FORM 10-KSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

[X]   Annual report  pursuant to section 13 or 15(d) of the Securities  Exchange
      Act of 1934 [FEE REQUIRED] for the fiscal year ended MAY 31, 1998 or
[ ]   Transition  report  pursuant  to section 13 or 15(d) of the  Securities
      Exchange Act of 1934 [NO FEE REQUIRED] for the transition period from    
                                                                           -----
      to 
        --------
Commission file number   0-7501

                               RUBY MINING COMPANY
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

     COLORADO                                              83-0214117  
------------------------------                       ---------------------------
(State  or  other   jurisdiction  of                       (I.R.S.Employer
 incorporation or organization)                             Identification No.)

      877 North 8th West
      RIVERTON, WY                                          82501
-------------------------------                      ---------------------------
(Address of principal executive offices)                    (Zip Code)

Registrant's Telephone Number, including area code:         (307) 856-9278
                                                    ----------------------------
           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:
                         COMMON STOCK, $0.001 PAR VALUE
--------------------------------------------------------------------------------
                                (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
                                             -----   -----

     Indicate by check mark if disclosure of delinquent filers, pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ X ]

      Registrant's revenues in fiscal year 1998 were $1,300.

      There is no established  trading market for the Registrant's  voting stock
and as a result  the  aggregate  market  value of shares of that  stock  held by
non-affiliates of the Registrant can not be accurately estimated. The Registrant
has securities of only one class of stock (common) outstanding.

            CLASS                               OUTSTANDING AT JULY 2, 1998
------------------------------------          ------------------------------
      Common Stock, $0.001 par value                   9,000,000 shares

DOCUMENTS INCORPORATED BY REFERENCE:  None.
------------------------------------

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: YES   NO  X
----------------------------------------------    ----  ----


<PAGE>



                                     PART I

ITEM 1.       DESCRIPTION OF BUSINESS
              ------------------------

(a)(1)   Business Development.

Ruby Mining Company  ("Registrant" or "Company") was incorporated under the laws
of the State of Colorado on February 16, 1971.  The  Registrant has been engaged
in the general minerals  business,  which includes the acquisition,  exploration
and development  and/or sale or lease of mineral properties and the purchase and
lease of mineral  exploration and mining  equipment.  The Registrant's  minerals
activity has been conducted both directly,  and indirectly through various joint
ventures with both affiliated and non-affiliated  entities. The Registrant holds
no mining claim interests.  The Registrant intends to examine  opportunities for
the joint venture to acquire other mineral properties or interests  therein,  as
warranted. The Registrant owns various mining equipment.

(a)(2)     The Registrant has not been involved in any bankruptcy, receivership
or similar proceedings in the last three fiscal years.

(a)(3)      In the last three fiscal years, the Registrant did not engage in any
material  reclassification,  merger  or  consolidation,  nor did it  acquire  or
dispose of any material  amount of assets  otherwise than in the ordinary course
of business.

(b)   Business of Issuer.

(b)(1)     During the three most recent fiscal years,  the  Registrant has been
devoting its resources  primarily to examine  various  mineral  properties.  The
Registrant  operates  in  one  business  segment;  the  location,   acquisition,
exploration, sale or lease and/or development of natural resource properties.

(b)(2)     The Registrant's  business  activities in the past have included its
participation  in the USECC Joint  Venture (a joint  venture with its  principle
shareholder,  U.S. Energy Corp.  ("USE"),  and USE's  subsidiary,  Crested Corp.
("Crested")),  and other  affiliates  of USE and Crested.  The  Registrant is no
longer a party to any USECC Joint Venture  activities,  or other activities with
USE or Crested  affiliates,  although such Venture provides  certain  management
services.  See  Item  6  "Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations."

(b)(3)    There has not been a public  announcement  of, nor has the Registrant
otherwise  publicized a new product or industry  segment which would require the
investment  of a  material  amount of the assets of the  Registrant,  or that is
otherwise material.

(b)(4)     The  evaluation and  acquisition of base and precious  metals mining
properties and oil and gas properties is a highly  competitive  business.  There
are numerous companies involved in this business,  many of which are larger than
the Registrant.

b)(5)     The  Registrant's  business is not dependent  upon the supply of raw
materials.

(b)(6)     The Registrant's  business is not dependent upon any single or a few
customers;  during  the most  recently  completed  fiscal  year  the  Registrant
received all of its revenues from interest earned on cash assets.


                                        2

<PAGE>



(b)(7)     The Registrant holds no patents, trademarks,  licenses,  franchises,
concessions,  royalty  agreements or labor  contracts and does not consider such
property rights to be important to its operations.

(b)(8)     Mining  operations are subject to statutory and agency  requirements
which address various issues, including (i) environmental permitting and ongoing
compliance  costs,  supervised by the EPA and state agencies (e.g., the Colorado
Department  of  Environmental  Quality),  for water and air  quality,  hazardous
waste, etc.; (ii) mine safety and OSHA generally;  (iii) wildlife (Department of
Interior  for  migratory  fowl if  attractive  standing  water  is  involved  in
operations);  and (iv) nuclear and radioactive materials (generally, the Nuclear
Regulatory Commission, which preempts state regulation in such matters).

The Registrant presently has no operations requiring government approval, and no
applications for any approval are pending or planned at Report date.

(b)(9)     Because any mining  operations of the Registrant would be subject to
at least some of the requirements discussed in (b)(8) above, the commencement of
such  operations  would be delayed  pending agency  approval (or a determination
that approval is not required  because of size,  etc.) or the project might even
be abandoned due to prohibitive costs (water treatment facilities for mine water
discharge might be too expensive for the projected cash flow from the property).

Generally,  the effect of current or probable  governmental  regulations  on the
Registrant  cannot be determined  until a specific  project is undertaken by the
Registrant.

(b)(10)     The   Registrant   has   made   no   direct    expenditures   for
company-sponsored research and development activities, nor has it been connected
with customer-sponsored research and development projects.

(b)(11)     Federal,  state and local  provisions  regulating the discharge of
material into the  environment,  or otherwise  relating to the protection of the
environment,  such  as  the  Clean  Air  Act,  Clean  Water  Act,  the  Resource
Conservation  and Recovery  Act, and the  Comprehensive  Environmental  Response
Liability Act ("Superfund") affect minerals operations. For mining operations in
Colorado,  applicable environmental regulation includes a permitting process for
mining  operations,  an  abandoned  mine  reclamation  program and a  permitting
program for industrial  development and siting.  Corresponding statutes exist in
most other  jurisdictions  and would be expected to affect any mining  operation
undertaken by the  Registrant.  Compliance  with these laws and any  regulations
adopted  thereunder  can make the  development  of mining  claims  prohibitively
expensive,  thereby  frustrating the sale or lease of properties,  or curtailing
profits or royalties  which might have been received  therefrom.  The Registrant
believes it is in compliance in all material  respects with all rules,  laws and
regulations  promulgated  by the  various  federal,  state  and  local  agencies
applicable  to  its  current  activities,  but it  cannot  anticipate  what  new
regulations  of this type might be proposed and adopted,  or what the  resulting
effect on its capital expenditures, earnings and competitive position may be.

(b)(12)     The Registrant has no full-time employees.



                                      3

<PAGE>



ITEM 2.  DESCRIPTION OF PROPERTY
         ------------------------

2(a)  Description of Property

MINERAL PROPERTIES

Until fiscal 1994, the Registrant  owned 153 unpatented  lode mining claims
located in the Ruby Mining District about five miles west of the town of Crested
Butte, Gunnison County, Colorado. These claims were abandoned in fiscal 1994.

JOINT VENTURE PROPERTIES

The Registrant  also owns a 25% interest in a joint  venture,  which held (until
fiscal 1994) 168 unpatented lode mining claims in the Colorado Mineral Belt. The
remaining  joint  venturers are USE,  Crested,  and certain  mining  exploration
limited partnerships,  and NUPEC Resources,  Inc. These claims were abandoned in
fiscal 1994, and the joint venture is inactive.

OTHER PROPERTIES

USE and  Crested  provide  management  services to the  Registrant  for $500 per
month. Management services include managerial, legal, accounting, geological and
secretarial  services.  The  Registrant  has the use of the common  area of some
3,500  square  feet of the Glen L.  Larsen  Building,  owned by the USECC  Joint
Venture,  located at 877 North 8th West in Riverton,  WY. Those  facilities  are
adequate for the Registrant's executive offices.

2(b)  Investment Policies.  Not Applicable.

2(c)  Description of Real Estate and Operating Data.  Not Applicable.

ITEM 3.  LEGAL PROCEEDINGS.
         -----------------

The Registrant is not engaged in any legal proceedings.

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

No matters were submitted to the Registrant's  security holders during the final
quarter of the most recently completed fiscal year.

                                      4

<PAGE>



                                     PART II

ITEM 5.  MARKET PRICE OF AND DIVIDENDS FOR THE REGISTRANT'S COMMON
         ----------------------------------------------------------
         STOCK AND RELATED SECURITY HOLDER MATTERS.
         ------------------------------------------

(a)(1)   Market Information.

There is no established  trading market for the Registrant's common stock, which
trades infrequently,  if at all, in the over-the-counter  market. The Registrant
has been unable to establish that there was trading in the stock during the past
two years or determine whether any price quotations or sale prices may have been
provided during that period.

(b)      The  Registrant  had  approximately  2,500 record holders of its common
stock at July 2, 1998.

(c)      The  Registrant has paid no dividends with respect to its common stock.
There are no  contractual  restrictions  on the  Registrant's  present or future
ability to pay dividends.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         -----------------------------------------------------------
         AND RESULTS OF OPERATIONS
         -------------------------

      The  following is  management's  discussion  and  analysis of  significant
factors which have affected the Registrant's  liquidity,  capital  resources and
results of operations during the periods specified.

LIQUIDITY AND CAPITAL RESOURCES

Working  capital  decreased by $12,900 to a working  capital  deficit of $28,200
during fiscal 1998. The decrease in working  capital was a result of an increase
of $14,200 in accounts payable to affiliates.  This increase was the result of a
$6,000 management fee due USECC Joint Venture  ("USECC") for managerial,  legal,
accounting,   secretarial,   geologic  and  reporting  services  and  $8,200  in
professional  services and supplies  paid for  Registrant  by USECC.  USECC is a
joint venture  between U.S.  Energy Corp.  ("USE"),  a 26.7%  shareholder of the
Company, and Crested Corp., a USE subsidiary.

Commitments  for the Company's  cash resources  include its ongoing  general and
administrative expenses and a management fee of $500 per month to USECC.

Sources  of  working  capital  are cash on hand and cash  invested  in  interest
bearing  accounts.  It is  anticipated  that  the  Registrant  will not have any
capital  expenditures  during fiscal 1998;  however,  the Registrant  would need
additional capital to acquire and develop new properties, and continue operating
long-term.  Sources of capital could come from either  liquidation of investment
assets,  equipment  or  negotiation  with USECC for a  reduction  to the payable
amounts. No assurance can be given that such events will occur.

The  Registrant  has assessed all  relationships  with third parties and through
consultation   therewith,   management  has  determined  that  all  third  party
relationships  are Year 2000 compatible.  Accordingly,  management  believes the
Year 2000  issue will not have a material  or  adverse  effect on the  Company's
business, results of operations, or financial condition.


                                        5

<PAGE>



RESULTS OF OPERATIONS


FISCAL 1998 COMPARED WITH FISCAL 1997

Revenues  from  interest  earned  on cash  held  in  interest  bearing  accounts
increased by $200 to $1,300 for fiscal 1998. Expenses increased by $2,400 during
fiscal 1998 due to slightly higher  administration  costs  associated with stock
transfer fees, independent financial statement audit and filing fees.

The  Registrant  recorded a net loss of $12,900 for fiscal 1998 as compared to a
net loss of $10,700 for fiscal 1997.

FISCAL 1997 COMPARED WITH FISCAL 1996

Revenues  from  interest  earned  on cash  held  in  interest  bearing  accounts
decreased by $100 to $1,100 for fiscal 1997.  Expenses  decreased by $200 during
fiscal  1997 due to reduced  independent  financial  statement  audit and filing
fees.

The  Registrant  recorded a net loss of $10,700 for fiscal 1997 as compared to a
net loss of $10,800 for fiscal 1996. There was no significant change in revenues
and expenses during 1997.


ITEM 7.  FINANCIAL STATEMENTS
         --------------------

Financial statements meeting the requirements of Regulation S-B follow.

                                        6

<PAGE>



                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                   ----------------------------------------


To The Shareholders of Ruby Mining Company:

We have  audited  the  accompanying  balance  sheet of RUBY  MINING  COMPANY  (a
Colorado  corporation)  as of May  31,  1998,  and  the  related  statements  of
operations,  shareholders' equity and cash flows for each of the two years ended
May 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our 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 Ruby Mining Company as of May
31, 1998,  and the results of its  operations and its cash flows for each of the
two years in the  period  ended  May 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 A to the
financial  statements,  the Company has  experienced  recurring  losses,  has no
current operations and has a significant accumulated deficit, matters that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these  matters are also  described  in Note A. The  financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of asset carrying  amounts or the amount and  classification  of
liabilities  that might  result  should the  Company be unable to  continue as a
going concern.




ARTHUR ANDERSEN LLP

Denver, Colorado,
July 2, 1998


                                        7

<PAGE>



                               RUBY MINING COMPANY

                                  BALANCE SHEET

                                  MAY 31, 1998

                                     ASSETS

CURRENT ASSETS:
    Cash and cash equivalents                                  $ 35,300
    Other assets                                                    300
                                                               --------
                                                                 35,600

INVESTMENTS (Notes B and C)                                     103,800

PROPERTY AND EQUIPMENT, at cost:
    Mining equipment                                             39,600
    Less:  accumulated depreciation                             (31,700)
                                                                ------- 
                                                                  7,900
                                                                  -----
                                                               $147,300
                                                               ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Director fees payable (Note C)                             $ 10,400
    Accounts payable - affiliates                                53,400
                                                               --------
                                                                 63,800

SHAREHOLDERS' EQUITY:
    Common stock, $.001 par value;
      20,000,000 authorized shares;
       9,000,000 shares  issued
       and outstanding,                                           9,000
    Additional paid-in capital                                  623,400
    Accumulated deficit                                        (573,800)
    Unrealized holding gain on investments
      (Note C)                                                   24,900
                                                                 ------
                                                                 83,500
                                                                 ------
                                                               $147,300
                                                               ========



The  accompanying  notes to financial  statements  are an integral  part of this
balance sheet.


                                        8

<PAGE>



                               RUBY MINING COMPANY

                            STATEMENTS OF OPERATIONS



                                                        YEAR ENDED MAY 31,
                                                        ------------------
                                                     1998               1997
                                                     ----               ----
REVENUES: 
    Interest                                        $  1,300           $  1,100


COSTS AND EXPENSES:
    General and administrative                        14,200             11,800
                                                     -------           --------

NET LOSS                                            $(12,900)          $(10,700)
                                                     =======           ========

NET LOSS PER SHARE, BASIC AND DILUTED              $   *             $   *
                                                     =======           ========
 
BASIC WEIGHTED AVERAGE SHARES
    OUTSTANDING                                    9,000,000          9,000,000
                                                   =========          =========

      *  Less than $.01 per share.


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


                                        9

<PAGE>

<TABLE>


                               RUBY MINING COMPANY

                        STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>

                                                                                    Unrealized
                                                                                    Holding
                                                         Additional                 Loss On             Total
                                   COMMON STOCK          Paid-in       Accumulated  Marketable          Shareholders'
                                 ------------------
                               SHARES        AMOUNT      CAPITAL       DEFICIT      EQUITY SECURITIES   EQUITY
                               ------        ------      -------       -------      -----------------   ------
<S>                            <C>           <C>         <C>           <C>          <C>                 <C>             

Balance, May 31, 1996        9,000,000       $9,000      $623,400      $(550,200)     $262,600          $344,800

Net unrealized holding
   loss on investments           --             --          --             --         (211,000)         (211,000)
Net loss                         --             --          --           (10,700)        --              (10,700)
                              --------       ------      --------      ---------      --------           --------

Balance, May 31, 1997        9,000,000        9,000       623,400       (560,900)       51,600           123,100

Net unrealized holding
  loss on investments            --             --          --             --          (26,700)          (26,700)
Net loss                         --             --          --           (12,900)        --              (12,900)
                              --------       ------      --------      ---------      --------           --------

Balance, May 31, 1998        9,000,000       $9,000      $623,400      $(573,800)     $ 24,900          $ 83,500
                             =========       ======      ========      =========      ========           ========


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

</TABLE>

                                       10

<PAGE>



                               RUBY MINING COMPANY

                            STATEMENTS OF CASH FLOWS


                                                     YEAR ENDED MAY 31,
                                                     ------------------
                                                   1998              1997
                                                   ----              ----

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                     $(12,900)         $(10,700)

   Adjustments to reconcile net loss to
      net cash provided by (used in)
      operating activities:
      Increase in accounts payable                14,200             9,000
                                                ------------      --------

NET CASH PROVIDED BY (USED IN)
   OPERATING ACTIVITIES                            1,300            (1,700)
                                                --------          --------

NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                            1,300            (1,700)

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                            34,000            35,700
                                                --------          --------

CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                $ 35,300          $ 34,000
                                                ========          ========

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY:

   Changes in market
      value of investments                      $(26,700)        $(211,000)
                                                ========          =========

   No  interest  or income  taxes were paid in the years  ended May 31, 1998 and
1997.


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


                                       11

<PAGE>


                               RUBY MINING COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                  MAY 31, 1998
                                   

A.    BUSINESS ORGANIZATION AND GOING CONCERN

      Ruby Mining  Company  (the  "Company")  was  incorporated  in the State of
Colorado on February 16, 1971,  to engage in the  acquisition,  exploration  and
development  and/or sale or lease of mineral  properties  and the  purchase  and
lease of mineral exploration and mining equipment.

      The Company currently has no operating activities,  but continues to incur
losses  from  general  and   administrative   expenses  and  has  a  significant
accumulated  deficit.  Expenses  are  projected  to exceed  investment  interest
revenues  again in 1999.  Management  continues to analyze the  viability of the
Company and its  future.  There is  substantial  doubt as to whether the Company
will continue as a going concern.  However,  the Company has no commitments  for
capital expenditures in the next year and management believes its available cash
is  sufficient  to fund next  year's  obligations,  primarily  for  general  and
administrative expenses.

B.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that 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 those
estimates.

PROPERTY AND EQUIPMENT

      The Company capitalizes all costs related to the acquisition,  exploration
and  development  of  mineral  properties.  Capitalized  costs  are  charged  to
operations  when the properties are determined to have declined in value or have
been abandoned. The Company currently has no operations or mineral properties.

      Depreciation of mining equipment is provided by the  straight-line  method
over the  estimated  useful lives of the related  assets.  All mining  equipment
owned by the  Company is fully  depreciated  with a remaining  salvage  value of
$4,900. Other remaining assets have a book value of $3,000.

INVESTMENTS

      Based on the  provisions  of Statement of Financial  Accounting  Standards
("SFAS")  No. 115, the Company  accounts for  marketable  equity  securities  as
available-for-sale  securities.  Available-for-sale  securities  are measured at
fair value at each reporting date, with net unrealized  holding gains and losses
excluded  from  earnings and reported as a separate  component of  shareholders'
equity until realized.

NET LOSS PER SHARE, BASIC AND DILUTED

      Net loss per share,  basic and  diluted,  is computed  using the  weighted
average number of common shares outstanding during the period.


                                       12

<PAGE>


                               RUBY MINING COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                  MAY 31, 1998
                                   (CONTINUED)

CASH AND CASH EQUIVALENTS

      Amounts held by depository  institutions  in demand  deposit  accounts are
considered  cash and cash  equivalents.  For purposes of the  statements of cash
flows, cash equivalents include all cash investments with original maturities of
three months or less.

INCOME TAXES

      The Company  accounts  for income taxes in  accordance  with SFAS No. 109,
"Accounting for Income Taxes." This statement  requires  recognition of deferred
income  tax  assets  and   liabilities   for  the  expected  future  income  tax
consequences,  based on enacted tax laws, of temporary  differences  between the
financial reporting and tax bases of assets, liabilities and carryforwards.

      SFAS No. 109 requires  recognition of deferred tax assets and  liabilities
for the expected future effects of all deductible  temporary  differences,  loss
carryforwards  and tax  credit  carryforwards.  Deferred  tax  assets  are  then
reduced,  if deemed  necessary,  by a valuation  allowance  for any tax benefits
which, based on current circumstances, are not expected to be realized.

C.    MARKETABLE EQUITY SECURITIES AND RELATED PARTY TRANSACTIONS

     U.S. Energy Corp. ("USE"), a 26.7% shareholder, and its subsidiary, Crested
Corp.,  provide certain  management and  administrative  services to the Company
under a management  agreement.  Charges for these services were $6,000 per annum
for 1998 and 1997.

      The  Company  has  accrued  fees of  $10,400  to be paid to the  Board  of
Directors for services performed prior to 1990.

      The  Company's  investments  consist of  marketable  equity  securities of
affiliated, but not controlled companies as follows:

                                                      MAY 31, 1998
                                                      ------------
                                                                   Fair
                                                                   Market
                                                  COST             VALUE
                                                  ----             -----
      U.S. Energy Corp.                         $ 51,200          $82,800
      Crested Corp.                               27,700           21,000
                                                --------          -------
                                                $ 78,900          $103,800
                                                ========          ========

      The  aggregate  fair  market  value of the  marketable  equity  securities
decreased  $26,700  from  June  1,  1997  to May 31,  1998.  The  net  aggregate
unrealized holding gain on investments at May 31, 1998 was $24,900.


                                       13

<PAGE>


                               RUBY MINING COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                  MAY 31, 1998
                                   (CONTINUED)

D.    INCOME TAXES

      There were no taxes currently payable at May 31, 1998.

      The following  table  reconciles the Company's  effective  income taxes to
statutory federal income taxes:

                                                         MAY 31,  
                                             -----------------------------------
                                                1998             1997
                                                ----             ----
      Federal income tax benefit
         at statutory rates                     $(4,400)         $(3,600)
      Less valuation allowance                    4,400            3,600
                                                -------           ------

      Effective tax                             $  --            $  --
                                                =======          =======

      As  of  May  31,  1998,   the  Company  had  net  operating  loss  ("NOL")
carryforwards available of approximately $350,400 which expire beginning in 1999
through 2013.

      The components of deferred taxes as of May 31, 1998 are as follows:

      Deferred tax assets:
            Tax effect of NOL carryforwards              $  119,100
            Valuation allowance                            (119,100)
                                                         ----------

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

      The Company has  established a valuation  allowance for the full amount of
the NOL carryforwards  because, in its present nonoperating state, the Company's
ability to generate  future taxable income is uncertain.  The deferred tax asset
and the related valuation allowance decreased approximately $38,700 from May 31,
1997 due to the expiration of the 1982 NOL.

                                       14

<PAGE>



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

Not applicable.

                                    PART III

ITEM 9.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
           ---------------------------------------------------

(a)(1)(2)(3)  Identification of Directors and Executive Officers.

Members of the Registrant's  Board of Directors are elected to hold office until
the next annual meeting of shareholders  and until their  successors are elected
or appointed  and  qualified.  Officers are  appointed by the Board of Directors
until a successor  is elected and  qualified  or until  resignation,  removal or
death. The Registrant's executive officers and directors are listed below:

             NAME            AGE     POSITION AND TENURE
             ----            ---     -------------------

      John L. Larsen         67      CEO, President, Treasurer and a Director
                                     since February 1971.

      Harold F. Herron       45      Assistant  Secretary  since
                                     August 1979, Director since July 1980 and
                                     Secretary since May 1991.

     George F. Smith         63      Vice President and Director since May 1986.

No arrangement  exists between any of the above officers and directors  pursuant
to which any one of those person was elected to such office or position.

(a)(4)     BUSINESS EXPERIENCE. John L. Larsen has been principally employed as
           -------------------
chief executive officer of the Registrant's principal shareholder, USE, for more
than five years.  Harold F. Herron had been employed as President of The Brunton
Company  ("Brunton"),  a former  subsidiary  of USE.  George  F.  Smith has been
principally employed as operations manager for USE and Crested for more than the
past five years.

(a)(5)     DIRECTORSHIPS. John L. Larsen is also a director of USE and Crested.
           -------------
Mr. Herron is also a director of USE and Northwest  Gold, Inc.  Messrs.  Larsen,
Herron and Smith hold no other directorships of any other companies with a class
of securities  registered pursuant to Section 12 of the Exchange Act or that are
subject to the  requirements  of Section  15(d) of such Act,  or of any  company
registered as an investment company under the Investment Company Act of 1940.

(b)   Identification of Certain Significant Employees.

      Not applicable.

(c)   Family Relationships.

      Harold F. Herron is John L. Larsen's son-in-law.

(d)   Involvement in Certain Legal Proceedings.

      During the past five years,  no  director,  person  nominated  to become a
director, or executive officer of Registrant:


                                       15

<PAGE>



(1)     has  filed or had filed  against  him,  a  petition  under the  federal
bankruptcy  law or any  state  insolvency  law,  nor has any court  appointed  a
receiver,  fiscal  agent or similar  officer by or against any business of which
such person was a general partner, or any corporation or business association of
which he was an  executive  officer  within  two years  before  the time of such
filing;

(2)     was  convicted in a criminal  proceeding  or is the named  subject of a
pending  criminal  proceeding  (excluding  traffic  violations  and other  minor
offenses);

(3)     was the subject of any order,  judgment,  or decree,  not  subsequently
reversed,  suspended  or  vacated,  of  any  court  of  competent  jurisdiction,
permanently  or  temporarily  enjoining,  barring  or  suspending  him from,  or
otherwise  limiting  his  involvement  in, any type of business,  securities  or
banking activities, or

(4)     was found by a court of competent  jurisdiction in a civil action or by
the  Securities  and  Exchange  Commission  or  the  Commodity  Futures  Trading
Commission to have violated any federal or state  securities or commodities law,
and the judgment in such civil action or finding by the  Commission has not been
subsequently reversed, suspended or vacated.

Based upon a review of Forms 3 and 4 furnished to the  Registrant  pursuant
to Rule 16a-3(e) since June 1, 1996 and written  representations  referred to in
Item 405(b)(2)(i) of Regulation S-K, no directors,  officers,  beneficial owners
of more than ten percent of the  Registrant's  common stock, or any other person
subject  to Section 16 of the  Exchange  Act failed for the period  from June 1,
1997 through May 31, 1998,  to file on a timely basis,  the reports  required by
Section 16(a) of the Exchange Act.

ITEM 10.   EXECUTIVE COMPENSATION
           ----------------------

No executive officer of the Registrant received aggregate cash compensation from
the Registrant in excess of $100,000 during the  Registrant's  last fiscal year.
The  following  table  contains   information  with  respect  to  the  aggregate
compensation  accrued by the  Registrant for the last two fiscal years ended May
31, 1998, to the chief executive officer:

                       SUMMARY COMPENSATION TABLE(i)(ii)

                                                   Annual Compensation
NAME AND PRINCIPAL POSITION                   YEAR       SALARY       BONUS
---------------------------                   ----       ------       -----
John L. Larsen, CEO                           1998         -0-         -0-
                                              1997         -0-         -0-

(i)     During  fiscal 1998,  no cash  compensation  was paid to the  executive
officers.

(ii)     The  USECC  Joint  Venture  provides  management  and  administrative
services to the Registrant for a monthly fee of $500.

No cash bonuses were paid by the  Registrant to the group of persons  identified
in paragraph (a) of Item 9, during the year.

Minimum director fees of $1,500 are owed to the group of individuals  identified
in paragraph  (a) of Item 9, for services  during each fiscal year  ($10,400 for
periods  prior to June 1,  1989).  However,  for the past  several  years  these
amounts  have  not been  paid  and have  been  waived  by the  directors.  It is
anticipated that the directors will again waive these fees for fiscal 1999.

The  Registrant  does not  have any  annuity,  pension,  retirement,  incentive,
deferred  compensation  plans, stock option or stock appreciation  rights plans,
employment  contracts or arrangements  whereby any of its executive  officers or
directors have been paid or may receive compensation from the Registrant.


                                       16

<PAGE>



Alternative  Pension Plan  Disclosure:  The Registrant has no defined benefit or
actuarial pension plans.

(c)   Option/SAR Grants.

      The Registrant has no stock option or stock appreciation rights plans.

(d)   Aggregated Option/SAR Exercise and Fiscal Year-End Option/SAR Value.

      Not Applicable.

(e)   Long Term Incentive Plan ("LTIP") Awards.

      Not Applicable.

(f)   Compensation of Directors.

(1)     Standard  Arrangements:  The Registrant is obligated to pay each member
of the Board  directors'  fees of $500 per year and $100 per  meeting  attended,
together with reasonable travel and lodging expenses.  As discussed above, these
fees have been waived by the directors.

(2)     Other arrangements:  There were no other arrangements pursuant to which
any director of the Registrant was compensated for services as a director during
the fiscal year.

(g)     Employment  Contracts  and  Termination  of  Employment  and Change in
Control Arrangements.

The Registrant has no compensatory plan or arrangement,  nor are any payments to
be received from the  Registrant,  with respect to any  individual  named in the
Table at Item  11(b) for the latest or the next  preceding  fiscal  year,  which
compensation  results or will result  from the  resignation,  retirement  or any
other termination of such individual's  employment with the Registrant or from a
change in the individual's  responsibilities  following a change in control,  in
which the amount  involved,  including  all periodic  payments or  installments,
exceeds $100,000.

ITEM 11     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            ---------------------------------------------------
            MANAGEMENT.
            ----------

(a)   Security Ownership of Certain Beneficial Owners.

The  following  table  shows  the  holder  known  by  the  Registrant  to be the
beneficial owner of more than five percent of the  Registrant's  common stock as
of report date.

                                                   AMOUNT AND
                                                   NATURE OF
                     NAME AND ADDRESS              BENEFICIAL       PERCENT
TITLE OF CLASS       OF BENEFICIAL OWNER           OWNERSHIP       OF CLASS
--------------       -------------------           ---------       --------
Common stock,        U.S. Energy Corp.             2,400,000          26.7%
$.001 par value      Glen L. Larsen Building
                     877 North 8th West
                     Riverton, WY 82501

The listed holder  exercises sole voting and  investment  powers over the shares
set forth opposite its name.

(b)   Security Ownership of Management.


                                       17

<PAGE>



The  following  table shows,  as of July 2, 1998  ownership by the  Registrant's
officers  and  directors,  individually  and as a group,  of  securities  of the
Registrant and its parent, USE.


                                                  AMOUNT AND
                                                  NATURE OF
NAME AND ADDRESS                                  BENEFICIAL         PERCENT
OF BENEFICIAL OWNER       TITLE OF CLASS          OWNERSHIP          OF CLASS(2)
-------------------       --------------          ---------          -----------
John L. Larsen            Ruby Mining Company     2,400,000(3)          26.7%
201 Hill Street           common stock, $.001
Riverton, WY  82501       par value

Harold F. Herron          Ruby Mining Company     2,400,400(3)          26.7%
3425 Riverside Drive      common stock, $.001
Riverton,  WY  82501      par value

George F. Smith           Ruby Mining Company          -0-               0.0%
1602 East Pershing        common stock, $.001  
Riverton, WY  82501       par value

All officers and          Ruby Mining Company     2,400,400(3)          26.7%
directors as a group      common stock, $.001
(three persons)           par value
----------
(1)     Except as otherwise noted the listed executive  officer  exercises sole
dispositive and voting powers over the shares set forth opposite his name.

(2)     Percent  of class  is  computed  by  dividing  the  number  of  shares
beneficially  owned plus any options held by the reporting  person or group,  by
the number of shares  outstanding  plus the shares  underlining  options held by
that person or group.

(3)     John L. Larsen and Harold F. Herron are two of seven  directors  of USE
and accordingly share the dispositive and voting power over the 2,400,000 shares
of the Registrant's stock held by USE, with the remaining directors of USE.

(c)     The  Registrant  is not aware of any  pledge of its  securities  or any
other  arrangement  which may at a subsequent date result in a change in control
of the Registrant.

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
            -----------------------------------------------

(A)(B)      TRANSACTIONS WITH MANAGEMENT AND OTHERS.

Since  June 1,  1997  there  were no  transactions  and  there  are no  proposed
transactions  in which the  amount  involved  exceeds  $60,000  and in which any
executive  officer,  nominee or director of the Registrant,  any security holder
who is known by the Registrant to hold of record or beneficially  more than five
percent of any class of the Registrant's  voting securities or any member of the
immediate  family of any of the foregoing  person,  had or will have a direct or
indirect material interest.

(C)   PRINCIPLE SHAREHOLDER OWNERSHIP.

USE is the  principle  shareholder  of the  Registrant  and  holds  26.7% of the
Registrant's common stock.


                                       18

<PAGE>



(D)   TRANSACTIONS WITH PROMOTERS.

      Not applicable.

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

(a)   Exhibits Required to be Filed:

      3.1   Articles of Incorporation...................................   [1]

      3.2   Amendment to Articles of Incorporation......................   [1]

      3.3   By-Laws.....................................................   [1]

     10.1   Joint Venture Agreement -
            USE, Crested, NUPEC and Registrant..........................   [2]

      [1]   Incorporated  by  reference  from the like  numbered  exhibit to the
            Registrant's  Annual  Report on Form 10-K for the year ended May 31,
            1991.

      [2]   Incorporated  by  reference  from the  exhibit  to the  Registrant's
            November 30, 1990, Quarterly Report on Form 10-Q.

(b)   Reports filed on Form 8-K.

            During the fourth  quarter of the last fiscal year,  the  Registrant
            did not file any reports on Form 8-K.


                                       19

<PAGE>


                                  SIGNATURES


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

                                                     RUBY MINING COMPANY
                                                    (Registrant)



Date:  August           , 1998              By:      S/ JOHN L. LARSEN
              ----------                              --------------------
                                                      JOHN L. LARSEN,
                                                      Chief Executive Officer


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 thereunto duly authorized.



Date:  August           , 1998         By:      S/ JOHN L. LARSEN
              ----------                         --------------------
                                                 JOHN L. LARSEN, Director



Date:  August           , 1998         By:      S/ GEORGE F. SMITH
              ----------                         ---------------------
                                                 GEORGE F. SMITH, Director



Date:  August           , 1998         By:      S/ HAROLD F. HERRON
              ----------                         ----------------------
                                                 HAROLD F. HERRON, Director



Date:  August           , 1998         By:      S/ ROBERT SCOTT LORIMER
              ----------                         --------------------------
                                                 ROBERT SCOTT LORIMER, Principal
                                                 Financial Officer and 
                                                 Chief Accounting Officer


                                       20

<PAGE>