UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the quarterly period ended December 31, 2001

                                       OR

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

     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 incorporation                 (I.R.S. Employer
 or organization)                                            Identification No.)

                             7239 N. El Mirage Road
                             Glendale, Arizona 85307
                             -----------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (623) 935-0774
                                 --------------
              (Registrant's telephone number, including area code)


(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes   X           No ____
    ------

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock,  as of the latest  practicable  date.  The Company had  30,050,621
shares of Common Stock outstanding as of February 11, 2002.

<PAGE>

                                AZCO MINING INC.

                          PART I. FINANCIAL INFORMATION


Item 1. Financial Statements

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Consolidated Balance Sheets                                                    3
Consolidated Statements of Operations                                          4
Consolidated Statements of Cash Flows                                          5
Consolidated Statement of Stockholders' Equity                                 6
Notes to Interim Consolidated Financial Statements                          7-12

</TABLE>

<PAGE>

Azco Mining Inc.
Consolidated Dalance Sheets
(Unaudited)

<TABLE>
<CAPTION>
ASSETS
                                                                December 31,            June 30,
                                                                   2001                   2001
                                                                ------------            --------
<S>                                                             <C>                     <C>
Current assets:
  Cash and cash equivalents                                     $        7,464          $       39,920
  Prepaids and other                                                    35,325                  74,689
  Inventories (Note 3)                                               1,080,078               1,061,447
                                                                     ---------               ---------
        Total current assets                                         1,122,868               1,176,056
                                                                     ---------               ---------
Property and equipment:
  Mineral properties, plant & equipment (Note 2)                    10,125,941              10,130,668
  Capital assets                                                       342,390                 407,421
                                                                       -------                 -------
                                                                    10,468,331              10,538,089
                                                                    ----------              ----------
Restricted cash                                                        190,400                 190,400
                                                                       -------                 -------
        Total assets                                            $   11,781,599          $   11,904,545
                                                                    ----------              ----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities                      $      714,159          $      690,719
  Notes payable (Note 4)                                               621,877                 715,280
                                                                       -------                 -------
        Total current liabilities                               $    1,336,036          $    1,405,999
                                                                     ---------               ---------

  Other liabilities                                                    319,641                 341,143
  Long-term notes payable (Note 4)                                     509,845

Contingencies and commitments (Note 5)

Stockholders' equity:
  Common stock: $.002 par value, 100,000,000 shares
   authorized:                                                          60,901                  60,101
  30,050,621 shares outstanding as of December 31, 2001
   and June 30, 2001
  Addition paid-in capital                                          29,461,933              28,753,656
  Deficit                                                          (19,906,757)            (18,656,354)
                                                                   ------------            ------------
                                                                     9,616,077              10,157,403
                                                                     ---------              ----------
        Total liabilities and stockholders' equity              $   11,781,599          $   11,904,545
                                                                    ==========              ==========

</TABLE>

<PAGE>

Azco Mining Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended              Six Months Ended
                                                                    December 31,                    December 31,
                                                                2001            2000            2001            2000
                                                                ----            ----            ----            ----
<S>                                                             <C>             <C>             <C>             <C>
Revenue:
  Sales                                                         $    24,800     $        -      $      24,800   $         -
                                                                     ------              -             ------             -
Expenses:
  Cost of sales                                                      12,800              -             12,800             -
  Salaries                                                           82,626        143,975            166,248       319,196
  General and administrative                                        156,033        177,311            279,833       370,035
  Exploration & development                                          35,720         77,497             83,586       194,492
  Write-down of inventory                                           208,648        417,729            453,565       879,644
  Interest expense                                                  189,896              -            211,326             -
  Amortization & depreciation                                        36,936         15,842             69,666        31,764
  Reclamation expense                                                    92             93                 92           371
                                                                         --             --                 --           ---


                                                                $   722,751     $  832,447      $   1,277,116   $ 1,795,502
                                                                    -------        -------          ---------     ---------
Income:
  Interest income                                               $     1,110     $   39,174      $       1,913   $   104,686
                                                                      -----         ------              -----       -------
Net loss                                                        $  (696,841)    $ (793,273)     $  (1,250,403)  $(1,690,816)
                                                                   =========      =========        ===========   ===========
Basic loss per common share                                     $     (0.02)    $    (0.03)     $       (0.04)  $     (0.06)
                                                                      ======         ======             ======        ======
Diluted loss per common share                                   $     (0.02)    $    (0.03)     $       (0.04)  $     (0.06)
                                                                      ======         ======             ======        ======
Weighted average common shares                                   30,050,621     29,892,121         30,050,621    29,891,659
                                                                 ==========     ==========         ==========    ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements

<PAGE>

Azco Mining Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                                           December 31,
                                                                        2001            2000
                                                                        ----            ----
<S>                                                                     <C>             <C>
Cash flows from operating activities:
  Net loss                                                              $  (1,250,403)  $   (1,690,816)
  Adjustment to reconcile net loss to net cash
  used in operations:
        Depreciation and amortization                                          69,758           31,764
        Write down of inventory                                               453,565          879,644
        Amortization debt discount                                            150,269                -
  Changes in assets and liabilities, net:
        Prepaid and other                                                      39,364           49,580
        Inventories                                                          (472,196)        (949,113)
        Accounts payable and accrued liabilities                               23,440          (58,038)
                                                                               ------          --------
Net cash used in operating activities                                        (986,203)      (1,736,979)
                                                                             ---------      -----------

Cash flows from investing activities:
  Mineral properties, plan & equipment                                              -       (1,344,527)
                                                                                    -       -----------
Net cash used for investing activities                                              -       (1,344,527)
                                                                                    -       -----------

Cash flows from financing activities:
  Proceeds from notes payable                                                 811,000                -
  Proceeds from stock sale                                                    164,250                -
  Payments on capital lease obligations                                       (21,502)               -
  Proceeds from exercise of options                                                 -            2,400
                                                                                    -            -----

Net cash provided by financing activities:                                    953,748            2,400
                                                                              -------            -----

Net decrease in cash and cash equivalents                                     (32,455)      (3,079,106)

Cash and cash equivalents at beginning of period                               39,920        4,324,886
                                                                               ------        ---------

Case and cash equivalents at end of period                              $       7,465   $    1,245,780
                                                                                =====        =========

</TABLE>

   The accompanying notes are an integral part of these financial statements

<PAGE>

Azco Mining Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)

<TABLE>
<CAPTION>
                                                        Common                  Additional
                                                        Stock                   Paid-In
                                                Shares          Amount          Capital         Deficit         Total
                                                ------          ------          -------         -------         -----
<S>                                             <C>             <C>             <C>             <C>             <C>
Balance June 30, 2001                           30,050,621      $  60,101       $28,753,656     $(18,656,354)   $ 10,157,403

Warrants issued (Note 4)                                                            544,827                          544,827
Subscription of Stock (Note 6)                                        800           163,450                          164,250

Net loss                                                                                          (1,250,403)     (1,250,403)

Balance December 31, 2001                       30,050,621      $  60,901       $29,461,933     $(19,906,757)   $  9,616,077

</TABLE>

         These notes are an integral part of these financial statements

<PAGE>

Azco Mining Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Basis of Presentation and Going Concern
-----------------------------------------------

The  unaudited  consolidated  financial  information  presented  herein has been
prepared in accordance  with the  instructions to Form 10-Q and does not include
all of the  information  and note  disclosures  required by  generally  accepted
accounting principles. Therefore, this information should be read in conjunction
with the  consolidated  financial  statements and notes thereto  included in the
Azco Mining Inc.  ("Azco" or "the  Company")  Annual Report on Form 10-K for the
fiscal year ended June 30, 2001. This interim financial information reflects all
adjustments  that  are,  in  the  opinion  of  management,  necessary  to a fair
statement of the results for the interim period.

Azco Mining Inc.  is a mining  company  incorporated  in  Delaware.  Its general
business  strategy is to acquire,  explore and develop mineral  properties.  The
Company's  principal  assets are the 100% owned  Black  Canyon  Mica  Project in
Arizona and a 30% interest in the Piedras Verdes Project in Sonora, Mexico.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue to operate as a going  concern.  The Company has
suffered   recurring  losses  from  operations  and  the  Company  will  require
additional  funds to  continue  operations.  On January  17,  2002,  the Company
completed a financing lease transaction that yielded the Company net proceeds of
$2,842,500.  The Company will need additional funds to continue  operations into
fiscal 2003. Management is actively seeking additional financing however,  there
is no assurance that these efforts will be successful on terms acceptable to the
Company.  These matters raise some doubt about the Company's ability to continue
as a going concern.  These consolidated  financial statements do not include the
adjustments  that would be necessary,  including a provision of  impairment  for
plant and equipment which could be significant,  should the Company be unable to
continue as a going concern.

Construction  of  the  Black  Canyon  Mica  Project  production  facilities  was
completed  in the  previous  fiscal  year.  Due  to  earlier  cash  constraints,
production and marketing efforts  progressed on a limited basis through December
31, 2001. If the mica project does not achieve  commercial  production levels or
if the Company is unable to successfully market the mica product during the next
12 months,  the Company  will need  increased  additional  financing to meet its
operating expenses and pay obligations as they become due.


<PAGE>

Azco Mining Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Continued)


Note 2. Black Canyon Mica Project (Arizona)
-------------------------------------------

During the quarter ended  December 30, 2001,  production  and  commissioning  of
production circuits  progressed on a limited basis.  Marketing efforts continued
as well but additional funding will be necessary to advance the project further.

Detail of mica project mineral properties, plant and equipment is as follows:

<TABLE>
<CAPTION>
                                                                      Dec. 31,                   June 30,
                                                                        2001                       2001
                                                                   ----------------          -----------------
<S>                                                                <C>                        <C>
Acquisition of mineral properties                                  $         2,219,996        $         2,219,996
Mining and processing plant and equipment                                    6,882,869                  6,882,869
Development costs                                                            1,104,966                  1,104,966
Accumulated amortization                                                      (81,890)                   (77,163)
                                                                  ---- ----------------     ---- -----------------
Total                                                              $                          $
                                                                  ---- ----------------     ---- -----------------

</TABLE>

Detail of other capital assets is as follows:

<TABLE>
<CAPTION>
                                                                      Dec. 31,                   June 30,
                                                                        2001                       2001
                                                                   ----------------          -----------------
<S>                                                                <C>                        <C>
Office building                                                    $           152,997        $           152,997
Furniture and equipment                                                        381,383                    381,383
Vehicles                                                                        81,146                     81,146
Accumulated depreciation                                                     (273,136)                  (208,105)
                                                                  ---- ----------------          -----------------

Total                                                              $           342,390        $           407,421
                                                                  ---- ----------------     ---- -----------------

</TABLE>

Note 3. Inventories

<TABLE>
<CAPTION>
                                                                       Dec. 31,                June 30,
                                                                         2001                    2001
                                                                   ----------------        ---------------
<S>                                                                <C>                      <C>
Broken ore                                                         $           789,360      $         814,107
Work-in-process                                                                228,918                187,540
Finished goods                                                                  61,800                 59,800
                                                                       ----------------        ---------------
                                                                       ----------------

Total                                                              $                        $
                                                                       ----------------        ---------------
</TABLE>

<PAGE>

Azco Mining Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Continued)

During the  three-month  and six month  periods  ended  December 31,  2001,  the
Company expensed $208,648 and $453,565,  respectively,  as inventory write downs
representing  mica project  operating  costs incurred in excess of the estimated
realizable value of inventories produced during the quarter.

Note 4. Notes payable and warrants
----------------------------------

On October 12, 2001, the Company  restructured  its $800,000 loan agreement with
Mr. Olson the Company's Chairman, CEO and President.  Mr. Olson agreed to extend
the note  payable an  additional  year to March 15,  2003 in  consideration  for
700,000  warrants to purchase the Company's stock at an exercise price of $0.40.
The warrants  vested in December  2001 and shall expire on October 12, 2003.  In
addition,  effective  October 1, 2001, the interest rate payable on the $800,000
Olson loan was adjusted from prime plus 1% to 12% annually.

On October 19, 2001,  the Company  received a one-year  $100,000  loan,  bearing
interest at 12% per annum,  from a sophisticated  investor and  shareholder.  In
connection  with this loan,  the Company  issued a warrant to  purchase  125,000
shares of the Company's  common stock at $.40 per share.  This warrant vested in
December 2001 and is excercisable through October 19, 2002.

On December 3, 2001, the Company received an additional  one-year $100,000 loan,
bearing  interest at 12% per annum,  from the same  sophisticated  investor  and
shareholder.  In  connection  with this loan,  the  Company  issued a warrant to
purchase  125,000 shares of the Company's  common stock at $.40 per share.  This
warrant vests in February 2002 and is excercisable through December 3, 2002.

During the quarter  ended  December  31,  2001,  an insider  provided  unsecured
short-term financing amounting to a total of $211,000.  These funds were offered
on a  6.5%  short-term  basis,  until  alternate  financing  could  be  secured.
Subsequent to the closing of the financing  lease agreement in January 2002 (see
Note 8) whereby Azco  secured  alternate  financing,  these notes along with all
interest and fees associated were repaid in full.

<PAGE>

Azco Mining Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Continued)

Notes payable at December 31, 2001 consisted of the following:

<TABLE>
<CAPTION>
                                                             Principal                     Unamortized Discount
                                                             ---------                     --------------------
<C>                                                          <C>                           <C>
6.5% note due January 31, 2002                               $211,000
12% note due August 27, 2002                                  200,000                            $53,356
12% note due September, 2002                                  200,000                             55,033
12% note due October 19, 2002                                 100,000                             28,164
12% note due March 15, 2003                                   800,000                            314,732
12% note due December 3, 2002                                 100,000                             27,993
                                                             ----------------------------- --------------------
Total                                                        $1,611,000                          $479,278
                                                             ----------------------------- --------------------
</TABLE>

Note 5. Contingencies
---------------------

Termination of Management Agreements
------------------------------------

In  October  2000,  the  Company  notified  two of its  former  officers  of its
intention  to not renew the  contracts  with each of their  personal  management
companies contracts which were scheduled to expire in February 2001.

The parties have demanded payment of termination fees of $297,675 each, pursuant
to their personal  management  company  contracts.  The Company has disputed its
obligation  to pay these  amounts  and, in December  2000,  filed a  declaratory
judgment  action in United  States  District  Court for the  district of Arizona
seeking a declaration that the dispute is not subject to arbitration and further
that the Company was not obligated to pay a termination fee under the management
contracts.   In  January  2001,  the  named   defendants  filed  an  answer  and
counterclaim  each seeking an award of damages and prejudgment  interest alleged
to be owed as termination fee under the management  contracts and declaration of
stock option rights alleged to be owed them after  termination of the management
contracts.  The litigation is pending with a pretrial conference set for June 3,
2002. No accrual has been made for the termination fees as a liability,  if any,
is not yet determinable.

Litigation
----------

On January 22, 1999, the trustee (Petitioner) in bankruptcy  proceedings against
Eagle River served a petition,  in the Quebec Superior Court,  District of Hull,
upon the Company in order to recover  assets from the  Company.  The  Petitioner
alleges  that,  through the Company's  involvement  with Eagle River in the Mali
Project,  the Company is guilty of contractual breaches in excess of $3,400,000.
In  management's  opinion,  this

<PAGE>

Azco Mining Inc.
NOTES TO INTERIM  CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

claim  is  unfounded  although  the  eventual  outcome  of the  case  is not yet
determinable.  No accrual has been made for this claim  because the Company does
not believe it is probable that the case will be determined against the Company.

Note 6. Capital Stock and Outstanding Options
---------------------------------------------

2,815,500 and 3,134,500 options to purchase shares of the Company's common stock
were outstanding  under the Company's Stock Option Plan at December 31, 2001 and
2002,  respectively.  The impact of these  options  has been  excluded  from the
diluted EPS calculation,  as their effect would be anti-dilutive.  These options
are  exercisable  between  $0.46 and $1.75 per  common  share at  varying  dates
through 2006.

As of December 31, 2001, 375,000 shares of the Company's common stock subscribed
to by an investor  on August 10,  2001 had not been  issued.  In  addition,  the
Company has not issued but has agreed to issue  25,000  shares of the  Company's
common  stock as a legal  retainer.  The shares will be issued under Rule 144 of
the Securities and Exchange Act of 1933. It is anticipated  that the shares will
be issued during the quarter ended March 31, 2002.


Note 7. New pronouncements
--------------------------

In October 2001, the Financial  Accounting  Standards Board issued  Statement of
Financial Accounting Standards (SFAS) No.144,  "Accounting for the Impairment or
Disposal of Long-Lived  Assets." SFAS No. 144 replaces certain previously issued
accounting  guidance,  develops a single  accounting model for long-lived assets
other than goodwill and indefinite-lived intangibles, and broadens the framework
previously  established for assets to be disposed of by sale (whether previously
held or newly  acquired).  This  Statement is  effective as of the  beginning of
fiscal 2003.

In August 2001,  the  Financial  Accounting  Standards  Board  issued  Financial
Accounting Standard No.143,  "Accounting for Asset Retirement  Obligations." The
Statement addresses financial  accounting and reporting  obligations  associated
with the  retirement  of tangible  long-lived  assets and the  associated  asset
retirement costs. The Statement is effective for financial statements issued for
the fiscal years beginning after June 15, 2002.

The  Company  is  currently  in the  process  of  assessing  the impact of these
statements on its financial condition and results of operations.

<PAGE>

Azco Mining Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Continued)


Note 8. Subsequent event
------------------------

In January 2002 Azco completed a financing  lease  transaction  that yielded the
Company net  proceeds of  $2,842,500.  Under the terms of the  transaction,  the
Company sold a 40 percent  ownership in the Company's mica  processing  facility
located in Glendale, Arizona. Subsequently, Azco leased the property back for an
initial  period of 10 years,  with an  option  to  repurchase  the stake for 120
percent of the purchase price after the second year. The repurchase price of the
property  increases  by 10  percent of the  purchase  price each year the option
remains  unexercised  up to a maximum  of 150  percent  of the  purchase  price.
Payments for the first 6 months under the lease  agreement are $30,000,  for the
second 6 months they  increase to $37,500  after which time they are $45,000 per
month.

In connection  with this  transaction,  the Company issued a warrant to purchase
2,550,000 shares of the Company's  common stock at $.50 per share.  This warrant
vested in January 2002 and is excercisable through January 16, 2007.


<PAGE>

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  contains  statements  concerning  trends  and other  forward-looking
information,   within  the  meaning  of  the  federal   securities   laws.  Such
forward-looking  statements are subject to uncertainties and factors relating to
our operations and business  environment,  all of which are difficult to predict
and many of which are beyond our control. We believe that the following factors,
among others,  could affect our future  performance  and cause actual results to
differ materially from those expressed or implied by forward-looking  statements
made by us or on our behalf: (1) unfavorable weather conditions,  in particular,
high water levels in the Agua Fria river which could temporarily limit access to
the Black Canyon mica mine site;  (2) the lack of  commercial  acceptance of our
mica product or  by-products;  (3) changes in  environmental  laws; (4) problems
regarding  availability  of  materials  and  equipment;  (5) failure of the mica
project  equipment  to process or operate  in  accordance  with  specifications,
including  expected  throughput,  which could prevent the project from producing
commercially viable output; and (6) our lack of necessary financial resources to
complete  development of the mica product and by-products,  successfully  market
our mica product and fund our other capital commitments.

References to "we", "us", "our", and Azco Mining,  refer to Azco Mining Inc. and
its  subsidiaries,  on  a  consolidated  basis,  unless  the  context  otherwise
requires.

General
-------

We were formed in 1988. In December 1995, we sold our Sanchez copper project and
a 70% interest in our Mexican copper  project,  the Piedras Verdes  Project,  to
Phelps Dodge  Corporation  for $40 million.  Material  income since the sale has
been a result of interest earned on the proceeds of the sale of these assets.

We are currently focused on the start up of our recently  constructed  operating
facilities to produce high quality  muscovite mica and feldspathic sand from our
100% owned Black Canyon mica project located near Phoenix,  Arizona.  The recent
$2,842,500  financing  lease  transaction  obtained  by the  Company has enabled
limited  production  and marketing  efforts to continue.  It is most likely that
additional  financing  will be  necessary,  in  fiscal  2003,  to bring our mica
project to commercial production levels.

Results of Operations
---------------------

Three Months ended December 31, 2001 compared to Three Months ended December 31,
2000

The net loss for the three  months ended  December 31, 2001 was $696,841  ($0.02
per share)  compared to a net loss of  $798,273  ($0.03 per share) for the three
months  ended  December  31,  2000.  The  decreased  net loss is the  result  of
decreased  salaries and operating  losses offset by increased  interest  expense
during the quarter ended December 31, 2001.

<PAGE>

Salaries  expense was  $82,626  for the three  months  ended  December  31, 2001
compared to $143,975 for the three months ended  December 31, 2000. The decrease
in  salaries  expense is due to the  closure of the  Vancouver  office,  and the
non-renewal  of the  contracts  with the  personal  management  companies of two
former officers.

Write-down of inventory expense for the three months ended December 31, 2001 was
$208,648 compared to $417,729 for the three months ended December 31, 2000. This
decrease is due to reduced production activities in the current quarter.

Interest  expense was  $189,896  for the three  months  ended  December 31, 2001
compared to $0 for the three months ended December 31, 2000. The increase is due
to the interest  expense  associated  with the  amortization of the discounts on
notes payable incurred, since March 2001.


Six Months  ended  December 31, 2001  compared to Six Months ended  December 31,
2000

The net loss for the six months ended  December 31, 2001 was  $1,250,403  ($0.04
per share)  compared to a net loss of  $1,690,816  ($0.06 per share) for the six
months  ended  December  31,  2000.  The  decreased  net loss is the  result  of
decreased  corporate  overhead expenses and operating losses offset by increased
interest expense incurred during the six months ended December 30, 2001.

Salaries  expense  was  $166,248  for the six months  ended  December  31,  2001
compared to $319,196 for the six months ended December 31, 2000. The decrease in
salary expense is due to the closure of the Vancouver office and the non-renewal
of the contracts with the personal management companies of two former officers.

General  and  administrative  expense  was  $279,833  for the six  months  ended
December 31, 2001  compared to $370,035  for the six months  ended  December 31,
2000.  The decrease is due to lower  expenses  resulting from the closure of the
Vancouver office and reduced investor relations activity.

Write-down of inventory  expense for the six months ended  December 31, 2001 was
$453,565  compared to $879,644 for the six months ended December 31, 2000.  This
decrease is due to reduced operating activities in the current period.

Interest  expense  was  $211,326  for the six months  ended  December  31,  2001
compared to $0 for the six months ended  December 31, 2000.  The increase is due
to the interest  expense  associated  with the  amortization  of the discount on
notes payable incurred since March 2001.

<PAGE>

FINANCIAL CONDITION
-------------------

As of December 31, 2001, we had unrestricted cash of $7,465.

Net cash used in operating  activities  was $986,203 for the first six months of
fiscal 2002 as compared to $1,736,979 in the same period of the prior year.  The
reduction  was  primarily  related  to the  decrease  in net loss for the period
combined with an increase in accounts payable and accrued expenses.

Azco did not use any cash flows  from  investing  activities  for the six months
ended December 31, 2001 as compared to $1,344,527 used in the same period of the
prior year for purchases of mineral property, plant and equipment.

Net cash flows from  financing  activities was $953,748 for the first six months
of fiscal 2002 as compared to $2,400 in the same period of the prior year.

On October 12, 2001, the Company  restructured  its $800,000 loan agreement with
Mr. Olson the Company's Chairman, CEO and President.  Mr. Olson agreed to extend
the note  payable an  additional  year to March 15,  2003 in  consideration  for
700,000  warrants to purchase the company's stock at an exercise price of $0.40.
The  warrants  will be  exercisable  on December  12,  2001 and shall  expire on
October 12, 2003.  In addition,  effective  October 1, 2001,  the interest  rate
payable  on the  $800,000  Olson  loan was  adjusted  from  prime plus 1% to 12%
annually.

On October 19, 2001,  the Company  received a one-year  $100,000  loan,  bearing
interest at 12% per annum,  from a sophisticated  investor and  shareholder.  In
connection  with this loan,  the Company  issued a warrant to  purchase  125,000
shares of the Company's  common stock at $.40 per share.  This warrant vested in
December 2001 and is excercisable through October 19, 2002.

On December 3, 2001, the Company received an additional  one-year $100,000 loan,
bearing  interest at 12% per annum,  from the same  sophisticated  investor  and
shareholder.  In  connection  with this loan,  the  Company  issued a warrant to
purchase  250,000 shares of the Company's  common stock at $.40 per share.  This
warrant vests in February 2001 and is excercisable through December 3, 2002.

In January,  2002 the  Company  completed a  financing  lease  transaction  that
yielded  the  Company  proceeds  of  $2,842,500.  This  enables  production  and
marketing  efforts  to  continue.  Depending  on the  success  of the  Company's
marketing  efforts,  additional  funds could be  necessary as early as the first
quarter  of  fiscal  2003 to bring our mica  project  to  commercial  production
levels.   The  Company   currently  has  an  $8  million  loan  commitment  from
International  Commercial  Financing.  Due to  the  length  of  time  that  this
commitment  has been left  unfunded,  the Company  has serious  doubts as to the
validity of this commitment and continues to seek alternate financing. Under the
Cobre  del Mayo  shareholders  agreement,  we are  obligated  to fund 30% of the
development  expenses incurred in connection with the Piedras Verde project. The
type,  amount and timing of development are determined at the sole discretion of
Phelps Dodge.  During the six months ended  December 30, 2001 our share of these
development  costs  was  $23,340.  We  expect  that our  share  of the  required
development  costs during the fiscal year will be  approximately  $250,000.  The
required  amount could be more,  perhaps  substantially  more,  if Minera Phelps
Dodge accelerates the rate of development.  If we cannot fund our share of these
development  expenses,  our interest in Cobre del Mayo will be diluted under the
terms of the shareholders agreement.

<PAGE>

In conjunction  with the departure of Alan Lindsay and Anthony Harvey on October
25,  2000,  we may be  obliged  to pay  termination  fees under the terms of the
management  agreements between us and the personal management companies pursuant
to which we employed  each of Messrs.  Lindsay and Harvey.  Messrs.  Lindsay and
Harvey had demanded  payment of termination  fees of $297,675 each,  pursuant to
their personal management company contracts.  We have disputed any obligation to
pay these amounts and, in December 2000, filed a declaratory judgement action in
the United  States  District  Court for the District of Arizona to determine our
duties in this regard. This litigation is pending.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

     None.


                           PART II. OTHER INFORMATION

Item 1: Legal Proceedings

     None.

<PAGE>


                                   SIGNATURES

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

                                                                AZCO MINING INC.


                                                           /s/ Lawrence G. Olson
                                                           ---------------------
                                                               Lawrence G. Olson
                                                     CEO, President and Chairman
Date:  February 13, 2001

                                                             /s/ Ryan A. Modesto
                                                             -------------------
                                                                 Ryan A. Modesto
                                                         Vice President Finance,
                                                             Corporate Secretary

dATE:  February 13, 2001