UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                 FORM 10-KSB

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1997

                                      OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
    EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to_______________
Commission file number    0-15078    

                  NOVA NATURAL RESOURCES CORPORATION        
                (Name of small business issuer in its charter)

           COLORADO                                   84-1227328  
  
(State or other jurisdiction of                 (I.R.S. Employer
 incorporation or organization)                 Identification No.)

789 Sherman Street, Suite 550
Denver, CO                                             80203   
(Address of principal                                 (Zip Code)
executive offices)

                               (303) 863-1997                   
                         (Issuer's telephone number)

             Securities registered under Section 12(b) of the Act:

                                    -None-

             Securities registered under Section 12(g) of the Act:

                          Common Stock, $.10 Par Value       
                               (Title of Class)


  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 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 ]

  Issuer's revenues for its most recent fiscal year aggregated:
$829,289.
  Documents Incorporated By Reference:  None
  Transitional Small Business Disclosure Format    Yes_____ No  X 
 

  As of December 5, 1997, the Registrant had outstanding 1,792,267
shares of Convertible Preferred Stock, $1.00 par value, and
6,200,379 shares of Common Stock, $.10 par value, its only classes
of voting stock, and $250,000 principal amount of convertible
subordinated debentures.

  Aggregate market value of the 3,779,703 shares of Common Stock
owned by Non-affiliates of the Registrant as of December 19, 1997
was $207,884, based on the average of the bid and ask prices on
December 19, 1997.  All Convertible Preferred Stock is owned by
affiliates.

                             PART I 

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

Nova Natural Resources Corporation (the "Registrant", "Company" or
"Nova") was incorporated under Colorado Law on April 1, 1993 and is
the surviving company in a merger, effective February 1, 1995, of
the Company and Nova Natural Resources Corporation, a Delaware
corporation.  The merger was effected to change the Company's
domicile from Delaware to Colorado and caused no change in the
Company's capitalization.  The Delaware corporation was the
successor to Nova Petroleum Corporation and Power Resources
Corporation, which merged in 1986.  Prior to that merger, Nova
Petroleum Corporation and Power Resources Corporation operated
since 1979 and 1972, respectively.

BUSINESS DEVELOPMENT
                           Operations

In its past three fiscal years, the Company has focused on
marketing and selling kaolin clay from its Minnesota kaolin mine,
exploring for paper-grade kaolin on leases elsewhere in Minnesota,
seeking partners for exploration and development of gold on its
properties in Alaska and Colorado and seeking partners for
exploratory drilling on two oil and gas prospects in Wyoming. 
While the Company receives revenues from interests in oil and gas
wells in the western United States and owns interests in
exploratory oil and gas leases, the Company does not operate any
wells.

           Significant Developments During Fiscal 1997

NovaChek Limited Liability Company 

In the Spring of 1996, the Company organized NovaChek Limited
Liability Company ("NovaChek"), an Idaho Limited Liability Company,
which was capitalized by an offering pursuant to Regulation D under
the Securities Act of 1933, as amended, principally to fund
operations to recover placer gold and related minerals on certain
State of Alaska off-shore mining leases held by Nova and located
near Nome, Alaska.  Nova held a 42% membership interest in NovaChek
during 1996.  Two of Nova's Directors each hold a 1/3 of 1% net
profits interest in one of the leases sub-leased to NovaChek. 
Offering proceeds aggregating $350,000 were received from the sale
of 35 Units at $10,000 per Unit (an additional five Units were sold
for services).  The Company and Chek agreed to reduce their
interest in NovaChek in order to raise more capital in 1997.  The
Company's interest was reduced to 35.14%.  Each Unit was composed
of one membership interest in NovaChek and a convertible debenture
issued by the Registrant.  The price of each Unit was allocated at
$3,750 as a capital contribution to NovaChek and $6,250 for each
debenture.  Nova also contributed a significant portion of the
debenture proceeds as capital for NovaChek.  Each debenture
provides for interest payments at an annual rate of 10% of the face
amount, payable semi-annually; may be converted into the Company's
common stock at the rate of one share of stock for each $0.15 of
principal; may be redeemed by the Company after March 31, 1998
(holders of $175,000 face amount of the debentures, which includes
both affiliates and non-affiliates, agreed in June, 1996 that the
Company could call the debentures after September 1, 1996, provided
that such `early call' would cause a reduction in the conversion
price to $0.10/share and the payment of six months advance
interest); and is due on April 1, 2001.  No early call has been
made by any debenture holder.

NovaChek is managed by the Company and Chek Technologies and
Exploration, LLC ("Chek"), a Nevada limited liability company.  The
Company serves as the administrative manager of NovaChek, including
all day-to-day responsibilities not entailing mining activities. 
Chek serves as the field operations manager with responsibility for
supervising the mining activity and related matters.  Nova's field
operations role has been primarily geological supervision.  The
ability to decide on major policy matters is a shared decision with
Chek and a number of significant decisions require approval of both
parties.

Nova obtained all of the necessary permits so that NovaChek could
conduct the contemplated mining operations on its leases.  All of
the necessary permits were in place in early June, 1996.

Chek fabricated and assembled a special-purpose jet-pump suction
dredge to mine portions of two of the State of Alaska offshore
mining leases held by Nova, the shallow rights (under between 2 and
10 meters of water) which were subleased to NovaChek.  The initial
operations were planned for an area where the water depth is
approximately 5 meters.  Divers were equipped with an 8-inch
suction nozzle to selectively mine gold-bearing sand and gravel
from the top meter (approximately 3 feet) of the ocean floor.  This
material would be pumped to the dredge, where the sand and gravel
would pass through a trommel to separate the materials and larger
rocks would be discharged immediately.  Smaller materials would
pass through a sluice to recover any coarse gold and material less
than 1.8 inches in size would pass through jigs which concentrated
gold and other heavy minerals.  No chemicals were to be used.  The
concentrate so obtained would be transported to shore for further
concentration before shipping to a refiner.

The Company anticipated that operations would be conducted over
approximately a 93-day season, depending on the weather.  Due to
the adverse weather in Nome, operations can normally take place
from the time the ice goes out in the Spring -- generally late May
-- until early October.  During that period, operations must be
suspended whenever severe weather impacts the Nome area, due to the
risk and operational difficulty of operating when wave heights
reach or exceed approximately three feet.  When ice begins to form
in Nome harbor, the risk of continuing operations increases due to
the possibility that the dredge might become trapped in the harbor
ice.

Although it was intended that the barge and ancillary equipment
would be shipped to Nome and operational in June of 1996, the
equipment did not reach Nome until July due to delays in completion
of the fabrication of the barge.  Assembly of the dredge, which had
been broken down for shipment, proceeded at a slow pace after it
reached Nome, impeded by severe weather conditions at Nome during
the summer, and by a variety of mechanical and engineering problems
encountered in final assembly of the dredge and equipment.  Most,
but not all, of these problems were solved and testing of the
dredge began in late September 1996.  As a result of all of these
difficulties, very limited operations, consisting of approximately
14 hours of intermittent operation of the suction equipment, were
conducted in the 1996 season.  The early onset of winter weather
conditions caused shutdown of all operations for the season in
early October.  On October 9, 1996 the dredge was removed from the
water and stored with all ancillary equipment on land for the
winter.

The Company believed that its experience during the 1996 season
would dictate the modifications needed to improve performance in
1997.  However, since NovaChek had expended its working capital
during 1996 without producing, additional funding was needed for
the 1997 season.  Chek committed to contribute approximately
$60,000 of the funds needed, several of the members invested an
additional $25,000 in cash, the divers accepted membership
interests in lieu of cash payment for a portion of their services,
and Chek's attorney also accepted a membership interest in return
for certain legal work for NovaChek.  These contributions enabled
the project to proceed.

Chek shipped the modified dredge mining and concentration
components, which it had fabricated in Spokane, to Nome in mid-
April.  Chek's personnel modified the dredge and installed the new
components, from mid-April until early June.  The dredge was
launched May 26, but was not ready for significant mining
operations until after the first week of June.  After producing
about 15 ounces of gold and operating for a cumulative total of 27
hours, the dredge was removed from the water June 13 for
modifications of the eductors which transfer slurry from the main
hopper to the primary jigs.  Stormy weather occurred, delaying
further mining until June 21.  The first shipment of 45.4 ounces of
gold concentrate was mailed June 30, and one week later the second
shipment of 42.1 ounces was made.  A third shipment of 38.8 ounces
was mailed July 22, and a fourth and subsequent final shipment of
16.4 ounces was made.

From May 28 to August 4, thirty seven dredging days were achieved
and thirty-two dredging days were lost due to a combination of
weather and mechanical problems.  NovaChek actually dredged a total
of 232 hours in this period or 28% of the potential time.  Wind and
waves restricted operations on most days from about 4 a.m. until
late morning or early afternoon.  The divers tried to maximize
operational time by getting out in the early hours, but the
productive time was less than half of what had been projected.

Production was also less than projected for the hours of actual
operation.  This low rate of production was due to a thin layer of
densely packed cobble gravel covering the entire area.  The gold is
either concentrated along the base of this gravel "armor" where it
rests directly on tough glacial clay or within a soft gravelly
accumulation beneath the "armor".  Where there was a measurable
thickness of the loose gravel, it is possible to undermine the
"armor" and increase the gold production rate.  Unfortunately, no
large areas underlain by loose gravel were found.  The "armor" also
masked the pay zone and made it impossible to limit mining to the
area of high grade.  High-grade zones were dredged into and out of
frequently, so that the average grade was less than what had been
projected from drill tests.

Once dredging was resumed on June 21, the dredge and concentrating
plant were functioning very well.  However, the dredge could not
efficiently mine the hard packed gravel on the sea floor, and it
could not safely operate in the winds which developed on a regular
basis this summer.  One other factor reduced the 1997 gold
production.  The drill holes on which the dredge plans were based
were too widely spaced to adequately define the pay streaks.  It
had been intended to sample ahead of the dredge and set buoys
marking the margins of the high-grade pay zones, but an efficient
sampling device was not developed and tested.  Because of the hard-
packed "armor" on the sea floor, the Company is not certain that
sampling can be done at a reasonable cost.  

In mid-July, testing began of high-grade drill hole sites where the
geologist's logs suggested the possibility of easier mining or no
"armor".  Such testing was not successful.  It is likely that the
sea floor is essentially blanketed with the gravel armor from the
surf zone out to some undetermined depth.  The bottom at depths
greater than 20 feet was not tested, and the possibility of easier
mining at greater depths has not been evaluated.

The Company and Chek determined that the dredge could not
efficiently mine the "armor" which blankets the sea floor.  Also,
the dredge could not navigate safely in the winds which were common
during the past summer.  NovaChek has not been able to successfully
address these deficiencies, and, unsolved, they render the project
unprofitable.  The dredge and concentrator will mine and process 40
cu. yds/hr, but the operations were unable to average more than 8 -
 10 cu. yds/hr.

From early August through mid-September the wind so reduced mining
operations sufficiently that gold sales failed to cover operating
costs and NovaChek again ran out of funds.  Two divers operated the
dredge on an intermittent basis over the last several weeks of the
season, in an attempt to locate easier areas to mine, with higher
grades.  However, the September weather, which is normally fairly
calm and conducive to maximizing operational hours, was mostly
adverse, and few operational hours were achieved.  In early October
the dredge was removed from the water.  NovaChek has sufficient
funds only to store the dredge and all of the equipment over
winter.  

The poor results achieved to date, lack of funds to continue
operations, and low gold prices, which, combined with the poor
operational experience make it unlikely that additional funds can
be raised. Consequently, the Managers--Nova and Chek--have
recommended to the members of NovaChek LLC that the LLC be
dissolved, effective December 22, 1997, and its assets liquidated
to satisfy its outstanding debts, which are primarily owed to Nova,
three members who are also affiliated with Nova (two officers and
directors and one director who is not an officer), and one member
who is a principal of Chek.  The members approved liquidation of
NovaChek on December 22, 1997.  The liquidation of NovaChek's
assets will not be sufficient to discharge these debts, and
accordingly, Nova has written down the value of its NovaChek
investment and loans on its fiscal 1997 financial statements to
$4,000.

Lease Position Offshore Nome, Alaska Reduced

Nova has relinquished leases or portions of leases aggregating
10,537 acres of its 21,411 acres of State of Alaska mining leases
offshore Nome, Alaska, and has assigned its interest in 1,880 acres
of such leases to a third party, retaining a royalty on any gold
produced, and intends to enter into arrangements with third parties
to mine the 8,994 acres it has retained, including the leases
formerly assigned to NovaChek, the rights to which will be returned
to Nova due to NovaChek's inability to perform.  These
arrangements, if made, will be at no cost to Nova, and Nova will
receive a royalty on any gold produced.  Nova may enter into such
an arrangement on the former NovaChek leases with Chek
Technologies.  At this time, it is impossible to determine whether
such arrangements, if entered into, will generate any funds to
Nova.

Oil And Gas Operations

On November 14, 1996, the Registrant sold at an auction conducted
by The Oil & Gas Asset Clearinghouse in Houston, Texas several oil
& gas producing assets and leasehold interests, primarily
overriding royalty interests in producing oil & gas wells in the
Wyoming Overthrust Belt.  Proceeds from this sale, effective as of
November 1, 1996, net of commissions and direct selling costs paid
to the Clearinghouse were $230,257.  The bulk of the interests were
sold to a Denver, Colorado based firm not affiliated with the
Company, which was the successful bidder among a group of bidders
at the auction for the greater portion of the oil & gas assets and
interests referred to above.  

The majority of the value of the properties sold was related to a
single producing well.  Management believed that if a production
problem occurred at some point in the future with that well, the
value of the Registrant's oil and gas reserves could have declined
substantially (although there was no current indication of any
problem).  The sale was made to eliminate that risk, to generate
cash to improve the Company's liquidity, and for re-investment of
cash in the Company's business.  The Company retains other oil and
gas interests, and presently has no intention of withdrawing from
this business.

The Company and Robert McDonald, a Director and the Company's
largest shareholder, have been actively seeking industry
participation in exploratory drilling on two prospects in Wyoming. 
The Company holds an undivided interest of 50% in one and 55% in
the other, with the Robert McDonald Trust, of which Mr. McDonald is
Trustee, holding the balance of the interest.  One of these
prospects has been sold, and the Company has collected a prospect
fee of $13,750, but it is not certain whether this prospect will be
drilled.  If it is not drilled or a lease extension granted before
December 31, 1997, the leases on this particular prospect will
expire.

Nova has no patents, trademarks, licenses, franchises, or
concessions other that certain oil and gas leasehold interests
granted by federal, state, and other governmental authorities, and
private mineral owners.  The Company's oil and gas business is not
seasonal except to the extent that weather and market conditions,
and certain lease terms can affect oil and gas exploration and
production activities.

Sale Of Kaolin Mine

Pursuant to a contract dated January 25, 1997, the Company sold its
cement-grade kaolin mining operation and property (the "Cement
Kaolin Mine") near Redwood Falls, Minnesota, to Northern Con-Agg,
Inc., an unaffiliated Minnesota corporation whose address is 3131
Fernbrook Lane North, Plymouth, Minnesota 55447 ("NCA").  A portion
of the Cement Kaolin mine is located on lands which are currently
subject to a joint venture between the Company and U. S. Borax Inc.
("Borax"), which was formed in 1993 primarily to explore, develop
and produce high quality paper-grade kaolin.  No paper-grade kaolin
has yet been sold from the joint venture property.  Borax released
the portion of the paper-grade kaolin property occupied by the
Cement Kaolin Mine from the joint venture to permit the Company's
sale of the mine to NCA.  The Company sold all of its cement-grade
kaolin operations to NCA, while retaining its interest in the
paper-grade joint venture.  The Cement Kaolin Mine encompasses 314
acres, and the paper-grade kaolin property retained by the Company
encompasses 3,682 acres.  After the sale to NCA, ownership of the
cement-grade kaolin property is separate and distinct from
ownership of the paper-grade kaolin property.  Except for the
inclusion of an immaterial portion of the paper grade kaolin
prospect in the sale to NCA the sale had no impact on the Company's
joint venture with Borax.  The Company is currently negotiating the
termination of the joint venture with Borax, and if these
negotiations are successful, it is expected the Company will
control 100% of the paper-grade properties (see separate
discussion).

Under the terms of the purchase and sale agreement with NCA (the
"NCA Agreement"), NCA acquired approximately 78 fee acres owned by
the Company and an additional 236 acres leased by the Company, as
well as the inventory, equipment, contracts, permits and other
personal property held by the Company in connection with these
cement-grade mining operations.  NCA is continuing the current
cement-grade operations of the Company, and has agreed to turn over
to the Company any profits which it may earn during a 21 year
period after the date of closing as a result of sales of kaolin
produced from the property to paper manufacturers.  The Company
agrees that, if it or any joint venture of which it is a member
sells kaolin to the cement-industry in Minnesota, Iowa, North
Dakota, South Dakota or Wisconsin during a five year period
following the closing, the Company will pay to NCA the sum of
$30,000 for each year in which any sale occurs.

NCA will pay a total of $700,000 to the Company for the Cement
Kaolin Mine.  The Company received $125,000 in cash at closing,
$50,000 on August 15, 1997, and $35,420 ($50,000 less Nova's share
of certain expenses) on December 15, 1997.  Nova will receive an
aggregate of $350,000 in non-interest bearing semi-annual
installments on August 15 and December 15 of each year until August
15, 2001, and a final payment of $125,000 on December 15, 2001.  Up
to $70,008 of the gross NCA proceeds is payable to Thomas F. Kane,
a former director, as part of the Company's purchase of his Common
and Preferred Stock, over the same period as the NCA payments.  The
Company will retain both a mortgage and a security interest
covering the property being sold to NCA in order to secure full
payment of the purchase price.  NCA assumed liability for all
existing contracts relating to the property. 

Pursuant to the contract, when NCA expanded the cement-grade mining
operations, the lessor of the Mine Property had to be relocated
from her home on the property.  NCA paid the first $25,000 of
relocation costs, and Nova was responsible for 50% of the balance
over $25,000.  The lessor agreed to a price of $40,000.  Nova's
portion of the $15,000 ($7,500) was taken out of the NCA payment
due on December 15, 1997.

Prior to the NCA Agreement, NCA had no relationship to the Company,
its officers or directors.  The Company has not secured an
independent opinion concerning the fairness of the consideration to
be paid by NCA, but the Company's officers believe such
consideration to be appropriate based upon the Company's prior net
income from the property, the anticipated kaolin reserves, and the
demand for cement-grade kaolin in the area.  

Purchase of Stock of a Director and Preferred Shareholder

During 1996, disputes arose between Thomas F. Kane, then a
director, and the other directors of the Company concerning
decisions by the other directors and the business operations of the
Company.  Mr. Kane asserted, inter alia, that the continued
operation of the Company was not in the best interests of the
owners of the Company's Preferred Stock who, if the Company were
liquidated, would receive all of the proceeds in the liquidation
after payment to the Company's creditors.  Mr. Kane also asserted
that continuation of the Company's business would cause the
dissipation of assets which otherwise would be distributable to
owners of the Company's Preferred Stock upon liquidation.  Mr. Kane
recommended and proposed that the Company be liquidated and
threatened to commence litigation to force the liquidation and
dissolution of the Company.  The Company's other directors
disagreed with Mr. Kane, determined to continue the Company as a
going concern and determined to oppose any attempt to liquidate and
dissolve the Company.

In resolution of these disputes, the Company, Mr. Kane and Brian
Spillane, the Company's President and a director, entered into an
Agreement(the "Kane Agreement"), dated February 5, 1997, for the
purchase of all of Mr. Kane's Common and Preferred Stock.  By terms
of the Kane Agreement, the Company purchased from Mr. Kane 895,415
shares of his Preferred Stock and 510,342 shares of his Common
Stock.  All of the stock purchased by the Company was retired upon
completion of the purchase.  Mr. Spillane purchased from Mr. Kane
the rest of his stock:  203,426 shares of Preferred Stock and
115,942 shares of Common Stock.  Mr. Spillane paid $50,000 for the
stock he purchased from Mr. Kane.  The Company paid $150,000 and
agreed to pay an amount equal to 12% of the net proceeds from the
sale of the Cement Kaolin Mine less $13,992, as and when received
by the Company.  The Agreement among the Company, Mr. Spillane and
Mr. Kane also contained certain releases of claims between and
among the parties, and certain other representations. 

Mr. Kane proposed that the Company purchase his stock for $400,000. 
Management felt this price was not justified, and if paid, would
place too severe a financial burden on the Company.  Mr. Kane
threatened litigation, which would have destroyed the Company with
no return to any shareholder.  Prolonged negotiations resulted in
an agreement to purchase Mr. Kane's stock for a downpayment of
$200,000($150,000 of which was paid by the Company and $50,000 was
paid by Mr. Spillane).  The amount to be paid would be affected by
the outcome of negotiations then underway for the sale of the
Cement Kaolin Mine, since this affected the book value of the
Company.  In order to accommodate this uncertainty, it was agreed
that there would be future payments by the Company of either a
royalty on kaolin sales of $0.10 per ton, as such tons are sold and
paid for, or a percentage of the payments received from the sale of
the mine.  Mr. Kane felt this percentage should be as high as 20%,
and management felt 10% was the correct figure.  In the
negotiations, it was agreed that this percentage would be 12%. 
Once a price was determined for all of the stock held by Mr. Kane
and his affiliated entities, it was determined that 466,395 common
shares were controlled by a Trustee of an affiliate who refused to
allow the sale of the shares.  The withheld shares were valued by 
Nova management at $.03 per share, or a total of $13,992.  Since
the maximum amount which would have been received by Mr. Kane
pursuant to 12% of the net proceeds of the sale of the Cement
Kaolin Mine would be $84,000 (12% times $700,000) if all of the
stock were purchased, the purchase price was reduced by $13,992. 
Accordingly, the maximum future amount to be paid to Mr. Kane is
$70,008 ($84,000 minus $13,992).  However, that amount will be
reduced by 12% of expenses of the sale or not less than $65,808.

The Colorado Business Corporation Act and the Company's Articles of
Incorporation and Bylaws permitted the Company to purchase Mr.
Kane's stock without approval of its shareholders so long as
certain financial requirements were satisfied.  In the opinion of
management, these statutory requirements were met.

Stock Repurchase

The Company decided to offer to purchase all of the shares of
Common Stock of any shareholder who did not vote in favor of the
Cement Kaolin Mine sale and requested such a repurchase.  Pursuant
to a procedure established by management in a manor similar but not
identical to the procedure for dissenter's rights established by
the Colorado Business Corporate Act.  Management believes that the
combination of its Cement Kaolin Mine sale and its sale of oil and
gas overriding royalty interests and purchase of the stock of
Thomas F. Kane represented material events which might have
prompted a shareholder to sell his Common Stock if an adequate
market for that Stock existed.  The Company recognized that the
absence of an active trading market impeded such a sale.  As such,
management decided to afford shareholders who disagreed with these
decisions or with the directors' decision to continue operation of
the Company the ability to sell their Common Stock at $.04 per
share.

Shareholders tendered 44 certificates (a total of 13,700 shares)
for redemption in fiscal 1997.  In October 1997 (Fiscal 1998) a
total of 411,447 shares were tendered for redemption by 2
shareholders. 

                     Business of the Issuer

Mineral Operations

The Company sold its cement-grade kaolin mine, effective July 22,
1997 (see Significant Developments During Fiscal 1997). Prior to
the mine sale, Nova produced and sold 31,634 metric tons of kaolin
to a single customer during fiscal 1997.  Pursuant to the contract
of sale of the mine, the Company is restricted from selling cement-
grade kaolin to its former customers and certain potential
customers for a five-year period.  The Company presently has no
plans to re-enter this business, and is concentrating its efforts
on its paper-grade kaolin project in Minnesota.  The Company's gold
exploration and production activities are currently limited to the
retention of a royalty interest in certain of its offshore Nome,
Alaska leases.  While the Company holds properties for possible
future development of limestone products, it has no immediate plans
to pursue that business.

There is a significant difference between cement-grade kaolin and
paper-grade kaolin.  Cement-grade kaolin is essentially a low-
alkali source of alumina, which is a necessary ingredient in the
manufacture of cement, and it is mined and loaded directly onto
railcars for delivery to the customer without further processing. 
Paper manufacture is a highly sophisticated procedure in which an
extremely thin layer of kaolin is applied to the surface of paper
as a coating while the paper is rotating on a drum at surface
speeds of approximately 4,000 feet per minute.  The purpose of the
kaolin coating is to increase brightness and opacity and improve
the printing characteristics of the paper surface.  The kaolin must
meet stringent brightness, viscosity and other criteria in order to
be suitable for coating paper. Unless the raw kaolin has a base
level of certain parameters such as brightness, it cannot be
rendered suitable by processing for use in paper manufacture. 
Processing of raw kaolin which meets base-level criteria involves
screening to reduce undesirable constituents, magnetic separation,
acid treatment and other steps which purify it and render it
suitable for use in paper manufacture.  These processing steps are
expensive, and paper-grade kaolin typically sells for prices in the
range of thirty times the price of the commoner cement-grade
product.

Paper Grade Kaolin

In 1990, Nova granted, and later extended, an option to U.S. Borax
Inc., an unaffiliated mineral development company which is a
wholly-owned subsidiary of London-based Rio Tinto plc("Borax"), to
explore for paper-grade kaolin and other industrial minerals on the
Company's paper grade kaolin prospect (the "Prospect") in
southwestern Minnesota.  During the term of the option, Borax
expended approximately $400,000 in combined exploration and land
activities and earned a 65% interest in the Prospect.  In August
1992, Borax exercised its option to enter into a joint venture
("the Joint Venture") at which time Nova was paid an additional
$165,000.  The joint venture and operating agreement became
effective July 1, 1993.  Under the operating agreement, the Company
assigned a 100% working interest in the prospect to Borax in
exchange for the agreement by Borax to pay 100% of the costs of
exploring for and developing paper grade kaolin and other
industrial minerals on property in the prospect.  The Company
retained a net proceeds interest in the prospect until Borax 
recovered 100% of its capitalized costs.  At that time, the Company
had the option to purchase a 30% working interest by paying Borax
an amount equal to 15% of the capitalized costs from April 1, 1993
to the date of recovery of those costs by Borax.

Exploration activities performed by Borax on this exploration-stage
property to date include drilling 185 exploratory core holes on
portions of the properties, bulk sampling, testing and evaluating
the quality of the kaolin contained therein, and the construction
and operation of a pilot-scale kaolin processing facility. A pilot-
scale facility was constructed by Borax and became operational in
Georgia during 1996.  Processed kaolin from the Joint Venture's
property has previously been shipped to paper mills in Minnesota
and Wisconsin, where generally successful coating tests were
completed.  These tests are steps in the evaluation process and
cannot be regarded as any guarantee of commercial feasibility,
however, the results of these tests are encouraging.

Thirty-six of the 185 core holes were drilled in 1996, but only
seven of the 1996 cores have been processed, nor have the bulk
samples from the last four large-diameter holes been processed.  
These four samples represent about 20 tons of kaolin from the
largest and best-defined deposit.  After completing the 1996
drilling program, Borax shipped the cores and bulk samples to
Georgia, processed the seven cores, then placed the remaining 29
cores in storage, and ceased active development of the project,
citing budget priorities at Rio Tinto.  (Results from the seven
holes are consistent with the good results obtained from previous
drilling in the same area).

In late summer, 1997, Borax informed Nova that processing of the
cores from the 1996 drilling program would be further deferred, and
that Rio Tinto would limit funding to lease maintenance through the
end of 1998.  Budget priorities on other worldwide projects were
taking precedence.

Management determined that Borax's plans were unacceptable to Nova,
in view of the favorable results of the program, and Nova notified
Borax that unless Borax was willing to aggressively pursue the
project, Nova desired to immediately open negotiations to replace
Borax with a partner who was willing to carry the project forward
to commercial realization on a more aggressive schedule.  In August
1997, representatives of Nova and Rio Tinto/Borax met in Denver and
agreed to propose a termination of the joint venture to Rio Tinto
and to Nova's Board of Directors.  Terms acceptable to both parties
were subsequently negotiated, and a definitive agreement has been
drafted for signatures.  It is expected the termination will take
effect on or about January 1, 1998.  Under the settlement
agreement, Nova owns an exclusive option until December, 2001, to
purchase all of Borax's earned interest in the project for a
payment of $300,000.  If the payment is not made, Nova must assign
the critical leases -- all of which are held by Nova -- to Borax. 
During the option period, Nova will have full operating rights on
the properties.

Nova moved the cores and bulk samples to a secure facility under
Nova's control in Milledgeville, Georgia in October 1997, and has
begun analysis of the results of the 1996 drilling campaign.  The
Company is seeking a new co-venturer who will agree to implement a
more aggressive development program.  In the absence of such a co-
venturer, Nova will be unable to continue the project on the scale
required unless sufficient funding is obtained from that partner,
the availability of which cannot be assured at this time.

In order to produce a commercial product, a processing facility and
associated mining facilities would have to be designed and built,
the total cost of which, including the exploration and development
activities contemplated for the next several years, could reach $50
million.  The location of these properties affords a significant
transportation advantage over the current primary source of paper-
grade kaolin in Georgia, since a significant portion of the paper
manufacturing plants in the United States which utilize kaolin are
located in the Upper Midwest, within easy reach of the joint
venture's properties.

Nome Gold

In April 1984, Nova acquired a gold prospect located offshore Nome,
Alaska.  In May 1985, Nova transferred all of its rights and
obligations in the Nome Gold Prospect (the "Nome Prospect") to
Inspiration Gold, Inc., who later transferred that interest to
Western Gold Exploration and Mining Company, Limited Partnership
("WestGold"), a non-affiliated mining entity, and retained a 10%-
17% net profits royalty.

During five full seasons of dredging in the Nome Prospect, WestGold
recovered approximately 121,000 ounces of gold.  Notwithstanding
such operations, WestGold was unable to profitably mine this
property and Nova did not receive any income pursuant to its net
profits royalty interest.

In September, 1990, WestGold terminated its operations and returned
the project to Nova.  At that time, Nova also received a
substantial portion of the data gathered by WestGold.  The Company
retained a former WestGold geologist who catalogued and put the
data into a form suitable for use in marketing the Nome Prospect to
a new partner.  Due to the lack of success in finding a buyer or
joint venture partner who would be willing to make an up-front
payment to the Company of its historical cost in this property, and
the uncertainty as to whether any arrangement entered into would
recover those historical costs, for accounting purposes, the
Company wrote off its investment in the property in fiscal 1995. 
However, the Company's efforts to put the property into production
continue.  

Nova initiated mining operations on a portion of the property on a
joint-venture basis during 1996, and further operations were
conducted in 1997 (see also 'Significant Developments During Fiscal
1997').  The managers of NovaChek -- Nova and Chek Technologies --
have recommended to the members of NovaChek LLC that the LLC be
dissolved and the venture terminated.  The termination of the LLC
was approved by the members, effective December 22, 1997.  The
lands subject to the NovaChek LLC sublease revert to Nova due to
NovaChek's failure to fulfill the requirements of the sublease.  

Nova formerly held State of Alaska leases offshore Nome aggregating
21,411 acres.  The Company has elected to relinquish leases or
portions of leases aggregating 10,537 acres, has assigned leases or
portions of leases aggregating 1,880 acres, retaining a royalty on
any gold production achieved, and has retained leases or portions
of leases aggregating 8,994 acres, on all of which it intends to
enter into arrangements with other entities interested in
initiating mining operations at no cost to Nova.  The Company
contemplates arrangements whereby rental payments will be paid by
third parties, and Nova will retain a royalty interest in any gold
production achieved.  The Company's discussions with such third
parties may or may not result in additional mining activities on
the properties during 1998.  The Company may enter into such an
arrangement with Chek Technologies on all or a portion of the
former NovaChek sublease.  At this time, there cannot be assurance
that these third-party arrangements will be finalized, but the
Company believes that this will be the case.

Querida

The Company held a 42.22% to 45% interest in an exploration stage
gold prospect in Custer County, Colorado.  The balance of the
interest was held by the Robert E. McDonald Trust.  An extensive
drilling program was commenced in October, 1993.  The results of
this drilling program have been reviewed and the Company has
determined further exploration activities are necessary to define
this project.  No further exploration activities have taken place
since the 1993 program.  The Company and the Trust elected to
terminate their interest in this prospect during fiscal 1997 due to
low gold prices and the probability that the Company and the Trust
would be unable to interest an industry partner in financing
further exploration on the properties.  Due to the lack of
certainty as to whether Nova would be able to recover its
historical costs in the Querida prospect, for accounting purposes,
the Company wrote off its investment in the property during the
1995 fiscal year.

West Rozell Prospect

The Company holds a 50% interest in 1,600 acres of State of Utah
oil and gas leases in the Great Salt Lake.  The other 50% is held
by the Robert E. McDonald Trust.  The Company and the Trust have
jointly been attempting to interest an industry partner in
developing the heavy oil resources known to exist under these
leases, which resources were estimated by Amoco Production Company
to exceed 90 million barrels in place.  Amoco estimated that 1% to
10% of the oil in place might be recoverable.  However, Amoco
abandoned its effort to put the leases into commercial production
using the technology then available, and dropped the leases in
1989.  Technology has improved to the point where the outlook for
improved recoveries of the oil in place appears favorable.

In March 1997 the Company and the Trust entered into an agreement
with Roaring River Resources LLC ("Roaring River"), an unaffiliated
third party, pursuant to which Roaring River was granted an option
to acquire the leases and attempt to put them into production.  
Roaring River intended to apply technology not previously available
to Amoco.  The Company and the Trust will each retain a 1.5%
overriding royalty if the option is exercised.  Roaring River made
a payment of $5,000 on April 16, 1997 to maintain the option,
however, a further payment of $20,000 scheduled to be made on or
before July 15, 1997 to keep the option in effect was not made, and
the Company agreed with Roaring River to extend the timing of this
payment.  The extension expired on September 8, 1997.  Upon
exercise of the option, a final payment of $225,000 (of which the
Company will receive half) must be made.  The Company granted
another extension to Roaring River, but now considers the option of
the option null and void.  The Company would prefer to enter into
a new arrangement with Roaring River, if it appears they have the
ability to perform, but under the circumstances, Nova must consider
an arrangement with other parties.  At present, it cannot be
determined whether any such arrangement can be made, nor can it be
ascertained with certainty when, or if, the properties will be put
into production.  The leases will expire August 31, 1999 if
production has not been established unless an extension can be
obtained from the State of Utah.

Environmental Regulations 

Inherent in all mining operations is the obligation to comply with
environmental, reclamation, and other applicable state and federal
laws and regulations.  The Company has obtained those environmental
permits, licenses or approvals required for its operations. 
Management is not aware of any violations of environmental permits,
licenses or approvals issued with respect to the Company's
operations.  In the past, Nova has been involved in extensive
hearings regarding the environmental impact of its Minnesota kaolin
mine and has voluntarily taken steps to mitigate any environmental
impact. While the Company believes it is currently in compliance
with all such laws and regulations and is not aware of any current
violations, the applicability and impact of, and the Company's
obligations under such provisions cannot always be determined with
certainty.  However, the Company's liability could continue after
relinquishment of its interest in its properties, even in the
absence of operations. As such, the Company cannot fully determine
the extent of its liability or potential liability in connection
with these matters.

The Company is not currently subject to any pending administrative
or judicial enforcement proceedings arising under environmental
laws or regulations.  Environmental laws and regulations may be
adopted in the future which may have an impact upon the Company's
operations.  The Company cannot now accurately predict or estimate
the impact of any such future laws or regulations on its
operations.

Exploration and Development Arrangements

The Company's financial resources are not sufficient to fund
significant exploration or development of its mineral properties. 
Therefore, to evaluate and, if justified, to develop its mineral
prospects, Nova typically enters into arrangements under which
other companies acquire a portion of the Company's interest in the
properties in return for performing necessary activities. The terms
of these arrangements generally are dictated by the type of
minerals involved, the extent of prior development, prospective
value of the properties and other diverse factors.

While the Company intends to retain a working interest in its
properties when possible, it has in the past and may from time to
time, sell its entire interest and retain only a royalty or other
income interest to reduce risk and obtain working capital for
exploration and development.

Mineral exploration and development is highly competitive.  Success
is dependent on a number of factors including the ability to
identify areas having mineral potential, to acquire leases or other
mineral interests in such areas, and attract sufficient capital to
acquire, explore and develop mineral properties.  The minerals
industry is dominated by a number of large companies having
resources far in excess of Nova.  The Company's competitors include
mining companies, major oil companies and companies in unrelated
fields making it impossible to estimate the actual number of
competitors.  Furthermore, a significant portion of the data
utilized by the Company in making acquisitions is public
information.  Mining permits are required by various state and
federal agencies before mining can be undertaken.  There is no
assurance that the necessary permits can be acquired or that the
projects would be economically viable if the permits are acquired.

The Company has no patents, trademarks, licenses, franchises, or
concessions other than certain leasehold interests granted by
federal, state, and other governmental authorities, and private
mineral owners, although the Company will have certain licensing
rights pursuant to its pending agreement with U.S. Borax to a
patent which was granted to Borax in connection with its kaolin
processing technology development in support of the joint venture. 
The Company's mineral business is not seasonal except to the extent
that weather and market conditions can affect exploration and
production.

Oil and Gas Operations

The principal hydrocarbons currently produced from properties in
which Nova has an interest are crude oil and natural gas. Such
products are sold by or on behalf of the Company to purchasers
located near the wellhead.  None of the entities purchasing the
Company's production is an affiliate of the Company.

During fiscal 1997, the Company had three customers which accounted
for approximately 75% of its total oil and gas sales:  Scurlock
Permian Corporation (32% of total oil and gas sales), Chevron
U.S.A. (14%) and Eighty Eight Oil Company (29%).  Because
purchasers for oil and gas are generally available and prices paid
for oil and gas do not fluctuate materially from purchaser to
purchaser, Nova believes that the loss of any of these purchasers
would not have a materially adverse effect on its financial status. 
Although the Company believes a ready market exists for its
hydrocarbon production, the acquisition, exploration, development,
production, and sale of oil and gas are subject to many factors
beyond its control, including worldwide and domestic economic
conditions, political stability in the Persian Gulf, oil import
quotas, availability of drilling rigs, casing and other equipment
and supplies, proximity to and availability of gas pipelines,
supply and price of competing fuels, and the regulation of prices,
production, transportation, and marketing by certain federal and
state governmental authorities.  The source and availability of raw
materials affecting Nova's oil and gas operations is generally
limited to the availability of oil field equipment and supplies,
including tubular steel products and drilling rigs, all of which
currently are in sufficient supply.  However, any shortages of or
delays in obtaining such materials could delay drilling or
production activities and adversely affect operations conducted by
Nova or by operators of its properties.
    
The oil and gas industry is extremely competitive and involves a
high degree of risk.  The Company is in competition with "major"
integrated oil and gas companies, other independent oil and gas
companies, and other entities.  The Company cannot ascertain the
exact number of its competitors or its relative competitive
position, but does not believe such factors to be of significance.

Nova's exploration and development activities are subject to all of
the risks and hazards typically associated with such activities.
Among these risks are the necessity of expending large sums of
money to acquire properties and drill exploratory wells which are
usually non-productive or may not generate income sufficient to
repay the cost of drilling.  A large number of companies and
individuals, many with financial resources and staffs greater than
those of the Company, are engaged in exploration for and
development of oil and gas.  Accordingly, the Company may be at a
competitive disadvantage on its property acquisition activities.

Nova requires working capital to carry lease costs and delay
rentals until arrangements can be negotiated with other entities to
explore and/or develop Nova's oil and gas properties.  Consistent
with industry practice, working capital may be generated by the
Company from proceeds of production, sales of properties and
operating fees.  At September 30, 1997, the Company did not operate
any of its producing oil and gas properties.  However, the Company
does operate a number of exploratory properties.  The Company was
aggressively marketing two prospects, both in Wyoming, in an
endeavor to interest industry partners in funding exploratory
drilling efforts on either or both of these prospects.  In October,
1997, the Company sold one of these properties to North American
Resources, a subsidiary of Montana Power Company for $25,000
(55.56% of which was Nova's interest, the balance being the
interest of the Robert E. McDonald Trust) and retained an
overriding Royalty interest.  To date the property has not been
drilled, and it cannot be determined at this time whether the
property will be drilled prior to the expiration of the leases,
which are due to expire, unless extended, on December 31, 1997.

The nature of Nova's business precludes a backlog of orders. There
is no portion of the Company's business which may be subject to
renegotiation or termination at the election of the Government. 
The Company has not engaged in any research and development
activities as those terms are customarily used.

In recent years, the natural gas industry has undergone substantial
changes, principally as the result of gas pipelines withdrawing
from their historical role as merchants and purchasers and
restricting their involvement to transportation.  As a result,
producers like Nova increasingly will have to find new purchasers
for their natural gas.  Nova is not dependent upon any single
customer for purchases of natural gas.

On November 14, 1996, the Registrant sold at an auction conducted
by The Oil & Gas Asset Clearinghouse in Houston, Texas several oil
& gas producing assets and leasehold interests, primarily
overriding royalty interests in producing oil & gas wells in the
Wyoming Overthrust Belt.  Proceeds from this sale, net of
commissions and direct selling costs paid to the Clearinghouse were
$230,257.  The sale was effective as of November 1, 1996.  The bulk
of the interests were sold to a Denver, Colorado based firm not
affiliated with the Company, which was the successful bidder among
a group of bidders at the auction for the greater portion of the
oil & gas assets and interests referred to above.  The net book
value of the assets sold represented approximately 10% of the
Company's total assets as of September 30, 1996.  

The majority of the value of the properties sold was related to a
single producing well.  If a production problem occurred at some
point in the future with that well, the value of the Registrant's
oil and gas reserves could have declined substantially (although
there was no current indication of any problem).  The sale was made
to eliminate the aforementioned risk, to generate cash to improve
the Company's liquidity, and for re-investment of cash in the
Company's business.  The Company retains other oil and gas
interests, and presently has no intention of withdrawing from this
business.  The Company and Robert McDonald, its Board Chairman, are
currently actively seeking industry participation in exploratory
drilling on two prospects in Wyoming, in both of which the Company
holds an undivided interest, with the Robert McDonald Trust, of
which Mr. McDonald is Trustee, holding the balance of the interest.

Nova has no patents, trademarks, licenses, franchises, or
concessions other than certain oil and gas leasehold interests
granted by federal, state, and other governmental authorities, and
private mineral owners.  The Company's oil and gas business is not
seasonal except to the extent that weather and market conditions
can affect oil and gas exploration and production activities.

Environmental Regulation - Oil and Gas

Drilling and production activities are subject to regulation under
federal and state pollution control and environmental laws and
regulation.  The Company is subject to a variety of federal, state,
and local environmental laws relating to spillage, noise, air
quality, and disposal of waste products arising from the Company's
operations.  Such environmental and conservation laws and
regulations could significantly limit the Company's activities and
increase the costs of exploring and developing its acreage. 
Existing as well as future legislation could cause additional
expense, capital expenditures, restrictions and delays in the
development of properties, the extent of which cannot be predicted. 
Additional energy taxes, higher patent and permit fees and similar
proposals have been discussed in Congress, but the Company is
unaware at this time of any pending legislation which would
adversely affect its operation.

Regulation of Production and Pricing

Production and sale of oil and gas are subject to federal and state
governmental regulation, which while lessening in recent years,
includes limitations on the production of oil and gas by
restricting the rate of flow for oil and gas wells below their
actual capacity to produce.  Restrictions on the purchase prices
for natural gas have largely been rescinded by the Natural Gas
Decontrol Act of 1989.  A phase-out of such regulations was
substantially complete by mid-1993.  While the effect of such
deregulation cannot be determined, the predictability of gas
pricing is anticipated to be substantially lessened as a result of
such decontrol and changes in the operations of gas pipelines from
purchasers to transporters of gas.  To the Company's knowledge, as
of September 30, 1997, none of the Company's gas reserves were
subject to price controls.

Employees

At September 30, 1997, Nova had four full-time employees.  The
Company also utilizes the services of various consultants and
independent contractors with expertise in those fields of interest
in which the Company is active.  The Company has no contracts with
these consultants.

ITEM 2.  DESCRIPTION OF PROPERTIES

PERSONAL PROPERTY

The Company's personal property consists of furniture and fixtures
and technical equipment, with a total net book value at September
30, 1997 of $2,671.

OFFICE LEASE

In February 1997, the Company moved from a much larger office space
in the downtown area into smaller space in mid-town, reducing its
rental cost almost 50% over the first twelve months of its lease
from approximately $2,500 per month to $1,318 per month.  The
Company's current office lease is a three-year lease effective
February 1, 1997.  The space consists of 1,517 square feet, and
lease payments for the first year of the lease will be $15,810. 
These payments will increase to $18,059 during the second year of
the lease, and to $18,817 during the final year.

OIL AND GAS PROPERTIES

All of the Company's oil and gas properties are located within the
continental United States.  There are no quantities of oil and gas
subject to long-term supply or similar agreements with foreign
governments or authorities.

No major discovery or other favorable or adverse event is believed
to have caused a significant change in the estimated proved
reserves of the Company subsequent to September 30, 1997 shown in
the following sections, which set forth information concerning the
Company's interests in oil and gas properties.

          Proved Reserves and Present Value Information

For information concerning the Company's proved reserves and
present value information, see "Supplementary Information On Oil
And Gas Operations."  Estimates of the Company's estimated proved
oil and gas reserves and present value of the estimated future net
revenues attributable to such reserves for the year ended September
30, 1997 and 1996 are based upon reports by the independent
consulting firm of D. J. Low, Inc.  The Company files such reports
with the Securities and Exchange Commission, pursuant to
regulations of that agency which also provides public access to
those documents.

The Securities and Exchange Commission requires that estimates of
reserves, estimates of future net revenues and the present value of
estimated future net revenues be based on the assumption that oil
and gas prices will remain at current levels (except for gas prices
determined by fixed contracts), and that production costs will not
escalate in future periods.  The present value of estimated future
net revenues for fiscal years 1997 and 1996 has not been adjusted
for income taxes because significant net operating loss
carryforwards exist for income tax and financial reporting
purposes.  All such estimates have been adjusted for the
anticipated costs of developing proved undeveloped reserves.

Reserve calculations require estimation of future net recoverable
reserves of oil and gas and the timing and amount of future net
revenues to be received therefrom.  Such estimates are based on
numerous factors, many of which are variable and uncertain. 
Accordingly, it is common for the actual production and revenues to
vary from earlier estimates.  Estimates made from the first few
years of production from a property are not likely to be as
reliable as later estimates based on a lengthy production history. 
Hence, reserve estimates and estimates of future net revenues from
production may vary from year to year.  The Company has not
provided reserve estimates to any federal agency other than the
Securities and Exchange Commission.

                Production, Average Sales Price,
             and Average Production (Lifting) Costs

The following table sets forth oil and gas production (net of all
royalties, overriding royalties, and other outstanding interests of
other entities) attributable to the Company for the fiscal years
ended September 30, 1997 and 1996 and the average sales prices and
production costs per unit of production.
<TABLE>
<CAPTION>

                                          Years Ended September 30, 
          
                                                  1997        1996
<S>                                             <C>          <C>
Production:
  Oil (Bbls) . . . . . . . . . .                  5,181       7,675
  Gas (Mcf)  . . . . . . . . . .                 19,147      48,160
Average Sales Prices:
  Oil (per Bbl)  . . . . . . . .                 $18.34      $19.96
  Gas (per Mcf)  . . . . . . . .                 $ 1.36      $ 1.34
Average Production Costs
  Per Equivalent Barrel Of Oil*.                 $10.78**    $ 4.67
<FN>                  
* Equivalent barrels include oil, condensate and gas.  Gas is
converted to equivalent barrels on the basis of 6 Mcf per equiva-
lent barrel.

** In November, 1996, the Company sold most of its overriding
royalty properties, leaving the majority of 1997 production from
working interest wells which have higher production costs.
</FN>
</TABLE>
                        Drilling Activity

The Company did not participate in any drilling activity during
fiscal 1997 or 1996.

                Approximate Developed Acreage and
                  Productive Oil and Gas Wells

The following table identifies productive wells and sets forth an
approximation of developed oil and gas acreage in which the Company
owned a leasehold interest as of September 30, 1997.
<TABLE>
<CAPTION>
                                             Productive Wells (2) 
   
                   Developed Acres (1)      Gross (5)       Net (6) 
                   Gross (3)   Net (4)     Oil    Gas     Oil  Gas 
 Geographic Area
<S>             <C>            <C>            <C>   <C>   <C>   <C>
Colorado          320.00        24.10         2     -     0.15  -
North Dakota      680.80       130.81         4     -     0.77  -
Texas             160.00        40.00         1     -     0.25  -
Wyoming         1,131.72        33.84         1     -     0.03  - 

    TOTAL        2,292.52       228.75        8     0     1.20  0 
                   
<FN>
(1)   Acreage spaced or assignable to productive wells.

(2)   Wells either producing or capable of production.

(3)   An acre in which a working interest is owned.  The number of 
      gross acres is the total number of acres in which working   
      interests are owned.

(4)   When the sum of fractional working interests in gross acres 
      equals one, a net acre is deemed to exist.  The number of net 
      acres is the sum of all the fractional working interests    
      owned in gross acres expressed in whole numbers and fractions 
      thereof.

(5)   A well in which a working interest is owned.  The number of 
      gross wells is the total number of wells in which working   
      interests are owned.                                        

(6)   When the sum of fractional working interests owned in gross 
      wells equals one, a net well is deemed to exist.  The number 
      of net wells is the sum of all of the fractional working    
      interests owned in gross wells expressed as whole numbers and 
      fractions thereof.
</FN>
</TABLE>
           Approximate Undeveloped Oil and Gas Acreage

The following table sets forth the approximate undeveloped oil and
gas acreage in which the Company owned a leasehold interest as of
September 30, 1997.
<TABLE>
<CAPTION>

                          Undeveloped Acreage    
                           Gross                    Net   
     <S>                 <C>                     <C>            
     Utah                1,600.00                  800.00
     Wyoming             5,627.12                2,234.38

     TOTAL               7,227.12                3,034.38
</TABLE>
The Company's leases are primarily federal and fee leases, carry
landowner's royalties of at least 12.5% and are subject to
overriding royalty interests ranging from 0% to 7.5%.  Each lease
requires the payment of annual delay rentals ranging from $1 to $5
per acre.  A delay rental is the amount paid for the privilege of
deferring development of leased acreage, payment of which can be
avoided by abandonment of the lease, commencement of development
operations, or by obtaining production.

Most of the leases will expire at the end of their respective
primary terms, unless production has been obtained prior to that
date, in which event the lease term will continue until production
ceases.  The Company will attempt to enter into cost-sharing
arrangements to evaluate expiring acreage before the end of the
lease terms.  From time to time, geologic evaluations and cost
considerations may cause the Company to cease paying delay rentals
and abandon such leases prior to the expiration of their primary
terms.  Where justified and within the financial capabilities of
the Company, the Company may seek to renew leases on certain
expiring acreage. 

       Overriding Royalty Interests in Undeveloped Acreage

The following table sets forth, as of September 30, 1997, the
Company's overriding royalty interests in undeveloped oil and gas
acreage.
<TABLE>
<CAPTION>
                                 Net (2)             Company's
                   Royalty(1)    Royalty      Overriding Royalty
                    Acres         Acres              Interest     
<S>                  <C>            <C>                <C>
Texas                640.00          4.89              3.125%
Wyoming              319.29         14.37              4.5%

  TOTAL              959.29         19.26              7.625%
<FN>
1)    A royalty acre is a full one-eighth royalty on one acre of
land.

(2)    A net royalty acre is calculated by multiplying the royalty
acres by the overriding royalty interest.
</FN>
</TABLE>
In November 1996, the Company sold its overriding royalty interests
in certain properties in Wyoming, Texas and Colorado, a minor
portion of which could be considered undeveloped.  The interests
sold ranged from 0.2491% to 2.5%. The reduction in gross and net
undeveloped acres resultant from this sale is not material.

        Overriding Royalty Interests in Developed Acreage
                       and Producing Wells

The following table sets forth, as of September 30, 1997, the
Company's overriding royalty interests in developed oil and gas
acreage and producing wells.
<TABLE>
<CAPTION>

                                          Company's      Gross
                           Net (2)        Overriding    Royalty
                  Royalty  Royalty        Royalty         Wells  
                   Acres(1) Acres         Interest       Oil  Gas
<S>              <C>         <C>           <C>           <C>   <C>
Wyoming          632.80      1.59          .25%          0     1
<FN>
(1)    A royalty acre is a full one-eighth royalty on one acre of
land.

(2)    A net royalty acre is calculated by multiplying the royalty
acres by the overriding royalty interest.
</FN>
</TABLE>
In November 1996, the Company sold its overriding royalty interests
in certain producing properties in Wyoming, Texas and Colorado. 
The interests sold ranged from 0.2491% to 2.5%.  The sale reduced
the Company's Gross royalty oil wells in Colorado from 3 to none,
royalty oil wells in Texas from 2 to none, royalty oil wells in
Wyoming from 6 to none, and royalty gas wells in Wyoming from 4 to
1.  The Company's royalty acreage in Wyoming decreased to 632 gross
acres and 1.59 net acres; and its royalty acreage in Colorado and
Texas decreased to zero gross and net acres.

UNDEVELOPED MINERAL PROPERTY INTERESTS

The Company currently owns a net proceeds interest in a kaolin
prospect covering approximately 3,862 acres of leases and lease
options located near Redwood Falls, Minnesota.  Pursuant to a
pending agreement with the operator -- U.S. Borax -- the Company
will have an option to buy our Borax's interest in the properties. 
See "Mineral Operations-Paper Grade Kaolin".

DEVELOPED MINERAL PROPERTY INTERESTS

The Company owned a 100% working interest in 69.3 acres in Redwood
County, Minnesota which were permitted for the purposes of mining
kaolin clay.  This property was sold in July, 1997.  See "Sale of
Kaolin Mine".

ITEM 3.  LEGAL PROCEEDINGS

The Company is currently involved in a lawsuit against Chevron
alleging underpayment of overriding royalties.  This is not
expected to have a material effect on the Company.

As discussed in ITEM 1. DESCRIPTION OF BUSINESS, disputes have
arisen between Thomas Kane, one of the Company's directors and a
principal shareholder, over the Company's continuing operations and
their impact on Mr. Kane's ownership of shares of the Company's
convertible preferred stock.  Mr. Kane threatened to seek court
intervention to preserve assets of the Company for liquidation. 
The Company's other directors disagreed with Mr. Kane.  In
resolution of these disputes, the Company, Mr. Kane and Brian
Spillane, the Company's President and a director, entered into an
Agreement, dated February 5, 1997, for the purchase of all of Mr.
Kane's Common and Preferred Stock.  

The Company knows of no other legal proceedings contemplated or
threatened against it.

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

A shareholders meeting was held on July 21, 1997.  Five directors
were to be elected at this meeting.  The management nominees were: 
Robert E. McDonald, Brian B. Spillane, Milton O. Childers, Robert
W. Meier, and John R. Parker.  No persons were nominated by
Shareholders not in the management group to run for director.  Each
of the nominees was duly elected a director of the Company, to
serve for the oncoming term of office and until their respective
successors are duly elected and qualified.

The shareholders were asked to approve an agreement dated January
25, 1997 between the Company and NCA for the sale by the Company
and the purchase by NCA of the Company's Cement Kaolin mine located
near Redwood Falls, Minnesota. The Mine Sale resolution was
considered and adopted at the shareholders' meeting.

                             PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is traded on the over-the-counter market
and is listed on the Electronic Bulletin Board under the symbol
"NVNU".  The following table sets forth the range of high and low
closing bid prices of the Common Stock for the years ended
September 30, 1997 and 1996, as reported by the National Quotation
Bureau, LLC.  These prices are believed to be representative of
inter-dealer prices, without retail markup, markdown, or
commissions, and may not necessarily represent actual transactions.

                                                Bid Price    
   Fiscal 1997                              High        Low 
    First Quarter                         $ 0.040     $ 0.030
    Second Quarter                          0.050       0.030
    Third Quarter                           0.060       0.050
    Fourth Quarter                          0.080       0.060
                                               Bid Price  
   Fiscal 1996                              High        Low 
    First Quarter                         $ 0.050     $ 0.040
    Second Quarter                          0.040       1/32
    Third Quarter                           0.040       0.035
    Fourth Quarter                          0.035       0.020

The bid and asked prices for the Company's Common Stock on
September 30, 1997, were $0.06 and $0.10, respectively, as reported
by the National Quotation Bureau, LLC.

The number of record holders of the Company's Common Stock as of
September 30, 1997 was 5,250.

Also outstanding as of September 30, 1997 were options under the
Company's employee stock option plans to purchase a total of
1,000,000 shares, of Common Stock.  These options are held by a
total of five persons, all of whom are officers, directors or
employees of Nova, and are exercisable until April, 1999 at $0.105
per share.

The Company has not paid any dividends on its Common Stock and does
not expect to do so in the foreseeable future.  The Company intends
to employ its cash flow and earnings, if any, in its oil & gas and
mineral exploration and development activities and for other
working capital needs.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Statements

Management's discussion of anticipated future operations contains
predictions and projections which may constitute forward looking
statements.  The Private Securities Litigation Reform Act of 1995,
including provisions contained in Section 21E of the Securities
Exchange Act of 1934, provides a safe harbor for forward-looking
statements.  In order to comply with the terms of the safe harbor,
the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from
the anticipated results or other expectations expressed in the
Company's forward-looking statements.  The risks and uncertainties
that may affect the operations, performance, development and
results of the Company's business include, but are not limited to,
the following:

     (a)  The Company may not be able to enter into an
          agreement with a new partner to assist the Company
          in carrying its paper-grade kaolin project to the 
          commercial feasibility stage on terms acceptable to
          Nova.

     (b)  The paper-grade kaolin project may encounter            
          difficulties, currently unforeseen, which will prevent  
          attainment of commercial feasibility.

     (c)  The Company may not be able to find industry partners
          to evaluate its oil & gas prospects.

     (d)  Present and anticipated sources of funds may be         
          insufficient to meet the Company's working capital
          needs.

Liquidity and Capital Resources

The Company has suffered recurring losses and cash flow deficits
from operations due to the inability of operating cash flows to
cover expenses needed to maintain those operations.  At September
30, 1997, the Company has an accumulated deficit of $9,173,938. 
The Company's working capital decreased as of September 30, 1997 to
$147,876, from working capital of $198,637 as of September 30,
1996.  Total assets decreased to $812,780 as of September 30, 1997,
from $1,545,920 as of September 30, 1996.  The decrease in both
working capital and total assets was attributable primarily to the
repurchase of the Kane Stock and the sale of the Kaolin Mine which
decreased receivables and payables.  The decrease in total
liabilities from $567,663 in 1996 to $381,327 in 1997 is also due
to the sale of the Kaolin Mine during the year.  As a result of the
operating revenue and working capital decrease during the year,
there are uncertainties that may have a significant impact on the
Company's liquidity and which raise substantial doubt about the
Company's ability to continue as a going concern.

The Company sold its Kaolin Mine in July of 1997.  This resulted in
cash from sales proceeds and the recovery of a reclamation deposit
of $225,000 in fiscal 1997.  However, the Company did not generate
positive cash flow from operations in 1997.  Cash used by
operations during 1997 was approximately $73,605.

The Company's liquidity is primarily dependent on receipt of
proceeds from the installment sale of the Company's kaolin mine,
income from oil and gas production, receipt of fees from the sale
of oil and gas prospects, mineral royalties, and contemplated
overhead coverage and management fees in connection with the
operation of its paper kaolin project.  The Company intends to
operate its paper-grade kaolin project with a new partner, and has
structured this venture with overhead coverage and fees to cover
the expenses of operating this project, but it is not certain that
the Company will be successful in entering into an agreement with
a partner on the basis needed to cover the costs of such
operations.  The Company may need to raise additional funds for
working capital purposes via the private placement of securities,
the success of which cannot be determined in advance.  The Company
has sold an oil & gas prospect to an industry partner, and if that
prospect is successfully drilled, the Company will realize cash
flow from its retained royalty interest.

Disputes had arisen between Thomas Kane, one of the Company's
directors and a principal shareholder, over the Company's
continuing operations and their impact on Mr. Kane's ownership of
shares of the Company's convertible preferred and common stock.  In
order to resolve this dispute, the Company, Mr. Kane and Brian
Spillane, the Company's President and a director, entered into an
Agreement(the "Kane Agreement"), dated February 5, 1997, for the
purchase of all of Mr. Kane's Common and Preferred Stock.  (See
"Significant Developments During Fiscal 1997 - Purchase of Kane
Stock").  At the time the decision was made to repurchase the Kane
stock, management felt that on-going legal fees and the diversion
of management time in connection with the Kane dispute would drain
the Company's assets and prevent the Company from focusing its
efforts on those areas most likely to result in asset growth.  In
addition, it appeared at that time that the Nome project would
generate significant cash flow, which would largely offset the
effect of the cash expenditure required to repurchase the stock. 
The purchase of Mr. Kane's stock has reduced the Company's
available working capital, and accordingly, reduced the Company's
liquidity.                                                

In order to improve liquidity, on November 14, 1996, the Company
sold several oil and gas producing assets and leasehold interests,
primarily overriding royalty interests in producing oil and gas
wells for proceeds of $230,257, which is net of commissions and
direct selling costs.  The proceeds of these sales were devoted to
working capital, used to offset operating losses, and reinvested in
the Company's business, with the goal of developing additional
sources of revenue, earnings and asset growth.  Primary use of
these funds has been in the Company's efforts to market its oil and
gas prospects, and to conduct necessary activities in connection
with its paper-grade kaolin project.  

The Company has been attempting to get commitments from the
industry to drill two of the Company's exploratory prospects in
Wyoming, one primarily an oil prospect, and the other a gas
prospect.  One of these prospects has been sold, and it is expected
it will be drilled, although it is not certain that this will be
the case.  Depending on its success in getting industry
participation in the drilling of these two prospects, the Company
will attempt to acquire other drillable prospects for its future
exploration efforts, when it is financially capable of doing so.

The Company has been conducting limited examination of cores, and
processing raw kaolin from the 1996 drilling program on its paper
kaolin properties, analyzing the data from seven years of
exploration and development work on this project, and preparing to
market the project to the industry to bring in a new partner who
will assist Nova in aggressively pursuing the further development
of this project.

Results of Operations

The Company realized a net loss of $360,598 for the year ended
September 30, 1997, compared to a net loss in the 1996 fiscal
period of $143,673.  Both oil and gas sales and mineral sales
decreased substantially, reflecting the sale of a significant
portion of the Company's producing oil & gas assets, and the sale
of the Company's kaolin mine.  Both mining costs and oil & gas
operating costs declined, but general and administrative costs
increased $50,159 or 13% to $435,752 for the year ended September
30, 1997 over the same period in 1996.  This increase was almost
wholly the result of increased legal and accounting fees due to the
Kane dispute and the asset sales, in particular, the sale of the
kaolin mine, and printing and mailing costs associated with
obtaining shareholder approval of the mine sale.  Management
considers all of the increased expenses to be non-recurring
extraordinary events.  Also contributing to the loss was the
Company's share of losses of NovaChek Limited Liability Company. 
The Company's share of NovaChek losses in fiscal 1997 was $181,720,
a substantial increase from a loss of $11,437 in fiscal 1996. 
Operations of NovaChek were unprofitable in both years, and
NovaChek is being dissolved, effective December 22, 1997.  Interest
income was up slightly in fiscal 1997 to $17,378, compared to
$11,587 in the 1996 period.  The Company had more cash on hand on
average in 1997 due to receipts from asset sales, and therefore
earned slightly more interest income.  The 1997 interest income
also includes imputed interest on the note receivable from NCA.
While there is risk of default in regard to the Company's
convertible debentures when they come due, it is Management's
present intention to fund the debentures from the proceeds of the
NCA note if other sources of funding are not available.
  
Revenues

Mineral sales from kaolin declined 43% to $700,707 from  $1,224,192 in
fiscal 1996, and oil & gas sales declined 43% to $124,168 from $217,807
in the 1996 period.  Due to the sale of the Kaolin Mine in July 1997,
the Company did not operate the mine for the full year in 1997. 
Actual results of kaolin mining operations were lower during 1997
due to the reduced mining season.  Gravel royalties decreased to
$4,414 in 1997 from $66,939 in 1996.  The Company collects
royalties on the sale of gravel from land leased by the Company
pursuant to an arrangement with a third party, which mines and
sells the gravel.  In fiscal 1996, the Company was paid for both
its royalty and the landowner's royalty on gravel sales, and in
fiscal 1997, the Company was paid only for its royalty.  This was
chiefly responsible for the decline in the 1997 mineral sales
figures, although a lower level of gravel sales was also recorded.

Oil and gas sales decreased $93,639 or 43% for the year ended
September 30, 1997 as compared to the same period in 1996.  This
decrease is attributable primarily to the sale of the Company's
Overriding Royalty Interests in November, 1996.  A comparison of
production and prices in 1997 and 1996 is as follows:
<TABLE>

                                     1997          1996
<S>                                <C>           <C> 
Sales Volume
 Oil (bbls)                         5,181         7,675
 Gas (MCF)                         19,147        48,160

Average Sales Price
  Oil (bbls)                        $18.34        $19.96
  Gas (MCF)                         $ 1.36        $ 1.34
</TABLE>
The Company realized a one-time gain on the sale of its oil & gas
production interests of $76,557.  

Other revenue for the year ended September 30, 1997 consisted
primarily of revenue received from an option on West Rozell Point
of $2,500, and an $800 lease bonus on an oil property in which the
Company had an interest.  Other revenue of $825 in 1996 was
primarily realized from grain sales.

Expenses

Because the sale of the Company's kaolin mine shortened its
operating season, mining costs from kaolin operations, including
transportation and royalties, declined 40% to $603,335 in fiscal
1997 compared to $1,009,224 in the 1996 period.  Gravel royalties
declined to $983 in fiscal 1997 from $40,163 in fiscal 1996.  The
Company collects royalties on the sale of gravel from land leased
by the Company pursuant to an arrangement with a third party, which
mines and sells the gravel.  In fiscal 1996, the Company was paid
for both its royalty and the landowner's royalty on gravel sales,
and in fiscal 1997, the Company was paid only for its own royalty. 
This was responsible for the decline in the 1997 gravel royalties,
although a lower level of gravel sales also contributed.

Oil & gas lease operating costs, including production taxes
declined 16% in fiscal 1997 to $90,276 from $106,952.  Oil and gas
production costs did not decline as sharply as oil & gas sales
since the majority of the oil & gas assets sold by the Company were
royalties, and these have a very low cost since there is no
deduction for operating costs from royalty payments.
  
Depreciation, depletion and amortization dropped 67% from $86,931
in 1996 to $28,367 in 1997.  This was primarily resultant from the
sale of oil & gas assets, although normal production decline also
contributed, and to the sale of the cement kaolin mine.  General
and administrative expenses increased $50,159 or 13% to $435,752
for the year ended September 30, 1997 over the same period in 1996. 
The increase was almost wholly the result of increased legal and
accounting fees due to the Kane dispute and the asset sales, in
particular, the sale of the kaolin mine, and printing and mailing
costs associated with obtaining shareholder approval of the mine
sale.

Interest expense increased 59% or $10,471 to $28,162 in fiscal 1997
compared to fiscal 1996.  The interest expense of $17,691 in fiscal
1996 resulted from interest payments on a short-term working
capital loan, since retired, and the $250,000 of convertible
subordinated debentures issued in connection with the Regulation D
offering described in "Significant Developments during Fiscal
1997".  Since the debentures were outstanding for half of the 1996
fiscal year, and were outstanding throughout fiscal 1997, interest
expense connected with the debentures doubled in 1997 compared to
1996.  In 1997, interest expense also includes imputed interest
expense on the note payable to Mr. Kane.

Commitments

The Company's current office lease is a three-year lease effective
February 1, 1997.  The space is 1,517 square feet, and lease
payments for the first year of the lease will be $15,810.  These
payments will increase to $18,059 during the second year of the
lease, and to $18,817 during the final year.

Impact of Inflation

Due to the Company's size and the uncertainties normal in its lines
of business, the impact of inflation on the Company's operations is
negligible.

New Accounting Standards

Statement of Financial Accounting Standards 128 (FAS 128) "Earnings
per Share" provides a different method of calculating earnings per
share than is currently used in accordance with Accounting
Principles Board Opinion 15 "Earnings per Share."  FAS 128 provides
for the calculation of "basic" and "diluted" earnings per share. 
Basic earnings per share includes no dilution and is computed by
dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. 
Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity, similar
to fully diluted earnings per share.  Statement of Financial
Accounting Standards 129 (FAS 129)) "Disclosure of Information
About an Entity's Capital Structure" establishes standards for
disclosing information about an entity's capital structure.  FAS
128 and 129 are effective for financial statements issued for
periods ending after December 15, 1997.  Their implementation is
not expected to have a material effect on the financial statements.

Statement of Financial Accounting Standards 130 (FAS 130)
"Reporting Comprehensive Income" establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances.  Comprehensive income is defined to include
all changes in equity except those resulting from investments by
owners and distributions to owners.  Among other disclosures, FAS
130 requires that all items that are required to be recognized
under current accounting standards as components of comprehensive
income be reported in a financial statement that displays with the
same prominence as other financial statements.  Statement of
Financial Accounting Standards 131 (FAS 131) "Disclosure About
Segments of an Enterprise and Related Information" establishes
standards on the way that public companies report financial
information about operating segments in annual financial statements
and requires reporting of selected information about operating
segments in interim financial statements issued to the public.  It
also establishes standards for disclosures regarding products and
services, geographic areas, and major customers.  FAS 131 defines
operating segments as components of a company about which separate
financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate
resources and in assessing performance.  FAS 130 and 131 are
effective for financial statements for periods beginning after
December 15, 1997 and require comparative information for earlier
years to be restated.  Because of the recent issuance of these
standards, management has been unable to fully evaluate the impact,
if any, the standards may have on the future financial statement
disclosures.  Results of operations and financial position,
however, will be unaffected by implementation of these standards.


       ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  INDEPENDENT AUDITOR'S REPORT

The Board of Directors
Nova Natural Resources Corporation
Denver, Colorado

We have audited the accompanying balance sheet of Nova Natural
Resources Corporation as of September 30, 1997, and the related
statements of operations, stockholders' equity, and cash flows for
the year then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility is
to express an opinion on these financial statements based on our
audit.

We conducted our audit 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 significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Nova
Natural Resources Corporation as of September 30, 1997, and the
results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in
Note 2 to the financial statements, the Company has suffered
recurring losses and cash flow deficits from operations which,
along with other factors described in Note 2, raise substantial
doubt about its ability to continue as a going concern. 
Management's plans in regard to these matters are also described in
Note 2.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

HEIN + ASSOCIATES LLP


Denver, Colorado
December 17, 1997


                  INDEPENDENT AUDITOR'S REPORT

The Board of Directors and Stockholders
Nova Natural Resources Corporation

We have audited the accompanying statements of operations,
stockholders' equity, and cash flows of Nova Natural Resources
Corporation for the year ended September 30, 1996.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit 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 significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the results of operations and
cash flows for Nova Natural Resources Corporation for the year ended
September 30, 1996 in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in
Note 2 to the financial statements, the Company has suffered
recurring losses and cash flow deficits from operations which,
along with other factors described in Note 2, raise substantial
doubt about its ability to continue as a going concern. 
Management's plans in regard to these matters are also described in
Note 2.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


KPMG PEAT MARWICK LLP


Denver, Colorado
November 27, 1996
<TABLE>
<CAPTION>

               NOVA NATURAL RESOURCES CORPORATION
               
                         BALANCE SHEET
                      SEPTEMBER 30, 1997

                  
                            ASSETS
                                             1997
<S>                                      <C>                
CURRENT ASSETS:
  Cash and equivalents                   $   150,484              
  Accounts receivable:
    Oil and gas                                6,809
    Other                                     17,075 
  Current maturities of note receivable       61,629
  Prepaid expenses and other                  11,762              
                                           _________
    Total current assets                     247,759              
   
OIL AND GAS PROPERTIES, at cost
  (using the full
  cost method of accounting):                 
  Unproved properties not being amortized     33,750
  Properties being amortized               5,982,257
                                           _________
                                           6,016,007            
  Accumulated depreciation, depletion
    and amortization                      (5,914,624)
                                          ___________
      Net oil and gas properties             101,383

MINERAL PROPERTIES, at cost                  110,679
                                          __________
OTHER ASSETS:
  Note receivable, net of current maturities 346,288
  Investment in and advances to NovaChek       4,000
  Furniture and technical equipment,                            
    net of accumulated depreciation 
    of $127,064                                2,671
                                             _______
    Total other assets                       352,959
                                             _______
TOTAL ASSETS                             $   812,780
<FN>
         See accompanying notes to these financial statements.
</FN>
</TABLE>

<TABLE>
<CAPTION>  
                     LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                      <C>
CURRENT LIABILITIES:
  Current maturities of long-term debt   $     8,333
  Accounts payable                            29,433
  Accrued expenses                            62,117
                                           _________
      Total current liabilities               99,883
                                           _________
LONG TERM DEBT, less current maturities      281,444
                                           _________
COMMITMENTS AND CONTINGENCIES (Notes 2 and 9)

STOCKHOLDERS' EQUITY

  Convertible preferred stock, $1.00
    par value; 3,000,000 shares
    authorized; 1,792,267 shares
    issued and outstanding,
    liquidation preference $1,792,267      1,792,267
  Common stock, $.10 par value;
    17,000,000 shares authorized;
    6,200,379 shares issued and
    outstanding;                             620,038
  Additional paid-in capital               7,193,086              
  Accumulated deficit                     (9,173,938)
                                          ___________
     Total Stockholders' equity              431,453             

TOTAL LIABILITIES 
   AND STOCKHOLDERS' EQUITY              $   812,780
<FN>
         See accompanying notes to these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
                 NOVA NATURAL RESOURCES CORPORATION
                     STATEMENTS OF OPERATIONS

                                           FOR THE YEARS ENDED    
                                              SEPTEMBER 30,
                                         ______________________

                                         1997             1996   
                                        ______           ______
<S>                                  <C>              <C>
REVENUES:
  Mineral sales:
     Kaolin                          $   700,707      $ 1,224,192
     Gravel Royalties                      4,414           66,939
  Oil and gas sales                      124,168          217,807
                                       _________        _________
        Total revenues                   829,289        1,508,938
                                       _________        _________
COSTS AND EXPENSES:
  Mining costs:           
     Kaolin operations                   603,335        1,009,224

     Gravel royalties                        983           40,163
  Oil and gas production costs            90,276          106,952
  Depletion, depreciation, and
   amortization                           28,367           86,931
  Mining property abandonments             1,742            7,032
  General and administrative             435,752          385,593
                                       _________        _________
        Total costs and expenses       1,160,455        1,635,895
                                       _________        _________
OPERATING LOSS                          (331,166)        (126,957)

OTHER INCOME (EXPENSES):
  
  Equity in losses of NovaChek LLC      (181,720)         (11,437)
  Interest income                         17,378           11,587
  Interest expense                       (28,162)         (17,691) 
  Gain on sale of assets                 159,566               -- 
  Other                                    3,506              825
                                       _________         ________
                                         (29,432)         (16,716)
                                       _________         _________

NET LOSS                             $  (360,598)     $  (143,673)
                                       ==========        =========
NET LOSS PER SHARE                          (.06)            (.02)
                                       ==========        =========
WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING                         6,185,000        6,496,188
                                       =========        =========
<FN>
         See accompanying notes to these financial statements
</FN>
</TABLE>
<TABLE>
<CAPTION>
                              NOVA NATURAL RESOURCES CORPORATION
                              STATEMENTS OF STOCKHOLDERS' EQUITY
                            YEARS ENDED SEPTEMBER 30, 1997 AND 1996

                                    CONVERTIBLE 
                                   PREFERRED STOCK                COMMON STOCK
                                  SHARES       AMOUNT         SHARES        AMOUNT
                                _________     _________     _________      ________          
<S>                              <C>         <C>             <C>         <C>                               
BALANCES, October 1, 1995        2,687,682   $ 2,687,682     6,496,188   $   649,619

  Net loss                              --            --            --            --

BALANCES, September 30, 1996     2,687,682     2,687,682     6,496,188       649,619

  Purchase and retirement of
    preferred and common stock:
       Former director            (895,415)     (895,415)     (510,342)      (51,034)
       Other                            --            --       (13,700)       (1,370)
  Contribution of stock to
    employee stock ownership plan       --            --       228,233        22,823

  Net loss                              --            --            --            --
                                 _________      _________     ________       _______
BALANCES, September 30, 1997     1,792,267   $ 1,792,267     6,200,379   $   620,038
<FN>

                       See accompanying notes to these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
                            NOVA NATURAL RESOURCES CORPORATION
                      STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
                         YEARS ENDED SEPTEMBER 30, 1997 AND 1996


                                   ADDITIONAL                     TOTAL
                                   PAID-IN      ACCUMULATED    STOCKHOLDERS'
                                   CAPITAL        DEFICIT         EQUITY 
<S>                               <C>          <C>             <C>
BALANCES, October 1, 1995         $6,454,296   $(8,669,667)    $1,121,930

  Net loss                                --      (143,673)      (143,673)
                                  __________    ___________     _________
BALANCES, September 30, 1996      $6,454,296    (8,813,340)       978,257
  Purchase and retirement of
    preferred and common stock:
       Former director               742,532            --       (203,917)
       Other                             822            --           (548)
  Contribution of stock to  
    employee stock ownership plan     (4,564)           --         18,259
  Net loss                                --      (360,598)      (360,598)
                                   _________    __________      __________
BALANCES, September 30, 1997      $7,193,086   $(9,173,938)    $  431,453
<FN>
                     See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
                              NOVA NATURAL RESOURCES CORPORATION
                                   STATEMENTS OF CASH FLOWS

                                                                    FOR THE YEARS ENDED       
                                                                        SEPTEMBER 30,
                                                                    ___________________
                                                                  1997               1996   
                                                                 ______             ______
<S>                                                           <C>                <C>                  
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                    $  (360,598)       $  (143,673)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
    Depletion, depreciation and amortization                       28,367             86,931
    Mining property abandonments                                       --              7,032
    Gain on sale of assets                                       (159,566)                -- 
    Equity in losses of NovaChek LLC                              181,720             11,437
    Convertible debentures issued for services, charged
      to general and administrative expense                            --             31,250
    Contribution of stock to employee stock ownership plan         18,259                 -- 
    Changes in operating assets and liabilities:
       Decrease (increase) in:            
         Accounts receivable                                      408,648           (164,505) 
         Prepaid expenses and other                                (7,821)            (2,441)
         Deposits                                                  51,000             20,411 
       Increase (decrease) in:                                                                
         Accounts payable                                        (260,154)            61,798
         Accrued expenses                                          26,540             22,104
                                                                _________           ________
      Net cash used in operating activities                       (73,605)           (69,656)
                                                                _________           _________

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of assets                                    355,000             25,215
  Investment in and advances to NovaChek LLC                      (49,003)          (148,154) 
  Capital expenditures                                            (43,933)           (17,148)
  Collection of principal on note receivable                       46,885                 -- 
                                                                _________           _________
      Net cash provided by (used in) investing activities         308,949           (140,087)
                                                                _________           _________

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt                             (5,687)                 --
  Purchase and retirement of common and preferred stock          (159,000)                 --
  Proceeds from note payable                                           --             218,750
                                                                _________            ________
  Net cash provided by (used in) financing activities            (164,687)            218,750
                                                                _________            ________

INCREASE IN CASH AND EQUIVALENTS                                   70,657               9,007
                                                                _________            ________
CASH AND EQUIVALENTS, at beginning of year                         79,827              70,820
                                                                _________            ________
CASH AND EQUIVALENTS, at end of year                          $   150,484          $   79,827
                                                                =========            ========
SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid for interest                                      $    25,311          $   16,292
                                                                =========            ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
  Note receivable for sale of Kaolin property                 $   454,802          $       --
                                                                =========            =========
  Note payable for purchase and retirement of
   common and preferred stock                                 $    45,465           $      --
                                                                =========            ========= 
<FN>  
                                  See accompanying notes to these financial statements.      
</FN>
</TABLE>


               NOVA NATURAL RESOURCES CORPORATION
                  NOTES TO FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - Nova Natural Resources Corporation (the Company),
has focused on marketing and selling kaolin clay from its Minnesota
kaolin mine, exploring for paper grade kaolin on leases elsewhere
in Minnesota, seeking partners for exploration and development of
gold on its properties in Alaska and Colorado and seeking partners
for exploratory drilling on two oil and gas prospects in Wyoming. 
The Company does not operate any of its interests in oil and gas
wells, which are principally located in the western United States.

Use of Estimates - The preparation of the Company's financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and
accompanying notes.  The actual results could differ from those
estimates.

The Company's financial statements are based on a number of
estimates, including the allowance for doubtful accounts, the
selection of estimated useful lives of property and equipment, and
realization of the carrying value of long-lived assets.  It is
reasonably possible that estimates affecting the realization of
long-lived assets will change in the forthcoming year and such
revisions could be material.

Cash Equivalents - The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or
less to be cash equivalents.

Investment in NovaChek Limited Liability Company - The Company owns
an interest in NovaChek Limited Liability Company (NovaChek LLC)
which is accounted for by the equity method.  Under the equity
method, the investment has been recorded at cost and is
subsequently adjusted to recognize the Company's share of the
income or losses of NovaChek LLC.  Dividends or other distributions
are recorded as a reduction of the investment.  Recognition of
losses is limited to the extent of the Company's investment in,
advances to, commitments and guarantees, if any, relating to
NovaChek LLC.

Mining Properties - Exploration expenditures are charged to
operations in the period incurred except for expenditures on
specified properties having indicated the presence of a mineral
resource with the potential of being developed into a mine, in
which case the expenditures are capitalized.

Mine development costs incurred to expand the capacity of operating
mines, to develop new orebodies or to develop mine areas
substantially in advance of current production are capitalized and
charged to operations on a units-of-production method based upon
the estimated recoverable reserves of the related deposit. 
Reclamation takes place concurrently with production and such costs
are expensed as mining costs in the period incurred.

The Company periodically reviews the carrying value of its
properties by comparing the net book value with the estimated
undiscounted future cash flow from the property, which is generally
based upon estimated recoverable reserves utilizing current market
prices and costs.  If the net book value exceeds the undiscounted
future cash flow, the Company records a provision for impairment. 
Changes in the significant estimates and assumptions underlying
future cash flow estimates may have a material effect on the future
carrying value of assets and operating results.

Oil and Gas Properties - The Company follows the "full cost" method
of accounting for its oil and gas properties, in accordance with
rules promulgated by the Securities and Exchange Commission (the
SEC).  All of the Company's properties are located within the
continental United States.  All costs associated with property
acquisition, exploration, and development activities are
capitalized in one cost center (the full cost pool), including
costs of unsuccessful exploration.  No gains or losses are
recognized on the sale or abandonment of oil and gas properties
unless the transaction involves the sale of significant reserves.  

Capitalized costs less related accumulated amortization may not
exceed the sum of (1) the present value of future net revenue from
estimated production of proved oil and gas reserves, calculated
using current prices; plus (2) the cost of properties not being
amortized, if any; plus (3) the lower of cost or estimated fair
value of unproved properties included in the costs being amortized,
if any; less (4) income tax effects related to differences in the
book and tax basis of oil and gas properties.

Amortization of the full cost pool is computed using the
units-of-production method based on proved reserves as determined
annually by the Company and independent petroleum engineers.  The
provision for depletion, depreciation, and amortization on a per
equivalent barrel basis during fiscal years 1997 and 1996 was $2.18
and $3.83, respectively.

Furniture and Technical Equipment - Furniture and technical
equipment is stated at cost and is depreciated using the
straight-line method over estimated useful lives ranging from three
to eight years.

Income Taxes - The Company accounts for income taxes under the
liability method, which requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns. 
Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates.

Net Loss Per Share - Loss per share is computed by dividing net
loss attributable to common stock by the weighted average number of
common shares outstanding during each period.  Common share
equivalents including convertible preferred stock and stock options
were not included in the computation as their effect was anti-
dilutive for 1997 and 1996.  A fully diluted per share calculation
considering stock which would be issued if the Company's
convertible debentures were converted into common stock is not
presented as it is anti-dilutive.

Stock-Based Compensation - The Company accounts for stock-based
compensation for employees using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
interpretations.  Accordingly, compensation cost for stock options
granted to employees is measured as the excess, if any, of the
quoted market price of the Company's common stock at the
measurement date (generally, the date of grant) over the amount an
employee must pay to acquire the stock.

In October 1995, the Financial Accounting Standards Board issued a
new statement titled "Accounting for Stock-Based Compensation" (FAS
123).  The new statement is effective for fiscal years beginning
after December 15, 1995.  FAS 123 encourages, but does not require,
companies to recognize compensation expense for grants of stock,
stock options, and other equity instruments to employees based on
fair value.  Companies that do not adopt the fair value accounting
rules must disclose the impact of adopting the new method in the
notes to the financial statements.  Transactions in equity
instruments with non-employees for goods or services must be
accounted for by the fair value method.  The Company has elected
not to adopt the fair value accounting prescribed by FAS 123 for
employees, but is subject to the related disclosure requirements.
The estimated fair value of an option granted to an employee in 
1996 was not material to the 1996 financial statements and no options 
were granted in fiscal 1997.  Accordingly, the pro forma disclosures
required by FAS 123 are not included herein.

Impact of Recently Issued Accounting Standards - Statement of
Financial Accounting Standards 128 (FAS 128) "Earnings per Share"
provides a different method of calculating earnings per share than
is currently used in accordance with Accounting Principles Board
Opinion 15 "Earnings per Share."  FAS 128 provides for the
calculation of "basic" and "diluted" earnings per share.  Basic
earnings per share includes no dilution and is computed by dividing
income available to common shareholders by the weighted average
number of common shares outstanding for the period.  Diluted
earnings per share reflects the potential dilution of securities
that could share in the earnings of an entity, similar to fully
diluted earnings per share.  Statement of Financial Accounting
Standards 129 (FAS 129)) "Disclosure of Information About an
Entity's Capital Structure" establishes standards for disclosing
information about an entity's capital structure.  FAS 128 and 129
are effective for financial statements issued for periods ending
after December 15, 1997.  Their implementation is not expected to
have a material effect on the financial statements.

Statement of Financial Accounting Standards 130 (FAS 130)
"Reporting Comprehensive Income" establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances.  Comprehensive income is defined to include
all changes in equity except those resulting from investments by
owners and distributions to owners.  Among other disclosures, FAS
130 requires that all items that are required to be recognized
under current accounting standards as components of comprehensive
income be reported in a financial statement that displays with the
same prominence as other financial statements.  Statement of
Financial Accounting Standards 131 (FAS 131) "Disclosure About
Segments of an Enterprise and Related Information" establishes
standards on the way that public companies report financial
information about operating segments in annual financial statements
and requires reporting of selected information about operating
segments in interim financial statements issued to the public.  It
also establishes standards for disclosures regarding products and
services, geographic areas, and major customers.  FAS 131 defines
operating segments as components of a company about which separate
financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate
resources and in assessing performance.  FAS 130 and 131 are
effective for financial statements for periods beginning after
December 15, 1997 and require comparative information for earlier
years to be restated.  Because of the recent issuance of these
standards, management has been unable to fully evaluate the impact,
if any, the standards may have on the future financial statement
disclosures.  Results of operations and financial position,
however, will be unaffected by implementation of these standards.

Reclassifications - Certain amounts in the 1996 financial
statements have been reclassified to conform with the 1997
presentation.  These reclassifications had no effect on the 1996
net loss.

(2)  UNCERTAINTY OF FUTURE OPERATIONS

The financial statements have been prepared assuming that the
Company will continue as a going concern.  Certain factors,
discussed below, raise substantial doubt about the Company's
ability to continue as a going concern.  The financial statements
do not include any adjustments that might result from the outcome
of this uncertainty. 

The Company has suffered recurring losses and cash flow deficits
from operations.  At September 30, 1997, the Company has an 
accumulated deficit of $9,174,000.  At September 30, 1997, the
Company has working capital of $148,000 and stockholders' equity of
$431,000.  Accordingly, the Company's current capital resources are
not sufficient to fund continued operating losses.  In order to
improve liquidity, the Company has sold a substantial portion of
the Company's operating assets.  The future viability of the
Company is dependent upon the  ability of the Company to obtain
additional equity or debt financing and to ultimately achieve
profitable operations.
     
(3)  SALE OF ASSETS:

On November 14, 1996, the Company sold several oil and gas
producing assets and leasehold interests, primarily overriding
royalty interests in producing oil and gas wells in the Wyoming
Overthrust Belt (an estimated 6,976 bbls of oil and an estimated
282,127 mcf of gas), effective as of November 1, 1996.  Proceeds
from this sale, net commissions and direct selling costs, were
$230,257.  The Company recognized a gain on sale of $76,557 related
to this transaction.

In July 1997, the Company obtained shareholder approval to close
the sale of its cement-grade Kaolin mine, including certain mineral
leases and technical equipment.  The Company received cash at
closing of $125,000 and the purchaser executed a note which
provided for installments of $50,000 in August and December of each
year through August 2001 and a final installment of $125,000 in
December 2001.  Payments under the note are collateralized by the
property and equipment conveyed to the purchaser.  The Company
imputed interest at 10% to arrive at the present value of the note
of $454,801 on the closing date.  The Company recognized a gain of
$83,009 on this transaction.  Management estimates that fair value of
the note receivable is approximately equal to the carrying value at
September 30, 1997.

(4)   INVESTMENT IN NOVACHEK LLC

On April 1, 1996 the Company organized NovaChek LLC to recover
precious metals from off-shore mining leases located near Nome,
Alaska, utilizing a dredging operation.

The Company contributed mineral leasehold interests and $118,750 in
cash for a 42% voting interest in NovaChek.  An additional 4.125%
interest in NovaChek is held by affiliates of the Company. 
NovaChek LLC is managed by the Company and Chek Technologies and
Exploration, LLC (Chek) which owns a 38.75% interest in NovaChek
LLC.  The Company is entitled to receive an annual management fee
of $65,000 from NovaChek LLC.  To date, no management fee has been
collected or recorded by the Company.  A number of significant
decisions require the approval of both the Company and Chek.  Such
decisions include, but are not limited to, certain borrowings,
capital expenditures, and asset disposals.

During fiscal 1997, NovaChek LLC commenced dredging operations but
management determined that it was not possible to operate
economically.  In December 1997, the managers of NovaChek LLC
decided to liquidate the LLC by the end of 1997 and they determined
that the net realizable value of NovaChek LLC's assets would not be
sufficient to satisfy all of the liabilities.  Accordingly,
NovaChek LLC recorded a provision for impairment of $334,721 during
the quarter ended September 30, 1997.

The condensed balance sheet of NovaChek LLC at September 30, 1997
is presented below.



    Cash and other assets                  $  10,056
    Mineral property interests, net of
     allowance for impairment                     --
    Mining and related equipment, net
      of accumulated depreciation and
      allowance for impairment                40,000
                                            ________
           Total assets                    $  50,056
                                              =======
    Accounts payable and accrued expenses  $   5,070
    Payable to the Company                    99,818
    Short-term notes payable                  39,600
    Members' deficit                         (94,432)
                                           __________
           Total liabilities and members'
           equity                          $  50,056
                                              =======

The condensed statements of operations of NovaChek LLC for the year
ended September 30, 1997 and the period from inception (April 1,
1996) through September 30, 1996 are presented below.

                                   1997        1996
                                  ______      ______

Gold and silver sales          $  45,850     $     --
Operating expenses              (140,405)      (27,230)
Impairment expense              (334,721)           --
                               _________      _________
       Net loss                $(429,276)    $ (27,230)
                               ==========      ========
(5)   LONG TERM DEBT

On April 1, 1996, the Company issued $250,000 of convertible
debentures.  These debentures provide for interest payments at an
annual rate of 10%, payable semi-annually, and are due on April 1,
2001, but are redeemable in common stock by the Company after March
31, 1998.  The debentures are convertible into the Company's common
stock at the rate of one share of stock for each $0.15 of
principal, which would result in the issuance of 1,666,667 common
shares if so converted.  In June 1996, holders of $175,000 of the
debentures, of which $40,625 of debentures are held by affiliates,
agreed that the Company could redeem such debentures after
September 1, 1996, provided that such early redemption is effected
at $0.10 per common share and the payment of six months advance
interest.  No such early redemption has been made to date.  Management
believes the fair value of the convertible debentures was approximately
$125,000 at September 30, 1997.

The Company issued $31,250 of the convertible debentures to Chek in
exchange for services that Chek performed for NovaChek, on behalf
of the Company.  This amount was charged to general and
administrative expense in fiscal 1996.

The following is a summary of long-term debt as of September 30,
1997:

     Convertible debentures                          $250,000

     Contract payable in connection with purchase and
     retirement of common and convertible preferred
     stock, interest imputed at 10%, payable in
     installments of $6,000 in August and December
     of each year through August 2001, final payment
     of $1,008 due in December 2001.                   39,777
                                                     ________
         Total                                        289,777
     Less current maturities                           (8,333)
                                                     _________
         Long-term debt, less current maturities     $281,444

Aggregate maturities required on long-term debt at September 30,
1997, are as follows:

Year Ending September 30,

     1998                                $  8,333
     1999                                   9,185
     2000                                  10,124
     2001                                 261,159
     2002                                     976
                                         ________
                                         $289,777
                                         ======== 

(6)   INCOME TAXES

The components of the net deferred tax asset and liabilities at
September 30, 1997 and 1996 are as follows:

                                             1997                 1996
Deferred tax assets-
  Net operating loss carryforward        $ 2,152,000           $ 2,766,000
  Less valuation allowance                (2,069,000)           (2,585,000)
                                          __________             __________
      Net deferred tax asset                  83,000               181,000

Deferred tax liabilities-
  Depletion, depreciation, amortization,
  and valuation allowance for income tax
  purposes in excess of amounts for
  financial statement purposes               (83,000)            (181,000)
                                          __________             _________

      Net deferred tax asset            $        --            $     --
                                         ===========             =========

The Company has net operating loss carryforwards at September 30, 1997 for
federal income tax reporting purposes of approximately $5,800,000. 
Approximately $830,000 of these tax operating losses will expire during the
year ending September 30, 1998 with the balance expiring over the period
ending in the year 2012.  The valuation allowance decreased by $516,000
during the current year mainly due to expiring net operating loss
carryforwards.

(7)   STOCKHOLDERS' EQUITY 

Preferred Stock - The Company's preferred stock outstanding is convertible
into 3,584,534 shares of common stock.  The preferred shares contain
2-for-1 voting rights, have a $1.00 liquidation preference and have no
stated dividend rate.

Stock Option Plans - The Board of Directors have approved two stock option
plans for the benefit of Company employees and key personnel.  The first
plan is the Nova Natural Resources Corporation 1989 Non-qualified Stock
Option Plan (the "Non-qualified Plan") and the second plan is the Nova
Natural Resources Corporation 1989 Incentive Stock Option Plan, a qualified
plan (the "Incentive Plan").  Both plans include terms whereby participants
are issued options to purchase shares of the Company's common stock at the
market price at the time of grant.  The options are exercisable at the date
of grant and expire five years after the date of grant.  Options granted to
employees under both plans who subsequently terminate employment with the
Company are canceled if not exercised within three months after termination
of employment.  No options may be granted under these plans after five
years from the date the plans were adopted.

A total of 2,000,000 shares were reserved for issue under the two plans. 
Activity in the stock option plans for the years ended September 30, 1997
and 1996 is as follows:
<TABLE>
<CAPTION>
                                                   Incentive Plan            Non-qualified Plan
                                                          Weighted                          Weighted
                                                          Average                           Average                       
                                             Number of    Exercise Price  Number of         Exercise Price
                                              Shares      Per Share         Shares          Per Share
<S>                                        <C>            <C>              <C>              <C>                    
Outstanding, October 1, 1995                820,000       $  .105          620,000          $  .104
       Expired                             (220,000)         .104          (20,000)            .063
                                           ________                        _______
Outstanding, September 30, 1996             600,000          .105          600,000             .105
       Expired                                   --            --         (200,000)            .105
                                           ________                        _______
Outstanding, September 30, 1997             600,000          .105          400,000             .105
                                           ========                        =======
</TABLE>
All options outstanding under the plans are vested at September 30, 1997. 
If not previously exercised, all options outstanding under both plans will
expire on April 1, 1999.  
      
Other Options - In February 1996, the Company granted nonqualified options
for 50,000 shares to an officer.  These options were exercisable at $.05
per share for five years and were not granted pursuant to either of the
stock option plans discussed above.  In December 1997, the Board of
Directors and the officer agreed to cancel these options.

Stock Ownership Plan - The Company has also established the "Nova Natural
Resources Corporation Employee Stock Ownership Plan" (the ESOP Plan) for
all employees.  The ESOP Plan provides for contributions of Company stock
to a trust in an amount determined by the Board of Directors.  The
Company's contributions to the Plan during the year ended September 30,
1997 amounted to 228,233 shares of common stock with an aggregate value of
$18,259.  No contribution was made in 1996.

(8)   RELATED PARTY TRANSACTIONS

The Company owns interests in various producing and non-producing mineral
properties with the REM Family Trust ("the Trust"), a trust in which the
Chairman of the Company is the trustee.  The Trust also held a royalty
interest on the Company's cement grade kaolin property.  Royalty expense,
under this agreement, was $3,309 and $11,662 in 1997 and 1996,
respectively.  The Company and the Trust jointly own, through various
agreements, an interest in a gold prospect in southern Colorado.

Five directors of the Company and one officer purchased $46,875 of the
Company's debentures and a 4.125 interest in NovaChek LLC during 1996.

In April, 1997 the Company received a check for $5,000 as an option payment
on the West Rozell Oil and Gas Prospect.  The Company and the Trust each
own 50% of this property.  The company paid the Trust $2,500 for its
interest in this prospect.  The Company and the Trust also share ownership
in two other oil & gas prospects in Wyoming.
  
(9)  COMMITMENTS AND CONTINGENCY

Shareholder Dispute - Through fiscal 1996, the Company was involved in a
dispute with Thomas Kane, a director and principal shareholder of the
Company.  Mr. Kane had expressed his belief that the Company was not viable
as a going concern and should be liquidated in order to protect his
interests as a holder of the Company's convertible preferred stock.  In
February 1997, the Company and Mr. Kane settled this dispute whereby the
Company agreed to purchase 895,415 shares of convertible preferred stock
and 510,342 shares of common stock from Mr. Kane.  A principal shareholder,
officer, and director of the Company also agreed to purchase for $50,000
from Mr. Kane 203,426 shares of convertible preferred stock and 115,942
shares of common stock as part of the agreement.  The Company's share of
the purchase price was $150,000 in cash and up to $70,008 in additional
consideration based on a percentage of revenues from either the operation
or sale of the Company's cement grade Kaolin mine.  The present value of
this obligation was $45,465 and the remaining balance is included in long-
term debt in the accompanying balance sheet.  In connection with the
agreement with Mr. Kane, he resigned as a member of the Board of Directors
and stock options for 200,000 shares were cancelled.

During fiscal 1997, the Company offered to purchase common shares from
shareholders desiring to sell for $.04 per share.  Through September 30,
1997, the Company purchased and retired 13,700 shares for $548.  In October
1997, an additional 411,447 shares were purchased for $16,458 and retired.
Leases - Future minimum rental payments for office facilities under the
remaining terms of noncancelable leases are $17,806, $18,564, and $7,841
for the fiscal years ending September 30, 1997, 1998, 1999, and 2000,
respectively.  Net rental payments charged to expense under all operating
leases amounted to $21,607 in 1997 and $27,194 in 1996.

(10)  INDUSTRY SEGMENTS AND MAJOR CUSTOMER

Segment Information - The Company conducts all of its operations within the
United States, which consist principally of oil and gas exploration and
production and mining.  There are no sales or other transactions between
these two business segments.  Presented below is information concerning the
Company's business segments for the years ended September 30, 1997 and
1996:

                                               1997          1996
REVENUE:
    Oil and gas                              $  124,168     $  217,807
    Mining                                      705,121      1,291,131
                                               ________      _________
                                             $  829,289     $1,508,938
                                               ========      =========
OPERATING INCOME (LOSS):
    Oil and gas                              $  (48,112)    $     5,263
    Mining                                     (143,805)         42,526
    General corporate activities               (139,249)       (174,746)
                                              _________       _________
                                             $ (331,166)    $  (126,957)
                                              =========       ==========
DEPRECIATION AND DEPLETION:
    Oil and gas                              $   18,216     $    60,108
    Mining                                        8,975          21,620
    General corporate activities                  1,176           5,203
                                               ________         _______
                                             $   28,367     $    86,931
                                               =========        =======
IDENTIFIABLE ASSETS, net:
    Oil and gas                              $  108,192     $   284,881
    Mining                                      531,990         919,430
    General corporate activities                172,598         341,609
                                              _________       _________
                                             $  812,780     $ 1,545,920
                                              =========       =========
CAPITAL EXPENDITURES INCURRED:
    Oil and gas                              $   12,985     $     5,759
    Mining                                       29,356           8,969
    General corporate activities                  1,600           2,420
                                              _________       _________
                                            $    43,941     $    17,148
                                              =========       =========

Major Customer - For the years ended September 30, 1997 and 1996, the
Company had one mining customer that accounted for 72.0% and 85.6% of total
revenue, respectively. 

(11)  DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES:

All oil and gas operations of the Company and its subsidiaries are
conducted in the United States.  Capitalized costs relating to oil and gas
producing activities are as follows:
                                                       September 30,
                                                  1997           1996
Unproved properties not being amortized       $    33,750   $        --
Properties being amortized:
   Unproved properties                             90,703       111,468
   Proved properties                            5,891,554     6,044,954
                                                _________     _________
                                                6,016,007     6,156,422
Accumulated depreciation, depletion and
  amortization                                 (5,914,624)   (5,896,408)
                                                __________    _________
                                              $   101,383   $   260,014
                                                ==========    =========

Costs incurred in oil and gas producing activities, whether capitalized
or expensed during the years ended September 30, 1997 and 1996 are as follows:

                                                  1997           1996
                                               _________       _________
  Acquisition costs                           $       --      $    5,759
                                               =========       =========
  Exploration costs                           $   12,986      $       --
                                               =========       =========
  Development costs                           $       --      $       --
                                               =========       =========

Estimated Quantities of Proved Oil and Gas Reserves (Unaudited) - Proved
oil and gas reserves are the estimated quantities of crude oil and natural
gas, which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under
existing economic and operating conditions.  Proved developed oil and gas
reserves are those expected to be recovered through existing wells and
existent equipment and operating methods.  However, reserve information
should not be construed as the current market value of the Company's oil
and gas reserves or the costs that would be incurred to obtain equivalent
reserves.  Reserve calculations involve the estimation of future net
recoverable reserves of oil and gas and the timing and amount of future net
revenues to be received therefrom.  These estimates are based on numerous
factors, many of which are variable and uncertain.  Accordingly, it is
common for the actual production and revenues to vary from earlier
estimates.

Reserve estimates for recently drilled wells and undeveloped properties are
subject to substantial upward or downward revisions after drilling is
completed and a production history obtained.  Hence, reserve estimates and
estimates of future net revenues from production may be subject to
substantial revision from year to year.  Reserve information presented
herein is based on reports prepared by independent petroleum engineers.

Set forth below is the unaudited summary of the changes in the net
quantities of the Company's proved oil (bbls) and natural gas (mcf reserves
for the years ended September 30, 1997 and 1996:

                                             1997                   1996       
                                       (bbls      (mcf)       (bbls      (mcf) 

Proved reserves-beginning of year      32,378    358,036      36,618    276,315
    Revisions of previous estimates     2,752      5,701       6,015    133,567
    Sales of reserves-in-place         (6,976)  (282,127)     (2,580)    (3,686)
    Production                         (5,181)   (19,147)     (7,675)   (48,160)

Proved reserves-end of year            22,973     62,463      32,378    358,036
                                       ======     =======     ======    =======
Proved developed reserves:
  Beginning of year                    32,378    358,036      36,618    276,315
                                       ======    =======      ======    =======
  End of year                          22,973     62,463      32,378    358,036
                                       ======     ======      ======    =======

Standardized Measure of Discounted Future Net Cash Flows (Unaudited) - The
following presentations contain no provision for estimated future income
tax expenses due primarily to net operating loss carryforwards and tax
credits.  The standardized measure of discounted future net cash flows
relating to proved oil and gas reserves at September 30, 1997 and 1996, is
as follows:

                                                      1997            1996  

Future cash in-flows                             $   433,301     $ 1,252,791
Future production costs                             (294,614)       (466,618)
Future development costs                              (5,000)         (5,000)
                                                   _________       _________
      Future net cash flows                          133,687         781,173

10% annual discount for estimated
  timing of cash flows                               (35,047)      (291,882)
                                                   _________       _________
      Standardized measure of discounted
        future net cash flows                    $    98,640     $   489,291

The following are the principal sources of change in the standardized measure
of discounted future net cash flows during 1997 and 1996:


                                                     1997            1996   
Standardized measure of discounted future
  net cash flows at beginning of year            $   489,291     $   370,573
Sales of oil and gas produced,
  net of production costs                            (33,892)       (110,855)
Sales of reserves-in-place                          (301,413)        (23,925)
Net changes in prices and production costs           (75,536)         73,751 
Revisions of previous quantity estimates              18,233         153,066
Accretion of discount                                 29,188          19,758
Other                                                (27,231)          6,923
                                                    ________         _______
    Standardized measures of discounted future
      net cash flows at end of year              $    98,640     $   489,291
                                                    ========         =======

The Company estimates net quantities of proved reserves of oil and
gas and calculates the standardized measure of discounted future
net cash flows using current prices in effect at the time estimates
are made.

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

On May 5, 1997, the Company received a letter from KPMG Peat
Marwick LLP ("KPMG") that the client-auditor relationship between
the Company and KPMG had ceased, effective May 2, 1997.

This event was preceded by a conversation between the Company's
President and the KPMG Partner in charge of the Company's account
to the effect that due to the Company's need to reduce costs, it
would be necessary for the Company to look into engaging a smaller
accounting firm, which might be able to offer more cost-effective
services.

In September, 1997 the Company engaged the firm of Hein +
Associates LLP to audit the Company's financial statements as of
September 30, 1997. 

                            PART III

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

Directors

The directors of the Company are set forth in the following table:


Name and Positions                            Served as
 Held With the Company                      Age     Director Since

John R. Parker, Chairman of the
  Board (1)                                  51      April 22, 1986

Robert E. McDonald,(2)             
                                             69      April 22, 1986

Brian B. Spillane, President and
  Chief Executive Officer (3)                61      April 22, 1986

Milton O. Childers                           
  Exploration Manager                        69      April 22, 1986

Robert W. Meier (2)                          61      April 22, 1986

                       
   (1)  Chairman of the Board since February 17, 1997.

   (2)  Member of the Executive Committee.

   (3)  President and Chief Executive Officer since April 1, 1989.

All directors are elected to serve until the next annual meeting or
until retirement or resignation.  There is no family relationship
between any director of the Company and any other director or
executive officer.  The following paragraphs set forth an account
of the business experience of each of the Company's directors and
executive officers, including his principal occupation and
employment.

Mr. McDonald is currently a consulting geologist and oil and gas
explorationist.  He is also engaged in agricultural and real estate
pursuits.  He was President of Nova Natural Resources Corporation
from its inception until his resignation on April 1, 1989.  He
served as Chairman of the Board from inception until February 17,
1997.  He continues to serve as a member of the Board of Directors. 
From January 1, 1984 to September, 1986, he was President and
Chairman of the Board of Nova Petroleum Corporation, a predecessor
to the Company.  He graduated from the University of Kansas in 1951
with a B.S. degree in Geology.  Mr. McDonald has published several
papers relating to oil and gas geology in the Rocky Mountain area.

Mr. Spillane became President and Chief Executive Officer of the
Company effective April 1, 1989.  Prior to that time he was an
independent consultant to the oil, gas and minerals industry.  From
February, 1982 to November, 1987, he was employed as Executive Vice
President of Barrett Resources Corporation, a publicly held oil and
gas exploration company, where his duties primarily involved
mergers, acquisitions, and capital financing in addition to
involvement in other operations.  He graduated from the University
of Detroit in 1961 with a B.S. in Mechanical Engineering and holds
a M.S. in Mechanical Engineering from San Diego State University. 
He is a Registered Professional Engineer (mechanical) in
California.

Dr. Childers was President, Treasurer, and Director of Power
Resources Corporation until the merger in 1986 of Power Resources
Corporation into Nova Natural Resources Corporation, and holds B.S.
and M.A. degrees in geology from the University of Wyoming and a
Ph.D. degree in geology from Princeton University.  Dr. Childers
was an independent consulting geologist in the Denver, Colorado
area from 1986 to 1992 when he became the Company's Exploration
Manager.  He became the Vice President of Exploration of the
Company in January, 1993, and continues in that capacity.

Mr. Meier served as President and Chairman of the Board of Nova
Petroleum Corporation from May 1979 to January 1, 1984.  From 1984
to 1989 he was an independent consulting geologist.  From 1989 to
1994 he was Project Geologist for Dames & Moore, specializing in
the disposal of hazardous waste materials.  He is currently
retired, but occasionally works as a consulting geologist.  He
graduated from Northern Illinois University in 1961 with a B.S.
degree in Geology and in 1964 received an M.S. degree in Geology
from Southern Methodist University.  Mr. Meier is a member of the
American Association of Petroleum Geologists and is a certified
member of the Association of Professional Geological Scientists.

Mr. Parker is currently a real estate developer in Vermont.  Prior
to this activity he was a registered investment councilor with
McRae Capital Management in Morristown, New Jersey.  Prior to
joining McRae, Mr. Parker worked as an independent financial
consultant to various companies and as a general partner in an
investment banking firm.  Mr. Parker is also a director of several
investment companies associated with the Capstone Group in Houston,
Texas.  He graduated from St. Lawrence University in 1969 with a
B.S. in Psychology and holds a P.M.D. from Harvard Graduate School
of Business Administration.  Mr. Parker has served as Chairman of
the Board since February 17, 1997.

No directors of the Company receive compensation as directors,
although certain expenses incurred for Company business may be
reimbursed.

Executive Officers

The following table sets forth the executive officers of the
Company:

  Name and Officer                Age     Served as Officer Since

Brian B. Spillane
  President and Chief
  Executive Officer                61           April 1, 1989

James R. Schaff
  Secretary and Treasurer
  Manager of Lands                 42           May 2, 1996

Milton O. Childers
  Vice President of Exploration,
  and Assistant Secretary          69           January 22, 1993


An account of the business experience during at least the past five
years of Mr. Schaff is as follows (for Messrs. Spillane and
Childers, see "Directors"):

Mr. Schaff assumed his position as Nova's Land Manager on April 1,
1994, and was appointed Secretary and Treasurer of the Company on
May 2, 1996.  From 1981 until 1990, he was an independent
consultant for various major and independent companies in the oil
and gas industry.  From 1990 to 1994, he consulted principally for
Nova and U. S. Borax Inc. in mining-related land affairs.  He
graduated from Rocky Mountain College in 1981 with a B.S. degree in
Business Administration-Economics.  He is a Certified Professional
Landman (CPL) and an active member of the American Association of
Professional Landmen (AAPL), the Rocky Mountain Association of
Mineral Landmen (RMAML) and the Rocky Mountain Mineral Law
Foundation.

ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth information concerning the
compensation of the Chief Executive Officer, the Exploration
Manager and the Land Manager of the Company as of September 30,
1997, 1996, and 1995 for services in all capacities to the Company.

                      Summary Compensation Table

                                            Long Term Compensation   
                              Annual
                           Compensation             Awards           
    Name and                 Salary    Restricted Stock     Options
Principal Position   Year       $          Award ($)*           #    

Brian B. Spillane    1997     51,600          5,160              --
     CEO             1996     50,120             --              --
                     1995     67,939          3,397              --  
                                                                  
Milton O. Childers   1997     50,400          5,040              --
Exploration V.P.     1996     50,240             --              --
                     1995     66,160          3,308              --  
                                                                        
James R. Schaff
Secretary/Treasurer  1997     49,800          4,980              --   
Manager of Lands     1996     48,930             --          50,000    
                     1995     52,456          2,623              --

*ESOP contribution

                       Option Grants in Last Fiscal Year

                         Individual Grants                              
                                    % of Total
                       Options      Options Granted  Exercise or
                       Granted/     to Employees      Base Price  Expiration
     Name             (Expired)     in Fiscal Year      ($/sh)       Date   

Brian B. Spillane         --               -              --            -
Milton O. Childers        --               -              --            -
James R. Schaff           --               -              --            - 

                 Employee Stock Option Plans

The Board of Directors have approved two stock option plans for the benefit
of Company employees and key personnel.  The first plan is the Nova Natural
Resources Corporation 1989 Non-qualified Stock Option Plan (the "Non-
qualified Plan") and the second plan is the Nova Natural Resources
Corporation 1989 Incentive Stock Option Plan, a qualified plan (the
"Incentive Plan").  Both plans include terms whereby participants are issued
options to purchase shares of the Company's common stock at the market price
at the time of grant.  The options are exercisable at the date of grant and
expire five years after the date of grant.  

Options granted to employees under both plans who subsequently terminate
employment with the Company are canceled if not exercised within three months
after termination of employment.

Both plans expired in 1994.  In February 1996, the Company granted
nonqualified options for 50,000 shares to an officer.  These options
were exercisable at $.05 per share for five years and were not
granted pursuant to either of the stock option plans discussed above.
In December 1997, the Board of Directors and the officer agreed to 
cancel these options.

A total of 2,000,000 shares of the Company's Common Stock have been reserved
for issuance under the terms of the two Plans.  At September 30, 1997,
options to purchase 400,000 shares of Common Stock had been issued to the
Company's Directors under the Non-qualified Plan (600,000 in 1996); under the
Incentive Plan, options to purchase 600,000 shares had been issued (600,000
in 1996), including, 200,000 each to Messrs. Spillane, Childers and Schaff. 
None of the options issued under the Plan were exercised during 1997 or 1996.

Employee Stock Ownership Plans

The Board of Directors and the stockholders of the Company have also adopted
the Nova Natural Resources Corporation Employee Stock Ownership Plan ("ESOP")
for the benefit of its full-time employees, including its officers and
directors.

Only employees who have reached the age of 21 and have completed one year of
Company service are eligible to participate in this plan.  With respect to
each plan year, the Company may contribute cash or Common Stock of the
Company to a trust in such amounts as the Board of Directors deems advisable. 
Contributions may not exceed the lesser of 25% of the participant's total
annual compensation or $30,000.  Any cash contributions are to be used
primarily by the trustee to purchase shares of Common Stock of the Company,
which, in addition to shares of Common Stock of the Company contributed by
the Company, are allocated to the accounts of all participants in the ratio
that the total annual compensation (not in excess of $150,000) of each
participant bears to the total compensation of all participants in such year. 
The plan does not allow contributions by participants.

Each participant's right to the stock allocated to his account is fully
vested after three years of service.  Nonetheless, a participant's benefits
will be fully vested if his employment terminates by reason of death or upon
his reaching 65.  If a participant incurs a break in service (passage of one
plan year in which the employee works 500 or fewer hours), his benefits are
forfeited to the extent they have not vested.  All forfeitures are allocated
among the remaining participants in the same manner as the annual
contribution.

Distributions under the plan are to commence no later than 60 days after the
last day of the year in which the participant reaches age 65 or, if later,
the plan year in which the participant terminates employment with the
Company.  The distribution will consist of the Company's Common Stock.  Any
distributions are payable in a lump sum or, if the participant elects, in
annual or monthly installments.

Each participant is entitled to direct the trustee as to the manner in which
any stock allocated to his account is voted.  The trustee is empowered to
vote any stock which has not been allocated in a manner which, in the
judgement of the Board of Directors, represents the participants' best
interests. 

As of September 30, 1997, 462,711, 124,343 and 264,497 shares have been
allocated to accounts of Messrs. Spillane, Schaff, and Childers,
respectively.  No other current officers or directors of Nova are currently
eligible to participate in the plan.  A total of 228,233 shares were
contributed to the plan in 1997.  No ESOP contribution was made for 1996.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Principal Shareholders

The following table sets forth the only persons known to the Company, as of
September 30, 1997, to own beneficially more than 5% of the Company's Common
Stock, $.10 par value, or the Company's Convertible Preferred Stock, $1.00
par value, the Company's only classes of issued and outstanding voting
securities.  Except as otherwise noted in the footnotes to the table, each
person named has sole voting and investment powers relating to his shares.

Name and Address               Amount and Nature of        Percent
of Beneficial Owner            Beneficial Ownership        of Class

Preferred Stock

Robert E. McDonald                   794,421 (1)           44.3%
P.O. Box 481243
Denver, CO 80248-1243

Karen McDonald                       794,420 (2)           44.3%
540 South Forest Unit N
Denver, CO 80246

Brian B. Spillane                    203,426 (5)           11.4%
789 Sherman St., Ste. 550
Denver, CO 80203

Common Stock

Robert E. McDonald                   484,851 (1)           7.82%
P.O. Box 481243
Denver, CO  80248-1243

Karen McDonald                       484,850 (2)           7.82%
540 South Forest Unit N
Denver, CO 80246

Milton O. Childers                   494,494 (4)           7.98%
17939 E. Brown Place
Aurora, CO 80013

James E. Taets                       411,427 (3)           6.64%
7979 So. Jasmine Circle
Englewood, Colo. 80112

Brian B. Spillane                    578,653 (5)           9.33%
255 S. Eudora
Denver, CO 80222
                
(1) The preferred and common shares are held by the REM Family    
    Trust, in which Mr. McDonald is the Trustee.  Does not        
    include 200,000 shares underlying stock options held by Mr.   
    McDonald.  Includes options held by two officers and          
    directors and one director of the Company to purchase an      
    aggregate of 561,788 shares of common stock directly from Mr. 
    McDonald, all exercisable at $.10 per share at any time on or 
   before April 3, 2003.  Does not include 62,500 shares which
    would be issued were Mr. McDonald to elect to convert his
    $9,375 face amount of convertible subordinated debentures to
    common stock.
 
(2) The preferred and common shares are held by the Karen         
    McDonald Trust, in which Ms. McDonald is Trustee.  Includes
    options held by two officers and one director of the Company
    to purchase an aggregate of 561,787 shares of common stock
    directly from Ms. McDonald, all exercisable at $.10 per share
    at any time on or before April 3, 2003.  Does not include
    62,500 shares which would be issued were Ms. McDonald to
    elect to convert her $9,375 face amount of convertible
    subordinated debentures to common stock.

(3) Mr. Taets is a former employee of the Company.  Consists of
    411,278 shares vested in his account under the ESOP and 149   
    owned directly.  These shares were presented to the Company
    for repurchase in October, 1997, were purchased and
    cancelled.

(4) Consists of 225,154 shares owned by Mr. Childers, 4,843
    shares held by Mr. Childers' wife and 264,497 shares vested
    under the ESOP, but does not include options to purchase
    186,789 shares directly from Mr. McDonald, options to
    purchase 186,788 shares from Ms. McDonald, or options to
    purchase 200,000 shares from the Company.  Does not include
    62,500 shares which would be issued were Mr. Childers to
    elect to convert his $9,375 face amount of convertible
    subordinated debentures to common stock.

(5) Consists of 462,711 shares vested in his account under the    
    ESOP, but does not include options owned by Mr. Spillane to   
    purchase 250,000 shares directly from Mr. McDonald, options   
    to purchase 250,000 shares directly from Ms. McDonald, or
    options to purchase 200,000 shares from the Company.  Does
    not include 83,333 shares which would be issued were Mr.
    Spillane to elect to convert his $12,500 face amount of
    convertible subordinated debentures to common stock.

The following table shows, at September 30, 1997, the shares of
the Company's outstanding Common Stock, $.10 par value (6,200,379
shares), beneficially owned by each of the officers and directors
of the Company and the shares beneficially owned by all of the
officers and directors as a group.  Except as otherwise noted in
the footnotes to the table, each person named has sole voting and
investment powers related to his shares.

    Name of                 Amount and Nature of     Percent
Beneficial Owner            Beneficial Ownership     of Class

Robert E. McDonald               484,851 (1)           7.82%
Brian B. Spillane                578,653 (3)           9.33%
James R. Schaff                  184,650 (4)           2.98%
Milton O. Childers               494,494 (5)           8.54%
Robert W. Meier                  193,178 (6)           3.12%
John R. Parker                        -- (7)            (2)

All Directors and Officers
as a group (7 persons)         1,935,826              31.79%
                

    (1)  See note (1) of the preceding table.

    (2)  Less than 1%.

    (3)  See note (5) of the preceding table.

    (4)  Consists of 124,343 shares vested in his account under the 
         Esop plan.  Does not include 200,000 shares underlying   
         stock options held by Mr. Schaff, nor does it include    
         20,833 shares which would be issued were Mr. Schaff to   
         elect to convert his $3,125 face amount of convertible   
         subordinated debentures to common stock.

    (5)  See note (4) of the preceding table.

    (6)  Does not include 200,000 shares underlying stock options 
         held by Mr. Meier.  Does not include 41,667 shares which
         would be issued were Mr. Meier to elect to convert his   
         $6,250 face amount of convertible subordinated debentures
         to common stock.

    (7)  Does not include options owned by Mr. Parker to purchase 
         125,000 shares directly from Mr. McDonald, options to    
         purchase 125,000 shares directly from Ms. McDonald, or   
         options to purchase 200,000 shares from the company.  Does 
         not include 41,667 shares which would be issued were Mr. 
         Parker to elect to convert his $6,250 face amount of     
         convertible subordinated debentures to common stock.

The following table shows as of September 30, 1997, the shares of
the Company's Common Stock which would be held by Officers and
Directors, $.10 par value, assuming full conversion of the
Preferred Stock, full exercise of all options, and full conversion
of convertible subordinated debentures.

    Name of                 Amount and Nature of        Percent
Beneficial Owner            Beneficial Ownership        of Class

Robert E. McDonald             1,774,404                14.25%
Brian B. Spillane              1,768,838                14.21%
James R. Schaff                  405,483                 3.26%
Milton O. Childers             1,130,571                 9.08%
Robert W. Meier                  434,845                 3.49%
John R. Parker                   491,667                 3.95%

All Directors and Officers
as a group (7 persons)         6,005,808                48.24%

If full conversion of all outstanding shares of convertible
preferred stock, options, and convertible subordinated debentures
occurred, the Company would have outstanding 12,451,580 shares of
its Common Stock.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain of the Company's directors and officers have participated
directly or indirectly in the past and may continue to participate,
from time to time in the future, in oil, gas and mineral prospects
in which the Company has an interest.  All such participation has
been and will continue to be on terms no less favorable to the
Company than it can obtain from unaffiliated persons.

The Company and the former Chairman of the Board, Robert E.
McDonald, jointly owned property on the Company's cement grade
kaolin property in Redwood Falls, Minnesota.  In 1992, the Company
purchased Mr. McDonald's interest in this property for a $.15 per
ton royalty on all kaolin removed from that portion of the mine. 
Royalty expense, under this agreement, was $3,309 and $11,662 in
1997 and 1996, respectively.
  
Messrs. McDonald, Spillane, Childers, Meier, Parker, and Schaff
purchased one and one-half, two, one and one-half, one, one, and
one and one-half Units respectively (7.5 total, at a cost of
$75,000), in the Company's Regulation D offering described in
"Significant Developments in Fiscal 1996".  These Units were
purchased at the identical price paid by non-affiliated third
parties.

In April, 1997 the Company received a check for $5,000 as an option
payment on the West Rozell Oil and Gas Prospect.  The Company and
the Trust each own 50% of this property.  The company paid the
Trust $2,500 for its interest in this prospect.  The Company and
the Trust also share ownership in two other oil & gas prospects in
Wyoming.

There have been no other significant transactions between the
Company and officers or directors of the Company during the fiscal
year ended September 30, 1997.  See also "Item 10.  Executive
Compensation".

                             PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

    (a) (3)  Exhibits

    The following Exhibits are filed herewith pursuant to Rule 601
of the Regulation S-K or are incorporated by reference to previous
filings.

 Exhibit
Table No.      Document                                   Reference

  (2)          Articles of Incorporation and By-Laws         (a)

  (3)          Instruments defining the right of
               security holders, including indentures        N/A

  (5)          Voting trust agreement                        N/A

  (6)          Material contracts not in ordinary
                      course of business                     N/A

  (7)          Material foreign patents                      N/A

                  

(a)  Filed with Registration Statement No. 33-5520 (under the
Securities Act of 1933) and incorporated herein by this reference.

(b)  The following documents were filed and are incorporated
herein:
                         Description of
                       Document and Filing

  (i)       Convertible Preferred Stock Purchase Agreement filed
with Form 10-Q dated December 31, 1986.

 (ii)       Nova Natural Resources Corporation 1987 Non-qualified
Stock Option Plan and 1987 Incentive Stock Option Plan.

(iii)       Report on Form 8-K date of report March 4, 1997.

(iv)        Report on Form 8-K, date of report May 5, 1997.

 (v)        Report SC 13E4, date of report June 13, 1997.        
(vi)        No 8-K's were filed in the last quarter of 1997.
                           SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Nova Natural Resources Corporation
has duly caused this Annual Report on Form 10-KSB to be signed on
its behalf by the undersigned, thereunto duly authorized, in
Denver, Colorado on this 24th day of December, 1997.

                              NOVA NATURAL RESOURCES CORPORATION
                              (Registrant)


                               By:/s/ Brian B. Spillane          
                                  Brian B. Spillane, President


     Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on Form 10-K 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/ Robert E. McDonald        Director                   12-24-97
Robert E. McDonald                     

/s/ Brian B. Spillane         President, Chief           12-24-97
Brian B. Spillane             Executive Officer

/s/ James R. Schaff           Secretary and Treasurer    12-24-97
James R. Schaff

/s/ Milton O. Childers        Director                   12-24-97
Milton O. Childers

/s/ John R. Parker            Chairman of                12-24-97
John R. Parker                the Board

/s/ Robert W. Meier           Director                   12-24-97
Robert W. Meier