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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005

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

For the transition period from _____________ to
_______________

____________________

Commission File Number: 0-20430____________________

AZCO MINING INC.(Exact name of Registrant as specified in its charter)

|Delaware                        | 84-1094315                       
|------------------------------- | ---------------------------------
|(State or other jurisdiction of | (IRS Employer Identification No.)
|incorporation or organization)  |                                  

7239 North El Mirage Road Glendale, AZ 85307(Address of principal executive offices)

(623) 935-0774(Issuers telephone number)

Check whether the issuer (1) filed all reports required to be
  filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
  for such shorter period that the registrant was required to file such reports),
  and (2) has been subject to such filing requirements for the past 90 days.

Yes  _______    No  X

The number of shares outstanding of each of the issuers classes of common
  equity was 63,963,712 shares of common stock, par value $0.002, as of July 28,
  2006.

Transitional Small Business Disclosure Format (check one):

Yes  _______    No  X

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AZCOMININGINC.
INDEX TOFORM10-QSBFILINGFOR THEQUARTERENDEDSEPTEMBER30,2005

TABLE OFCONTENTS

PART IFINANCIALINFORMATION

|               |                                                                                                                            | **Page**
|-------------- | -------------------------------------------------------------------------------------------------------------------------- | --------
|               |                                                                                                                            |         
|Item 1.        | Financial Statements                                                                                                       | 2       
|               |                                                                                                                            |         
|               | Consolidated Balance Sheet, September 30, 2005 (Unaudited)                                                                 | 2       
|               |                                                                                                                            |         
|               | Consolidated Statements of Operations For the Three Months
      Ended September 30, 2005 (Unaudited) and 2004 (Unaudited) | 3       
|               |                                                                                                                            |         
|               | Consolidated Statements of Cash Flows For the Three Months
      Ended September 30, 2005 (Unaudited) and 2004 (Unaudited) | 4       
|               |                                                                                                                            |         
|               | Notes to the Consolidated Financial Statements (Unaudited)                                                                 | 5       
|               |                                                                                                                            |         
|Item 2.        | Managements Discussion and Analysis and Plan of Operations                                                                | 10      
|               |                                                                                                                            |         
|Item 3.        | Controls and Procedures                                                                                                    | 13      
|               |                                                                                                                            |         
|               | **PART II****OTHER INFORMATION**                                                                                           |         
|               |                                                                                                                            |         
|Item 2.        | Changes in Securities and Use of Proceeds                                                                                  | 13      
|               |                                                                                                                            |         
|Item 4.        | Submission of Matters to a Vote of Security Holders                                                                        | 14      
|               |                                                                                                                            |         
|Item 6.        | Exhibits                                                                                                                   | 14      
|               |                                                                                                                            |         
|SIGNATURES     | 14                                                                                                                        
|               |                                                                                                                            |         
|CERTIFICATIONS | 15                                                                                                                        

1

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PARTI

FINANCIALINFORMATION

ITEM1. FINANCIALSTATEMENTS

AZCOMININGINC. CONSOLIDATEDBALANCESHEETSEPTEMBER30,2005(UNAUDITED)

|ASSETS                                                        |  
|------------------------------------------------------------- | -
|CURRENT ASSETS:                                               |  
|Cash and
      cash equivalents                               | $
|Prepaid expenses                                              |  
|Total Current
      Assets                                    |  
|CAPITAL ASSETS:                                               |  
|Land                                                          |  
|Building, net                                                 |  
|                                                              |  
|OTHER ASSETS:                                                 |  
|Idle
      plant and equipment, net                           |  
|Restricted cash                                               |  
|                                                              |  
|                                                              |  
|                                                              | $
|                                                              |  
|LIABILITIES AND
      STOCKHOLDERS (DEFICIT)                 |  
|CURRENT LIABILITIES:                                          |  
|Accounts
      payable and accrued liabilities                | $
|Accrued interest payable
       related parties              |  
|Line of
      credit                                          |  
|Note payable 
      shareholder                              |  
|Accrued
      lease payments payable                          |  
|Accrued settlement
      obligations                          |  
|Derivative instrument liability                               |  
|Total Current Liabilities                                     |  
|                                                              |  
|LONG TERM LIABILITIES:                                        |  
|Financing lease
      liability                               |  
|Note payable  related party                                  |  
|Asset retirement
      obligation                             |  
|Total Liabilities                                             |  
|                                                              |  
|                                                              |  
|STOCKHOLDERS (DEFICIT):                                      |  
|Common stock, $.002 par
      value, 100,000,000 shares       |  
|authorized and 59,778,367 shares issued and
      outstanding |  
|Additional paid in
      capital                              |  
|Deferred stock compensation                                   |  
|Accumulated
      (deficit)                                   |  
|Total Stockholders
      (Deficit)                           |  
|                                                              |  
|                                                              | $

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

2

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AZCOMININGINC. CONSOLIDATEDSTATEMENTS OFOPERATIONS(UNAUDITED)

|                                                      |   | Three Months Ended |  
|----------------------------------------------------- | - | ------------------ | -
|                                                      |   | September 30,      |  
|                                                      |   | 2005               |  
|                                                      |   |                    |  
|SALES                                                 | $ | 395                |  
|                                                      |   |                    |  
|OPERATING COSTS AND EXPENSES:                         |   |                    |  
|Exploration and mine related
      costs              |   | 11,082             |  
|General and
      administrative                      |   | 256,583            |  
|General and administrative -
      stock compensation |   | 1,017,496          |  
|Depreciation and
      amortization                   |   | 6,170              |  
|Accretion of asset retirement
      obligation        |   | 1,250              |  
|                                                      |   | 1,292,581          |  
|                                                      |   |                    |  
|(LOSS) FROM OPERATIONS                                |   | (1,292,186         | )
|                                                      |   |                    |  
|OTHER INCOME (EXPENSES):                              |   |                    |  
|Gain on sale of asset                                 |   | --                 |  
|(Loss) on
      derivative instrument liability       |   | (221,415           | )
|Interest income                                       |   | 675                |  
|Foreign currency
      exchange adjustment            |   | (1,552             | )
|Accretion of discounts on notes
      payable         |   |                    |  
|and lease liability                                   |   | (55,489            | )
|Interest expense                                      |   | (41,741            | )
|Total Other (Expense)                                 |   | (319,522           | )
|                                                      |   |                    |  
|(LOSS) BEFORE PROVISION FOR INCOME TAXES              |   | (1,611,708         | )
|                                                      |   |                    |  
|PROVISION FOR INCOME TAXES                            |   | --                 |  
|                                                      |   |                    |  
|NET (LOSS)                                            | $ | (1,611,708         | )
|                                                      |   |                    |  
|                                                      |   |                    |  
|Basic and Diluted (Loss) Per Common Share             | $ | (0.03              | )
|                                                      |   |                    |  
|Basic and Diluted Weighted Average Number             |   |                    |  
|of Common Shares
      Outstanding                    |   | 52,824,943         |  

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

3

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AZCOMININGINC. CONSOLIDATEDSTATEMENTS OFCASHFLOWS(UNAUDITED)

|                                                                |   | Three Months Ended September
      30, |  
|--------------------------------------------------------------- | - | -------------------------------------- | -
|                                                                |   | 2005                                   |  
|                                                                |   |                                        |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                           |   |                                        |  
|Net (loss)                                                      | $ | (1,611,708                             | )
|                                                                |   |                                        |  
|Adjustments to reconcile
      net (loss) to net cash (used in) |   |                                        |  
|operating
      activities:                                     |   |                                        |  
|Depreciation and amortization                                   |   | 6,170                                  |  
|Stock compensation                                              |   | 1,017,496                              |  
|Accretion of asset retirement obligation                        |   | 1,250                                  |  
|Amortization of debt discount                                   |   | 55,489                                 |  
|(Gain) loss on sale of equipment                                |   | --                                     |  
|Foreign currency exchange rate adjustment                       |   | 1,552                                  |  
|Loss
      on derivative instrument liability                   |   | 221,415                                |  
|Net changes in operating assets and liabilities:                |   |                                        |  
|Prepaid expenses                                                |   | 12,849                                 |  
|Accounts payable and accrued
      liabilities                  |   | 34,222                                 |  
|Accrued interest payable  related parties                      |   | 36,000                                 |  
|Accrued lease payments payable                                  |   | 135,000                                |  
|Net Cash (Used in) Operating Activities                         |   | (90,265                                | )
|                                                                |   |                                        |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                           |   |                                        |  
|Proceeds from sale of property and equipment                    |   | --                                     |  
|Capital asset
      addition                                    |   | --                                     |  
|Net Cash Provided
      by Investing Activities:                |   | --                                     |  
|                                                                |   |                                        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                           |   |                                        |  
|Proceeds from sale of
      common stock                        |   | 435,491                                |  
|Net Cash Provided
      by Financing Activities                 |   | 435,491                                |  
|                                                                |   |                                        |  
|INCREASE IN CASH AND CASH EQUIVALENTS                           |   | 345,226                                |  
|                                                                |   |                                        |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF
      PERIOD            |   | 20,101                                 |  
|                                                                |   |                                        |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                        | $ | 365,327                                |  

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

4

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AZCOMININGINC.NOTES TO THECONSOLIDATEDFINANCIALSTATEMENTSSEPTEMBER30,2005(UNAUDITED)

NOTE1 - NATURE OFBUSINESS,BASIS OFPRESENTATION ANDMANAGEMENTPLANS

Azco Mining Inc. (the Company) is a mining company incorporated
in Delaware in August 1991. Its general business strategy is to acquire, explore
and develop mineral properties. The Companys principal assets are the leased
Ortiz gold project in New Mexico and the 100% owned Black Canyon mica project in
Arizona.

Azco is currently focused on financing efforts to: (1) fund the
re-opening and enhancement of its Black Canyon mica project, and (2) acquire
other high quality gold, silver and/or copper properties.

The unaudited interim consolidated financial statements of the
Company included herein have been prepared in accordance with generally accepted
accounting principles for interim financial information and in accordance with
the instructions for Form 10-QSB under the Security Exchange Act of 1934. These
statements do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended September 30, 2005, are not
necessarily indicative of the results that may be expected for the year ended
June 30, 2006. The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and footnotes
thereto for the fiscal year ended June 30, 2005, included in the Companys
Annual Report on Form 10-KSB, as filed with Securities and Exchange Commission.

NOTE2-SUMMARY
  OFSIGNIFICANTACCOUNTINGPOLICIES

Net (Loss) per Common Share

The Company calculates net income (loss) per share as required
by Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per
Share. Basic earnings (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common shares outstanding for the
period. Diluted earnings (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common shares and dilutive common stock
equivalents outstanding. During the periods when they are anti-dilutive, common
stock equivalents, if any, are not considered in the computation. The impact of
outstanding stock options and warrants has not been included in the computation
of diluted loss per common share as it would be anti-dilutive.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees
for services based on the fair value of the equity instruments issued and
accounts for equity instruments issued to other than employees based on the fair
value of the consideration received or the fair value of the equity instruments,
whichever is more reliably measurable.

The Company accounts for stock based compensation in accordance
with SFAS 123, "Accounting for Stock-Based Compensation." The
provisions of SFAS 123 allow companies to either expense the estimated fair
value of stock options or to continue to follow the intrinsic value method set
forth in Accounting Principles Board Opinion 25, "Accounting for Stock Issued
to Employees" (APB 25") but disclose the pro forma effects on net income
(loss) had the fair value of the options been expensed. The Company has elected
to continue to apply APB 25 in accounting for its stock option incentive plans.

5

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Derivative Financial Instruments

The Company does not use derivative instruments to hedge
exposures to cash flow, market, or foreign currency risks.

The Company reviews the terms of convertible debt, equity
instruments and other financing arrangements issued to determine whether there
are embedded derivative instruments, including embedded conversion options, that
are required to be bifurcated and accounted for separately as a derivative
financial instrument. Also, in connection with the issuance of financing
instruments, the Company may issue freestanding options or warrants that may,
depending on their terms, be accounted for as derivative instrument liabilities,
rather than as equity. The Company may also issue options or warrants to
non-employees in connection with consulting or other services they provide.

Derivative financial instruments are initially measured at
their fair value. For derivative financial instruments that are accounted for as
liabilities, the derivative instrument is initially recorded at its fair value
and is then re-valued at each reporting date, with changes in the fair value
reported as charges or credits to income. For option-based derivative financial
instruments, the Company uses the Black-Scholes option- pricing model to value
the derivative instruments. To the extent that the initial fair values of the
freestanding and/or bifurcated derivative instrument liabilities exceed the
total proceeds received, an immediate charge to income is recognized, in order
to initially record the derivative instrument liabilities at their fair value.

The discount from the face value of the convertible debt or
equity instruments resulting from allocating some or all of the proceeds to the
derivative instruments, together with the stated interest on the instrument, is
amortized over the life of the instrument through periodic charges to income,
usually using the effective interest method.

The classification of derivative instruments, including whether
such instruments should be recorded as liabilities or as equity, is reassessed
at the end of each reporting period. If reclassification is required, the fair
value of the derivative instrument, as of the determination date, is
reclassified. Any previous charges or credits to income for changes in the fair
value of the derivative instrument are not reversed. Derivative instrument
liabilities are classified in the balance sheet as current or non-current based
on whether or not net-cash settlement of the derivative instrument could be
required within 12 months of the balance sheet date.

NOTE3-DERIVATIVEINSTRUMENTLIABILITY

The Company uses the Black-Scholes option-pricing model to
value options and warrants, and the embedded conversion option components of any
bifurcated embedded derivative instruments that are recorded as derivative
liabilities.

The warrant derivative associated with the financing lease, at
the time it was issued, January 16, 2002, was determined to be $1,093,898 and at
June 30, 2005, to be $81,057. The fair value of the warrant derivative liability
at September 30, 2005, was determined to be $302,472 using the following
assumptions, expected dividend yield of zero, expected stock price volatility of
106.8%, risk free interest of 4.18% and remaining contractual life of 1.3 years.
Based upon this change in fair value, the Company has recorded a non-cash loss
on derivative financial instruments during the quarter ended September 30, 2005,
of $221,415 and a corresponding increase in the derivative liability.

NOTE4-STOCKHOLDERS(DEFICIT)

Issuances of Common Stock

During the quarter ended September 30, 2005, the Company sold
3,938,245 shares of common stock at

6

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$0.10 - $0.20 per share for cash proceeds of $435,491.

At June 30, 2005, the Company had recorded $105,250 of deferred
stock compensation. During the quarter ended September 30, 2005, $60,146 was
expensed as general and administrative stock compensation and the balance of
$45,104 is recorded as deferred stock compensation.

During the quarter ended September 30, 2005, the Company issued
1,130,000 shares of common stock for investor relations and marketing services
to be provided over a period of three months, for an aggregate market value of
$214,700 on the date of the transaction. At September 30, 2005, $107,350 was
classified as deferred stock compensation and the balance of $107,350 has been
recorded as general and administrative stock compensation expense.

On September 22, 2005, the Company issued 1,500,000 shares of
common stock with an aggregate value of $450,000, based on the fair market value
on the transaction date. The total reduction of accrued wages and interest
amounted to $200,000 and the balance of $250,000 has been recorded as general
and administrative stock compensation expense.

On September 22, 2005, the Company issued 2,000,000 shares of
common stock at a market value of $600,000 on the date of the transaction, to
its President, for the rights, title and interest in and to the lease with New
Planet Copper Mining Company. The value assigned to the transaction has been
recorded as general and administrative stock compensation expense as the
affiliated party had no monetary basis in the property.

Stock Options and Warrants

The fair value of option grants during the three months ended
September 30, 2004, were estimated as of the date of grant utilizing the
Black-Scholes option-pricing model with the following average assumptions for
all grants, expected life of options of 3 years, volatility of 106%, risk-free
interest rate of two and one-half percent (2.5%), and a zero percent (0%)
dividend yield. The pro forma stock based compensation presented below is
comprised $210,000 recognized on the options granted in the current quarter and
$36,459 recognized on option grants on October 7, 2003, that became vested in
the period ended September 30, 2004.

The following table illustrates the pro forma effect on net (loss)
  and loss per share if the Company had applied the fair value recognition provisions
  of FASB Statement No. 148, Accounting For Stock-BasedCompensation
  - Transition & Disclosure, An Amendment To FASB Statement No. 123,
  to stock-based employee compensation.

|                                                                     |   | Three Months Ended September 30, |  
|-------------------------------------------------------------------- | - | -------------------------------- | -
|                                                                     |   | 2005                             |  
|                                                                     |   | (Unaudited)                      |  
|                                                                     |   |                                  |  
|Net (loss), as reported                                              | $ | (1,611,708                       | )
|                                                                     |   |                                  |  
|Deduct  stock-based compensation expense
      determined under the |   |                                  |  
|fair value method, net of
      tax effect                           |   | --                               |  
|                                                                     |   |                                  |  
|Pro forma net (loss)                                                 | $ | (1,611,708                       | )
|                                                                     |   |                                  |  
|(Loss) per share:                                                    |   |                                  |  
|Net
      (loss) per share, as reported                              | $ | (0.03                            | )
|                                                                     |   |                                  |  
|Net
      (loss) per share, pro forma                                | $ | (0.03                            | )

Options to purchase 11,500,000 of the Companys common stock
  were outstanding under the Companys Stock Option Plan and non-plan at
  September 30, 2005. These options are exercisable at $0.10 or $0.11 per common
  share at varying dates through October 2013.

7

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Warrants to purchase 2,900,000 of the Companys common stock
  were outstanding at September 30, 2005. These warrants are exercisable between
  $0.50 and $2.50 per common share at varying dates through April 2007.

Stock option and warrant activities for the quarter ended
September 30, 2005, were as follows:

|                                  |  | Stock Options |  |   | Stock Warrants | 
|--------------------------------- |  | ------------- |  | - | -------------- | 
|                                  |  |               |  |   | Weighted       | 
|                                  |  |               |  |   | Average        | 
|                                  |  | Shares        |  |   | Price          | 
|                                  |  |               |  |   |                | 
|Outstanding at June 30, 2005      |  | 11,500,000    |  | $ | 0.10           | 
|Granted                           |  | ---           |  |   | ---            | 
|Canceled                          |  | ---           |  |   | ---            | 
|Expired                           |  | ---           |  |   | ---            | 
|Exercised                         |  | ---           |  |   | ---            | 
|                                  |  |               |  |   |                | 
|Outstanding at September 30, 2005 |  | 11,500,000    |  | $ | 0.10           | 

Stock options and warrants exercisable at September 30, 2005,
are as follows:

Exercisable Options
      
      
      
      
      
      Exercisable WarrantsWeighted
      
      
      
      
      
      
      
      WeightedAverage
      
      
      
      
      
      
      
      AverageRemaining
      
      Weighted
      
      
      
      
      
      Remaining
      
      WeightedExercise
      
      
      
      Contractual
      
      Average
      
      Exercise
      
      
      
      Contractual
      
      AveragePrice
      
      
      
      Life
      
      Exercise
      
      Price
      
      
      
      Life
      
      ExerciseRange
      
      Number
      
      (In
        Years)
      
      Price
      
      Range
      
      Number
      
      (In
        Years)
      
      Price$ 0.10
      
      6,000,000
      
      3.68
      
      $ 0.10
      
      $ 0.70
      
      300,000
      
      .46
      
      $ 0.70$ 0.11
      
      5,500,000
      
      6.66
      
      $ 0.11
      
      $ 0.50
      
      2,550,000
      
      1.30
      
      $ 0.5011,500,000
      
      
      
      $ 0.10
      
      $ 2.50
      
      50,000
      
      1.52
      
      $ 2.502,900,000
      
      
      
      $
        0.56


NOTE5COMMITMENTS ANDCONTINGENCIES

Consulting Agreement

On September 15, 2005, the Company entered into a consulting
agreement with an attorney who is the son of the Companys President and Chief
Executive Officer. Terms of the contract provide for compensation of $4,000 per
month and payment of certain expenses for an initial three-month period, after
which the contract extends on a month-to-month basis until terminated by either
party. On November 28, 2005, the contract was extended and the consultant was
awarded 50,000 shares of the Companys common stock at a value of $25,000. On
May 2, 2006, the contracted was terminated and replaced with full time
employment at a salary of $5,000 per month. In connection with full-time
employment, the Company granted 50,000 options under its stock option plan at an
exercise price of $1.24 per share, the closing price on May 2, 2006.

8

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NOTE6SUBSEQUENTEVENTS

Placement of Senior Secured Convertible Note

On March 21, 2006, Azco completed a private placement of senior
secured convertible notes, additional investment rights and warrants to five
institutional investors for an aggregate purchase price of $2,500,000. Azco
received net proceeds of approximately $2,270,000 after deducting fees and
expenses. The convertible notes have a term of 17 months and amortize over 12
months beginning on the first day of the fifth month following their issuance.
Interest on the principal amount outstanding will accrue at a rate of 7% per
annum. Azco may pay principal and accrued interest in cash or, at Azco's option,
in shares of its common stock. The holder of each convertible note, at the
holders option, may convert the note into Azcos common stock at a conversion
price of $1.58 per share. Azco also granted additional investment rights to the
investors, giving each the right for 12 months to purchase, under the same
terms, an additional convertible note for 50% of the amount initially purchased.
Azco also issued warrants to the note holders, giving the right for a period of
5 years to purchase in the aggregate 791,139 shares of Azcos common stock at a
price of $1.58 per share. Financial advisory fees included a fee equal to 8% of
the gross proceeds, and 75,000 warrants exercisable at $1.58 per share. In
connection with the transaction, Azco is required within 60 days of the closing
to file a registration statement with the Securities and Exchange Commission and
within 150 days to cause the registration statement to be declared effective.
The registration statement requirement is currently in default.

Summit Silver-Gold Project

On May 4, 2006, for a cash price of $1,300,000, the Company
acquired 100% of the shares of The Lordsburg Mining Company, a New Mexico
corporation, from Imagin Minerals Inc., a privately owned industrial minerals
company. The major assets of The Lordsburg Mining Company include the Summit
mining property consisting of approximately 117 acres of patented mining claims
and 600 acres of unpatented mining claims in the Steeple Rock Mining District,
Grant County, southwestern New Mexico; the Lordsburg mill site property, located
approximately 60 miles south of the Summit property, consisting of approximately
257 acres of patented mining claims near Lordsburg, Hidalgo County, New Mexico;
mining and operating permits related to the Summit mining property and the
Lordsburg mill site property; and mineral processing equipment consisting of a
ball mill and 400 ton-per-day flotation plant, stored at Winston, Sierra County,
New Mexico. The Summit property is subject to underlying net smelter return
royalties capped at $4,000,000 and to a net proceeds interest on sales of
unbeneficiated mineralized rock with an end price of $2,400,000. The Company
holds The Lordsburg Mining Company as a wholly owned subsidiary. The Summit
acquisition is subject to a property identification agreement between the
Company and its President and Chief Executive Officer.

Issuance of Equity

Subsequent to September 30, 2005, the Company issued 653,012
shares of common stock valued at $570,000 pursuant to debt conversion agreements
with two entities, including payment of notes payable and accrued interest. The
Company recognized a gain associated with the conversion of debt amounting to
$119,667.

Subsequent to September 30, 2005, the Company sold an aggregate
of 2,067,333 shares of common stock for cash proceeds of $597,750.

Subsequent to September 30, 2005, the Company issued in the
aggregate 1,165,000 shares of common stock valued at $992,850 to unrelated
parties pursuant to consulting and service agreements for services to be
rendered over a period of up to 24 months.

On March 15, 2006, a director exercised warrants to purchase
  300,000 shares of common stock at $0.70 per share in exchange for a reduction
  of accrued interest and principal on the note payable for $800,000, aggregating
  $210,000.

9

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ITEM2MANAGEMENTSDISCUSSION ANDANALYSIS ANDPLAN OFOPERATION

THIS FORM 10-QSB MAY CONTAIN CERTAIN FORWARD-LOOKING
STATEMENTS AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 AND BY THE SECURITIES AND EXCHANGE COMMISSION IN ITS RULES,
REGULATIONS AND RELEASES, WHICH REPRESENT THE REGISTRANTS EXPECTATIONS OR
BELIEFS, INCLUDING BUT NOT LIMITED TO, STATEMENTS CONCERNING THE REGISTRANTS
OPERATIONS, ECONOMIC PERFORMANCE, FINANCIAL CONDITION, GROWTH AND ACQUISITION
STRATEGIES, INVESTMENTS, AND FUTURE OPERATIONAL PLANS. FOR THIS PURPOSE, ANY
STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE
DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, WORDS SUCH AS MAY, WILL, EXPECT, BELIEVE, ANTICIPATE,
INTENT, COULD, ESTIMATE, MIGHT, PLAN, PREDICT OR CONTINUE OR THE
NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE
SUBSTANTIAL RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE
REGISTRANTS CONTROL, AND ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON A
VARIETY OF IMPORTANT FACTORS, INCLUDING UNCERTAINTY RELATED TO ACQUISITIONS,
GOVERNMENTAL REGULATION, MANAGING AND MAINTAINING GROWTH, THE OPERATIONS OF THE
COMPANY AND ITS SUBSIDIARIES, VOLATILITY OF STOCK PRICE AND ANY OTHER FACTORS
DISCUSSED IN THIS AND OTHER REGISTRANT FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE COMPANY DOES NOT INTEND TO UNDERTAKE TO UPDATE THE INFORMATION
IN THIS FORM 10-QSB IF ANY FORWARD-LOOKING STATEMENT LATER TURNS OUT TO BE
INACCURATE. THE FOLLOWING SHOULD BE READ IN CONJUNCTION WITH THE INFORMATION
PRESENTED IN THE COMPANYS ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED JUNE
30, 2005.

GENERAL

Azco Mining Inc. is a U.S. mining company, incorporated in
August 1991 in the state of Delaware, with a general business strategy to
acquire and develop mining properties amenable to low cost production. Azco is
currently focused on financing efforts to: (1) fund the re-opening and
enhancement of its Black Canyon mica project located in Arizona, and (2) acquire
high quality gold, silver and/or copper properties.

CHANGESINCRITICALACCOUNTING
  ESTIMATES

The preparation of the consolidated financial statements in
conformity with United States generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent 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. Management routinely makes judgments and estimates about the effects
of matters that are inherently uncertain. Note 2, Significant Accounting
Policies in the Notes to the Consolidated Financial Statements in the Companys
Form 10-KSB for the year ended June 30, 2005, describes the Companys
significant accounting policies which are reviewed by management on a regular
basis.

The Companys critical accounting estimates are those where
  the Companys has made the most difficult, subjective or complex judgments
  in making estimates, and/or where these estimates can significantly impact the
  financial results under different assumptions and conditions. The critical accounting
  estimates are:

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Derivative Financial Instruments - In connection with the issuance
  of debt or equity instruments, the Company may issue options or warrants to
  purchase the Companys common stock. In certain circumstances, these options
  or warrants may be classified as derivative liabilities, rather than as equity.
  Additionally, the debt or equity instruments may contain embedded derivative
  instruments, such as conversion options, which in certain circumstances may
  be required to be bifurcated from the associated host instrument and accounted
  for separately as a derivative instrument liability.

The identification of, and accounting for, derivative
instruments is complex. The derivative instrument liabilities are re-valued at
the end of each reporting period, with changes in the fair value of the
derivative liability recorded as charges or credits to income, in the period in
which the changes occur. For warrants that are accounted for as derivative
instrument liability, the determination of the fair value of these warrants
using the Black-Scholes option-pricing model. That model requires assumptions
related to the remaining term of the instruments and risk-free rates of return,
the Companys current common stock price and expected dividend yield, and the
expected volatility of the common stock price over the life of the warrants. The
identification of, and accounting for, derivative instruments and the
assumptions used to value them can significantly affect the financial statements

RESULTS OFOPERATIONS

Operating Results for the Three Months Ended September 30,
2005 and 2004

Sales

Sales decreased $25,591 for the quarter ended September 30,
2005, to $395 as compared to $25,986 for the quarter ended September 30, 2004.
The decrease in sales is a result of reduced sales of mica-filled plastic
pellets. The mica sold was sourced from inventory. The Company continues to
process and sell inventoried mica into the cosmetic and reinforced plastic
industries, while it seeks financing to resume production. The Company is not
actively marketing the mica pellets.

Operating Costs and Expenses

Mine related costs decreased in the quarter ended September 30,
2005, to $11,082 from $36,715 for the comparable quarter ended in 2004, or a
decrease of $25,633. This decrease in the current quarter was mainly due to
decreased property taxes approximating $14,800 and mine lease fees approximating
$10,800.

General and administrative stock compensation increased to
$1,017,496 for the quarter ended September 30, 2005, from $137,252 for the
comparative quarter ended September 30, 2003, an increase of $880,244. The
increase in the current quarter is mainly attributable an aggregate of $850,000
stock compensation recognized on the conversion of accrued interest and wages to
the chairman of the board of directors and to the President and CEO and the
reacquisition of the New Planet Copper Mining Company.

Other Income and Expenses

Total other (expenses) for the quarter ended September 30,
2005, was $(319,522) as compared to $(81,955) for the comparable period ended
September 30, 2004. The increase in expenses incurred in the current period of
$237,567 is mainly attributable to an increase non-cash expense recognized on
the derivative instrument liability of $209,755 and a decrease in the gain on
the sale of assets aggregating $28,967.

Gain (loss) on Derivative Financial Instruments

Company recognized a loss on derivative financial instruments
  of $(221,415) for the quarter ended September 30, 2005, as compared to a loss
  of $(11,660) for the comparable prior year period. These losses arise from adjustments
  to record Company derivative financial instruments at fair values in accordance
  with current accounting standards. Company derivative financial instruments
  arose in connection with a financing lease. Otherwise, Company generally does
  not use derivative financial instruments for other purposes, such as hedging
  cash flow or fair-value risks. Company uses the Black-Scholes model to estimate
  the fair value of this derivative. Because Black-Scholes uses Company stock
  price, changes in Company stock price will result in volatility in Company earnings
  in future periods as Company continue to reflect Company derivative financial
  instruments at fair values.

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PLAN OFOPERATIONS

Liquidity and Capital Resources

To continue with the deployment of the Company business
strategies, will require significant additional working capital. The Company
also will require additional working capital funds for continuing payments for
necessary corporate personnel, related general and administrative expenses.

As of September 30, 2005, the Company had cash-on-hand of
$365,327, a negative working capital of $3,157,637 and an accumulated deficit of
$39,556,091.

Azco is continuing to seek funding for its mica project. The
Company anticipates financing these efforts during fiscal 2006 with minimal
proceeds of the sale of mica-filled plastic pellets and mica powder, including
cosmetic grade mica and from the sale of unused equipment. In addition, the
Company intends to obtain interim funding during fiscal 2006 by the sale of
unregistered common stock to accredited investors. To the extent that additional
capital is raised through the sale of equity or equity related securities, the
issuance of such securities could result in the dilution of the current
shareholders.

If and when financing is procured and production resumes, the
Company expects that it will require a minimum of 12 months lead time in order
for it to introduce its mica and feldspathic sand products into the markets and
to build a customer base necessary for sustained sales and profitable operation.
Although the Company anticipates being able to sell dual products of mica and
feldspathic sand, it has not yet sold significant quantities of these products
and has not entered into sales contracts. There are numerous factors beyond the
Companys control that could affect markets for both mica and feldspathic sand.
The profitability of the Companys operations could be adversely affected if it
does not achieve the selling prices or sales volumes currently targeted for its
products.

During the remainder of Companys current fiscal year, the
Company will concentrate on raising the necessary working capital through equity
financing and acceptable debt facilities to insure the Companys ability to
implement its business strategies. The Company intends to seek to have the
Company securities quoted on the OTC Bulletin Board in 2006, which may provide a
better ability to attract investors. The Company is in process of completing the
Companys Securities Act filings to facilitate this process.

The Company can make no assurance, however, that the Company
will be able to have access to the capital markets in the future, or that the
financing will be available on terms acceptable to satisfy the anticipated cash
requirements for operations. The Companys inability to access various capital
markets or acceptable financing could have a material effect on the results of
operations and deployment of business strategies and severely threaten the
Companys ability to operate as a going concern.

Factors Affecting Future Operating Results

In an effort to bring the mica project to commercial
production, fund the Companys corporate commitments and initiate an exploration
program, Azco anticipates the need for at least $5.7 million of additional
financing during the next 36 months, in order to fund the following anticipated
uses:

Mica project operating losses
    $
    1,200,000Mica project capital expenditures
    
    2,800,000


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Corporate overhead and
      related expenses
    
    1,200,000Exploration program
    
    500,000Total funds required
    $
    5,700,000


This projection assumes that the Company will be able to
restructure its current debt and lease commitments whereby interest, principal
and lease payments will be paid from future mica project revenues or with equity
components.

Management has developed a plan to place the Company on an
improved financial footing. Important elements of the plan include becoming
compliant in the filing of the Companys annual and quarterly financial
statements, raising of interim funding to provide for corporate survival,
restructuring of debt with secured creditors and arrangement of funding of $4.0
-$6.0 million. An important priority has been to bring the financial reports
current. The Company anticipates providing for interim financing of the
Companys activities by selling mica, on a limited basis, to key customers in
the plastics and cosmetic industries. The Company has received verbal,
non-binding expressions of interest for a larger project financing once the
Company becomes compliant in the filing of its financial statements and its
stock resumes trading on the Over the Counter Bulletin Board. The Company will
continue discussions with secured creditors concerning restructuring of debt and
believe such restructuring may be possible in conjunction with a major project
financing if such financing can be arranged.

If the Company is unable to procure such additional funding,
the Company may be required to eliminate substantially all business activities
to conserve cash or may need to seek protection under the U.S. bankruptcy laws.

Off-Balance Sheet Arrangements

During the three months ended September 30, 2005, the Company
did not engage in any off-balance sheet arrangements as defined in Item 303(c)
of the SECs Regulation S-B.

ITEM3CONTROLS
  ANDPROCEDURES

The Companys Chief Executive Officer and also the Chief
  Financial Officer have evaluated the Registrants disclosure controls and
  procedures within 90 days of the filing date of this quarterly report. Based
  upon this evaluation, the Companys Chief Executive Officer and Chief Financial
  Officer have concluded that the Companys disclosure controls and procedures
  pursuant to Exchange Act Rules 13a-15 and 15d-15 as of the end of the period
  covered by this report are effective in ensuring that material information required
  to be disclosed is included in the reports that it files with the Securities
  and Exchange Commission and were timely recorded, processed and reported within
  the time periods specified in the Securities and Exchange commission rules and
  forms.

There were no significant changes in the Companys internal
controls or, to the knowledge of the management of the Company, in other factors
that could significantly affect these controls subsequent to the evaluation
date.

PARTIIOTHERINFORMATION

ITEM2.    UNREGISTEREDSALE ANDOTHERDISTRIBUTIONS OFEQUITYSECURITIES ANDUSE OFPROCEEDS

During the quarter ended September 30, 2005, the Company sold
3,938,245 shares of restricted common stock at $0.10 - $0.20 per share for
aggregate proceeds of $435,491.

During the quarter ended September 30, 2005, the Company issued
1,130,000 shares of restricted common

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stock for services with an aggregate market value of $214,700.

On September 22, 2005, the Company issued 1,500,000 shares of
restricted common stock with an aggregate value of $450,000, based on the fair
market value on the transaction date. The total reduction of accrued wages and
interest amounted to $200,000 and the balance of $250,000 has been recorded as
general and administrative stock compensation expense.

On September 22, 2005, the Company issued 2,000,000 shares of
restricted common stock at a market value of $600,000 on the date of the
transaction, to its President, for the rights, title and interest in and to the
lease with New Planet Copper Mining Company. The value assigned to the
transaction has been recorded as general and administrative stock compensation
expense as the affiliated party had no monetary basis in the property.

The Company is utilizing the proceeds from the sale of its
restricted common stock for general working capital purposes.

ITEM4.    SUBMISSION OFMATTERS TO AVOTE OFSECURITYHOLDERS

None.

ITEM6.    EXHIBITS

(a) The following exhibits are filed as part of this report:

| | 31.1 | Certification of
        Chief Executive officer and Chief accounting Officer of Periodic Report
        pursuant to Rule 13a-14a and Rule 15d-14(a).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                      
| | 32.1 | Certification of
        Chief Executive officer and Chief accounting Officer pursuant to 18 U.S.C.
         Section 1350.                          

SIGNATURES

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

|Dated: August 2, 2006 | AZCO MINING INC,                                  
|--------------------- | --------------------------------------------------
|                      |                                                   
|                      | By: /s/ Pierce
      Carson                       
|                      | Pierce Carson                                     
|                      | Chief
      Executive Officer, President, Director
|                      | and
      Principal Accounting Officer            

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