389,668        4,137,032 
                         --------------------  ------------  ---------------              

   Total Expenses                  4,310,686     9,312,262       32,739,893 
                         --------------------  ------------  ---------------

   Loss Before Extra-
      ordinary Item               (4,288,420)   (9,270,102)     (28,163,670)

Extraordinary Item, Net
  Gain from Debt
  Extinguishment, Net
  of Tax                                   -             -          144,462 
                         --------------------  ------------  ---------------              
Net Loss                 $        (4,288,420)  $(9,270,102)  $  (28,019,208)
                         ====================  ============  ===============              
Loss per Common Share
  Before Extraordinary
  Item                   $              (.21)  $      (.96)
                         ====================  ============                               

Net Loss per Common
  Share                  $              (.21)  $      (.96)
                         ====================  ============                               

Weighted Average
  Common Shares
  Outstanding                     20,831,619     9,634,616 
                         ====================  ============                               
</TABLE>



<PAGE>

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

               BRUSH CREEK MINING AND DEVELOPMENT COMPANY, INC.
                                AND SUBSIDIARY
                       (A DEVELOPMENT STAGE ENTERPRISE)
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
         FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND FOR THE PERIOD
     FROM JULY 1, 1989 (DATE OF RESUMPTION OF DEVELOPMENT STAGE ENTERPRISE
                       ACTIVITIES) THROUGH JUNE 30, 1997

<TABLE>
<CAPTION>            
                                                             Accumulated
                           Common Stock                        Deficit
                     -----------------------                  During the                                  
                      Number of                Accumulated   Development 
                       Shares      Amount        Deficit        Stage        Total
                     ----------  -----------  -------------  -----------  ------------
<S>                  <C>         <C>          <C>            <C>             <C>

Balance,
 June 30, 1989       1,233,041   $12,318,877  $(11,260,214)  $         -   $ 1,058,663 

Issuance of stock
 for options
 on mining
 properties             15,667       117,500             -             -       117,500 
Sale of stock in
 private placement,
 net of offering
 costs                 150,000       434,000             -             -       434,000 
Issuance of stock
 for services           23,500        72,500             -             -        72,500 
Sale of stock in
 private placement,
 net of offering
 costs                 131,727       828,110             -             -       828,110 
Issuance of units
 for debt to
 affiliates             73,766       553,242             -             -       553,242 
Net loss                     -             -             -     (768,436)     (768,436)
                     ----------  -----------  -------------  -----------  ------------

Balance,
 June 30, 1990       1,627,701    14,324,229   (11,260,214)    (768,436)    2,295,579 

Issuance of stock
 for options on
 mining properties     154,737     2,283,020             -            -     2,283,020 
Sale of stock in
 private placement,
 net of offering
 costs                 141,606       910,840             -            -       910,840 
Exercise of
 warrants                3,333        35,000             -            -        35,000 
Issuance of stock
 for services           64,122     1,097,258             -            -     1,097,258 
Issuance of stock
 for debt                5,150       114,560             -            -       114,560 
Cancellation of
 units from CSGM       (73,766)            -             -            -             - 
Issuance of shares
 to CSGM               120,000             -             -            -             - 
Issuance of stock
 for litigation
 settlement, net        33,334       875,000             -            -       875,000 
Net loss                     -             -             -   (2,558,381)   (2,558,381)
                     ----------  -----------  -------------  -----------  ------------
</TABLE>



<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, 1997 AND 1996 AND FOR THE PERIOD
     FROM JULY 1, 1989 (DATE OF RESUMPTION OF DEVELOPMENT STAGE ENTERPRISE
                ACTIVITIES) THROUGH JUNE 30, 1997 - (CONTINUED)

<TABLE>
<CAPTION>

                                                              Accumulated 
                           Common  Stock                        Deficit 
                       ---------------------                  During  the
                       Number  of               Accumulated   Development
                         Shares      Amount       Deficit        Stage        Total
                       ---------  -----------  ------------  -----------  -----------
<S>                    <C>        <C>          <C>           <C>          <C>

Balance,
  June 30, 1991        2,076,217  19,639,907   (11,260,214)  (3,326,817)   5,052,876 

Issuance of stock
  for options on
  mining properties      195,780     564,899             -            -      564,899 
Sale of stock in
  private placement,
  net of offering
  costs                  142,100   2,298,451             -            -    2,298,451 
Exercise of warrants
  and options            124,834   1,250,750             -            -    1,250,750 
Issuance of stock
  for services           184,579   1,818,102             -            -    1,818,102 
Issuance of stock
  for debt                24,440     336,617             -            -      336,617 
Issuance of shares
  to CSGM                 88,000     748,750             -            -      748,750 
Capital
  contributions                -     312,805             -            -      312,805 
Net loss                       -           -             -   (3,178,878)  (3,178,878)
                       ---------  -----------  ------------  -----------  -----------

Balance,
  June 30, 1992        2,835,950  26,970,281   (11,260,214)  (6,505,695)   9,204,372 

Issuance of stock
  for mining
  properties and
  equipment               37,290     255,238             -            -      255,238 
Sale of stock             10,664      80,000             -            -       80,000 
Exercise of warrants
  and options             95,404     707,105             -            -      707,105 
Exchange of options
  for debt, CSGM          33,334     250,000             -            -      250,000 
Issuance of stock
  for services           183,190   1,616,659             -            -    1,616,659 
Issuance of stock
  for debt               105,140     713,494             -            -      713,494 
Issuance of shares
  for CSGM               100,256     500,285             -            -      500,285 
Issuance of stock
  for the acquisition
  of Trans-Russian       539,402     (84,176)            -            -      (84,176)
Net loss                       -           -             -   (3,420,220)  (3,420,220)
                       ---------  -----------  ------------  -----------  -----------
</TABLE>



<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, 1997 AND 1996 AND FOR THE PERIOD
     FROM JULY 1, 1989 (DATE OF RESUMPTION OF DEVELOPMENT STAGE ENTERPRISE
                ACTIVITIES) THROUGH JUNE 30, 1997 - (CONTINUED)

<TABLE>
<CAPTION>                                                          
                                                          Accumulated   
                        Common Stock                        Deficit                     
                   ----------------------                 During  the
                   Number  of              Accumulated    Development
                     Shares      Amount      Deficit         Stage          Total
                   ----------  ----------  ------------   ------------   ------------
<S>                <C>         <C>         <C>            <C>            <C>
Balance,
 June 30, 1993     3,940,630  31,008,886    (11,260,214)    (9,925,915)     9,822,757 

Sale of stock         82,485     241,139              -              -        241,139 
Exercise of
  warrants and
  options             58,319     608,925              -              -        608,925 
Issuance of stock
  for services       215,099     938,159              -              -        938,159 
Net income                 -           -              -        136,625        136,625 
                   ---------  ----------   ------------   ------------   ------------

Balance,
  June 30, 1994    4,296,533  32,797,109    (11,260,214)    (9,789,290)    11,747,605 

Sale of stock      2,566,666   3,696,457             -               -      3,696,457 
Net loss                   -           -             -      (4,671,396)    (4,671,396)
                   ---------  ----------   ------------   -------------  -------------

Balance,
  June 30, 1995    6,863,199  36,493,566    (11,260,214)   (14,460,686)    10,772,666 

Sale of stock      6,783,503   6,875,416             -              -       6,875,416 
Issuance of stock
  for partial
  settlement of
  Royal Bank
  agreement          216,667     223,436             -              -         223,436 
Compensation
  recognized on
  stock options
  granted                  -     160,021             -              -         160,021 
Issuance of stock
  for partial
  settlement of
  Zuri Invest
  litigation       1,100,000           -             -              -               - 
Net loss                   -           -             -     (9,270,102)     (9,270,102)
                   ---------  ----------  ------------   ------------   -------------
</TABLE>



<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, 1997 AND 1996 AND FOR THE PERIOD
     FROM JULY 1, 1989 (DATE OF RESUMPTION OF DEVELOPMENT STAGE ENTERPRISE
                ACTIVITIES) THROUGH JUNE 30, 1997 - (CONTINUED)

<TABLE>
<CAPTION>






                                                                 Accumulated
                            Common  Stock                          Deficit
                        ----------------------                   During  the
                         Number  of                Accumulated   Development                                
                           Shares      Amount       Deficit         Stage         Total
                        ----------  -----------  -------------  -------------  ------------
<S>                     <C>         <C>          <C>            <C>            <C>

Balance,
  June 30, 1996         14,963,369   43,752,439   (11,260,214)   (23,730,788)    8,761,437 

Sale of stock           16,387,113    2,111,101             -              -     2,111,101 
Issuance of stock
  for New California
  Placer mine               20,000        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                         -            -             -     (4,288,420)   (4,288,420)
                        ----------  -----------  -------------  -------------  ------------

Balance,
  June 30, 1997         31,370,482  $47,092,740  $(11,260,214)  $(28,019,208)  $ 7,813,318 
                        ==========  ===========  =============  =============  ============

</TABLE>



<PAGE>

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

               BRUSH CREEK MINING AND DEVELOPMENT COMPANY, INC.
                                AND SUBSIDIARY
                       (A DEVELOPMENT STAGE ENTERPRISE)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 AND FOR
        THE PERIOD FROM JULY 1, 1989 (DATE OF RESUMPTION OF DEVELOPMENT
              STAGE ENTERPRISE ACTIVITIES) THROUGH JUNE 30, 1997


<TABLE>
<CAPTION>

                                                        Development  Stage
                                       ------------------------------------------
                                                                    Period  from
                                                                   July  1,  1989
                                                                      Through
                                           1997          1996       June 30, 1997
                                       ------------  ------------  ---------------
<S>                                    <C>           <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                             $(4,288,420)  $(9,270,102)  $  (28,019,208)
                                       ------------  ------------  ---------------

  Gain on debt restructuring                     -             -         (144,462)
  Depreciation and amortization            370,642       373,443        1,433,902 
  Loss on lease abandonments                     -             -          444,359 
  Loss on litigation settlement            439,770     2,389,668        4,107,032 
  (Gain) loss on sale of mining
   equipment                                84,264          (116)          49,164 
  Other                                          -             -           43,576 
  Shareholder payment of services                -             -          105,055 
  Stock and debt for services                    -             -          703,068 
  Change in stock purchase price
   adjustment receivable                         -       284,749                - 
  Change in note receivable                 40,462         7,000           47,462 
  Change in inventory                       21,590        41,282             (410)
  Change in prepaid expenses                51,290        (4,530)         501,736 
  Change in deposits and other
   current assets                                -        (2,490)        (115,961)
  Change in deposits                       105,052      (115,500)         (29,065)
  Change in accounts payable and
   accrued liabilities                     330,746       495,065        4,323,471 
                                       ------------  ------------  ---------------

  Total adjustment                       1,443,816     3,468,571       11,468,927 
                                       ------------  ------------  ---------------

NET CASH USED IN OPERATING ACTIVITIES   (2,844,604)   (5,801,531)     (16,550,281)
                                       ------------  ------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of mineral properties,
   equipment and deferred
   developments                            (64,370)     (652,735)      (5,074,429)
  Acquisition of office equipment                -       (69,460)        (260,101)
  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                                 25,630      (722,195)      (4,930,114)
                                       ------------  ------------  ---------------

</TABLE>



<PAGE>

<PAGE>
          

<TABLE>
<CAPTION>

                                                      Development  Stage
                                           ---------------------------------------
                                                                      Period  from
                                                                     July  1,  1989
                                                                         Through
                                              1997         1996       June 30, 1997
                                           ----------   -----------  --------------
<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           2,140,301    7,035,435       20,266,513 
  Proceeds from warrant extensions                  -            -          207,750 
  Proceeds from issuance of notes payable           -            -          870,043 
  Payments on long-term debt                 (185,681)    (220,449)      (1,422,029)
  Proceeds from convertible debenture               -      300,000          300,000 
  Payments on convertible debenture          (300,000)           -         (300,000)
                                          ------------  -----------  ---------------

NET CASH PROVIDED BY FINANCING ACTIVITIES   1,654,620    7,114,986       21,587,606 
                                          ------------  -----------  ---------------

Net Increase (Decrease) in Cash            (1,164,354)     591,260          107,211 

Cash at Beginning of Period                 1,275,413      684,153            3,848 
                                          ------------  -----------  ---------------

Cash at End of Period                     $   111,059   $1,275,413   $      111,059 
                                          ============  ===========  ===============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for interest
  (net of amounts capitalized)            $   116,626   $   67,234   $      337,602 
                                          ============  ===========  ===============


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES(See Note 15)

</TABLE>
              The accompanying notes are an integral part of these             
                       consolidated financial statements.

<PAGE>

<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 $39,279,422 from
inception  to  June 30, 1997. The Company has not realized economic production
from  its  mineral  properties  as  of  June  30,  1997.   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.


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

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.

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

Mineral  properties  and  mining  equipment  include  land,  mining  claims,
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.

The  Company  defers  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  is  discovered,  previously
capitalized  costs  are  expensed in the period the property is abandoned. Any
revenue generated from pre-production activities is offset against the related
deferred  development  and  pre-production costs. When a property is placed in
commercial  production,  such  deferred  costs  are  depleted  using  the
units-of-production  method.

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  each  mine  and  development property on a regular basis.
Estimated  future net cash flows from each mine are calculated using estimated
future  prices,  operating  capital,  and reclamation costs on an undiscounted
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. Upon adoption of SFAS 121 in fiscal year 1995-96,
there  was  no  impact  to  the  financial  statements.

The  recoverability of the carrying value of development projects is evaluated
based  upon  estimated future net cash flows from each property, determined as
described  above,  using  estimates of contained mineralization expected to be
classified  as  proven  and 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.

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.


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

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 15:1, which the Board of Directors approved November
29,  1993.

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
---------

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, 1997.

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

For purposes of reporting cash flows, cash and cash equivalents include highly
liquid  debt instruments purchased with a maturity of five months or less.  Of
the $111,059 cash balance at June 30, 1997, $11,059 was not covered by Federal
Depository  Insurance.


<PAGE>
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.

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
Regulations  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.

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.


<PAGE>
NOTE  5  -  OFFICE  FURNITURE  AND  EQUIPMENT
            ---------------------------------

Office  furniture  and  equipment  consists of the following at June 30, 1997:
<TABLE>
<CAPTION>

<S>                             <C>

Office furniture and equipment  $  83,819 
Vehicles                          131,776 
                                ----------
                                  215,595 
Less accumulated depreciation    (170,048)
                                ----------
                                $  45,547 
                                ==========
</TABLE>



NOTE  6  -  MINERAL  PROPERTIES  AND  MINING  EQUIPMENT
            -------------------------------------------

The  Company's net investment in mineral properties and mining equipment as of
June  30,  1997  is  as  follows:
<TABLE>
<CAPTION>

                   Land  and     Development     Mining
                  Land Options     Costs       Equipment      Total
                  -------------  ----------  -----------  ------------
<S>               <C>            <C>         <C>          <C>

Carson Mine       $   2,199,858  $1,051,731  $   42,835   $ 3,294,424 
Brush Creek Mine        408,496   1,460,669     275,390     2,144,555 
Gardners' Point
 and Pioneer
 Mines                  185,477     770,327     128,521     1,084,325 
Ruby Mine               327,336   2,251,714   1,626,804     4,205,854 
High Commission
 Mine                   101,875       6,118           -       107,993 
Kate-Hardy Mine          58,667      97,789           -       156,456 
Rising Sun Mine           9,111     129,980           -       139,091 
                  -------------  ----------  -----------  ------------

                      3,290,820   5,768,328   2,073,550    11,132,698 
Accumulated
  depreciation                -           -    (942,117)     (942,117)
                  -------------  ----------  -----------  ------------

                  $   3,290,820  $5,768,328  $1,131,433   $10,190,581 
                  =============  ==========  ===========  ============
</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:


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

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 November 1,
1994.  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 $10,000
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 the leased
premises.

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,  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,  1997,  the Company owed approximately $100,000 on the Ruby Mine
lease  and  approximately  $50,000  on  the Rising Sun lease which constitutes
default  on  the agreements. The outstanding balances are included in accounts
payable  at  June  30,  1997.

A  valuation allowance to reduce the carrying balance of capitalized land/land
options  and  development  costs  associated  with  these  leases has not been
recorded.  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.


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

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.

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.  No  other extensions and/or agreements had been
negotiated  prior  to  the  date  of  the  auditor's  report.

At  June  30,  1997, the Company owed approximately $140,000 to the Kate-Hardy
Mine  lessor.  The outstanding balance is included in accounts payable at June
30,  1997.

A  valuation allowance to reduce the carrying balance of capitalized land/land
options  and  development  costs associated with the Kate-Hardy Mine lease has
not  been recorded. 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.


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

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.


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

Accounts  payable and accrued liabilities consist of the following at June 30,
1997:
<TABLE>
<CAPTION>


<S>                          <C>

  Accounts payable           $1,365,207
  Accrued payroll and other     405,807
                             ----------

                             $1,771,014
                             ==========
</TABLE>



NOTE  8  -  LONG-TERM  DEBT
            ---------------

Long-term  debt  consists  of  the  following  at  June  30,  1997:
<TABLE>
<CAPTION>


<S>                                           <C>

Royal Bank of Scotland litigation settlement
dated December 13, 1995. Settlement calls
for a combination of cash and stock
(see Note 13).                                 1,034,000

Less current portion                             672,000
                                              ----------

                                              $  362,000
                                              ==========
</TABLE>



NOTE  9  -  INCOME  TAXES
            -------------

At  June  30, 1997, 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 $31,000,000 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, 1997,
the  available  benefits are more likely than not to expire before they can be
used.


<PAGE>
NOTE  10  -  SHAREHOLDERS'  EQUITY
             ---------------------

During  fiscal  1997,  the  following  major  equity  transactions  occurred:

 The  Company  sold  2,867,563  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  20,000 shares of Common Stock with a value of $5,200 in
connection  with  its  acquisition  of  the  New  California  Placer  Mine.

 The  Company issued 165,000 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.

The Company sold 3,600,005  restricted  shares of Common Stock at $.0625 per
share wherein the Company  received  net  proceeds  of  $225,000; 6,600,000
restricted shares of Common  Stock  at  $.07 per share wherein the Company 
received net proceeds of $460,600;  1,754,545  restricted  shares  of  Common 
Stock  at $.11 per share wherein  the  Company  received net proceeds of 
$193,000; 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) of  the  Securities  Act  of  1933.
Investors  who  acquired such shares were required  to  be  accredited 
investors. The Company has agreed to register theshares  pursuant  to  a 
registration statement to be filed with the Securitiesand  Exchange  Commission.

During  fiscal  1996,  the  following  major  equity  transactions  occurred:

 The  Company  sold  6,783,503  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 1,100,000 shares as partial settlement of the Zuri Invest
litigation.

 The  Company issued 216,667 shares as partial settlement of the Royal Bank of
Scotland  litigation.

During  fiscal  1995,  the  following  major  equity  transactions  occurred:

 The  Company  sold  2,566,666  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  215,099  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.


<PAGE>
NOTE  10  -  SHAREHOLDERS'  EQUITY  -  (Continued)
             ---------------------

During  fiscal  1993,  the  following  major  equity  transactions  occurred:

 The  Company  issued  539,402  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 37,290 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 105,140 shares of Common Stock with a value of $713,494 in
satisfaction  of  outstanding  debt  obligations  amounting  to  $558,592.(*)

 The Company issued 100,256 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  183,190  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 10,664 shares of stock at $7.50 per share, totaling $80,000.

 The  Company issued 33,334 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  155,335  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  10,311  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 24,800
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 5,333
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  24,439  shares  of  Common  Stock  in  satisfaction  of
outstanding  debt  obligations  amounting  to  $336,617.(*)

 The  Company issued 88,000 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  117,912  shares of Common Stock in exchange for certain
legal,  engineering,  and employment services rendered to the Company totaling
$1,286,852.(*)


<PAGE>
NOTE  10  -  SHAREHOLDERS'  EQUITY  -  (Continued)
             ---------------------

 In  May  1992, the Company entered into a three-year consulting contract with
Mr.  Anderson  in  exchange  for  issuing 66,667 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 142,100 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 131,727 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
33,333 shares of the Company's Common Stock at $.50 through July 1992. In July
1990,  the  Company  sold  an  additional  141,606 units. The Company received
$910,840  after  offering  expenses.  Warrants  covering  253,333  shares  are
exercisable at $.70 through June 1992, and warrants covering 20,000 shares are
exercisable  at  $.90  through  June  1992.

 On  June  26, 1990, the Company's Board of Directors approved the issuance of
73,766  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 120,000 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 49,272 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  20,000 shares of Common Stock valued at fair
market  value  of  $581,250  to  an  engineering  firm  for  past  and  future
services.(*)


<PAGE>
NOTE  10  -  SHAREHOLDERS'  EQUITY  -  (Continued)
             ---------------------

 The  Company entered into a litigation settlement with Mr. Benarroch, whereby
66,667  shares  of the Company's outstanding Common Stock were returned to the
Company  and, simultaneously, the Company issued back to Mr. Benarroch 100,000
shares,  valued  at  fair  market  value  of  $1.75  per share. The settlement
resulted  in  a  net  issuance  of  33,333  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  150,000  shares  for  $450,000.

 In March 1990, Ms. Anderson sold 66,667 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 235,000 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.


NOTE  11  -  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 33,333 shares of the
Company's  Common Stock at the market price on the date of grant.  At June 30,
1997,  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,  1997.

The  Company  applies APB Opinion 25 and related interpretations in accounting
for  its stock option plan. 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 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>


                                        1997          1996
                                    ------------  -------------
<S>                    <C>          <C>           <C>

  Net loss             As reported  $(4,288,420)  $ (9,270,102)
                       Pro forma    $(4,445,984)  $(10,381,575)

  Net loss per common
    share              As reported  $      (.21)  $       (.96)
                       Pro forma    $      (.21)  $      (1.08)
</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.


<PAGE>
NOTE  11  -  STOCK  OPTIONS  AND  WARRANTS  (Continued)
             -----------------------------

A summary of the status of the Company's stock option plan as of June 30, 1997
and  1996,  and  changes  during  the years ending on those dates is presented
below:

1997
----
<TABLE>
<CAPTION>
                                                  Weighted                                                   
                                                  Average
                                                  Exercise      
                                         Shares    Price
                                       ----------  -----
<S>                                 <C>  <C>         <C>

Fixed Options
  Outstanding at beginning of year     1,051,000 
    Granted                            1,010,000     .23
    Cancelled                           (875,000)   2.27
    Exercised                                  - 
                                       ----------       
  Outstanding at end of year           1,186,000 
                                       ==========       
Options exercisable at year end        1,186,000 
                                       ==========       
Weighted-average fair value of
 options granted during the year       $     .18 
                                       ==========       
</TABLE>


1996
----
<TABLE>
<CAPTION>

                                                  Weighted
                                                  Average
                                                  Exercise
                                         Shares    Price
                                       ----------  -----
<S>                                 <C>  <C>         <C>

Fixed Options
  Outstanding at beginning of year       279,000 
    Granted                              789,500    2.11
    Cancelled                            (17,500)   3.03
    Exercised                                  - 
                                       ----------       
  Outstanding at end of year           1,051,000 
                                       ==========       
Options exercisable at year end        1,051,000 
                                       ==========       
Weighted-average fair value of
 options granted during the year       $     .93 
                                       ==========       
</TABLE>


The  following  table  summarizes  information  about  fixed  stock  options
outstanding  at  June  30,  1997:
<TABLE>
<CAPTION>
                           Options Outstanding   Options Exerciseable 
                           -------------------   --------------------
                           Weighted-              
               Number       Average               Number
             Outstanding   Remaining  Weighted  Outstanding   Weighted
Range of         at       Contractual Average       at        Average
Exercise       June 30,      Life     Exercise    June 30,    Exercise
Prices          1996        (Years)    Price       1997        Price
---------      -------      -------    -----     --------     --------

<S>            <C>          <C>        <C>       <C>          <C>

2.00-2.63       104,000      1.55          -      104,000            -
 .85-4.13        72,000      3.29       2.00       72,000         2.00
      .23       960,000      4.74        .23      960,000          .23
      .25        50,000      2.00        .25       50,000          .25
</TABLE>



<PAGE>
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, 1997 and 1996
was  approximately  $30,000,  respectively.

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.

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, 1997, 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.


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

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 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


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

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.


<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).

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.

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

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.

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.

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

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.

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.


<PAGE>
NOTE  15  -  SUPPLEMENTAL  SCHEDULE  OF  NON  CASH  INVESTING  ANDFINANCING
             --------------------------------------------------------------
             ACTIVITIES
             ----------

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


                                             1997       1996
                                          ----------  --------
<S>                                       <C>         <C>

Partial settlement of litigation          $1,200,000  $223,436
Compensation recognized on stock
  options granted                             24,000   160,021
Company stock issued to satisfy
  purchase price adjustments agreements      753,175         -
Company stock issued to convert 7%
  convertible debenture                      300,000   150,000
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.


NOTE  18  -  SUBSEQUENT  EVENTS
             ------------------

In  July  1997,  the  Company  issued  150,000  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 $0.375, the
average  of  the bid and asked price for the Company's Common Stock on July 8,
1997.

Also  in  July  1997,  the  Company  sold  600,000  shares of its Common Stock
pursuant  to  a  Private  Placement at a price of $0.125 per share. The shares
were  sold  pursuant  to Regulation D and Section 4(2). The Company received a
net  amount  of  $75,000  from  the  sale.

Also in July 1997, the Board of Directors approved a Private Placement for the
sale of 1,933,333 shares of the Company's Common Stock at a price of $0.15 per
share  pursuant  to  Regulation D and Section 4(2). The Company received a net
amount  of  $290,000 from the sale. The Company also approved a 10% commission
for  a  finder's  fee  in  connection  with  the  Private  Placement.


<PAGE>
NOTE  18  -  SUBSEQUENT  EVENTS  (Continued)
             ------------------

In  August  1997,  the Board of Directors approved a Private Placement for the
sale  of  1,350,000  of  the  Company's Common Stock at the price of $0.10 per
share  pursuant  to  Regulation D and Section 4(2). The Company received a net
amount  of  $135,000 from the sale. The Company also approved a 10% commission
for  a  finder's  fee  in  connection  with  the  Private  Placement.

Also  in  August  1997,  the  Company issued 125,668 shares to pay for certain
consulting  fees.  The shares were registered with the Securities and Exchange
Commission  on Form S-8. The shares are valued at $0.40625, the average of the
bid  and  asked  price  for  the  Company's  Common  Stock on August 25, 1997.

In  September  1997,  the  Board  of  Directors approved the sale of 4,200,000
shares  of  its  Common  Stock  at  a  price  of  $0.07  per share pursuant to
Regulation  D  and Section 4(2). The Company received a net amount of $294,000
from  the  sale.

Also,  in  September 1997, the Board of Directors approved a private placement
for  the sale of 2,120,000 of the Company's Common Stock at the price of $0.10
per  share  pursuant  to Regulation D and Section 4(2). The Company received a
net  amount  of  $227,000  from  the  sale.

Also in September 1997, the Company issued 100,000 shares to  pay  for certain 
consulting fees.  The shares were registered with the Securities and  Exchange
Commision on Form S-8.  The shares are valued at $0.313,the average of the bid
and the asked price for the Company's Common Stock on September 26, 1997.

<PAGE>
                                 EXHIBIT 11.1

                       COMPUTATION OF EARNINGS PER SHARE


<PAGE>
<TABLE>
<CAPTION>

                                      Year  Ended
                                -----------------------

                            June 30, 1997    June 30, 1996
                           ---------------  ---------------
<S>                        <C>              <C>

Net Loss                   $   (4,288,420)  $   (9,270,102)

Weighted Average Common
  Shares Outstanding           20,831,619        9,634,616 
                           ---------------  ---------------

Net Loss per Common Share  $         (.21)  $         (.96)
                           ===============  ===============
</TABLE>



<PAGE>
                                 EXHIBIT 21.1

                             LIST OF SUBSIDIARIES


<PAGE>







1.    B.  Creek  Acquisition  Corporation


2.    Alpha  Hardware
<PAGE>

                                 EXHIBIT 23.1

                    LETTER OF CONSENT OF INDEPENDENT AUDITORS                 
      
<PAGE>





                         CONSENT OF INDEPENDENT AUDITORS





We consent to incoporation by reference om Registration Statement No. 333-286 
on Form S-3 and Registration No. 333-25025, 333-31053, 333-34417 and 333-36443 
on Form S-8 of Brush Creek Mining and Development Co., Inc., of our report 
dated August 29, 1997 with respect to the consolidated financial statements of 
Brush Creek Mining and Development Co., Inc. included in its Annual Report on 
Form 10-KSB for the year ended June 30, 1997.


                                        BROWN ARMSTRONG RANDALL & REYES
                                        ACCOUNTANCY CORPORATION


                                        /s/Brown Armstrong Randall & Reyes
                                        Accountancy Corporation



Bakesfield, California
October 13, 1997


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                                 EXHIBIT 27.1

                            FINANCIAL DATA SCHEDULE



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