FORM 10-KSB
                   SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549

(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
    EXHANGE ACT OF 1934  (NO FEE REQUIRED)

               For the fiscal year ended:  DECEMBER 31, 1998

                  Commission file number:  001-10156

                  Original Sixteen to One Mine, Inc.
         (Exact name of registrant as specified in its charter)

              California                          94-0735390
    (State of other jurisdiction of            (I.R.S. Employer
     incorporation or organization)            Identification No.)

       Post Office Box 1621, Alleghany, CA            95910
    (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code:  (530)287-3223

Securities registered pursuant to Section 12 (b) of the Act:

                                            Name of each exchange
    Title of each class                      on which registered

     Common stock, par                         Pacific Exchange
  Value $.10 per share

Securities registered pursuant to Section 12 (g) of the Act:

                           None
                    (Title of Class)

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:

The aggregate market value of voting stock held by non-affiliates of the 
registrant:  $1,906,565 on December 31, 1998.

<PAGE>
PART I


ITEM 1:  BUSINESS

Description of Business

Original Sixteen to One Mine, Inc. (the Company) mines gold on properties 
it owns or on which it has claims, in and around the town of Alleghany in 
the California Gold Country, about 65 miles northeast of the intersection 
of I-80 and California State Route 49.

The Company's primary operation is the Sixteen to One mine from which more 
than 1,103,500 troy ounces of gold have been retrieved since the mine 
commenced operation in 1896.  The company began doing business in its 
present form in 1911 and has operated continuously ever since.  Unlike the 
common image of California '49ers panning for gold, the Company's 
operation is a hard rock underground mine in which the Company sinks 
diagonal shafts ("winzes") from which the miners create horizontal levels 
at various elevation.  The Company's activities are presently focused on 
the 800 foot level, 1500 foot level, 1700 foot level and 2400 foot level.  
When the miners are tunneling, they average about 6 linear feet of 
progress per day.  Periodically, the miners drift outward on quartz veins.  
Many areas within the quartz veins do not contain gold; however, on the 
Company's property, the gold appears primarily in quartz veins.  Because 
the gold appears intermittently, the Company makes no claim of reserves.

The Company's operations are characterized by significant amounts of 
preparation, tunneling, mine maintenance and upgrading, all of which are 
necessary to permit the location and extraction of the gold.  The Company 
from time to time focuses substantially all of its resources on 
infrastructure development and maintenance, and during those periods, 
little gold is mined.  At other times, the Company's miners are primarily 
searching for gold.  Accordingly, the Company's business is subject to two 
very different cycles, one dependent on whether the Company is directing 
its resources towards infrastructure or towards mining and the other as a 
function of the productivity of current mining operation.  In 1998 and 
1997, the Company devoted substantial resources toward mining for gold.  
In 1996, the Company channeled substantial resources to the maintenance of 
the mine and development of infrastructure; in 1995 and 1994, the Company 
had also devoted substantial resources to sinking a new winze and 
developing new levels to permit the exploration of additional areas of the 
mine.  Mining is classically a "boom or bust" activity, and the Company's 
operations fit that description.

The Company uses existing metal detection technology which enables miners 
to detect gold approximately 20 to 30 inches in from the tunnel wall, and 
the Company frequently works with other companies to develop new 
technologies potentially permitting non-invasive exploration substantially 
further within the rock wall.  The Company makes its mine available to 
third parties for the purposes of researching and developing new detection 
technology.  These arrangements allow the Company to benefit from research 
activities without incurring the costs usually associated with research 
and development.

The Company expects to be the first mine in which advanced metal 
detection, a new technology, is commercially deployed during 1999.  If the 
new system works as the tests conducted in the Company's mine during 1998 
and 1997 suggest, the Company's operating results would be favorably 
affected.  However, there can be no assurances that the new technology 
will work as expected.

For accounting purposes, gold revenues are accrued when the metal has been 
mined and recovered.  However, for tax purposes, revenues are not 
recognized until the gold has been sold.  Although most of the Company's 
gold is sold as refined bullion, the Company has additional value-added 
ways to sell its gold.  The Company markets rare high-grade gold and 
quartz specimens at a premium to museums, collectors and jewelers, and it 
also manufactures its own jewelry and sells its own proprietary mine bars.

The Company has no extraordinary working capital requirements, and the 
Company is not dependent on any particular customer or few customers, as 
commodity gold has multiple markets and gold jewelry is sold to a rather 
diversified customer base.  The Company has no backlog of orders, but 
rather sells gold from its inventory.  The Company does not believe that 
it operates in a materially competitive context; the Company's operating 
results generally reflect the efficiency and timeliness with which it 
locates gold.

The raw materials and equipment used for mining are commonly available, 
and the Company has generally been able to satisfy its labor requirements.  
The Company believes that within the Sixteen to One mine there is a 
substantial number of attractive exploration opportunities.

In 1994, following a long standing practice of acquiring former productive 
mines, the Company purchased the Brown Bear mine in Trinity County, 
California.  The mine site is 540 timbered and patented acres and has 
yielded 500,000 troy ounces of gold to its past owners.  The mine is 
underground yet no excavation exists below the adit level.  During the 
1980's the property was extensively core drilled by Santa Fe Mineral.  The 
Company believes that within the Brown Bear mine a substantial number of 
attractive exploration opportunities exist.  When funding is available for 
exploration and development, the Company will pursue the potential within 
this property.

There is no particular seasonality to the marketing of gold (other than 
the Company's gold jewelry sales for which some modest bias toward the 
fourth quarter is noted), and the Company's business is not otherwise 
seasonal except for the generally modest effect of winter storms on the 
ability of the Company's miners to come to work.

Management believes that the Company is in substantial compliance with all 
applicable federal, state and local laws and regulations relating to the 
discharge of materials into the environment.  The Company does not 
presently anticipate any material estimated capital expenditures for 
environmental control facilities, either for the remainder of its current 
fiscal year or for the succeeding fiscal year.

The Company is a California corporation formed October 11, 1911.  At 
December 31, 1998, it had 35 full time employees.  The Company's executive 
office is located at 527 Miners Street, Alleghany, California  95910.  The 
Company's phone number is (530)287-3223.  The internet address is 
www.origsix.com.


Risk Factors

(a) Price of Gold

The price of gold has been flat (with a few periodic exceptions) over the 
past year, probably reflecting diminished inflationary expectations and 
activities of the international banking institutions.  Any significant 
drop in the price of gold may have a material adverse effect on the 
results of the Company's operations unless the Company is able to offset 
such a price drop by substantially increased production or jewelry sales.

(b) Lack of Proven Reserves

As noted above, the Company is unable to predict if, where or when gold 
will be found and mined.  While (i) the Company has recovered over 37,500 
troy ounces of gold since January 1992 and (ii) management believes that 
substantial additional unrecovered gold exists in the Sixteen to One mine, 
the Company has no ability to measure or prove its reserves and thus may 
be unable to obtain additional debt or equity financing when needed.

(c)  Governmental Regulation

All mining operations are subject to substantial governmental regulation 
at every level related both to mining safety and to environmental 
protection.  Compliance with these regulations may cause significant 
delays in the operation of the Company as well as substantial capital and 
operating expenses.  While the Company believes it is currently operating 
in compliance with all know safety and environmental standards and 
regulations, there can be no assurance that it is in such compliance or 
that future changes in the laws, regulations or interpretations thereof 
will not have a material adverse effect on the results of the Company's 
operations.

(d)  Labor Pool

The Company believes it has been fortunate in attracting and retaining 
talented and dedicated miners.  While there can be no assurance that the 
Company will continue to have available the services of an appropriate 
underground mining force, mine closures and recent labor reductions of 
miners in the Western United States have increased current applications 
for employment.

(e)  Liquidity

The Company's gold inventory at December 31, 1998 was $414,246 (carried at 
the spot price for gold).  Much of that inventory is in the form of 
specimens or gold held for jewelry.  The Company may experience periodic 
shortfalls in liquidity which are not likely to be bridged by 
institutional debt financing.  Management will address these issues from 
time to time as they arise, which may involve the sale at commodity prices 
of gold held for specimen or jewelry sale.  All inventory of raw material 
is recorded at spot price per troy ounce.  In addition, contract 
manufacturing costs of jewelry are included in the finished jewelry 
inventory.

(f)  Dependence on Key Personnel

The Company is substantially dependent upon the continued services of 
Michael Miller, its President.  The Company has no employment agreement 
with Mr. Miller, nor is there either key person life insurance or 
disability insurance on Mr. Miller.  Accordingly, there can be no 
assurance that Mr. Miller's services will remain available to the Company.  
If Mr. Miller's services are not available to the Company, the Company 
will be materially and adversely affected.

(g)  Year 2000

The Year 2000 (Y2K) problem arises as a result of the way most computer 
and process control systems handle dates.  Most systems only store the 
last two digits of the year.  This equipment will not be able to 
differentiate between years at the turn of the century and, if the problem 
is left uncorrected, may result in malfunctions of the equipment.

The use of computers is limited to Windows operating systems on personal 
computers linked to an internal network throughout the Company.  Software 
consists of standardized packages from major developers.  The greatest 
internal impact is anticipated with the Company's accounting software.  
The Y2K issue also relates to other office equipment, such as telephone, 
voice mail and the security system.  The Company is in the process of 
contacting all affected vendors and manufacturers to determine where any 
updates of replacements will be required.  The cost of the project to date 
has not been material and the Company does not expect future costs of the 
project to be material.  An entire system replacement and software 
programs would total approximately $10,000.  Companies providing banking, 
insurance and other administrative services to the Company are being 
contacted for Year 2000 compliance.

(h)  Cautionary Statement for Purposes of the "Safe Harbor" Provisions of 
    the Private Securities Litigation Reform Act of 1995

From time to time the Original Sixteen to One Mine, Inc. (the Company), 
will make written and oral forward-looking statements about matters that 
involve risks and uncertainties that could cause actual results to differ 
materially from projected results.  Important factors that could cause 
actual results to differ materially include, among others:

+ Fluctuations in the market prices of gold.
+ General domestic and international economic and political conditions.
+ Unexpected geological conditions or rock stability conditions resulting
  in cave-ins, flooding, rock-bursts or rock slides.
+ Difficulties associated with managing complex operations in remote
  areas.
+ Unanticipated milling and other processing problems.
+ The speculative nature of mineral exploration.
+ Environmental risks.
+ Changes in laws and government regulations, including those relating to
  taxes and the environment.
+ The availability and timing of receipt of necessary governmental permits
  and approval relating to operations, expansion of operations, and 
  financing of operations.
+ Fluctuations in interest rates and other adverse financial market
  conditions.
+ Other unanticipated difficulties in obtaining necessary financing.
+ The failure of equipment or processes to operate in accordance with
  specifications or expectations.
+ Labor relations.
+ Accidents.
+ Unusual weather or operating conditions.
+ Force majeure events.
+ Other risk factors described from time to time in the Original Sixteen
  to One Mine, Inc., filings with the Securities and Exchange Commission.

Many of these factors are beyond the Company's ability to control or 
predict.  Investors are cautioned not to place undue reliance on forward 
looking statements.  The Company disclaims any intent or obligation to 
update its forward-looking statements, whether as a result of receiving 
new information, the occurrence of future events or otherwise.

A more detailed discussion of the foregoing factors is included in this 
report.


ITEM 2:  PROPERTIES

Properties

The Company's Sixteen to One mine was acquired in 1911, and additional  
properties were acquired prior to 1925; all of these properties have been 
carried on the Company's books at their original purchase price and have 
been fully amortized through depletion.  The Company has acquired 
additional mining properties for $405,517, but no depletion has been 
applied to those properties.

In 1991, the Company purchased a 200 ton per day mill, which it upgraded 
in 1996 after a fire damaged the facility.  The Company believes that it 
has all necessary permits and licenses to conduct a mining and milling 
business.  The Company's Original Sixteen to One Mine, located in the town 
of Alleghany, California, is accessed by a road maintained by the company.  
The mouth of the mine is approximately one-half mile from a county road.

The Company's Alleghany properties consist of 24 patented claims (412 
acres.  An additional 53 claims are  subject to subsurface access but with 
paramount title held by the Bureau of Land Management of the Department of 
the Interior).  In 1994, the Company purchased the Brown Bear Mine in the 
French Gulch Mining District, consisting of 34 patented claims (550 acres) 
and 22 unpatented claims (440 acres).  The following table sets forth 
further information with respect to the Company's mining claims.

ALLEGHANY DISTRICT:

PATENTED MINING CLAIMS OWNED 100% BY THE COMPANY

     NAME OF CLAIM                 NAME OF CLAIM

     Belmont                       Rainbow Fraction
     Number Three                  Twenty-One
     Eclipse Quartz                Eclipse Extension
     Tightner Extension            Contract
     Alene                         Valentine
     Red Star                      Bartlett
     Farnham Gold Quartz Mine      Belmont #2
     Contract Extension            Hanley Quartz Mine
     Noble                         Sixteen to One
     Groves Gold Quartz Mine       Denver
     Happy Jack Extension          Ophir
     Rainbow Extension             Happy Jack


UNPATENTED MINING CLAIMS OWNED 100% BY THE COMPANY

     NAME OF CLAIM               NAME OF CLAIM

     La Jard Lode                Tightner No. 4 Lode
     Tagalog Lode                Bald Mountain Placer #2
     Tightner # 5 Lode           Cumberland Lode
     Oversight Lode              Tightner No. 6 Lode
     Aurora Lode                 Tightner No. 1 Lode
     East Bartlett Lode          Copeland Two Lode
     Tightner No. 2 Lode         Red Star Ext Placer
     Antique Lode                Tightner No. 3 Lode
     Buckeye Placer              Bullion Lode
     Alene Ext Lode              Amethyst Lode
     Lava #1 Lode                Bartlett Ext Lode
     Amethyst Ext Lode           Lava #2 Lode
     Illocano Lode               Mabel Lode
     Lava #3 Lode                Bal Lode
     Margaret Lode               Alling One Lode
     Verde Lode                  Phoebe Lode
     Alling Two Lode             Butterfly Lode
     Blue Jay Lode               Lady Bug Lode
     North Star Lode             Triple M Lode
     South Fork Placer           Honey Bee Lode
     Mayflower Lode              Copeland One Lode
     Bald Mountain Placer        Parkman Placer
     Oregon Creek Placer         Apache
     Patriot                     Patriot Extension
     Tomahawk                    Thunderbolt
     Bradley                     Hercules
     Hercules Extension


FRENCH GULCH DISTRICT:

PATENTED MINING CLAIMS OWNED 100% BY THE COMPANY

     NAME OF CLAIM                 NAME OF CLAIM

     Dreadnaught Quartz Lode       Coon Dog Quartz Lode
     North Fork Quartz Lode        Madison Quartz Lode
     North Fork No. 2 Quartz Mine  Martin Quartz Lode
     Gem Quartz Lode               Brown Bear Ext. Qtz. Lode
     Slide Quartz Lode             Red Diamond Quartz Lode
     Abernathy Quartz Lode         New World Quartz Lode
     North Pole Quartz Lode        Cube Quartz Lode
     White Bear Quartz Lode        Highland Mary Quartz Lode
     Comet Quartz Lode             Dead Horse Quartz Lode
     Monte Cristo Gold Lode        Belmont Quartz Lode
     Rising Sun Quartz Lode        Capital Gold Quartz Lode
     Enterprise Gold Quartz Lode   New World Quartz Lode
     Last Chance Gold Lode         Black Bear Gold Lode
     Barted Gold Quartz Mine       Queen Gold Quartz Gold
     Brown Bear Gold Quartz Mine   Shoofly Gold Mining Claim
     Watt Quartz Lode              Melton Quartz Lode
     Deadwood Placer Mining Lode   Sebastian Placer Quartz
                                      Lode


UNPATENTED MINING CLAIMS OWNED 100% BY THE COMPANY

     NAME OF CLAIM                 NAME OF CLAIM

     Lost Hope                     Cardinal No. 1
     Cardinal No. 2                Cardinal No. 3
     Cardinal No. 4                Cardinal No. 5
     Cardinal Fraction No. 1       Cardinal Fraction No. 2
     Cardinal Fraction No. 3       Cardinal Fraction No. 4
     Cardinal Fraction No. 5       Cardinal Fraction No. 6
     Cardinal Fraction NO. 7       Cardinal Fraction No. 8
     Cardinal Fraction NO. 9       Cardinal Fraction No.10
     Coon Dog Extension            Golden Bear No. 1
     Golden Bear No. 2             Luck Boy
     Sunny Point                   Sunny Point No. 2


Governmental Regulation

Mining is generally subject to regulation by state regulatory authorities.  
In most states, the production of gold is regulated by conservation laws 
and regulations.  State and federal statutes regulate environmental 
quality, safety, exploration procedures, reclamation, employees health and 
safety, use of explosives, air quality standards, pollution of stream and 
fresh water sources, noxious odors, noise, dust, and other environmental 
protection controls as well as the rights of adjoining property owners.  
While laws may change preventing or delaying the commencement or 
continuance of given operations, no material expenditures for 
environmental control facilities are foreseen in the near future.


ITEM 3:  LEGAL PROCEEDINGS

                             Not applicable.


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

                             Not applicable.


PART II

ITEM 5:  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND  RELATED
         STOCKHOLDER MATTERS

Market Information

The Company's common stock is traded on the Pacific Exchange under the 
symbol OAU.

                          1998             1997              1996
Price range          High    Low      High      Low       High    Low
1st quarter         2-3/1   1-5/8     3-7/8    3-1/4     4-5/8   3-3/4
2nd quarter         2-1/8   1-9/16    4-1/4    2-7/8     4-3/4   4-5/16
3rd quarter         2-1/16    7/8     4        2-7/8     4-9/16  4-1/8
4th quarter         1-1/4     7/8     3        1-7/8     4       3-3/4


Shareholders

As of December 31, 1998, there were 1,051 holders of common stock.


ITEM 6:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

Balance Sheet Comparisons of 1998 with 1997

The Company's current assets decrease of $312,633 (38.28%) was attributed 
to gold being sold from inventory due to the lack of a significant 
discover of gold, to maintain day to day operations.  Mining property 
decreased $17,876 as development costs associated with exploration and 
development are being amortized over the production from the newly 
developed headings.  Total assets decreased $441,373 (16.54%).

The Company's current liabilities increased $213,120 (36.45%).  The 
primary increase is due to related party advances to the Company (see 
subsequent events).


Statement of Operations

(a)  Comparison of 1998 with 1997

The Company's revenues decreased $710,448 (32.63%) from $2,177,150 in 1997 
to $1,466,702 in 1998.  The primary reason for the decrease was a decline 
in gold production from 5,869.92 troy ounces in 1997 to 3,737.39 troy 
ounces in 1998.  Gross profit from jewelry, slab and specimen sales 
increased $17,891 (4.96%) from $360,910 in 1997 to $378,801 in 1998.  The 
Company's total operating expense decreased $511,801 (18.58%) from 
$2,754,860 in 1997 to $2,243,059 in 1998.  The Company's compensation and 
related expenses decreased $153,843 (11.08%) from the $1,389,567 incurred 
in 1997.  The workforce was reduced from 45 at year end 1997 to 35 at year 
end 1998.  The reduction in workforce coupled with a reduction in the 
modification factor for worker's compensation insurance attributed in part 
to a 20.58% reduction in insurance expense from $215,725 to $171,319 in 
1998.  Contract Labor decreased $15,200 (35.54%) as the Company utilized 
more of its own work force.  The $10,353 (14.31%) decrease in legal, 
accounting and other related expenses is primarily due to the expanded use 
of in-house employees rather than outside firms or individuals.

Depreciation and amortization of development costs decreased $90,627 
(39.83%) from December 31, 1997, to $ 136,907 for the year ended 1998.  
The decrease in depreciation and amortization cost is primarily attributed 
to lower gold production.  Based upon previous mine experience, management 
established that gold production from the new winze will approximate 
50,000 troy ounces of gold.  Accordingly, capitalized development costs 
are being amortized using the units of production method.

The Company continues to conserve working capital on discretionary 
expenses, thereby reflecting a decrease in supplies of $139,473 (46.13%), 
drayage of $12,383 (17.17%) and promotion of $14,647 (67.71%).  Other 
expenses increased or decreased only modestly and were not material.

As a result, the Company's operating losses increased from $319,817 ($.09 
per share) in 1997 to $666,909 ($.19 per share) in 1998.


(b)  Comparison of 1997 with 1996

The Company's revenues increased $734,691 (50.93%) from $1,442,459 in 1996 
to $2,117,150 in 1997.  Primary reasons for the increase were:  (1) gold 
production increased from 3,956.24 troy ounces in 1996 to 4,869.92 troy 
ounces in 1997 (48.33%) and (2) increase in higher margin jewelry, 
specimen, cabochon and slab sales.  Accordingly, as sales increased, the 
cost of goods sold for 1997 increased; however, the ratio of sales to cost 
of goods sold for 1997 decreased 7% compared with 1996, primarily because 
the closing spot price of gold decreased from $370 per troy ounce at the 
end of 1996 to nearly $288 per troy ounce at the end of 1997.  The 
Company's compensation and related expenses increased by $346,706 from the 
$1,042,861 incurred in 1996.  Factors affecting this increase were the 
Company's continued expansion of its workforce with the increased number 
carried through the entire year.  Merit pay increases were implemented 
among the miners.

Contract labor decreased $18,845 (30.59%) as the Company utilized more of 
its own work force.  The $37,241 (33.98%) decrease in legal, accounting 
and other related expenses are primarily attributed to reduced legal 
issues and the expanded use of in-house employees, rather than outside 
firms or individuals.

Depreciation and amortization of development costs increased 121.67% to 
$227,534 from $102,645 for year end 1996.  The increase in depreciation 
and amortization cost is primarily attributed to amortization of 
development costs.  The Company completed development of a new winze into 
unexplored ground in 1996.  Based upon precious mine experience, 
management estimated that gold production from the new winze will 
approximate 50,000 troy ounces.  Accordingly, capitalized development 
costs are being amortized using the units of production method in 1997.

Insurance increased from $189,783 in 1996 to $215,725 in 1997 as medical 
insurance costs rose and the cost of worker's compensation insurance 
increased.  Other expenses increased or decreased only modestly and were 
not material.

As a result, the Company's operating results improved from a loss of 
$654,468 ($0.19 per share) in 1996 to a loss of $319,817 ($0.09 per share) 
in 1997.


Liquidity and Capital Resources

The Company's liquidity (i.e., its ability to generate adequate amounts of 
cash to meet its needs for cash) is substantially dependent upon the 
results of its operations.  While the Company does maintain a gold 
inventory which it can liquidate from time to time to satisfy its working 
capital needs, there can be no assurance that such inventory will be 
adequate to sustain operations if the Company's gold mining activities are 
not successful.  Because of the unpredictable nature of the gold mining 
business, the Company cannot provide any assurance with respect to long-
term liquidity.  In addition, if the Company's mining operation does not 
produce meaningful additions to inventory, the Company may determine it is 
necessary to satisfy its working capital needs by selling gold in bullion 
form.

The Company is dependent on continued recovery of gold and sales of gold 
from inventory to meet its cash needs.  Although the Company has 
historically located at least $1.2 million of gold in each of the last 
five years, there can be no assurance that the Company's efforts in any 
particular period will provide sufficient funding for the Company to 
continue operations.  The Company has a fully extended line of credit with 
a bank.

If the Company's cash resources are inadequate and its gold inventory is 
depleted, the Company may seek debt or equity financing on the most 
reasonable terms available.


Subsequent Events

On February 17, 1999, the Company issued a press release announcing a 
restructuring of its plan of operations and workforce.  The move was 
designed to conserve capital and encourage mining focused on immediate 
gold production.  As of March 29, 1999, ten miners continue to mine the 
Sixteen to One vein.

The Company has stockpiled sixty tons of gold bearing concentrates from 
its mill.  Approximately forty tons were sampled and assayed by an 
independent assayer.  Results indicate that approximately 500 troy ounces 
of gold are contained in the concentrates.  Management's estimates a 
minimum net recovery from these concentrates at $75,000, which will be 
included in 1999 operations.

On March 12, 1999, the Board of Directors met in Alleghany.  All Directors 
who loaned the Company money in 1998 agreed to renew the loan or to 
consider converting the principle and accrued interest to common stock 
improving the Company's financial position in liquidity.  Other accredited 
shareholders agreed with the position of the Board.



ITEM 7:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Company are attached at the end of this 
document.



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

                                None.



PART III


ITEM 9:  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

Officers and Directors

The following table sets forth the Officers and Directors of the Company.  
The directors listed below will serve until the next annual shareholders 
meeting to be held on June 26, 1998.  All of the officers of the Company 
serve at the pleasure of the board of directors.

Name                Age  Position  Officer Since  Director Since

Charles I. Brown     67  Secretary/Treasurer
                          & Director    1990             1986

Leland O. Erdahl     70  Director       ----             1992

Sandor Holly         66  Director       ----             1997

Michael M. Miller    56  President
                          & Director    1983             1977

Richard C. Sorlien   76  Director                        1986


Charles I. Brown-Secretary/Treasurer and Director

Mr. Brown, from February 1, 1992 until his retirement on February 1, 1997, 
served as a Director and Executive Vice President, and as the Chief 
Financial Officer of Integrated Medical Systems, Inc. ("IMS"), which was 
acquired by Eli Lilly and Company in December 1995.  From 1983 to 1992, he 
was active as a financial consultant to, and a director of, several banks 
and corporations.  He was Chairman of American National Bank-Laramie, 
Laramie, Wyoming, Chairman of the Rawlins National Bank, Rawlins, Wyoming, 
Chairman of Prudential Bank of Denver, Colorado, and he continues to be a 
Director of Izzo Systems, Inc.  From 1974 to 1982, he served as Senior 
Vice President and Director of Energy Fuels Corporation, a privately owned 
mining company acquired by Getty Oil Company in 1982.  From 1959 to 1974, 
he served as Vice President/Finance and Director of Western Nuclear, Inc., 
acquired by Phelps Dodge Corporation in 1970.  He is a Trustee of the 
Colorado State University Research Foundation and the Colorado Outward 
Bound School.  He is a member of the American Alpine Club.  Mr. Brown 
received a Master of Business Administration, with distinction, from 
Harvard University in 1959 and a Bachelor of Arts, in geology, from 
Williams College in 1954.  He was born in Bombay, India.


Leland O. Erdahl-Director

Mr. Erdahl was Vice President and Chief Financial Officer for AMAX Gold, 
Inc. and a Director of Canyon Resources Corporation, Uranium Resources, 
Inc. and Hecla Mining Company.  He is also a trustee for a group of John 
Hancock Mutual Funds.  Mr. Erdahl has been an active participant in the 
mining industry most of his life.  From 1970 until 1984, he held executive 
offices including President and Chief Executive Officer with Ranchers 
Exploration and Development Corporation, a diversified mining company.  
From 1987 to 1992, Mr. Erdahl was President and Chief Executive Officer of 
Stolar, Inc., a company active in using underground radio communications 
and geologic imaging to assist mine operators.  Mr. Erdahl is a graduate 
of the College of Santa Fe with a degree in Business Administrations, and 
is a certified public accountant.  He was born in Doland, South Dakota.


Sandor Holly-Director

Mr. Holly has been employed by Rocketdyne since 1976 in various 
assignments including the design of Pulsed Wavefront Sensor, 
interferometric sensor systems development and multi-wavelength probe 
laser fabrication.  He is the recipient of eighteen patents including one 
of the first Free Electron Laser patents issued by the U.S. Patent Office 
in 1960.  He is active in national and international conferences in 
Switzerland, Hungary, Germany, Japan and Russia.  He was born in Budapest, 
Hungary in 1933, graduating from ELTE University of Sciences in 1955.  He 
received the following degrees:  M.S. (Electrical Engineering) from MIT in 
1960; S.M. (Physics) from Harvard University in 1962; Ph.D. (Applied 
Physics) from Harvard University in 1969; and Post Doctoral (Modern 
Optics) from Northeastern University in 1970.


Michael M. Miller-Director, President and CEO

As President and Chief Executive Officer , Mr. Miller is responsible for 
the day-to-day operations of the Company.  In 1975, Mr. Miller became the 
sole proprietor of the Morning Glory Gold Mines.  Prior to that, he was 
self-employed in Santa Barbara County, California from 1965 to 1974.  Mr. 
Miller served as a trustee and President of the Sierra County Board of 
Education (1979 to 1983 trustee) (President in 1983). Since 1991 he has 
served as a member of the Sierra County Planning Commission (Chairman in 
1992 and 1993). Mr. Miller is licensed as a California Class A general 
engineering contractor.  He is a member of the American Institute of 
Mining Engineers.   In 1965, Mr. Miller received a B.A. from the 
University of California at Santa Barbara in combined Social Sciences-
Economics.  He was born in Sacramento, California.


Richard C. Sorlien-Director

Mr. Sorlien served as a partner for 33 years and of Counsel for six years 
with the Philadelphia, Pennsylvania law firm of Pepper, Hamilton and 
Scheetz.  (He retired from the firm in March, 1997.)  Mr. Sorlien served 
22 years as a Director of the Glenmede Trust Company in Philadelphia.  He 
also served as a Director and Corporate Secretary of the Cressona Aluminum 
Company of Cressona, Pennsylvania from 1979 until January 1996.  He is a 
Director of the International Lawn Tennis Club of the United States.  He 
owns the Alaska Mine and Tree Farm in Pike, California. Mr. Sorlien 
received a Bachelors of Arts degree (A.B.) from Harvard University in 
1947, and earned his law degree (L.L.B.) from Harvard Law School in 1949.  
He was born in Minneapolis, Minnesota.



ITEM 10:  EXECUTIVE COMPENSATION

Remuneration of Directors and Executive Officers

Total compensation for each Director, excluding the President, consists of 
$750 per meeting attended and a $2,000 retainer effective January 1, 1994, 
and remains unchanged.

The Company has not paid or distributed and does not pay or distribute 
cash or non-cash compensation to officers, directors or employees under 
any retirement or pension plans, and has no intent to do so in the future.

In April, 1996, the Board of Directors adopted, subject to shareholders 
approval, the Company's Stock Incentive Plan for employees and directors.  
Shareholders approved the plan on June 22, 1996.


Management Remuneration for the Period Ended December 31, 1998.

   Name/
Principal       Annual
Position         Year   Salary    Bonus  Compensation  Securities

Michael Miller/  1998  $105,000   -----      -----        -----
President & CEO  1997  $105,000   -----      -----        -----
                 1996  $105,000  $20,000     -----        -----

The following table summarizes incentive options granted to the president:

     Issued June 30, 1998         50,000 shares       $2.13 per share
     Issued June 30, 1997         50,000 shares       $4.73 per share

These options vest ratably over a five year period beginning one year from 
the date of grant.

There were no salary increases or cash bonuses granted to the president 
during 1998 or 1997.


Non-qualified Stock Options granted to board members are summarized in the 
following table:

                               SHARES      EXERCISE PRICE     FULLY VESTED
                               ------      --------------     ------------
Issued June 30, 1998           20,000           $1.875       June 30, 2002
Issued June 30, 1997           20,000           $4.00        June 30, 2001
Issued June 30, 1996           15,000           $4.56        June 30, 2000

These options vest ratably over a four year period beginning one year from 
the date of grant.

ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management

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

Common     M. Blair Hull                496,750             14%
           Hull Trading Co.
           401 So. LaSalle, Suite. 505
           Chicago, IL  60605

Common     Kathy N. Hull                496,750             14%
           11 Sierra Ave.
           Piedmont, CA  94611

Common     Michael M. Miller            279,063              8%
           Officer and Director
           P.O. Box 941
           Alleghany, CA  95910

Common     Charles I. Brown             173,900              5%
           Officer and Director
           Family Partnership, LTD
           2691 Pinehurst Drive
           Evergreen, CO  80439

Common     Richard Sorlien               87,250            2.5%
           Director
           3000 Two Logan Square
           18th & Arch Street
           Philadelphia, PA  19103

Common     Leland Erdahl                 30,000            .85%
           Director
           8046 MacKenzie Court
           Las Vegas, NV  89129

Common     Sandor Holly                   8,100            .23%
           Director
           23801 Ladrillo Street
           Woodland Hills, CA  91367

Common     All Officers & Directors     578,313          16.32%
                (as a group)


ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                            None.



PART IV


ITEM 13:  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
          FORM 8-K

(a)  1 and 2.  Financial Statements

The financial statements and schedules listed in the accompanying index to 
financial statements and financial statement schedules are filed as part 
this report.


3.  Exhibits

The exhibits listed on the accompanying index to exhibits are filed as 
part of this annual report.

No reports on Form 8-K were required to be filed



INDEX TO EXHIBITS



                                                 Method of 
     Exhibit No.                                   Filing

          3      Articles of Incorporation      Incorporated
                                                by reference

          4      Stock Certificate              Incorporated
                                                by reference



SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this Annual Report to 
be signed on its behalf by the undersigned, thereunto duly authorized.


ORIGINAL SIXTEEN TO ONE MINE, INC.
Registrant

By:  /s/Charles I. Brown
     Charles I. Brown
     Secretary/Treasurer and Director
     March 31, 1999


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

/s/Michael M. Miller
Michael M. Miller
President and Director
March 31, 1999

/s/Richard C. Sorlien
Richard C. Sorlien
Director
March 31, 1999

/s/Leland O. Erdahl
Leland O. Erdahl
Director
March 31, 1999

/s/Sandor Holly
Sandor Holly
Director
March 31,1999
<PAGE>
THE ORIGINAL SIXTEEN TO ONE MINE, INC.

                   INDEX TO FINANCIAL STATEMENTS

                 AND FINANCIAL STATEMENT SCHEDULES
                       (ITEM 14 (a) 1 and 2)


                                                 Page

Independent Auditor's Report                      F-1

Balance Sheet at December 31, 1998 and 1997       F-2

Statement of Operations for each of the three
    years in the period ended December 31, 1997   F-4

Statement of Stockholders' Equity for each of
    the three years in the period ended
           December 31, 1998                      F-5

Statements of Cash Flows for each of the three
  years in the period ended December 31, 1998     F-6

Notes to financial statements                     F-8


All schedules are omitted since the required information is 
not present or is not present in amounts sufficient to require 
submission of the schedule, or because the information required 
is included in the financial statements and notes thereto.

<PAGE>


                        INDEPENDENT AUDITOR'S REPORT

The Board of Directors
Original Sixteen to One Mine, Inc.

     We have audited the accompanying balance sheet of Original Sixteen to 
One Mine, Inc. as of December 31, 1998 and 1997, and the related 
statements of operations, stockholders' equity and cash flows for each of 
the three years in the period ended December 31, 1998.  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 audits.

     We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and perform the 
audits 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 audits provide 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 Original 
Sixteen to One Mine, Inc. at December 31, 1998 and 1997, and the results 
of its operations and its cash flows for each of the three years in the 
period ended December 31, 1998 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 
11 to the financial statements, the Company has incurred recurring losses 
from operations and has negative working capital that raises substantial 
doubt about its ability to continue as a going concern.  Management's 
plans in regards to these matters are also described in Note 11.  The 
financial statements do not include any adjustments that might result from 
the outcome of this uncertainty.


                                 Perry-Smith & Co., LLP
                                 Certified Public Accountants

Sacramento, California
March 5, 1999



                                    F-1
<PAGE>
                  ORIGINAL SIXTEEN TO ONE MINE, INC.

                         BALANCE SHEET

                   December 31, 1998 and 1997

                                       1998              1997

     ASSETS

Current Assets:
Cash                             $   25,338         $   64,452
Accounts receivable - trade          24,931             60,872
Accounts receivable - employees      24,982             36,226
Inventory                           414,246            632,676
Other current assets                 14,677             22,581
                                  ---------         ----------
  Total Current Assets              504,174            816,807
                                  ---------         ----------

Mining property (Note 2):
Real estate and property rights,
 net of depletion of $524,145       182,091            182,091
Mineral property                    415,263            415,263
Development costs, net              799,144            817,020
                                  ---------         ----------
                                  1,396,498          1,414,374
                                  ---------          ---------

Fixed assets at cost:
Equipment                           861,857            859,864
Buildings                           170,721            164,546
Vehicles                            188,540            188,541
                                 ----------         ----------
                                  1,221,118          1,212,951
                                 ----------         ----------
Less accumulated depreciation      (916,229)          (799,601)
                                  ---------         ----------
  Net fixed assets                  304,889            413,350
                                    ---------         ----------
Other assets, net of accumulated
 amortization of $49,163 and 
 $46,760 in 1998 and 1997,
 respectively                         21,657             24,060
                                   ---------          ---------
  TOTAL ASSETS                    $2,227,218         $2,668,591
                                 ==========         ==========






                                 (Continued)
                                     F-2

<PAGE>
              ORIGINAL SIXTEEN TO ONE MINE, INC.

                         BALANCE SHEET
                          (Continued)
  
                   December 31, 1998 and 1997



LIABILITIES & STOCKHOLDERS' EQUITY

                                      1998               1997

Current Liabilities:

Accounts payable & accrued
 compensation                   $  201,206         $  168,782
Notes payable to related
 parties (Note 3)                  302,600             23,000
Notes Payable due within one
 year (Note 4)                     294,027            298,931
Deferred Income Tax (Note 6)                           94,000
                                 ---------         ----------
  Total Current Liabilities        797,833            584,713
                                 ---------         ----------
Notes Payable due after one
 year (Note 4)                       2,501              7,421
                                 ---------         ----------
Total Liabilities                  800,334            592,134
                                 ---------         ----------


Stockholders' Equity (Note 5):

Common Stock, par value $.10;
 10,000,000 shares authorized
 in 1998 and 1997; 3,544,065
 and 3,534,065 shares issued
 and outstanding in 1998 and
 1997, respectively               354,407            353,407
Additional paid-in capital      1,373,540          1,357,204
Notes receivable from employees   (26,000)           (26,000)
(Accumulated deficit)
 retained earnings               (275,063)           391,846
                                ---------         ----------
  Total Stockholders' Equity    1,426,884          2,076,457
                               ----------         ----------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY          $2,227,218         $2,668,591
                               ==========         ==========


             The accompanying notes are an integral
               part of these financial statements.
                                    F-3

<PAGE>
                  ORIGINAL SIXTEEN TO ONE MINE, INC.

                       STATEMENT OF OPERATIONS

           For Years Ended December 31, 1998, 1997 and 1996



                                  1998        1997       1996
Revenues:

Gold and Jewelry Sales       $1,466,702  $2,177,150  $1,442,459
                             ----------  ----------  ----------

Operating Expenses:

Salaries and Wages            1,235,724  1,389,567   1,042,861
Depreciation & Amortization     136,907    227,534     102,645
Contract Labor                   27,568     42,768      61,613
Telephone & Utilities           129,745    117,374     114,385
Taxes: Property & Payroll       159,860    160,778     164,933
Insurance                       171,319    215,725     189,783
Supplies                        162,901    302,374     342,027
Small Equipment & Repairs        48,680     52,338      68,537
Drayage                          59,757     72,140      63,390
Promotion                         6,985     21,632      49,867
Legal & Accounting               62,006     72,359     109,600
Other Expenses                   41,607     80,271      80,564
                              ---------   ---------   ---------
 Total Operating Expenses     2,243,059  2,754,860   2,390,205

  Loss from operations         (776,357)  (577,710)   (947,746)

Other income   
 (expense), net                  16,448    (23,107)     26,278
                              ---------   ---------   ---------
 Loss before income taxes      (759,909)  (600,817)   (921,468)

Income tax benefit, (Note 6)     93,000     281,000    267,000
                              ---------    ---------  ---------
  Net loss                    $(666,909)  $(319,817) $(654,468)
                              ==========  ==========  ==========
Basic & diluted loss per 
 share of common stock 
 (Note 10)                    $    (.19)  $    (.09) $    (.19)
                              ==========  ==========  =========


              The accompanying notes are an integral
                part of these financial statements.
                                    F-4
<PAGE>

<TABLE>
                                      ORIGINAL SIXTEEN TO ONE MINE, INC.

                                      STATEMENT OF STOCKHOLDERS' EQUITY
                            For the Years Ended December 31, 1998, 1997 and 1996
<CAPTION>
                                                                        NOTES
                                                                     RECEIVABLE                    TOTAL
                                 COMMON STOCK           PAID-IN         FROM         RETAINED  STOCKHOLDERS'
                              SHARES        AMOUNT      CAPITAL       EMPLOYEES      EARNINGS      EQUITY
                            ---------   -----------   -----------   -----------    -----------  -----------
<S>                         <C>         <C>           <C>           <C>           <C>           <C>
Balance, January 1, 1996    3,513,062   $   351,306   $ 1,369,318   $   (52,000)   $ 1,366,131  $ 3,034,755

Retired common stock
   (Note 5)                    (8,997)         (899)      (48,114)       26,000                     (23,013)

Net loss                                                                              (654,468)    (654,468)
                            ---------   -----------   -----------   ------------   -----------  -----------
Balance, December 31, 1996  3,504,065       350,407     1,321,204       (26,000)       711,663    2,357,274

Issuance of stock under
   stock option plan (Note 9)  30,000         3,000        36,000                                    39,000

Net loss                                                                              (319,817)    (319,817)
                            ---------   -----------   -----------   ------------   -----------  ------------
Balance, December 31, 1997  3,534,065       353,407     1,357,204       (26,000)       391,846    2,076,457

Issuance of stock 
   for supplies (Note 9)       10,000         1,000        16,336                                    17,336

Net loss                                                                              (666,909)    (666,909)
                            ---------    -----------  ------------  -------------  ------------  -----------

Balance, December 31, 1998  3,544,065    $  354,407   $ 1,373,540    $   (26,000)  $  (275,063) $ 1,426,884
                            =========    ==========   ===========    ===========   ============  ===========
<FN>
                                   The accompanying notes are an integral
                                     part of these financial statements.
                                                     F-5
</FN>
</TABLE>

                 ORIGINAL SIXTEEN TO ONE MINE, INC.

                     STATEMENT OF CASH FLOWS

       For the Years Ended December 31, 1998, 1997 and 1996


                                 1998         1997        1996
Cash flows from operating 
      activities:
  Net loss                   $ (666,909)  $ (319,817) $ (654,468)
  Adjustment to reconcile
    net loss to net cash 
    provided by operating
    activities:
      Depreciation and
        amortization            136,907      227,534     102,645
      (Decrease) increase in
        accounts receivable      47,185      (70,696)     (7,201)
      Decrease in inventory     218,430      505,365   1,090,151
      (Decrease) increase in
        other current assets      7,904       (3,356)    (15,504)
      Increase in accounts
        payable & accrued
        compensation             49,760       17,048      95,696
      Decrease in income 
        taxes payable                                    (80,000)
      Decrease in deferred
        income tax              (94,000)    (281,000)   (261,000)
      Gain on sale of asset                   (5,797)
                              ----------   ---------    --------

          Net cash (used in)
            provided by
            operating
            activities         (300,723)      69,281     270,319
                              ----------    --------   ---------

Cash flows from investing
        activities:
  Purchase of fixed assets
    and mining property          (8,167)     (98,768)   (264,778)
  Disposition of fixed assets                 27,664
  Capitalization of
    development costs                                   (184,948)
                               ---------    --------    --------
          Net cash used 
            in investing 
            activities            (8,167)    (71,104)  (449,726)
                               ---------    --------    --------


                                 (Continued)
                                      F-6
<PAGE>
                ORIGINAL SIXTEEN TO ONE MINE, INC.

                      STATEMENT OF CASH FLOWS
                            (Continued)
        For the Years Ended December 31, 1998, 1995 and 1996

                                 1998         1997        1996 
Cash flows from financing
         activities:
  Increase (decrease) in
    related party advances    $  279,600  $  (31,000)  $    54,000
  Common stock repurchased                                 (23,013)
  Repayment of notes payable    (299,438)     (4,381)       (3,531)
  Issuance of notes payable      289,614      31,016         2,973
  Proceeds from exercised
   stock options                              39,000
                               ---------    ----------    ---------
        Net cash provided
          by financing
          activities            269,776       34,635        30,429
                               ---------     ---------     --------
        (Decrease) increase
          in cash               (39,114)      32,812      (148,978)

Cash at beginning of year        64,452       31,640       180,618
                               ---------    ---------    ---------
Cash at end of year           $  25,338    $  64,452     $  31,640
                              =========    =========     =========

Supplemental schedule of
  cash payments:
 
  Cash paid during the
        year for:
    Interest expense          $  31,951    $  25,965     $  25,190
    Income taxes                           $   6,085     $  90,900

Supplemental schedule of
  noncash inventing and
  financing activities:

  Cancellation of note 
    receivable & accrued
    interest through 
    surrender & retirement
    of 7,194 shares of the
    Company's common stock                               $  33,300

  Cancellation of account 
    payable through issuance
    of 10,000 shares of the
    Company's common stock
    (Note 9)                   $  (17,336)

                      The accompanying notes are an integral 
                        part of these financial statements


                                       F-7
<PAGE>
                 ORIGINAL SIXTEEN TO ONE MINE, INC.

                  NOTES TO FINANCIAL STATEMENTS


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Original Sixteen to One Mine, Inc. (the Company) was incorporated in 1911 
and is actively involved in operating gold mines in Alleghany, California.


Inventory

Inventory consists of gold bullion, specimens and jewelry recorded at the 
quoted market price for gold bullion.  In addition, contract manufacturing 
costs of jewelry are included in the finished jewelry inventory.  Gold 
bullion held in the Company's name by the smelter is accounted for using 
the FIFO method.   All other gold inventory is accounted for using the 
specific identification method.


Fixed Assets

Fixed assets are stated at historical cost.  Depreciation is calculated 
using straight-line and accelerated methods over the following estimated 
useful lives:

               Vehicles              3 to 5 years
               Equipment             5 to 7 years
               Buildings         18 to 31.5 years


Depletion Policy

Because of the geological formation in the Alleghany Mining District, 
estimates of ore reserves currently cannot be calculated, and accordingly, 
a cost per unit depletion factor cannot be determined.  Should estimates 
of ore reserves become available, the units of production method depletion 
will be used.  Until such time, no depletion deduction will be recorded 
(see Note 2).


Mine Rehabilitation

The costs of mine rehabilitation are expensed as incurred.


Development Costs

In February, 1994, the Company began development of a new winze into 
unexplored ground.  Costs associated with the development have been 
capitalized.  Development was complete at December 31, 1996.  Based upon 
previous mine experience, management estimates that gold production from 
the new winze will approximate 50,000 troy ounces.  Accordingly, 
capitalized development costs are being amortized using the units of 
production method.  Amortization expense for the year ended December 31, 
1998 and 1997 totaled $17,876 and $81,965, respectively.


Other Assets

Other assets include payments for lease rights to certain mineral property 
which are being amortized over their estimated useful lives of ten years.


Income Taxes

Deferred tax assets and liabilities are recognized for the tax 
consequences of temporary differences between the financial statement and 
tax basis of existing assets and liabilities.  The principle items causing 
these temporary differences are net operating loss carryovers and tax 
recognition of gold sales.


Revenue Recognition

As they are mined, gold specimens are recorded in inventory and revenue is 
recognized using quoted market prices for gold.  Gold production from ore 
is recognized when the gold has been milled from the ore.  Changes in 
quoted market prices subsequent to mining are charged or credited to 
income for gold remaining in the Company's inventory at the date of the 
price change.  Jewelry and gold specimen sales prices may include a 
premium over the quoted market price of gold.  Such premiums are 
recognized at the date of sale.


Earnings per Share

Basic EPS, which excludes dilution, is computed by dividing income 
available to common stockholders by the weighted-average number of common 
shares outstanding for the period and replaces the presentation of primary 
EPS.  Diluted EPS reflects the potential dilution that could occur if 
securities or other contracts to issue common stock, such as stock 
options, result in the issuance of common stock which shares in the 
earnings of the Company.  Diluted EPS is computed similarly to, and 
replaces the presentation of, fully diluted EPS.  The treasury stock 
method has been applied to determine the dilutive effect of stock options 
in computing diluted EPS.


Use of Estimates

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


Stock-Based Compensation

Stock options are accounted for under the intrinsic value method 
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for 
Stock Issued to Employees".  Accordingly, compensation cost for stock 
options is measured as the excess, if any, of the quoted market price of 
the Company's stock at the date of grant over the exercise price.


Reclassifications

Certain reclassifications have been made to prior years' balances to 
conform to classifications used in 1998.


2.  MINING PROPERTY

The original mining property is carried on the books at its March 1, 1913, 
value of $379,000 as determined for depletion purposes in connection with 
Federal income taxes.  This value, together with the cost of mining 
properties acquired in 1920 and 1924 for the aggregated sum of $145,145 
has been fully amortized through depletion charges.  During 1994, the 
Company purchased mining properties at a cost of $300,000 and capitalized 
$86,633 in legal costs.  These legal costs were incurred in defense of 
certain mining claims.  During 1996, the Company purchased properties at a 
cost of $76,574.


3.  NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties consist of unsecured convertible notes 
due to Board members, the President and shareholders.  The notes bear 
interest at 10% and are due with interest, May 1, 1999.  The notes are 
convertible into shares of common stock at a price of $1.75 per share.


4.  NOTES PAYABLE

Notes payable at December 31, 1998 and 1997 are as follows:

                                                1998           1997

Notes payable to bank; secured by
  accounts receivable and inventory;
  interest only payments commencing
  March 1, 1999 with principal and
  interest due July 1, 1999; interest
  at the bank's prime rate plus 2.5%
  (9.75% at December 31, 1998)              $  199,519      $  275,000

Note payable to bank; secured by
  accounts receivable and inventory;
  due in monthly installments of
  $2,090 including interest; interest
  due monthly at the bank's prime rate
  plus 2% (9.75% at December 31, 1998)          90,095          20,000

9.95% note payable; secured by an
  automobile; monthly installments
  of $442 due through July 27, 2000              6,914          11,352
                                            ----------       ---------

                                               296,528         306,352

Less current portion                          (294,027)       (298,931)
                                            ----------       ---------

Notes payable due after one year            $    2,501      $    7,421
                                            ==========      ==========

Notes payable mature as follows:

           Year Ending
           December 31,               Future Payments

               1990                         294,027
               2000                           2,501
                                         ----------
                                         $  296,528
                                         ==========


5.  STOCK OPTIONS

In 1983 and 1996 the Board of Directors adopted, and the stockholders 
ratified, Stock Option Plans for which 530,000 shares of common stock are 
reserved for issuance to employees and directors under incentive and non-
qualified agreements.

The plans require that the price of all options may not be less than fair 
market value of the stock at the date the option was granted, and that the 
stock must be paid for in full at the time the option is exercised.  All 
options expire on a date determined by the Board of Directors, but not 
later than ten years from the date of grant.

In 1998, 196,000 incentive and 20,000 non-qualified options were issued to 
directors and employees.  The incentive options vest ratably over a five 
year period beginning one year from the grant date and expire ten years 
from the grant date.  The non-qualified options vest ratably over a four 
year period beginning one year from the grant date and expire the years 
from the grant date.  The average exercise price is $1.98, which 
approximates the fair market value of the stock on the date of issuance.

In 1997, 136,000 incentive and 20,000 non-qualified options were issued to 
directors and employees.  The incentive options vest ratably over a five 
year period beginning one year from the grant date and expire ten years 
from the grant date.  The non-qualified options vest ratably over a four 
year period beginning one year from the grant date and expire ten years 
from the grant date.  The average exercise price is $4.40, which 
approximates the fair market value of the stock on the date of issuance.

The Company has adopted the disclosure-only provisions of the Statement of 
Financial Accounting Standards No. 123 "Accounting for Stock-Based 
Compensation".  Accordingly, no compensation expense has been recognized 
under its stock option plan.  Consistent with the disclosure provisions of 
SFAS 123, the fair value of each option granted is estimated to be 
approximately $.88 and $1.50 in 1998 and 1997, respectively, using an 
option-pricing model and the following assumptions:

                                                1998          1997

  Dividend yield (not applicable)
  Expected volatility                             101%           68%
  Risk-free interest rate                           5%            5%
  Expected option life                        10 years      10 years

As discussed above, the options granted vest over five years.  The pro 
forma effect on the 1998 and 1997 losses for options vesting in those 
years is not material.

A summary of the activity within the plan follows:

                     1998               1997             1996
              -----------------  ----------------- ------------------
                        Weighted           Weighted          Weighted
                        Average            Average           Average 
                       Exercised          Exercised         Exercised
               Shares    Price    Shares    Price    Shares    Price
              -------- --------- -------- --------- -------- --------

Options out-
  standing,
  beginning 
  of year     171,000   $ 4.42    45,000   $ 2.39    30,000   $ 1.30

  Options 
  exercised                      (30,000)  $ 1.30

  Options
  canceled    (10,000)  $ 4.31

  Options 
  granted     216,000   $ 1.98   156,000   $ 4.40    15,000   $ 4.56
             --------           --------           --------          

Options out-
  standing,
  end of 
  year        377,000   $ 3.02   171,000   $ 4.42    45,000   $ 2.39
             ========           ========            =======

Options 
  exercis-
  able, end 
  of year      37,700   $ 4.43     3,000   $ 4.56    30,000    $1.30
            =========           ========           ========          

A summary of options outstanding at December 31, 1998 follows:

 Range   Number of Options   Weighted Average   Number of Options
  of        Outstanding          Remaining         Exercisable
Exercise    December 31,     Contractual Life      December 31,
 Prices         1998                                   1998
--------  ----------------   ----------------   -----------------
$1.88         20,000            9.5 years
$1.94        146,000            9.5 years
$2.13         50,000            9.5 years
$4.00         20,000            8.5 years              5,000
$4.31         76,000            8.5 years             15,200
$4.56         15,000            7.5 years              7,500
$4.73         50,000            8.5 years             10,000
          ----------------                       ---------------
             377,000                                  37,700
          ================                       ===============

Two employees exercised stock options in 1993 at a price of $1.30 per 
share through the issuance of promissory notes totaling $52,000.  These 
promissory notes bear interest of 7% and are collateralized by the stock 
issued.  In 1996, the Company purchased and retired 7,194 shares of 
stock to satisfy the outstanding note and accrued interest of $26,000 
and $7,300, respectively, upon the termination of one employee.


6.  INCOME TAXES

The income tax (benefit) expense for the years ended December 31, 1998, 
1997 and 1996 consisted of the following:

                              Federal       State        Total
                             ---------    ---------    ---------

1998
Current                                   $    1,000   $   1,000
Deferred                     $ (58,000)      (36,000)    (94,000)
                             ----------    ----------  ----------
   Income tax benefit        $ (58,000)   $  (35,000)  $ (93,000)

1997
Current                                   $   1,000    $   1,000
Deferred                     $(202,000)     (80,000)    (282,000)
                             ---------    ---------    ---------
   Income tax benefit        $(202,000)   $ (79,000)   $(281,000)
                             =========    =========    =========

1996
Current                      $  (8,000)   $   2,000    $  (6,000)
Deferred                      (212,000)     (49,000)    (261,000)
                             ----------   ----------    ---------
   Income tax benefit        $(220,000)   $ (47,000)   $(267,000)
                             ==========   ==========  ===========

Deferred tax assets (liabilities) are comprised of the following:

                                         1998            1997
Deferred tax assets:
  Net operating loss carryovers      $ 382,000       $ 149,000
  Accounts payable
    and other liabilities               68,000          57,000
  Alternative minimum tax credit       100,000          33,000
  State tax benefit                                     56,000
                                     ---------       ---------

      Total deferred tax assets        550,000         295,000
                                     ----------     ----------
 
Deferred tax liabilities:
  Tax basis recognition
    of gold revenue                   (178,000)       (271,000)
  Book basis of mineral 
    property & fixed assets           (148,000)       (118,000)
  State tax liability                   (4,000)
                                     ----------      ---------
      Total deferred tax liabilities  (330,000)       (389,000)

      Total deferred tax liabilities  (220,000)
                                     ---------      ----------

      Net deferred tax assets
        (liabilities)                $       0      $  (94,000)
                                    ==========      ==========

The Company has recorded a valuation allowance amounting to the entire 
deferred tax asset balance.  The Company's deferred tax asset is primarily 
attributable to net operating loss carryforward for tax reporting 
purposes.  The lack of consistent earnings, the Company's financial 
condition and potential limitations on the use of carryforwards give rise 
to uncertainty as to whether the deferred tax asset is realizable.

A reconciliation of the income tax benefit per the U.S. Federal statutory 
rate to the reported income tax expense follows:

                                  1998        1997        1996
                                --------    --------    --------
U.S. Federal statutory rate
  applied to pre-tax loss     $ (302,000) $ (204,000) $ (313,000)

Depletion deduction                                      (23,000)

Tax benefit of net 
  operating loss                             (45,000)    (19,000)

Alternative minimum tax                                   21,000

Valuation allowance              220,000

Other                            (11,000)    (32,000)     67,000
                               ---------    --------    --------
      Income tax (benefit)
           expense            $  (93,000) $ (281,000) $ (267,000)
                              ==========  ==========  ==========

For Federal income tax purposes, the Company has operating loss 
carryforwards totaling  approximately $1,033,000 and $355,000 
respectively, which may provide future tax benefits, expiring in 2007.


7.  401(k) PLAN

The Company's qualified 401(k) Plan is available to all employees who meet 
the Plan's eligibility requirements.  This Plan permits participants to 
make contributions by salary reduction up to the maximum limits allowed by 
Internal Revenue Code Section 401(k).


8.  FINANCIAL INSTRUMENTS

The Company adopted SFAS 107, "Disclosures About Fair Value of Financial 
Instruments", on January 1, 1995.  SFAS 107 requires that the Company 
disclose estimated fair values for certain financial instruments.  The 
carrying amounts of financial instruments including cash, accounts 
receivable, accounts payable and accrued compensation, notes payable and 
notes receivable from employees approximated fair value as of December 31, 
1998 and 1997, because of the relatively short maturity of these 
instruments.  The carrying value of inventory is based upon quoted market 
prices.


9.  ISSUANCE OF STOCK

In November 1998, the Company issued 10,000 shares of common stock to a 
supplier to settle a trade payable to the supplier totaling $17,336.


10.  EARNINGS PER SHARE

A reconciliation of the numerators and denominators of the basic and 
diluted (loss) earnings per share computations is as follows:

                                                Weighted
                                                 Average
                                                Number of
                                  Net (Loss)     Shares      Per Share
     For the Year Ended            Income      Outstanding     Amount
---------------------------      -----------   -----------   -----------

December 31, 1998

  Basic and dilutive
     loss per share              $ (759,909)    3,539,065     $    (.19)
                                 ==========     =========     =========

December 31, 1997

  Basic and dilutive
     loss per share              $ (319,817)    3,519,066      $   (.09)
                                 ==========     =========      ========

December 31, 1996

  Basic and dilutive
     loss per share              $ (654,468)    3,507,730      $   (.19)
                                 ==========     =========      ========

For the years ended December 31, 1998 and 1997, conversion of outstanding 
stock options was not assumed because assumed conversion would have an 
anti-dilutive effect on earnings per share.


11.  FINANCIAL RESULTS AND LIQUIDITY

The Company has incurred net losses of $666,909, $319,817 and $654,468 in 
1998, 1997 and 1996, respectively.  In addition, current liabilities 
exceed current assets by $293,659.  To meet current obligations as they 
become due, the Company must achieve and sustain profitable operations.

Management is in the process of implementing a business plan which will 
reduce operating expenses and generate additional revenues.  The final 
stages of contract negotiations to harvest timber on the Company's 
properties are currently in process.  Management believes these contracts 
will result in substantial revenues.  Negotiations to convert notes 
payable to related parties (Note 3) to equity or to extend the maturity of 
the notes to May 1, 2000 are also in process.  Further, management is 
actively working to establish an agreement which would result in an 
infusion of capital from an outside investor.  If successful, management 
believes their business plan will generate sufficient revenue and cash 
flows to meet obligations as they become due and sustain the current level 
of operations.