<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                                       OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                         COMMISSION FILE NUMBER 0-20430


                                AZCO MINING INC.

                            (A DELAWARE CORPORATION)

                I.R.S. Employer Identification Number 84-1094315

                         1250 - 999 West Hastings Street
                       Vancouver, British Columbia V6C 2W2
                                 (604) 682-7286

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 25,680,497 shares of the
Company's Common Stock were outstanding as of February 9, 1998.
<PAGE>   2
                           AZCO MINING INC. (DELAWARE)



                          PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                       PAGE
                                                       ----

<S>                                                      <C>
         Consolidated Balance Sheets ................... 3

         Consolidated Statements of Operations ......... 4

         Consolidated Statements of Cash Flows ......... 5

         Consolidated Statement of Stockholders' Equity. 6

         Notes to Interim Consolidated
           Financial Statements ........................ 7 - 9

</TABLE>
<PAGE>   3
AZCO MINING INC.  (DELAWARE)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)



<TABLE>
<CAPTION>

                                                  ASSETS                                    DECEMBER 31,           JUNE 30,
                                                                                                1997                 1997
<S>                                                                                         <C>                  <C>
Current assets:
     Cash and cash equivalents                                                               $ 18,995,439        $ 17,080,260
     Prepaids and other                                                                           217,564              80,893
     Income tax receivable                                                                      2,194,965             479,728
                                                                                             ------------        ------------

          Total current assets                                                                 21,407,968          17,640,881
                                                                                             ------------        ------------

Property and equipment:
  Furniture and equipment                                                                         146,862             158,539
  Less accumulated depreciation                                                                  (112,696)           (111,259)
                                                                                             ------------        ------------
                                                                                                   34,166              47,280
                                                                                             ------------        ------------

Refundable deposits                                                                               370,505             615,255
Restricted cash                                                                                    34,106              34,106
Deposit (Note 6)                                                                                                    4,000,000
Other assets                                                                                        7,725               7,725
                                                                                             ------------        ------------

                                                                                             $ 21,854,470        $ 22,345,247
                                                                                             ------------        ------------


                                                  LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
  Accounts payable and accrued liabilities                                                   $    591,796        $    337,050
                                                                                             ------------        ------------

     Total current liabilities                                                                    591,796             337,050
                                                                                             ------------        ------------


Commitments and contingencies

Stockholders' equity
  Common stock: $.002 par value, 100,000,000 shares authorized:
  25,663,425 and 25,579,834 shares issued and outstanding as
  of December 31, 1997 and June 30,1997 respectively                                               51,327              51,160
  Additional paid-in capital                                                                   25,861,902          25,776,411
  Deficit                                                                                      (4,650,555)         (3,819,374)
                                                                                             ------------        ------------
                                                                                               21,262,674          22,008,197
                                                                                             ------------        ------------

        Total liabilities and stockholders' equity                                           $ 21,854,470        $ 22,345,247
                                                                                             ============        ============
</TABLE>

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



                                        3
<PAGE>   4
AZCO MINING INC. (DELAWARE)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



<TABLE>
<CAPTION>


                                                       THREE MONTHS ENDED                       SIX MONTHS ENDED
                                                            DECEMBER 31,                          DECEMBER 31,
                                               ---------------------------------      ----------------------------------
                                                    1997               1996                1997                1996
<S>                                            <C>                 <C>                <C>                 <C>
INCOME:
    Interest income                            $    264,871        $   359,892        $    545,014        $    721,901
    Gain on sale of assets
    Other income                                                                                                25,000
                                               ------------        -----------        ------------        ------------

                                                    264,871            359,892             545,014             746,901
                                               ------------        -----------        ------------        ------------

EXPENSES:
     Salaries                                       238,316            172,724             417,392             361,108
     General and administrative                     328,566            282,016             609,646             452,962
     Exploration                                    576,357            555,259           1,424,015           1,633,895
     Accounting and legal                           157,934             68,182             229,466             129,987
     Amortization and depreciation                    4,666              8,746              10,913              17,852
     Financing and acquisitions                                         40,000                                 113,031
     Legal settlement costs (Note 6)                400,000                                400,000
                                               ------------        -----------        ------------        ------------

                                                  1,705,839          1,126,927           3,091,432           2,708,835
                                               ------------        -----------        ------------        ------------

INCOME BEFORE INCOME TAXES                       (1,440,968)          (767,035)         (2,546,418)         (1,961,934)

     Income Taxes                                (1,628,237)          (117,696)         (1,715,237)           (134,296)
                                               ------------        -----------        ------------        ------------

NET INCOME (LOSS)                              $    187,269        $  (649,339)       $   (831,181)       $ (1,827,638)
                                               ============        ===========        ============        ============


BASIC EARNINGS PER COMMON SHARE (NOTE 8)       $       0.01        $     (0.03)         $    (0.03)       $      (0.07)
                                               ============        ===========        ============        ============


WEIGHTED AVERAGE COMMON SHARES                   25,627,392         25,512,938          25,608,343          25,512,938
                                               ============        ===========        ============        ============
</TABLE>


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



                                        4
<PAGE>   5
AZCO MINING INC. (DELAWARE)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


<TABLE>
<CAPTION>

                                                                                      SIX MONTHS ENDED
                                                                                         DECEMBER 31,
                                                                             ---------------------------------
                                                                                  1997                1996
<S>                                                                          <C>                 <C>          
Cash flows from operating activities:
     Net loss                                                                $   (831,181)       $ (1,827,638)
     Adjustments to reconcile net loss to net cash used in operations:
           Stock issued for mineral properties                                     50,000
           Depreciation and amortization                                           10,913              17,851
     Changes in assets and liabilities, net:
           Other assets                                                          (136,671)           (129,055)
           Deposit                                                              4,000,000
           Accounts payable and accrued liabilities                               254,746              (2,825)
           Income tax refund                                                   (1,715,237)            (45,500)
                                                                             ------------        ------------
Net cash  provided by (used in) operating activities                            1,632,570          (1,987,167)
                                                                             ------------        ------------

Cash flows from investing activities:
     Investment in and advances to Mali property                                                   (1,750,000)
     Advances from (to) Indonesian projects                                       244,750          (1,083,055)
     Purchases of furniture and equipment                                          (2,900)             (4,350)
     Proceeds from sale of furniture and equipment                                  5,101
     Proceeds from maturity of investment securities                                                  699,595
                                                                             ------------        ------------
Net cash provided by (used in) investing activities                               246,951          (2,137,810)
                                                                             ------------        ------------

Cash flows from financing and offering activity:
     Proceeds from sale of common stock                                            35,658
                                                                             ------------        ------------
                                                                                   35,658
                                                                             ------------        ------------

Net increase (decrease) in cash and cash equivalents                            1,915,179          (4,124,977)

Cash and cash equivalents at  beginning of period                              17,080,260          24,295,805
                                                                             ------------        ------------

Cash and cash equivalents at end of period                                   $ 18,995,439        $ 20,170,828
                                                                             ============        ============

Cash paid during the period for:
       Interest                                                              $          0        $          0
                                                                             ============        ============
</TABLE>

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


                                        5
<PAGE>   6
AZCO MINING INC.  (DELAWARE)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

<TABLE>
<CAPTION>

                                                           Common                           
                                                            Stock                   Additional    
                                                 --------------------------          Paid-In 
                                                  Shares            Amount           Capital            Deficit            Total
<S>                                             <C>               <C>               <C>              <C>                <C>        
Balance, June 30,1997                           25,579,834        $  51,160         25,776,411       $(3,819,374)       $22,008,197

    Shares issued:
               Purchase of mineral properties       41,091               82             49,918                               50,000
               Exercise of stock options            42,500               85             35,573                               35,658

Net Loss                                                                                                (831,181)          (831,181)
                                               -----------        ---------        -----------       -----------        -----------


Balance, December 31, 1997                      25,663,425        $  51,327        $25,861,902       $(4,650,555)       $21,262,674
                                               ===========        =========        ===========       ===========        ===========
</TABLE>


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


                                        6
<PAGE>   7
AZCO MINING INC. (DELAWARE)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

In the opinion of management, the accompanying interim financial statements
contain all material adjustments consisting only of normal recurring adjustments
necessary to present fairly the financial position, the results of operations
and the cash flows of the Company and its consolidated subsidiaries for the
interim period. Users of financial information produced for interim periods are
encouraged to refer to the footnotes contained in the Annual Report on Form 10-K
when reviewing interim financial results.

AZCO Mining Inc. (Delaware) (the "Company") was formed on July 13, 1988 to
acquire mining properties and either develop or sell them. The Company will
consider properties of merit in almost any geographical location.

NOTE 2. MALI PROJECT (NORTHWESTERN AFRICA)

During the quarter ended December 31, 1997 the Company provided the Mali Project
$181,987 for operating costs. The operating costs are included in exploration
costs in the accompanying statement of operations. The Company, as of September
30, 1997, had advanced to the Mali Project a total of $4,511,799. On December
18, 1997, Western African Gold and Exploration Company - SA, owned 100% by the
Company, was granted a new exploration agreement on the property holdings of the
Mali Project. This new agreement runs through the year 2002 and has a total work
commitment of approximately $3,360,000 assigned to it, which has been surpassed
to date. It is the intent of the Company to find a joint-venture partner for the
Mali Project.

Effective November 18, 1997 the Company and Lion Mining Corporation
Limited("Lion") entered into an agreement whereby Lion assigned to the Company
all of its interest in the Mali agreement and Lion agreed to grant the Company
first right on all mining opportunities which are brought to it for a minimum
three year period.



                                        7
<PAGE>   8
AZCO MINING INC. (DELAWARE)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)

NOTE 3. PONGKOR PROJECT (INDONESIA)

The Company is attempting to establish ownership of an Indonesian company to
hold its interest in the Pongkor Properties. Once this has been established it
is the intent of the Company to joint-venture the Pongkor Properties.

NOTE 4. BENITOITE PROJECT (SAN BENITO COUNTY, CALIFORNIA)

On December 5, 1997 the Company announced that it had acquired the option to
purchase a Benitoite Gem Mine in San Benito County, California. The Company paid
$20,000 to have the exclusive right to evaluate the property until February 1,
1999. On or before this date the Company may elect to purchase the Project
outright for $1,500,000, unencumbered by royalty. If the Company elects to
relinquish the option to purchase it may walk from the Project with no
obligations.

NOTE 5. REFUNDABLE INCOME TAXES

The Company's federal taxable loss for the six months ended December 30, 1997
can be carried back to recover federal income taxes paid for the year ended June
30, 1996. Accordingly, the statement of operations for the six months ended
December 31, 1997 includes an income tax credit of $388,000. The Company accrued
an additional $1,327,237 as a recovery of federal income tax on investments
written off as exploration expense during fiscal 1997 related to the Mali
Project.

The Company filed its fiscal 1997 federal tax return during the current quarter
and received a $1,806,965 refund in January 1998.

NOTE 6. AIOC DEPOSIT

During the current quarter the Company settled all outstanding differences with
AIOC and the $4,000,000 held in escrow to satisfy any award in the AIOC
arbitration was returned to the Company. In addition a payment of $400,000 was
remitted to AIOC in full and final settlement of all matters and claims.


                                        8
<PAGE>   9
AZCO MINING INC. (DELAWARE)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)

NOTE 7. OUTSTANDING OPTIONS

At December 31, 1997 the Company had 2,272,572 options outstanding which are
exercisable between $1.00 and $3.00 per common share at varying dates through
2002.

NOTE 8. CHANGE IN METHOD OF CALCULATING EARNINGS PER SHARE

Effective for the interim period ended December 31, 1997, the Company adopted
SFAS 128, Earnings per Share, a simplified standard for computing earnings per
share. Basic earnings per share calculated in accordance with SFAS 128 are the
same for all periods presented as primary earnings per share calculated and
presented by the Company under the previous method. Stock options which could
potentially dilute basic earnings per share in the future, have not been
included in the computation of dilutive earnings per share because to do so
would be antidilutive for the periods presented.



                                        9
<PAGE>   10
                           AZCO MINING INC. (DELAWARE)


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

GENERAL

The Company was formed on July 13, 1988. On December 21, 1995 the Company
announced that it had completed the sale of its Sanchez Project and a 70%
interest in its Mexican Project, the Piedras Verdes, to Phelps Dodge Corporation
for $40 million. All material revenues since the sale have been a result of the
proceeds of the sale of assets to Phelps Dodge Corporation.

The Company is currently evaluating a number of opportunities in the mining
industry for the purpose of merger, joint venture or project acquisition.

SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1996.

The net loss for the six month period ended December 31, 1997 was $831,181
compared to a net loss of $1,827,638 for the same period ended December 31,
1996. The decrease in the current period net loss is the result of an accrual of
a federal tax refund for fiscal 1997.

Salaries expense for the six month period ended December 31, 1997 increased to
$417,392 from $361,108 for the same period last year due to the hiring of a
Chief Geologist.

General and administrative expense was $609,646 for the six month period ended
December 31, 1997 as compared to $452,962 for the same period ended December 31,
1996. This increase was the result of increased activity by the Company in the
areas of investor relations and travel during the six month period.

Exploration expense was $1,424,015 for the six month period ended December 31,
1997 compared to $1,633,895 for the same period ended December 31, 1996. The
decrease in exploration expense for the current period is the result of
decreased activity on the Mali Project.



                                       10
<PAGE>   11
                           AZCO MINING INC. (DELAWARE)


THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1996.

Net income for the three month period ended December 31, 1997 was $187,269
compared to a net loss of $649,339 for the same period ended December 31, 1996.
The increase in current period net income is the result of an accrual of a
federal tax refund for fiscal 1997.

Salaries expense was $238,316 for the quarter ended December 31, 1997 compared
to $172,724 for the quarter ended December 31, 1996. The increase was due to the
hiring of a Chief Geologist in fiscal 1998.

General and administrative expense was $328,566 for the quarter ended December
31, 1997 compared to $282,016 for the quarter ended December 31, 1996. The
current period increase is the result of increased activity by the Company in
the area of investor relations and travel.

FINANCIAL CONDITION

As of December 31, 1997 the Company had cash and cash equivalents of
$18,995,439.

The Company believes that for the current fiscal year end June 30, 1998 all
capital requirements will be funded with present cash and cash equivalents.





ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.



                                       11
<PAGE>   12
                           AZCO MINING INC. (DELAWARE)


PART II.  OTHER INFORMATION


ITEM 1:           LEGAL PROCEEDINGS

       On November 24, 1997 a Deed of Release and Compromise was entered into by
AZCO Mining Inc, Sanchez Mining Inc. and AIOC Corporation settling all
outstanding differences between the parties including, in particular, certain
matters being arbitrated under the rules of the London Metal Exchange. The
Company has since received the $4,000,000 held in escrow to satisfy any award in
the AIOC arbitration and has remitted a payment of $400,000 to AIOC in full and
final settlement of all matters and claims.


ITEMS 2-4:  Not Applicable


ITEM 5:           OTHER INFORMATION

                  None.


ITEM 6:           EXHIBITS AND REPORTS ON FORM 8-K

    (a)           Exhibits:
                                    None.

    (b)           Reports on Form 8-K
                                    None.



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<PAGE>   13
                           AZCO MINING INC. (DELAWARE)


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.


Date: February 13, 1997       BY:   Alan P. Lindsay
                                 ----------------------------------
                              Alan P. Lindsay
                              CEO, President and Chairman


Date: February 13, 1997       BY:   Ryan A. Modesto
                                 ----------------------------------
                              Ryan A. Modesto
                              Principal Accounting Officer



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