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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

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

For the transition period ________ to ________

Commission file number 000-28837

**NEW JERSEY MINING
COMPANY**(Name of small business issuer in its
charter)

|Idaho                                            | 82-0490295                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|89 Appleberg Road, Kellogg, Idaho                | 83837                               
|(Address of principal executive offices)         | (Zip code)                          

Issuers telephone number, including area code: (208)
783-1032

Securities registered under Section 12(b) of the Exchange Act:
**None**

Securities registered under Section 12(g) of the Exchange Act:
**Common Stock, No par value per share**

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
[X] No [ ]

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form and no disclosure will be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Exchange Act Yes [ ] No [X ]

The registrants revenues for its most recent fiscal year
  were $99,954.

The aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the average of the bid and ask prices
on March 10, 2008, as reported by the Over the Counter Bulletin Board was
$23,825,000.

At March 10, 2008, the registrant had 35,296,358 outstanding
shares of no par value common stock.

Transitional Small Business Disclosure Format (Check One): Yes [
] No [X ]

1

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|                                     | TABLE OF CONTENTS                                                               |   
|------------------------------------ | ------------------------------------------------------------------------------- | --
|                                     |                                                                                 |   
|Glossary of Significant Mining Terms | 3                                                                              
|                                     |                                                                                 |   
|                                     | PART I                                                                          |   
|                                     |                                                                                 |   
|Item 1.                              | Description of Business                                                         | 5 
|Item 2.                              | Description of Property                                                         | 9 
|Item 3.                              | Legal Proceedings                                                               | 21
|Item 4.                              | Submission of Matters to a Vote of Security Holders                             | 21
|                                     |                                                                                 |   
|                                     | PART II                                                                         |   
|                                     |                                                                                 |   
|Item 5.                              | Market for Common Equity and Related Stockholder Matters                        | 22
|Item 6.                              | Management's Discussion and
      Analysis of Financial Condition               |   
|                                     | and
      Results of Operations                                                 | 23
|Item 7.                              | Financial Statements                                                            | 27
|Item 8.                              | Changes In and Disagreements
      With Accountants on                          |   
|                                     | Accounting and Financial Disclosure                                             | 52
|Item 8A.                             | Controls and Procedures                                                         | 52
|Item 8B.                             | Other Information                                                               | 53
|                                     |                                                                                 |   
|                                     | PART III                                                                        |   
|                                     |                                                                                 |   
|Item 9.                              | Directors, Executive Officers,
      Promoters, Control Persons and Corporate   |   
|                                     | Governance; Compliance With Section 16(a) of the Exchange
      Act             | 54
|Item 10.                             | Executive Compensation                                                          | 57
|Item 11.                             | Security Ownership of Certain
      Beneficial Owners and Management and        |   
|                                     | Related Stockholder Matters                                                     | 58
|Item 12.                             | Certain Relationships and Related Transactions, and Director
      Independence | 59
|Item 13.                             | Exhibits                                                                        | 60
|Item 14.                             | Principal Accountant Fees and Services                                          | 61
|                                     |                                                                                 |   
|Signatures                           | 62                                                                             

2

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GLOSSARY OF SIGNIFICANT MINING TERMS

Ag-Silver.

Au-Gold.

Alluvial-Adjectivally used to identify minerals deposited over
time by moving water.

Argillites-Metamorphic rock containing clay minerals.

Arsenopyrite-An iron-arsenic sulfide. Common constituent of
gold mineralization.

Ball Mill-A large rotating cylinder usually filled to about 45%
of its total volume with steel grinding balls. The mill rotates and crushed rock
is fed into one end and discharged through the other. The rock is pulverized
into small particles by the cascading and grinding action of the balls.

Bedrock-Solid rock underlying overburden.

Cu-Copper.

CIL-A standard gold recovery process involving the leaching
with cyanide in agitated tanks with activated carbon. CIL means
"carbon-in-leach."

Crosscut-A nominally horizontal tunnel, generally driven at
right angles to the strike of a vein.

Dip-Angle made by an inclined surface with the horizontal,
measured perpendicular to strike.

Deposit-A mineral deposit is a mineralized body which has been
intersected by sufficient closely-spaced drill holes or underground sampling to
support sufficient tonnage and average grade(s) of metal(s) to warrant further
exploration or development activities.

Development Stage-As defined by the SEC-includes all issuers
engaged in the preparation of an established commercially mineable deposit
(reserves) for its extraction which are not in the production stage.

Drift-A horizontal mine opening driven on the vein. Driving is
a term used to describe the excavation of a tunnel.

Exploration Stage-As defined by the SEC-includes all issuers
engaged in the search for mineral deposits (reserves) which are not in either
the development or production stage.

Fault-A fracture in the earth's crust accompanied by a
displacement of one side of the fracture with respect to the other and in a
direction parallel to the fracture.

Flotation-A physiochemical process for the separation of finely
divided solids from one another. Separation of these (dissimilar) discrete
solids from each other is affected by the selective attachment of the particle
surface to gas bubbles.

GPT-grams per metric tonne.

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Galena-A lead sulfide mineral. The most important lead mineral
in the Coeur d'Alene Mining District.

Grade-A term used to assign the concentration of metals per
unit weight of ore. An example-ounces of gold per ton of ore (opt). One troy
ounce per short ton is 34.28 parts per million or 34.28 grams per metric
tonne.

Mill-A general term used to denote a mineral processing
plant.

Mineralization-The presence of minerals in a specific area or
geologic formation.

Ore-A mineral or aggregate of minerals which can be mined and
treated at a profit. A large quantity of ore which is surrounded by waste or
sub-ore material is called an orebody.

Production Stage-As defined by the SEC-includes all issuers
engaged in the exploitation of a mineral deposit (reserve).

Pyrite-An iron sulfide. A common mineral associated with gold
mineralization. Quartz-Crystalline silica (SiO2). An important rock-forming and
gangue material in gold veins. Quartzites-Metamorphic rock containing
quartz.

Raise-An underground opening driven upward, generally on the
vein.

Ramp-An underground opening usually driven downward, but not
always, to provide access to an orebody for rubber-tired equipment such as
loaders and trucks. Typically ramps are inclined at about a 15% grade.

Reserves-That part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination. Reserves are subcategorized as either proven (measured) reserves,
for which (a) quantity is computed from dimensions revealed in outcrops,
trenches, workings, or drill holes, and grade and/or quality are computed from
the results of detailed sampling, and (b) the sites for inspection, sampling,
and measurement are spaced so closely and geologic character is so well defined
that size, shape, depth, and mineral content are well-established; or probable
(indicated) reserves, for which quantity and grade and/or quality are computed
from information similar to that used for proven (measured) reserves, yet the
sites for inspection, sampling and measurement are farther apart.

Stope-An underground void created by the mining of ore.

Strike-The bearing or azimuth of the line created by the
intersection of a horizontal plane with an inclined rock strata, vein or
body.

Tellurium-Relatively rare chemical element found with gold and
silver which can form minerals known as tellurides.

Tetrahedrite-Sulfosalt mineral containing copper, antimony, and
silver.

Vein-A zone or body of mineralized rock lying within boundaries
separating it from neighboring wallrock. A mineralized zone having a more or
less regular development in length, width and depth to give it a tabular form
and commonly inclined at a considerable angle to the horizontal.

Wallrock-Barren rock surrounding a vein.

4

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PART I

ITEM 1.

DESCRIPTION OF THE BUSINESS

BUSINESS DEVELOPMENT

With the exception of historical matters, the matters discussed
in this report are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve risks and uncertainties
that could cause actual results to differ materially from projections or
estimates contained herein. Such forward-looking statements include statements
regarding planned levels of exploration and other expenditures, anticipated mine
lives, timing of production and schedules for development and permitting.
Factors that could cause actual results to differ materially include, among
others, metals price volatility, permitting delays, and the Companys ability to
secure funding. Most of these factors are beyond the Companys ability to
predict or control. The Company disclaims any obligation to update any
forward-looking statement made herein. Readers are cautioned not to put undue
reliance on forward-looking statements.

Form and Year of Organization

New Jersey Mining Company (the Company or NJMC) is a
corporation organized under the laws of the State of Idaho on July 18, 1996. The
Company was dormant until December 31,1996, when all of the assets and
liabilities of the New Jersey Joint Venture (a partnership) were transferred to
the Company in exchange for 10,000,000 shares of common stock. The New Jersey
Joint Venture, a partnership, was formed in 1994 to develop the New Jersey mine.
The partnership consisted of Mine Systems Design, Inc. [75%], Plainview Mining
Company [13%], Silver Trend Mining Company [10%], Mark C. Brackebusch [1%], and
Mascot Silver-Lead Mines, Inc. [1%].

Any Bankruptcy, Receivership or Similar
Proceedings

There have been no bankruptcy, receivership or similar
proceedings.

Any Material Reclassification, Merger, Consolidation, or
Purchase or Sale of a SignificantAmount of Assets Not in
the Ordinary Course of Business.

There have been no material reclassifications, mergers,
consolidations, purchases, or sales for the past three years.

BUSINESS OF THE COMPANY

General Description of the Business

The Company is involved in exploring for and developing gold,
silver and base metal ore resources in the Pacific Northwest of the USA. The
Company has a portfolio of mineral properties including: the Niagara copper
silver-deposit, the Toboggan exploration project, the New Jersey mine, the
Silver Strand mine, the Golden Chest mine and several other exploration
prospects. The Company operates a small (100 tonnes per day) mineral processing
facility (mill) in Kellogg, Idaho.

The Company is executing a strategy of mineral exploration that
is focused on the Belt Basin area of northern Idaho and western Montana. See
Location Map. Our mineral processing plant has been processing ore and other
mineralized material from the Golden Chest, New Jersey and Silver Strand
properties for the past three years. Our strategy is to produce some income from
these properties while we explore them at depth by driving ramps or drifts to
and along the mineralized structures. We can then

5

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mine and process any economic material to help offset our
exploration costs. We also conduct exploratory diamond drilling (surface and
underground), and grassroots exploration in the area. We view our mill as
another exploration tool that not only helps to provide a source of cash flow,
but also allows us to better determine the grade and metallurgical
characteristics of our properties. Feed for the mill in 2007 was sourced from
the Coleman vein at the New Jersey mine. Currently, the mill is not fully
utilized as it is operated four 10-hour days per week.

Our mining operations do not provide enough income to fund our
exploration and development activities and corporate overhead so it is necessary
for the Company to raise funds through the sale of common stock in private
placements to qualified investors. Therefore, our exploration plans and
resulting schedules are dependent on our ability to raise sufficient funding. If
we cannot raise funds through sales of common stock, our exploration programs
may be deferred or delayed.

Competitive Business Conditions

The Company competes on several different fronts within the
minerals exploration industry. Currently, the minerals exploration business is
very active due to the attractive price levels of metals such as gold, silver,
and copper. As a result, we compete with other junior exploration companies for
investment capital. There are many junior mining companies competing to attract
qualified investors to participate in their equity offerings which may make it
more difficult for us to raise capital. Also, we compete with other companies
for exploration properties. To date, we have not seen significant activity near
our exploration properties, but this may change as metal prices continue to move
up. There has been resurgence in exploration activity by junior mining companies
in the Silver Belt of the Coeur dAlene Mining District.

We also compete with other exploration and mining companies
within our area for qualified employees. The long bear market in the mining
industry caused many young people to find employment in other industries and
this has led to a shortage of qualified workers such as miners, drillers and
geologists. The tight market for labor has led to increased wages within the
industry which has led to higher exploration, development, and mining costs. We
pay our employees a competitive wage so that we can retain them.

We are also subject to the risks inherent to the mineral
industry. The primary risk of mineral exploration is the low probability of
finding a major deposit of ore. We attempt to mitigate this risk by focusing our
efforts in an area already know to host ore deposits, and also by acquiring
properties we believe have the geologic and technical merits to host potentially
economic mineralization. Another significant risk is the price of metals such as
copper, gold and silver. If the prices of these metals were to fall
substantially, it would most likely lead to a loss of investor interest in the
mineral exploration sector which would make it more difficult to raise the
capital necessary to move our exploration and development plans forward.

Effect of Existing or Probable Governmental Regulations
on the Business

All operating and exploration plans have been made in
consideration of existing governmental regulations. Regulations that would most
affect operations are related to water quality. A plan of operation is usually
required before exploration or mining activities can be conducted on public land
that is administered by the United States Bureau of Land Management (BLM) or
United States Forest Service (USFS). The New Jersey mine, the Silver Strand
mine and the Golden Chest properties are part of the expanded Bunker Hill
Superfund Site. Current plans for expanded cleanup do not include any of our
mines. There is no known evidence that previous operations at the New Jersey
mine prior to 1910 caused any ground water or stream pollution or discharged any
tailings into the South Fork of the Coeur d'Alene River; however, such evidence
could be uncovered. The nature of the risk would probably be to clean up or
cover old mine tailings that may have washed downstream from upstream mining
operations. No mineral processing operations were ever conducted at the Silver
Strand mine and water sampling

6

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data has not indicated any pollution. There are no mineral
processing tailings deposits at the Golden Chest mine. However, at least two old
adits have small water discharges. The Company could conceivably be required to
conduct cleanup operations at its own expense, however the Environmental
Protection Agencys (EPA) Record of Decision for the Bunker Hill Mining and
Metallurgical Complex Operating Unit 3 does not include any cleanup activities
at the Companys mines. New Jersey Mining Company has not received any
notifications that it could be liable for any environmental cleanup.

Estimate of the Amount Spent on Exploration for the Last
Two Years

During the years ending December 31, 2007 and 2006, we have
spent $508,139 and $319,954, respectively, on exploration activities.

Costs and Effects of Compliance with Environmental Laws
(Federal, State and Local)

No major Federal permits are required for the New Jersey mine
because most operations are on private land and there are no process discharges
to streams. Any exploration program conducted by the Company on unpatented
mining claims, usually administered by the BLM or USFS, requires a Plan of
Operation to be submitted. Our exploration programs can be delayed for
significant periods of time (one to two years) because of the slow NEPA
permitting process applied by the USFS. We believe the USFS permitting delays
are caused by insufficient manpower, complicated regulations, misplaced
priorities and sympathy for environmental groups who oppose any mining
project.

The Company submitted a Plan of Operation to the USFS in April
2003 for a seasonal, underground mining operation at the Silver Strand mine. The
USFS conducted an Environmental Assessment (EA) of the plan and requested public
comments on the EA in September 2004. In June 2005, the USFS issued a final
Decision Notice and Finding of No Significant Impact which essentially approved
the Companys Plan of Operations, but with 26 stipulations. The stipulations
cover various aspects of the plan including but not limited to the operating
season, public access through the site, water quality monitoring, development
rock monitoring, slope stability monitoring, and reclamation standards. In
August 2006, both the USFS and the Company signed the final operating plan or
Decision Notice. The Company posted a reclamation bond of $119,725 in June of
2007 to begin operations at the Silver Strand. An additional bond of $32,075 is
due prior to the second operating season which gives a total bond of $151,800
for the planned project. Permit compliance activities at the Silver Strand are
expected to cost about $10,000 per year.

The Company is also subject to the rules of the U.S. Department
of Labor, Mine Safety and Health Administration (MSHA) for the New Jersey mine
and Golden Chest mine operations. When a mine is operating, MSHA performs a
series of regular quarterly inspections to verify compliance with mine safety
laws, and can assess financial penalties for violations of MSHA regulations. A
typical mine citation order for a violation that is not significant or
substantial is about $120.

The New Jersey mine has two important State of Idaho permits.
The first is an Idaho Cyanidation Permit and the second is a reclamation plan
for surface mining operations. No permit is required for the current flotation
process as there is no discharge of water to surface waters and the tailings
impoundments are less than 30 feet high from toe to crest. An Idaho cyanidation
permit was granted October 10, 1995 [No. CN-000027]. Construction of the
Concentrate Leach Plant (CLP) at the New Jersey mine was completed in November
of 2007. The Idaho Cyanidation permit requires monthly surface water and
quarterly groundwater monitoring during the operation of the CLP. It is
estimated that water monitoring cost associated with operating the CLP will be
approximately $6,000 per year.

A surface mining reclamation plan for the New Jersey mine was
approved by the Idaho State Department of Lands in 1993. The plan calls for
grading of steep fill slopes and planting of vegetation

7

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on the area disturbed by the open pit mine. An annual
reclamation fee of $133 is paid to the Idaho Department of Lands for surface
disturbance associated with the New Jersey mine open pit. The Company has
estimated its costs to reclaim the New Jersey mine site to be $19,800.

When the Company plans an exploration drilling program on
public lands, it must submit a Plan of Operations to either the BLM or US Forest
Service. Compilation of the plan can take several days of professional time and
a reclamation bond is usually required to start drilling once the plan is
approved. Bond costs vary directly with surface disturbance area, but a small,
single set-up drilling program usually requires a bond amount of about $2,500.
Upon completion of the reclamation and approval by the managing agency, the bond
amount is returned to the Company.

The Company complies with local building codes and ordinances
as required by law.

Number of Total Employees and Number of Full Time
Employees

The Company's total number of employees is 14 including
President Fred Brackebusch, Vice President Grant Brackebusch and Secretary Tina
Brackebusch. Tina C. Brackebusch works part-time for the Company.

REPORTS TO SECURITY HOLDERS

The Company is not required to deliver an annual report to
shareholders, however, it plans to deliver an annual report to shareholders in
2008. The annual report will contain audited financial statements. The Company
may also rely on the Internet in the future to deliver annual reports to
shareholders.

The Company filed a Form 10-SB with the Securities and Exchange
Commission on January 11, 2000. The filing became effective on January 27, 2000.
The Company has filed the required annual 10-KSB reports, quarterly 10-QSB
reports, and occasional 8-K reports since that time.

The public may read a copy of any materials the Company files
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site (http://www.sec.gov) that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC.

The Company maintains a website where recent press releases and
other information can be found. A link to the Companys filings with the SEC is
provided on the Companys website-www.newjerseymining.com.

8

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ITEM 2.

DESCRIPTION OF PROPERTIES



Figure 1 - Project Location Map

9

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NEW JERSEY MINE

Location

The New Jersey mine is located in the Gold Run Gulch area, two
miles east of Kellogg, Idaho in the Coeur d'Alene Mining District. The property
includes the gold bearing Coleman vein system, a base metal Sullivan-type
prospect known as the Enterprise and another gold prospect called the Scotch
Thistle. The mine is adjacent to U.S. Interstate 90 and is easily accessed by
local roads throughout the entire year. Three phase electrical power is supplied
to the New Jersey mill by Avista Utilities. The area is underlain by argillites
and quartzites of the Prichard Formation [member of Belt Supergroup], which
commonly hosts gold mineralization.

Mineral Property

The Company owns 62 acres of patented mining claims, mineral
rights to 108 acres of fee land, and approximately 130 acres of unpatented
mining claims. The unpatented claims are on federal land administered by the
BLM. The Coleman pit and the current underground workings are located on the
patented mining claims wholly owned by the Company.

Mineral Leases

A mineral lease from William Zanetti in the New Jersey mill
area contains about 60 acres. The lease provides for the Company's exploration,
development and mining of minerals on fee land through October 2008 and
thereafter as long as mining operations are deemed continuous. The lessor may
terminate the lease upon the Company's failure to perform under the terms of the
lease. The lease provides for royalties of 5% of net sales of ores or
concentrates less transportation also known as a Net Smelter Return (NSR).
Additional royalties of 1% to 5% are due if the gold price exceeds $697 per
ounce as of December 31, 2007. This additional royalty gold price is indexed to
the Consumer Price Index with the December 1988 CPI as the base. Also, annual
advance royalties totaling $500 per year are required under the lease. The
advance royalties are accumulated and will be credited against the royalty
obligations.

A second mineral lease, known as the Grenfel lease, was
acquired from Mine Systems Design, Inc. (MSD) in 2001 in exchange for 1,000,000
shares of the Company's Common Stock. The lease covers the mineral rights to 68
acres located north of the New Jersey mine area. The lease has a fifteen year
term and thereafter so long as mining operations are deemed continuous. The
lessors may terminate the leases upon the Company's failure to perform under the
terms of the lease. A 3% NSR royalty will be paid to the lessors if production
is achieved. However, the NSR royalty shall not exceed 10% of the net proceeds,
except the NSR royalty shall not be less than 1%. No advance royalties or other
advance payments are required by this lease.

History

There are at least 14 gold prospects in or near the New Jersey
mine area. In the late 1800s and early 1900s more than 2,500 feet of
development workings including drifts, crosscuts, shafts, and raises, were
driven by the New Jersey Mining and Milling Company (an unrelated company) to
develop the Coleman vein and the northwest branch of the Coleman vein. A 10
stamp gravity mill was built and operated for a short period.

10

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Present Condition and Work Completed on the
Property

A 100 tonne per day flotation mill has been built and
commissioned on the New Jersey mine property. A six foot by six foot ball mill
is used to grind the crushed ore. Currently, hourly throughput is limited to
about 4.0 tonnes per hour by the ball mill. The crushing plant and grinding
circuit were built in 1996, and the flotation circuit was built in 2004.
Construction of a Concentrate Leach Plant (CLP) was started in mid-2006, and was
completed in November of 2007. The CLP plant uses cyanidation and direct
electro-winning to produce a gold-silver dore from gold-bearing pyrite
concentrates. Based on leach cycles for the Golden Chest pyrite concentrate, the
capacity of the plant is about 10 tonnes per day. Initial indications show the
CLP can recover about 97% of the gold from the Golden Chest concentrate which is
near the design parameters.

Since 2001, the Company has drilled 14 holes for a total of
1,765 meters to explore the Coleman vein and associated zones of gold
mineralization. The drilling confirmed the continuity of the Coleman vein system
and discovered a broad zone of low grade (0.70 gpt gold) gold mineralization
known as the Grenfel zone. Reserves on the Coleman vein were not increased as
the drilling was too widely spaced to meet the criteria for a reserve
calculation. The best intercept was in DDH02-02 which assayed 2.76 gpt gold over
12.5 meters including 2.5 meters of 6.80 gpt gold. The downward projection of
this intercept is the target of the exploration drifting currently underway. In
2007, a single hole of 115 meters in depth was drilled at the Enterprise
base-metal prospect on the New Jersey property and no significant mineralization
was encountered. Drilling at the Scotch Thistle gold prospect on the New Jersey
property commenced in December 2007 and 107 meters were completed by year
end.

In 2007, the Company began an underground exploration program
of drifting on the Coleman vein on the 740 level. A total of 66 meters of
drifting were completed with 30 meters of that on the vein and the remainder was
associated development necessary to gain access to the vein. Exploration
drifting in 2007 encountered pods of pyrite mineralization in the footwall of
the Coleman vein that assayed 54.9 gpt gold. A total of 798 tonnes were mined on
the Coleman vein and processed through the New Jersey mill. Daily production
assays from the mill indicate a gold grade of 2.28 gpt for the Coleman vein
where drifting took place in 2007. Finally, 792 tonnes of ore were mined and
processed from the Coleman open pit at a grade of 3.25 gpt gold.

As of December 31, 2007, the Company had a capital cost of
$1,047,266 associated with the mineral processing plant and a capitalized
development plus investment cost of $485,064 associated with the mine.

Exploration Plans

The Company plans to continue drifting on the Coleman vein
exploring for mineable, high-grade gold ore shoots. Drifting is currently
underway, and it is expected that the exploration drift will reach the DDH02-02
target by mid year 2008. Additional exploration core drilling from the surface
is also planned at the various prospects on the New Jersey mine property.

Geology and Reserves

The description of the geology of the New Jersey mine and the
calculation of mineral resources have been completed by the Company. The
description of the geology of the area can be verified from third party
published reports by the U.S. Geological Survey and unpublished reports by Oscar
Hershey, former Coeur d'Alene District geologist. The Company is solely
responsible for the reserve calculations.

Geology

The Prichard Formation, which is 25,000 feet in thickness,
underlies the New Jersey mine area which is adjacent to and north of the major
Osburn fault. The Osburn fault is in the center of a Proterozoic rifting

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basin. The Prichard Formation is divided into nine rock units
of alternating argillites, siltites, and quartzites, and the units exposed in
the New Jersey mine area appear to belong to the lower members. A broad domal
structure with a series of tighter folds near the Osburn fault typifies the
structure of the area. South of the Osburn fault, the Wallace formation is
exposed on the north flank of the Big Creek anticline.

Gold mineralization is associated with sulfide-bearing quartz
veins which cut the bedding in Prichard argillite and quartzite. Associated
sulfides are pyrite, arsenopyrite, chalcopyrite, low-silver tennatite, galena,
and sphalerite. Most commonly in the Coleman vein of the New Jersey mine visible
gold is associated with the tennantite. Gold is associated with arsenic, copper,
and antimony. Igneous dikes are relatively rare. Some wallrock alteration has
been observed, and the Coleman vein shows a characteristic brecciation.

Reserves

The reserves at the New Jersey mine as of this date are those
contained within the open pit on the Coleman vein. Open pit reserves are from
the planned pit which extends from the south portal north to the terminus of the
Coleman vein. The vertical extent of the pit is from the surface outcrop down to
the Keyhole Tunnel level. Grade estimation for the blocks in the pit reserve is
based upon calculated head grades from 5,000 short tons of gravity-mill
production. Other sample sources include channel samples from the outcrop and
also from the Keyhole Tunnel.

Open Pit Reserve (Proven & Probable)

Ore Blocks
    Metric Tonnes
    Gold Grade (grams per tonne)
      Ounces (gold)Coleman (17+00 to 21+00)
    56,250
    4.59
    8,303Coleman Split (21+00 to 23+00
    19,961
    3.53
    2,265Total
    76,211
    4.31
    10,568


The open pit reserve tonnages are diluted. That is, the
expected dilution from open pit mining is accounted for in the grade and tonnage
of the reserve blocks. The ounces stated in the above table are contained
ounces. The cutoff grade used was 3.0 grams/tonne gold. The cutoff grade is
based on historical costs of a 100 tonne/day open pit operation with a flotation
processing plant recovering 85% of the gold. Gold prices used are based upon a
three year average or $18.69/gram ($581.00/troy ounce). Proven and probable
reserves are combined as they cannot be readily separated.

SILVER STRAND MINE

Location

The Silver Strand mine is located in Kootenai County, Idaho
about 12 miles east-northeast of Coeur d'Alene, Idaho. It is situated on Lone
Cabin Creek, a tributary of Burnt Cabin Creek and of the Little North Fork Coeur
d'Alene River. Primary access is from Coeur d'Alene via paved and dirt roads
from Fernan Lake to Lone Cabin Creek.

Mineral Property

The Company's Silver Strand mine consists of fifteen unpatented
lode claims wholly owned by the Company. The claims are on public lands
administered by the U.S. Forest Service. The claims were acquired from Trend
Mining Company pursuant to a purchase agreement dated July 14, 2000. Mine
Systems Design, Inc. assumed Trends royalty on the Silver Strand claims in July
2001. The royalty is a 1.5% NSR capped at $50,000 after which the NSR royalty
decreases to 0.5% .

12

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History

The Silver Strand deposit was discovered during nearby logging
activity during the 1960's and mined during the 1970's and 1980's for siliceous
smelter flux. Production was 13,752 tons grading 0.093 ounces per ton gold, 9.6
ounces per ton silver and 87.1% silica. The mining operation was shut down when
the ASARCO Tacoma smelter closed in the early 1980's. Previous owner/operators
include Silver Strand Mining Company, Silver Trend Mining Company, and Trend
Mining Company. Mine Systems Design, Inc. (MSD) had an exploration agreement
with Silver Trend Mining Company that was terminated in 1997. During the term of
that lease, MSD made an agreement with U.S. Bureau of Mines (USBM), Spokane
Research Center to conduct a mining research project at the Silver Strand mine.
The USBM monitored water quality and flows from the mine, maintained the
underground openings, and conducted some diamond drilling.

Present Condition and Work Completed on the
Property

During 2002, the Company completed an exploration drilling
program which was successful in extending the ore shoot below the No. 3 Level.
Given the successful drilling results, the Company initiated the environmental
permitting process for a 1,000 tonne per month seasonal, underground mining
operation. In April 2003, the Company submitted a Plan of Operations (POO) to
the USFS. In June 2005, the USFS affirmed their original Finding of No
Significant Impact with respect to the Companys Plan of Operations after an
environmental group appealed their earlier decision. In August 2006, both the
USFS and the Company signed the final operating plan or Decision Notice.

In May of 2007, the Company posted a reclamation bond of
$119,725 in order to begin work at the Silver Strand. An additional bond of
$32,075 is due prior to the second operating season which gives a total bond of
$151,800 for the planned project. Work completed at the Silver Strand in 2007
included the building of a new road to the 225 Level and Rock Storage Site
(RSS), installation of sediment-catching tanks, the installation of a land
application site for mine water, and a new No. 3 portal was started. Of the
existing portals, only the No. 3 portal is accessible but it is not large enough
for equipment so a new No. 3 portal was started. The new No. 3 portal was not
completed in 2007, but it is expected to be completed in 2008. In October of
2007, a single exploration core hole with length of 78 meters was drilled on the
surface near the Silver Strand. The target was an Induced Polarization and
Resistivity geophysical anomaly, but no significant mineralization was found. No
surface infrastructure presently exists at the Silver Strand. There is no energy
available at the site, and electrical energy requirements are satisfied with an
on-site generator.

As of December 31, 2007, the Company had a capitalized
development plus investment cost of $133,004 associated with the Silver Strand
mine.

Exploration and Development Plans

Once the site is accessible in the spring, typically May, the
Company will resume mining efforts on the new No. 3 portal. It is expected that
the completion of the New No. 3 portal will occur in the third quarter of 2008,
and then mining of the reserves above the No. 3 level can commence. Ore will be
shipped to the New Jersey Mill in Kellogg, Idaho. Some exploration core drilling
may also take place in 2008. Usual environmental compliance activities such as
water monitoring will also take place. The typical operating season will be from
May through October.

Geology and Reserves

Company geologists have completed the description of the
geology of the Silver Strand mine. Reserve calculations were completed by the
Companys geologists and engineers. Verification of the areas geology can be
found from third party published reports by Alfred L. Anderson of the Idaho
Bureau of Mines and Geology (Pamphlet 53).

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Geology

The upper part of the Revett Formation outcrops at the mine.
The upper Revett member contains alternating sequences of quartzite and
siltite-argillite. Beds dip shallowly to moderately to the north (30 to 50
degrees). Alfred L. Anderson of the Idaho Bureau of Mines and Geology mapped the
geology and discussed the mineral resources of Kootenai County in 1940 (Pamphlet
53). Anderson combined the Burke and Revett formations and estimated the
combined thickness to be from 1,000 to 3,000 feet. There are no large intrusive
rock bodies near the Silver Strand mine except for a diabase dike which has
intruded the Silver Strand mineralized zone. The Burnt Cabin fault is the major
geologic structure near the Silver Strand mine.

The Silver Strand orebody consists of a nearly-vertical,
silicified (quartz) replacement zone which cuts the flat to moderately dipping
Revett beds. The zone is not a fissure-filling vein. The boundaries and shape of
the silicified zone were determined to some extent by a 1997 diamond drilling
program completed by a previous operator. The sulfide ore mined to date appears
to be enclosed within the quartz zone. The ore is black and very fine-grained.
Sulfide minerals are not easy to identify because of the fine-grained texture.
Occasional euhedral crystals of pyrite can be observed, and tetrahedrite is
visible in the higher grade ore. Minerals observed by microscopic study during
metallurgical tests include: pyrite, tetrahedrite, tennantite, sphalerite,
arsenopyrite and stibnite.

Reserves

Ore grades and dimensions of the reserve blocks are based on
chip sampling of the vein underground and diamond drilling. Reserves were
calculated using a gold equivalent cutoff grade of 5 grams per tonne gold and a
minimum mining width of 1.5 meters. The cutoff grade is based on historical and
estimated costs of a 1,000 tonne/month underground mining operation, hauling ore
to the Companys mineral processing plant about 40 miles distant, and processing
with flotation and recovering 75% of the silver and gold. Silver and gold prices
used are based upon a three year average or $0.35/gram ($10.75/troy ounce) and
$18.69/gram ($581.00/troy ounce), respectively.

Classification
      Metric 
        Tonnes
      Gold Grade
      Silver GradeGrams Per 
        Tonne
      Ounces Per 
        Ton
      Grams Per
        Tonne
      Ounces Per TonProven & Probable
    6,903
    5.43
    0.158
    361
    10.5


The reserve tonnages are diluted. That is, the expected
dilution from underground mining is accounted for in the grade and tonnage of
the reserve blocks. Proven and probable reserves are combined as they cannot be
readily separated.

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GOLDEN CHEST

Location

The Golden Chest project is located in Reeder Gulch about 2.4
kilometers east of Murray, Idaho along Forest Highway 9. The property consists
of two mining leases and unpatented claims covering approximately 500 acres. The
site is accessible by an improved dirt road. A 30 ft by 20 ft steel-clad pole
building is present near the ramp portal and is used as a shop and a dry. Single
phase electrical power supplied by Avista Utilities has been installed to the
portal site in Reeder Gulch.

Mineral Lease

On January 3, 2005, the Company signed a mining lease on the
Golden Chest with Metaline Contact Mines (MTLI) and J.W. Beasley Interests, LLC
(JWBI) that covers about 270 acres. The Company completed a pre-feasiblity study
on an open pit resource drilled by Newmont Exploration Limited and issued 50,000
shares of its restricted common stock to both MTLI and JWBI to exercise the
mining lease. The term of the lease is fifteen years and as long thereafter as
Leased Substances are mined, processed or marketed from the Leased Premises. A
NSR royalty of 3% is payable to the Lessors. An additional NSR royalty up to a
maximum 3% is payable based on a sliding scale of increasing gold prices
adjusted by the Consumer Price Index (CPI) using June 2003 (CPI = 183.7) as the
base. See table below.

Sliding Scale for Additional NSR Royalty

Price of Gold, $ / Troy Ounce (using December 2007
      CPI-U)
    Additional NSR Royalty< $457
    None$457 to $515
    1.0%$515 to $572
    1.5%$572 to $629
    2.0%> $629
    3.0%


Finally, the Company will issue 50,000 shares of restricted
common stock for each increment of 10,000 troy ounces of gold production.

On January 3, 2005, the Company signed a mining lease with
Prichard Creek Resource Partners, LLC that covers about 41 acres of unpatented
lode claims. Upon exercising the lease the Company issued 30,000 shares of
restricted common stock to Prichard Creek Resource Partners. The term of the
lease is fifteen years and as long thereafter as Leased Substances are mined,
processed or marketed from the Leased Premises. A NSR royalty of 3% is payable
to the Lessors. An additional NSR royalty is based on the same sliding scale,
presented in the table above, is also payable to Prichard Creek Resource
Partners. Finally, if commercial production is commenced from these claims, a
one-time payment of 30,000 shares of the Companys common stock is payable to
Prichard Creek Resource Partners.

The Company also holds an additional 195 acres at the Golden
Chest property through unpatented claims wholly owned by the Company. The
portion of these claims within Sections 4 and 5 of Township 49N, Range 5E, BM
are subject to a 1% Net Profits Royalty payable to MTLI.

History

The Golden Chest was the largest lode producer in the Murray
district, producing 65,000 ounces of gold from narrow high grade veins primarily
in the late 1800s. Newmont Exploration Limited (NEL) spent over $500,000 on an
exploration program at the Golden Chest in the late 1980s, which consisted of
soil and rock sampling, surface and underground mapping, and 3,390 meters of
drilling. Newmonts work

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identified a potential open pit gold resource. Newmont dropped
the property in 1990, apparently because it did not meet their criterion of a
one million ounce open-pit resource. New Jersey Mining Company signed a mining
lease for the property in January 2005.

Present Condition and Work Completed on the
Property

The Company started work on the property in 2004. An
exploration ramp of 152 meters was completed along with 40 meters of drifting on
the Katie vein. A gold ore shoot was exposed by the drifting and mining and
processing of material from this shoot commenced in 2005 and continued until
January 2007 when the economic limits of the oreshoot were reached.

Every year since 2004, the Company has completed an exploration
core drilling program on the Golden Chest property. A total of 3,350 meters of
drilling has been completed all from the surface. The majority of these holes
have been targeted at extending the Idaho vein below the No. 3 level which is
the deepest level in the Idaho vein area. This drilling has been successful in
extending the Idaho vein at depth. As an example, DDH04-06 intercepted 17.5
meters of quartz veining that assayed 4.83 gpt gold and included a higher grade
section of 5.8 meters that assayed 10.13 gpt gold. Based on this intercept and
several others, a section of the Idaho vein was converted to proven and probable
reserves on December 31, 2006.

The Company completed studies in 2004 on a potentially open
pitable resource drilled by Newmont in the 1980s. Handbook and scaled costs
were used in conjunction with current gold prices and three-year average prices.
It was concluded that the resource would not be feasible as a stand-alone
project and does not meet the SEC Guide 7 requirements for reserves. Therefore,
exploration at the Golden Chest will be directed toward developing resources on
the Idaho vein for a larger scale underground mine.

As of December 31, 2007, the Company had a capitalized
development plus investment cost of $216,875 associated with the Golden Chest
mine.

Exploration and Development Plans

In early 2007, the decision was made to suspend mining of the
Katie oreshoot and focus our efforts on driving the decline ramp (Idaho ramp) to
the reserve block on the Idaho vein. Approximately 130 meters of the Idaho ramp
was completed in 2007. It is expected that another crew of miners will be added
in 2008 to accelerate advancement of the Idaho ramp. Exploration drill stations
will be excavated along the Idaho ramp at regular intervals to provide platforms
for drilling of the Idaho vein with a goal of increasing ore reserves. It is
expected that the Idaho ramp project will take from 12 to 16 months to reach the
target 865 level.

Geology and Reserves

Company geologists have completed the description of the
geology of the Golden Chest mine. Reserve calculations were completed by the
Companys geologist and engineer. Verification of the areas geology can be
found from third party published reports by Philip J. Shenon (Idaho Bureau of
Mines Pamphlet No. 47) and unpublished reports by Newmont Mining
Corporation.

Geology

Gold mineralization occurs in veins associated with a thrust
fault that has exploited the top of a quartzite unit on the east limb of a
north-trending synclinal fold. The mineralization occurs in two types of quartz
veins which are generally conformable to bedding of the Prichard Formation of
Proterozoic age. Thin banded veins, occurring in argillite, contain visible
gold, pyrite, arsenopyrite, galena, and sphalerite. Thicker, massive veins occur
in quartzite and contain pyrite, sphalerite, galena, chalcopyrite, scheelite and
rare visible gold. Gold mineralization is of Mesozoic age and related to
granitic intrusive rocks.

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Reserves

Ore grades and dimensions of the reserve block are based on
nine diamond drillholes through the Idaho vein with an average spacing of 40
meters. Samples are collected by sawing the selected mineralized section of core
in half and submitting one-half to the assay lab and retaining the other half in
the Companys secure storage facility. Reserves were calculated by the Companys
geologist and engineer using a polygonal method with a cutoff grade of 4 gpt
gold, and a minimum mining width of 2 meters.

The reserves were calculated using actual 2006 operating costs
of a 400 tonne per month operation which includes the following costs:
underground mining costs, haulage costs for hauling ore to the Companys mineral
processing plant about 40 miles distant, and processing costs with a flotation
mineral processing plant recovering 94% of the gold. Gold prices used are based
upon a three year average or $18.69/gram ($581.00/troy ounce).

Classification
      Metric Tonnes
      Gold Grade 
        (grams per tonne)
      Ounces of GoldProven & Probable
    158,958
    5.52
    28,214


The reserve tonnages are diluted. That is, the expected
dilution from underground mining is accounted for in the grade and tonnage of
the reserve blocks. Proven and probable reserves are combined as they cannot be
readily separated.

NIAGARA PROJECT

Location

The Niagara copper-silver deposit is located near the forks of
Eagle Creek about seven kilometers northwest of the Company's Golden Chest
operation. The property is without known ore reserves, and consists of 22
unpatented claims which cover about 430 acres. Access to the site is maintained
through the use of a US Forest Service road which is closed to the general
public. No electrical energy is present at the site.

Mineral Agreement

The Company signed an exploration agreement with Revett Metals
Associates (RMA) in December 2006. The exploration agreement has a term of
five years, beginning on December 2, 2006, and is for nine unpatented claims
that cover the deposit. In addition, the exploration agreement covers an area of
mutual interest within 1⁄2 mile of the property excluding properties which are
valued primarily for their gold mineralization. Upon signing the agreement, the
Company issued 30,000 shares of restricted common stock to RMA and paid $4,500.
At each anniversary of the signing, the Company has agreed to pay $3,000 and
issue 30,000 shares of restricted common stock to RMA. Any time prior to the
expiration of the exploration agreement, the Company can exercise an option to
convert the exploration agreement to a mining agreement. If exercised, the
mining agreement would have a term of 25 years, and the Company would pay a NSR
royalty to RMA of 3.0% on ores or concentrates mined on the property. The
Company is granted the option to purchase 90% of the NSR royalty from RMA for
$2,500,000 which would leave a remaining royalty of 0.3% .

History

An exploration program completed by Earth Resources Company on
the Niagara property in the 1970's identified a large volume of copper-silver
mineralization within the Revett formation. Their exploration program included
eight drill holes and six trenches on the outcrop of the mineralized strata.
Earth Resources also completed metallurgical testwork that indicated
conventional flotation will achieve

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recoveries of 94% for copper and 90% for silver. Earth
Resources also completed preliminary economic studies on the deposit. Kennecott
owned the claims that cover the Niagara deposit for a period of time after Earth
Resources. RMA re-staked the property in 2004 after Kennecott dropped the
claims.

Exploration and Development Plans

Very little exploration or development work has taken place on
the property since Earth Resources work in the 1970s. A network of roads was
constructed on the site to provide drill stations and allow logging of the site.
Some clearing of brush and minimal dozer work will be required to re-open these
roads for more drilling. A Plan of Operations (POO) for a exploration drilling
program was approved by the USFS in October of 2007.

The Company plans to start a core drilling program at the
Niagara deposit in the spring of 2008 once the site is accessible. The primary
goal of the program is to perform in-fill drilling to upgrade the quality of the
resource estimate to the level sufficient for a feasibility study. The
feasibility study would evaluate the economics of an open pit and/or underground
mining operation with a mill processing in the range of 5,000 tonnes per day.
Another goal of the drilling program is to evaluate the Niagara deposit for gold
content and to drill deeper holes that will probe into the lower Revett
Formation to explore for a deeper copper-silver deposit.

On March 25, 2008, the Company announced that it has signed a
definitive agreement with Newmont North American Exploration Limited, a
subsidiary of Newmont Mining Corporation (NYSE: NEM) under which the parties
created a joint venture to explore for gold deposits within a 38 square mile
area north of Murray, Idaho. The joint venture, known as the Toboggan Project,
covers all of the Companys mining claims within this area except for the
Niagara property. Under the terms of the agreement, Newmont can earn a 51%
interest in the joint venture by spending $2,000,000 over three years. Newmont
can increase its interest to 70% by spending an additional $10,000,000 or
completing a feasibility study in the years four through seven, whichever comes
first.

As part of the terms of the agreement, Newmont retains an
option to include the Niagara property into the Toboggan Project which is
exercisable starting at the end of year one and extending to the end of year
three. If Newmont elects to include the Niagara property, it would be required
to spend at least another $1,000,000 or twice what NJMC spends on exploration of
the Niagara, whichever is greater, to earn its 51% interest.

As of December 31, 2007, the Company had an investment cost of
$19,500 associated with the Niagara project.

Geology

The Niagara deposit occurs in a section of mineralized upper
Revett Formation near the axis of a north-south striking syncline. The western
limb of the syncline has been truncated by the north-south striking Murray Peak
fault, a steep, west dipping reverse fault. Other faults offset the mineralized
zone slightly. In the Niagara deposit, the mineralization occurs in the upper
Revett Formation, which here is a light gray, massive quartzite with thin
siltite interbeds. The mineralized horizon crops out along the East Fork Eagle
Creek and is approximately 30 meters below the contact with the overlying St.
Regis Formation. Copper minerals include bornite, chalcopyrite, chalcocite and
some copper oxide minerals. Silver minerals include stomeyerite and jalpaite.
Pyrite and galena also occur in trace amounts. Recent sampling by the Company
indicates the Niagara deposit may have a significant gold content and historic
drill samples were not assayed for gold.

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TOBOGGAN PROJECT

Location

The Toboggan project is an exploration property without known
ore reserves. The Toboggan project consists of 146 unpatented lode claims
covering an area of approximately 2,910 acres in and near the East Fork of Eagle
Creek drainage. These claims are wholly owned by the Company. The Toboggan
project consists of the following claim groups or prospect names: Gold Butte,
Snowslide, Golden Reward, Mineral Ridge, CA, TB, Independence, and Lost Eagle.
The claims can be accessed from May through November using a USFS dirt road. No
electrical energy is available at the site.

History

Historic workings are present at the Gold Butte prospect and
consist of seven adits connected by a system of narrow roads. Most of the
underground work appears to have been completed by 1941. Two holes were drilled
on the Gold Butte prospect in the 1980s. Prior geophysical exploration work by
Cominco-American in the CA area in the mid 1980s found a large CSAMT
geophysical anomaly, roughly two square kilometers in area. In 1987, Cominco
American drilled a hole 500 meters in depth that was located on the eastern edge
of the anomaly. It appears that the hole was located too far to the east, and
that it was not drilled deep enough to investigate the large geophysical
anomaly. A company called Nord Pacific completed a gold exploration program in
the Mineral Ridge area including a soil sampling program and a
reverse-circulation drilling program in 1992. Nord Pacific identified several
anomalous gold zones with their soil sampling and completed nine holes totaling
850 meters in their drilling program. All of the drillholes intercepted
anomalous gold mineralization including a 1.5 meter intercept of 18.9 gpt gold.
Historic workings at the Mineral Ridge prospect, which were likely completed
before Nord Pacifics work, include six adits as well as numerous pits and
trenches. The Independence area was originally staked in 1906 and was active
intermittently through the 1900s. Work completed included four adits and
numerous pits and trenches.

Present Condition and Work Completed on the
Property

The Company has completed various geologic field work including
soil sampling, rock sampling, stream sediment sampling, geophysical surveys, and
mapping. A Plan of Operations was approved by the USFS for exploratory core
drilling at the CA claims, the Snowslide claims and the Gold Butte claims. The
Company drilled one core hole at the Snowslide prospect in October of 2007. Only
130 meters of drilling were completed before the drill had to be removed for the
winter. About 126 meters of this hole were drilled through the Toboggan
Intrusive, a trachytebasalt which contained anomalous amounts of gold and
tellurium.

Exploration and Development Plans

On March 25, 2008, the Company announced that it has signed a
definitive agreement with Newmont North American Exploration Limited, a
subsidiary of Newmont Mining Corporation (NYSE: NEM) under which the parties
created a joint venture to explore for gold deposits within a 38 square mile
area north of Murray, Idaho. The joint venture, known as the Toboggan Project,
covers all of the Companys mining claims within this area except for the
Niagara property. Under the terms of the agreement, Newmont can earn a 51%
interest in the joint venture by spending $2,000,000 over three years. Newmont
can increase its interest to 70% by spending an additional $10,000,000 or
completing a feasibility study in the years four through seven, whichever comes
first.

As part of the terms of the agreement, Newmont retains an
option to include the Niagara property into the Toboggan Project which is
exercisable starting at the end of year one and extending to the end of year
three. If Newmont elects to include the Niagara property, it would be required
to spend at least another $1,000,000 or twice what NJMC spends on exploration of
the Niagara, whichever is greater, to earn its 51% interest.

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Geology

Gold mineralization tends to occur in structurally controlled
zones within the Prichard Formation which are associated with large potential
feeder structures such as the Murray Peak fault, the Bloom Peak fault, and the
Niagara fault. The gold mineralization can occur either as discrete, high-grade
quartz veins or within wide zones of brecciation. Geochemical analysis of soils
and rocks has led to the discovery of very high levels of tellurium associated
with zones of higher grade gold mineralization. Electron microprobe analysis has
shown the presence of gold-silver electrum and the telluride mineral petzite.
The presence of telluride minerals along with the presence of alkaline intrusive
rocks and areas of potassic alteration has led the Company to believe the gold
mineralization is associated with a deeply buried alkaline intrusion. Alkaline
rocks are a type of igneous intrusive rock characterized by high potassium and
sodium and frequently associated with gold mineralization.

COPPER CAMP

Summary

The Copper Camp is an exploration project without known ore
reserves. Copper Camp lies about 8 kilometers northwest of Murray, Idaho and is
accessed by the Lost Creek USFS road. Electrical power is located adjacent to
the site. The Company signed an exploration agreement with RMA in December of
2007 which covers nine unpatented claims with an area of about 180 acres. Terms
of the agreement call for an exploration period of five years, and during or at
the end of the exploration period NJMC can decide to enter a mining agreement.
Upon entering a mining agreement, NJMC could exercise an option to buy 90% of
the royalty interest for $2.5 million or NJMC could decide to pay the full Net
Smelter Royalty of 3% on any production with annual minimum royalty
requirements. Upon signing of the agreement, the Company issued 30,000 shares of
restricted common stock plus $4,500. During the subsequent five-year exploration
period, the required annual payments are 30,000 shares and $3,000.

The Copper Camp showing is an early-stage copper and silver
exploration project, having been explored with limited drilling by previous
operators which include Kennecott, Cominco, and U.S. Borax. Previous operators
drilled core holes down dip from the outcrop and three holes penetrated the
favorable Revett Formation beds showing low-grade copper-silver mineralization.
At least three intercepts were made averaging 10 meters in thickness and grading
0.10% to 0.20% copper and 1.7 to 3.3 grams per tonne (gpt) silver. One short
0.18 meter interval at 173.2 meters of depth had structure-controlled bornite
mineralization grading 4.45% copper and 84.0 gpt silver

WISCONSIN-TEDDY PROSPECT

Summary

The Wisconsin-Teddy is an exploration project without known ore
reserves. The project area lies north of the New Jersey mine and is accessed by
a local frontage road. Electrical power is available adjacent to the site. The
Company's claims cover 83 acres. The claims are unpatented and are on public
land administered by the U.S. BLM. The project is a base metal exploration
project in the Prichard Formation. Several tunnels with an aggregate length of
2,000 feet were driven on the property prior to 1930. This development was
related to two veins systems:a copper-gold vein and a zinc-lead-silver vein.
Work completed by the Company included the opening of the Teddy underground
workings, sampling on the surface and underground, and geologic mapping. Two
exploration holes were drilled in the summer of 2003 and anomalous base metal
mineralization was found. No exploration work has been completed since 2003 and
there are no plans for additional exploration work in 2008.

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SILVER BUTTON/ROUGHWATER PROSPECT

Summary

The Silver Button is an exploration project without known ore
reserves, covers an area of 20 acres, and is located in the Clark Fork mining
district of northern Idaho. Clark Fork is about 96 kilometers north of Kellogg,
Idaho. The property was staked by the Company in 2004 and is located in the
Lightning Creek drainage. Float collected from over a 100 m length of a vein
subcrop on a talus slope contained silver minerals as identified by microscopic
and chemical analyses. Access to the site is via foot trail and no electrical
power is available at the site. Only preliminary field sampling and claim
staking have taken place at the prospect. A Plan of Operations for a
helicopter-mobilized core-drilling program has been submitted to the USFS.
Modifications to the Plan of Operations were made after meeting with the USFS in
June of 2005. A site visit was made with USFS personnel in 2006, but the USFS
has yet to indicate if or when the Plan of Operations will be approved.
Exploration drilling will be dependent on the Companys ability to raise
sufficient funds and the timely receipt of a permit from the USFS. As of
December 31, 2007, the Company had an investment cost of $25,500 associated with
this property.

ITEM 3.

LEGAL PROCEEDINGS

The Company is not currently involved in any legal proceedings
and is not aware of any pending or potential legal actions.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of shareholders during the
fourth quarter of 2007.

[The balance of this page has been intentionally left
blank.]

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PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Information

The Company's stock trades on the NASD's OTCBB under the symbol
"NJMC". The Company began trading on the OTCBB on January 28, 1998 following its
merger with Plainview Mining Company, Inc.

The following table sets forth, for the respective periods
indicated, the prices for the Company's Common Stock in the over-the-counter
market according to the NASD's OTC Bulletin Board. These prices represent
inter-dealer quotations, without adjustments for retail markups, markdowns or
commissions and may not necessarily represent actual transactions. All prices in
the following table have been rounded to the nearest whole cent.

Year Ending December 31, 2007
    High Bid
    Low BidFirst Quarter
    $0.93
    $0.51Second Quarter
    $0.85
    $0.65Third Quarter
    $0.65
    $0.34Fourth Quarter
    $0.57
    $0.32Year Ending December 31, 2006
    High Bid
    Low BidFirst Quarter
    $0.80
    $0.32Second Quarter
    $1.25
    $0.64Third Quarter
    $0.74
    $0.40Fourth Quarter
    $0.68
    $0.41


Shareholders

As of March 10, 2008 there were approximately 1,300
shareholders of record of the Company's Common Stock. As of March 10, 2008 the
Company had issued and outstanding 35,296,358 shares of Common Stock.

Dividend Policy

The Company has not declared or paid cash dividends or made
distributions in the past and the Company does not anticipate that it will pay
cash dividends or make distributions in the foreseeable future. The Company
currently intends to retain and reinvest future earnings, if any, to finance its
operations.

Transfer Agent

The transfer agent for the Company's Common Stock is Columbia
Stock Transfer Company, 601 E. Seltice Way Suite 202, Post Falls, Idaho 83854.

Securities Authorized for Issuance Under Equity
Compensation Plans

The Company has not adopted an equity compensation plan for the
award of options, warrants or rights to employees or non-employees. However, in
April of 2007, the Board of Directors approved a compensation plan for our
President, Fred W. Brackebusch, that states that any time over 130 hours per
month is compensated with restricted common stock at a rate of $150 per hour.
The number of shares is calculated quarterly using the average bid price for the
quarter as quoted by the OTC Bulletin Board.

22

---

During the years ended December 31, 2007 and 2006, the Company
issued 154,386 and 116,480 shares, respectively, of its restricted common stock
valued at $82,500 and $61,063, respectively, to Fred Brackebusch for management
services.

Occasionally, we pay for goods and services with restricted
common stock. Our policy is to determine the fair value of the goods or
services, and then issue the number of corresponding shares using the bid price
for our common stock as quoted by the OTC Bulletin Board.

Recent Sales of Unregistered Securities

On February 12, 2007 the company completed a non brokered (i.e.
no commissions were paid to an underwriter or broker) sale of 2,684,584 units at
a price of $0.40 per unit generating $1,073,819 in net proceeds. Each unit
consisted of one share of restricted common stock plus one half warrant whereby
each whole warrant could purchase one share of the Company's restricted common
stock at $0.55 per share until December 31, 2008. The sale was strictly limited
to persons in the United States who met certain minimum financial (accredited
investors) or sophistication requirements. The offering was made in reliance on
exemptions from registration provided by Section 4(2) and Rule 506 of Regulation
D of the Securities Act of 1933, as amended.

On November 13, 2007 the Company completed a non brokered (i.e.
no commissions were paid to an underwriter or broker) sale of 1,451,427 units at
$.035 per unit generating $507,600 in net proceeds. Each unit consisted of one
share of the Companys restricted common stock plus one warrant, whereby each
warrant could purchase one share of the companys restricted common stock at
$0.50 per share until August 31, 2009. The sale was strictly limited to persons
in the United States who met certain minimum financial (accredited investors) or
sophistication requirements. The offering was made in reliance on exemptions
from registration provided by Section 4(2) and Rule 506 of Regulation D of the
Securities Act of 1933, as amended.

For the year ending December 31, 2007, the Company issued
489,946 shares of restricted common stock for management and directors fees,
equipment, services, exploration, accounts payable and mining lease payments. A
value of $254,661 (for an average value of $0.52 per share) was assigned to
these fees, services, and equipment. See the statement of shareholders equity
for a detailed list. The transactions were strictly limited to persons in the
United States who met certain minimum financial (accredited investors) or
sophistication requirements. In managements opinion, the securities were issued
pursuant to exemption from registration under Section 4(2) of the Securities Act
of 1933, as amended.

ITEM 6.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Plan of Operation

The Company is executing its strategy to conduct exploration
for gold, silver and base metal deposits in the greater Coeur dAlene Mining
District of northern Idaho while concurrently conducting mining and mineral
processing operations on higher grade ore reserves it has located on its
exploration properties. The financial strategy is to generate cash from these
operations to pay for corporate expenses and to provide additional funds for
exploration, thus reducing the need to raise funds through financing activities
including sale of common stock. The strategy includes finding and developing ore
reserves in order to increase production of gold, silver, and base metals.

23

---

The Company has five properties at which most exploration is
being conducted; the Toboggan Project, the Niagara, the Golden Chest, the Silver
Strand, and the Coleman. The Toboggan Project is a group of prospects in the
Murray, Idaho District that appear to be related to alkaline magmatism and
contain gold and silver telluride minerals. The Niagara copper-silver deposit
was drilled in the 1970s, and although more drilling is needed to increase the
confidence in resource estimates and to evaluate whether gold is a significant
component of the deposit, the Company will conduct in-fill drilling and economic
studies to determine if the deposit can be mined profitably. At the Golden Chest
mine, production is not being done while a ramp is being driven to access a
block of reserves discovered by drilling from the surface. Permits are in place
and development of infrastructure has commenced in order to be able to begin
production of silver-gold ore at the Silver Strand mine in 2008. At the Coleman
underground mine, a drift is being driven on the Coleman vein toward a drill
intercept which indicates the presence of higher grade gold-silver
mineralization. Production from lower grade reserves at the Coleman open pit
mine may be conducted to fill up mill capacity.

The Company acquired a core drilling machine in 2007 and
completed 8 exploratory drillholes during the year. One hole was completed at
the Enterprise base metal prospect, three holes were completed at the Golden
Chest to assist in the evaluation of a potentially open pitable gold occurrence,
one hole was completed at the Silver Strand mine to test a geophysical anomaly,
one hole was completed on the Toboggan project to test a telluride mineral
occurrence, one hole was completed on the Steamboat copper-silver prospect to
determine which strata occur at the location, and one hole was completed at the
Scotch Thistle gold prospect. All of these drillholes were exploratory in nature
and did not result in any new ore reserves. In 2008, drilling will continue in
the New Jersey mine area until weather allows the mobilization of the drill to
the Niagara property where drilling will continue throughout most of the
year.

In 2007, an exploration program was continued in the Murray
area where the Golden Chest mine is located. The program was successful in
finding two more new drilling targets. The two new targets are the Mineral Ridge
and Golden Reward, both being gold-silver telluride mineral systems. Permits for
drilling both of these new targets have been submitted to the Federal land
management agency. The Companys long term objective in the Murray area is to
develop enough ore reserves to justify construction of a larger mineral
processing plant in the area.

In 2007, a concentrate leach circuit at the New Jersey mineral
processing plant was commissioned. Concentrate will be leached and a gold-silver
dore produced for sale in 2008. The reason for adding the concentrate leach
circuit was to obtain more revenue compared to selling concentrates by
increasing recovery and eliminating concentrate freight as well as to avoid any
potential difficulties in marketing concentrates.

Financial Condition- The Company maintains an adequate cash
balance by increasing or decreasing its exploration expenditures as limited by
availability of cash from operations or from financing activities. The cash
balance at the end of 2007 was $271,473, and Figure 1 shows the corresponding
balances for previous accounting periods.

24

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Results of Operations

Income Earned during the Development Stage (Revenue) for the
  year 2007 was $99,954 compared to $339,077 in 2006. Figure 2 shows the net loss
  for the fourth quarter of 2007 of $380,698 and the net losses in previous accounting
  periods. The net loss for 2007 was $1,453,268 compared to a net loss of $991,602
  in 2006. The net loss increased in 2007 because of higher exploration and management
  costs and lower revenue.

Gold production in pyrite concentrates and bullion was 40
ounces in the fourth quarter and 108 ounces for the year 2007 as compared to 228
and 679 ounces for the respective 2006 periods. Gold production was lower in
2007 due to lower grade ore and fewer tonnes processed than 2006. Gold
production is expected to be approximately 80 ounces per quarter during the next
two quarters and then to increase, along with silver production, when Silver
Strand ore processing starts.

25

---

Stoping operations at the Golden Chest mine are expected to be
suspended for approximately one year while the access ramp is being extended to
the Idaho vein reserves. Once the Idaho vein ramp development is completed there
will be enough reserves for many years of mining at the current rate of 4,000
tonnes/year.

Mining and mineral processing operations have continued year
around through the winter months even though occasional storms delay operations.
Mineral processing equipment is cleaned out in the winter period to supplement
production in the cold months. Experience is that about 20% of gold production
comes from cleanout.

Ore production is planned to start at the Silver Strand mine in
the third quarter of 2008, however a capital expenditure of approximately
$150,000 will be required to bring the mine into production. Operating results
at the Silver Strand mine will depend upon the price of silver as well as gold.
Present silver and gold prices are sufficient in managements estimation to
generate a gross profit at the Silver Strand mine based on the operating plan
which was part of the permitting process.

Some capital expenditures are planned for the mineral
processing plant in 2008 for a new ore feeder and possibly another filter. Mill
feed will come from the Coleman underground and the Silver Strand mine in
2008.

The amount of money to be spent on exploration at the Companys
mines and prospects will depend upon the amount of gross profit generated by
operations and the amount of money raised by financing activities. Basically,
management expects to be able to continue the present operating scenario with
its three active mines and mineral processing plant indefinitely, but expanded
exploration or production activities depend upon the results of financing
activities.

Off-balance sheet arrangements

The Company has no current or future off-balance sheet
arrangements that have, or are reasonably likely to have, a current or future
effect on the small business issuer's financial condition, changes in financial
condition, revenues and expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.

[The balance of this page has been intentionally left
blank.]

26

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ITEM 7.

FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Board of Directors New Jersey Mining Company

We have audited the accompanying balance sheets of New Jersey
Mining Company (A Development Stage Company) (the Company) as of
December 31, 2007 and 2006, and the related statements of operations and
comprehensive income (loss), changes in stockholders equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, based on our audits, the financial statements
referred to above present fairly, in all material respects, the financial
position of New Jersey Mining Company as of December 31, 2007 and 2006, and the
results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.

DeCoria, Maichel & Teague P.S. /s/ DeCoria, Maichel
& Teague P.S.

Spokane, Washington March 18, 2008

27

---

|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Table of Contents            

|                                                                                           | Page 
|------------------------------------------------------------------------------------------ | -----
|                                                                                           |      
|Balance Sheets, December 31, 2007 and 2006                                                 | 29   
|                                                                                           |      
|Statements of Operations and Comprehensive
      Income (Loss) for the years ended         |      
|December
      31, 2007 and 2006 and from the date of inception on July 18, 1996           |      
|through December 31, 2007 (Unaudited)                                                      | 30   
|                                                                                           |      
|Statement of Changes in Stockholders
      Equity for the years ended December 31,        |      
|2007 and
      2006 and for the period from inception on July 18, 1996 through             |      
|December
      31, 2007 (Unaudited)                                                        | 31-34
|                                                                                           |      
|Statements of Cash Flows for the years ended
      December 31, 2007 and 2006 and from the |      
|date of inception on July 18, 1996 through December 31,
      2007 (Unaudited)             | 35   
|                                                                                           |      
|Notes to Financial Statements                                                              | 36-51

[The balance of this page has been intentionally left
blank.]

28

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Balance Sheets               
|December 31, 2007 and 2006   

|ASSETS                                                                |   |            |   |  
|--------------------------------------------------------------------- | - | ---------- | - | -
|                                                                      |   | 2007       |   |  
|Current assets:                                                       |   |            |   |  
|Cash and cash equivalents                                             | $ | 271,473    |   | $
|Certificates of deposit                                               |   |            |   |  
|Investment in marketable
      equity security at market              |   |            |   |  
|(cost-2007-$6,531, 2006-$7,500)                                       |   | 391,872    |   |  
|Interest receivable                                                   |   | 1,277      |   |  
|Accounts receivable                                                   |   |            |   |  
|Inventory                                                             |   | 89,517     |   |  
|Total current assets                                                  |   | 754,139    |   |  
|                                                                      |   |            |   |  
|Property, plant, and equipment, net of accumulated
      depreciation |   | 1,524,463  |   |  
|Mineral properties, net of accumulated
      amortization             |   | 1,004,444  |   |  
|Reclamation bonds                                                     |   | 126,073    |   |  
|Total assets                                                          | $ | 3,409,119  |   | $
|                                                                      |   |            |   |  
|                                                                      |   |            |   |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                  |   |            |   |  
|                                                                      |   |            |   |  
|Current liabilities:                                                  |   |            |   |  
|Accounts payable                                                      | $ | 63,544     |   | $
|Accrued payroll and related payroll expenses                          |   | 37,730     |   |  
|Obligations under capital
      lease-current portion                 |   | 36,940     |   |  
|Notes payable-current portion                                         |   | 118,046    |   |  
|Total current liabilities                                             |   | 256,260    |   |  
|                                                                      |   |            |   |  
|Accrued reclamation costs                                             |   | 19,800     |   |  
|Obligation under capital lease-non-current                            |   | 46,956     |   |  
|Notes payable-non-current                                             |   | 263,896    |   |  
|Total non-current liabilities                                         |   | 330,652    |   |  
|                                                                      |   |            |   |  
|Total liabilities                                                     |   | 586,912    |   |  
|                                                                      |   |            |   |  
|Commitments and contingencies (Note 9)                                |   |            |   |  
|                                                                      |   |            |   |  
|Stockholders equity:                                                 |   |            |   |  
|Preferred stock, no par value,
      1,000,000 shares                 |   |            |   |  
|authorized;
      no shares issued and outstanding                    |   |            |   |  
|Common stock no par value,
      50,000,000                           |   |            |   |  
|shares
      authorized; 2007-32,291,192 and 2006-                    |   |            |   |  
|27,586,485 shares issued and outstanding                              |   | 6,935,297  |   |  
|Deficit accumulated during the development
      stage                |   | (4,498,431 | ) |  
|Accumulated other
      comprehensive income                          |   |            |   |  
|Unrealized
      gain in marketable equity security                   |   | 385,341    |   |  
|Total stockholders equity                                            |   | 2,822,207  |   |  
|                                                                      |   |            |   |  
|Total liabilities and stockholders equity                            | $ | 3,409,119  |   | $

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

29

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|New Jersey Mining Company                                         
|------------------------------------------------------------------
|(A Development Stage Company)                                     
|Statements of Operations and Comprehensive Income
      (Loss)    
|For the Years Ended December 31, 2007 and
      2006,             
|And from Inception (July 18, 1996) through
      December 31, 2007

|                                                 |   |              |   |   |            |   |   | From Inception    |  
|------------------------------------------------ | - | ------------ | - | - | ---------- | - | - | ----------------- | -
|                                                 |   |              |   |   |            |   |   | (July 18, 1996)   |  
|                                                 |   | December 31, |   |   | Through    |  
|                                                 |   |              |   |   |            |   |   | December 31, 2007 |  
|                                                 |   | 2007         |   |   | 2006       |   |   | (Unaudited)       |  
|Income earned during the development stage:      |   |              |   |   |            |   |   |                   |  
|Sales of gold                                    | $ | 49,447       |   | $ | 40,429     |   | $ | 99,156            |  
|Sales of concentrate                             |   | 50,507       |   |   | 298,648    |   |   | 601,168           |  
|                                                 |   | 99,954       |   |   | 339,077    |   |   | 700,324           |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Costs and expenses:                              |   |              |   |   |            |   |   |                   |  
|Direct production costs                          |   | 189,342      |   |   | 333,549    |   |   | 765,374           |  
|Management                                       |   | 326,807      |   |   | 284,454    |   |   | 975,315           |  
|Exploration                                      |   | 508,139      |   |   | 319,954    |   |   | 1,598,725         |  
|Gain on sale of mineral
      property           |   |              |   |   | (90,000    | ) |   | (90,000           | )
|Depreciation and amortization                    |   | 159,768      |   |   | 122,786    |   |   | 340,344           |  
|General and
      administrative expenses        |   | 434,767      |   |   | 342,780    |   |   | 1,608,959         |  
|Total
      operating expenses                   |   | 1,618,823    |   |   | 1,313,523  |   |   | 5,198,717         |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Other (income) expense:                          |   |              |   |   |            |   |   |                   |  
|Timber sales                                     |   | (487         | ) |   | (2,517     | ) |   | (54,699           | )
|Timber expense                                   |   |              |   |   | 3,317      |   |   | 14,554            |  
|Royalties and other
      income                 |   | (1,889       | ) |   | (5,317     | ) |   | (70,203           | )
|Royalties expense                                |   | 6,541        |   |   | 16,503     |   |   | 33,617            |  
|Gain on sale of
      marketable equity security |   | (70,109      | ) |   |            |   |   | (70,109           | )
|Interest income                                  |   | (26,969      | ) |   | (4,101     | ) |   | (31,071           | )
|Interest expense                                 |   | 27,312       |   |   | 9,271      |   |   | 56,999            |  
|Write-off of goodwill                            |   |              |   |   |            |   |   | 30,950            |  
|Write-off of investment                          |   |              |   |   |            |   |   | 90,000            |  
|Total other
      (income) expense               |   | (65,601      | ) |   | 17,156     |   |   | 38                |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Net loss                                         |   | 1,453,268    |   |   | 991,602    |   |   | 4,498,431         |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Other Comprehensive income:                      |   |              |   |   |            |   |   |                   |  
|Unrealized (gain) loss
      on marketable       |   |              |   |   |            |   |   |                   |  
|equity
      security                            |   | 525,909      |   |   | (911,250   | ) |   | (385,341          | )
|                                                 |   |              |   |   |            |   |   |                   |  
|Comprehensive loss                               | $ | 1,979,177    |   | $ | 80,352     |   | $ | 4,113,090         |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Net loss per common share-basic                  | $ | 0.05         |   | $ | 0.04       |   | $ | 0.26              |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Weighted average common                          |   |              |   |   |            |   |   |                   |  
|shares outstanding-basic                         |   | 30,717,377   |   |   | 26,298,167 |   |   | 17,148,723        |  

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

30

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|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity                                       
|For the Years Ended December 31, 2006, and 2007
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2007
      (unaudited)         

|                                                         |  |              |  |   |             |  |   |                   |   |   | Accum. Other |  |   |               |   |   | Total    |  
|-------------------------------------------------------- |  | ------------ |  | - | ----------- |  | - | ----------------- | - | - | ------------ |  | - | ------------- | - | - | -------- | -
|                                                         |  | Common Stock |  |   | Accumulated |  |   | **Comprehensive** |   |   | Treasury     |  |   | Stockholders' |  
|                                                         |  | Shares       |  |   | Amount      |  |   | Deficit           |   |   | Income       |  |   | Stock         |   |   | Equity   |  
|Issuance of common stock for:                            |  |              |  |   |             |  |   |                   |   |   |              |  |   |               |   |   |          |  
|Assets and liabilities of New
      Jersey Joint Venture |  | 10,000,000   |  | $ | 207,968     |  | $ |                   |   | $ |              |  |   |               |   | $ | 207,968  |  
|Acquisition of Plainview Mining Company                  |  | 1,487,748    |  |   | 148,000     |  |   |                   |   |   |              |  |   |               |   |   | 148,000  |  
|Cash from sales                                          |  | 228,816      |  |   | 110,115     |  |   |                   |   |   |              |  |   |               |   |   | 110,115  |  
|Services                                                 |  | 14,000       |  |   |             |  |   |                   |   |   |              |  |   |               |   |   |          |  
|Net loss                                                 |  |              |  |   |             |  |   | (44,174           | ) |   |              |  |   |               |   |   | (44,174  | )
|Balance, December 31, 1997                               |  | 11,730,564   |  |   | 466,083     |  |   | (44,174           | ) |   |              |  |   |               |   |   | 421,909  |  
|Issuance of common stock for:                            |  |              |  |   |             |  |   |                   |   |   |              |  |   |               |   |   |          |  
|Acquisition of Plainview Mining Company                  |  | 1,512,252    |  |   | 152,000     |  |   |                   |   |   |              |  |   |               |   |   | 152,000  |  
|Cash from sales                                          |  | 117,218      |  |   | 29,753      |  |   |                   |   |   |              |  |   |               |   |   | 29,753   |  
|Services                                                 |  | 18,000       |  |   |             |  |   |                   |   |   |              |  |   |               |   |   |          |  
|Treasury stock acquired with Plainview
      acquisition |  |              |  |   |             |  |   |                   |   |   |              |  | $ | (136,300      | ) |   | (136,300 | )
|Net loss                                                 |  |              |  |   |             |  |   | (30,705           | ) |   |              |  |   |               |   |   | (30,705  | )
|Balance, December 31, 1998                               |  | 13,378,034   |  |   | 647,836     |  |   | (74,879           | ) |   |              |  |   | (136,300      | ) |   | 436,657  |  
|Issuance of common stock for services                    |  | 79,300       |  |   | -           |  |   |                   |   |   |              |  |   |               |   |   |          |  
|Net loss                                                 |  |              |  |   |             |  |   | (23,738           | ) |   |              |  |   |               |   |   | (23,738  | )
|Balance, December 31, 1999                               |  | 13,457,334   |  |   | 647,836     |  |   | (98,617           | ) |   |              |  |   | (136,300      | ) |   | 412,919  |  
|Issuance of common stock for:                            |  |              |  |   |             |  |   |                   |   |   |              |  |   |               |   |   |          |  
|Silver Strand property                                   |  | 50,000       |  |   | 68,750      |  |   |                   |   |   |              |  |   |               |   |   | 68,750   |  
|Services                                                 |  | 62,100       |  |   | 4,313       |  |   |                   |   |   |              |  |   |               |   |   | 4,313    |  
|Net loss                                                 |  |              |  |   |             |  |   | (20,492           | ) |   |              |  |   |               |   |   | (20,492  | )
|Balance, December 31, 2000                               |  | 13,569,434   |  |   | 720,899     |  |   | (119,109          | ) |   |              |  |   | (136,300      | ) |   | 465,490  |  
|Issuance of common stock for:                            |  |              |  |   |             |  |   |                   |   |   |              |  |   |               |   |   |          |  
|Grenfel lease                                            |  | 1,000,000    |  |   | 100,000     |  |   |                   |   |   |              |  |   |               |   |   | 100,000  |  
|Lost Eagle property                                      |  | 50,000       |  |   | 5,000       |  |   |                   |   |   |              |  |   |               |   |   | 5,000    |  
|Roughwater property                                      |  | 255,000      |  |   | 25,500      |  |   |                   |   |   |              |  |   |               |   |   | 25,500   |  
|Services                                                 |  | 68,400       |  |   | 6,840       |  |   |                   |   |   |              |  |   |               |   |   | 6,840    |  
|Net loss                                                 |  |              |  |   |             |  |   | (6,448            | ) |   |              |  |   |               |   |   | (6,448   | )
|Balance, December 31, 2001                               |  | 14,942,834   |  |   | 858,239     |  |   | (125,557          | ) |   |              |  |   | (136,300      | ) |   | 596,382  |  

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

31

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|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity,
      continued:                     
|For the Years Ended December 31, 2006, and 2007
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2007
      (unaudited)         

|                                                           |  |              |   |   |             |   |   |               |   |   | Accum. Other |  |  |               |   |   | Total     |  
|---------------------------------------------------------- |  | ------------ | - | - | ----------- | - | - | ------------- | - | - | ------------ |  |  | ------------- | - | - | --------- | -
|                                                           |  | Common Stock |   |   | Accumulated |   |   | Comprehensive |   |   | Treasury     |  |  | Stockholders' |  
|                                                           |  | Shares       |   |   | Amount      |   |   | Deficit       |   |   | Income       |  |  | Stock         |   |   | Equity    |  
|Balance, December 31, 2001                                 |  | 14,942,834   |   | $ | 858,239     |   | $ | (125,557      | ) | $ | $            |  |  | (136,300      | ) | $ | 596,382   |  
|Issuance of common stock for:                              |  |              |   |   |             |   |   |               |   |   |              |  |  |               |   |   |           |  
|Cash                                                       |  | 1,700,000    |   |   | 255,000     |   |   |               |   |   |              |  |  |               |   |   | 255,000   |  
|Services                                                   |  | 9,835        |   |   | 1,475       |   |   |               |   |   |              |  |  |               |   |   | 1,475     |  
|Directors fees                                            |  | 15,000       |   |   | 2,250       |   |   |               |   |   |              |  |  |               |   |   | 2,250     |  
|Acquisition of Gold Run Gulch Mining Company               |  | 1,916,250    |   |   | 273,954     |   |   |               |   |   |              |  |  |               |   |   | 273,954   |  
|Net loss, as previously reported                           |  |              |   |   |             |   |   | (51,307       | ) |   |              |  |  |               |   |   | (51,307   | )
|Balance, December 31, 2002, as previously reported         |  | 18,583,919   |   |   | 1,390,918   |   |   | (176,864      | ) |   |              |  |  | (136,300      | ) |   | 1,077,754 |  
|Change in accounting for exploration costs                 |  |              |   |   |             |   |   | (9,883        | ) |   |              |  |  |               |   |   | (9,883    | )
|Correction of error in accounting for stock issuance costs |  | (25,500      | ) |   | 25,500      |   |   |               |   |   |              |  |  |               |   |   |           |  
|Balance, December 31, 2002, restated                       |  | 18,583,919   |   |   | 1,365,418   |   |   | (161,247      | ) |   |              |  |  | (136,300      | ) |   | 1,067,871 |  
|Issuance of common stock for:                              |  |              |   |   |             |   |   |               |   |   |              |  |  |               |   |   |           |  
|Exercise of stock purchase
      warrants                  |  | 810,000      |   |   | 200,750     |   |   |               |   |   |              |  |  |               |   |   | 200,750   |  
|Cash, net of issuance costs                                |  | 795,000      |   |   | 318,000     |   |   |               |   |   |              |  |  |               |   |   | 318,000   |  
|Management and directors fees                             |  | 381,200      |   |   | 144,326     |   |   |               |   |   |              |  |  |               |   |   | 144,326   |  
|Equipment                                                  |  | 5,000        |   |   | 3,000       |   |   |               |   |   |              |  |  |               |   |   | 3,000     |  
|Services                                                   |  | 21,915       |   |   | 7,262       |   |   |               |   |   |              |  |  |               |   |   | 7,262     |  
|Exploration lease                                          |  | 20,000       |   |   | 8,000       |   |   |               |   |   |              |  |  |               |   |   | 8,000     |  
|Treasury stock cancelled                                   |  | (1,947,144   | ) |   | (136,300    | ) |   |               |   |   |              |  |  | 136,300       |   |   |           |  
|Net loss                                                   |  |              |   |   |             |   |   | (379,274      | ) |   |              |  |  |               |   |   | (379,274  | )
|Balance, December 31, 2003                                 |  | 18,669,890   |   |   | 1,910,456   |   |   | (540,521      | ) |   |              |  |  |               |   |   | 1,369,935 |  
|Issuance of common stock for:                              |  |              |   |   |             |   |   |               |   |   |              |  |  |               |   |   |           |  
|Exercise of stock purchase
      warrants                  |  | 1,437,500    |   |   | 398,750     |   |   |               |   |   |              |  |  |               |   |   | 398,750   |  
|Cash                                                       |  | 1,184,550    |   |   | 511,440     |   |   |               |   |   |              |  |  |               |   |   | 511,440   |  
|Management and directors fees                             |  | 153,460      |   |   | 102,273     |   |   |               |   |   |              |  |  |               |   |   | 102,273   |  
|Equipment                                                  |  | 28,650       |   |   | 16,476      |   |   |               |   |   |              |  |  |               |   |   | 16,476    |  
|Services                                                   |  | 26,750       |   |   | 14,550      |   |   |               |   |   |              |  |  |               |   |   | 14,550    |  
|Exploration lease                                          |  | 20,000       |   |   | 12,000      |   |   |               |   |   |              |  |  |               |   |   | 12,000    |  
|Net loss                                                   |  |              |   |   |             |   |   | (922,555      | ) |   |              |  |  |               |   |   | (922,555  | )
|Balance, December 31, 2004                                 |  | 21,520,800   |   |   | 2,965,945   |   |   | (1,463,076    | ) |   |              |  |  |               |   |   | 1,502,869 |  

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

32

---

|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity,
      continued:                     
|For the Years Ended December 31, 2006, and 2007
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2007
      (unaudited)         

|                                                    |  |              |  |   |             |  |   |               |   |   | Accum. Other |  |   |               |  |   | Total     |  
|--------------------------------------------------- |  | ------------ |  | - | ----------- |  | - | ------------- | - | - | ------------ |  | - | ------------- |  | - | --------- | -
|                                                    |  | Common Stock |  |   | Accumulated |  |   | Comprehensive |   |   | Treasury     |  |   | Stockholders' | 
|                                                    |  | Shares       |  |   | Amount      |  |   | Deficit       |   |   | Income       |  |   | Stock         |  |   | Equity    |  
|Balance, December 31, 2004                          |  | 21,520,800   |  | $ | 2,965,945   |  | $ | (1,463,076    | ) | $ |              |  | $ |               |  | $ | 1,502,869 |  
|Issuance of common stock for:                       |  |              |  |   |             |  |   |               |   |   |              |  |   |               |  |   |           |  
|Cash                                                |  | 309,100      |  |   | 125,000     |  |   |               |   |   |              |  |   |               |  |   | 125,000   |  
|Exercise of stock purchase warrants                 |  | 195,250      |  |   | 78,100      |  |   |               |   |   |              |  |   |               |  |   | 78,100    |  
|Management and directors fees                      |  | 334,275      |  |   | 132,725     |  |   |               |   |   |              |  |   |               |  |   | 132,725   |  
|Services                                            |  | 82,170       |  |   | 37,826      |  |   |               |   |   |              |  |   |               |  |   | 37,826    |  
|Exploration and lease                               |  | 149,400      |  |   | 74,321      |  |   |               |   |   |              |  |   |               |  |   | 74,321    |  
|Equipment                                           |  | 11,500       |  |   | 4,700       |  |   |               |   |   |              |  |   |               |  |   | 4,700     |  
|Value of shares issued in prior years               |  |              |  |   | 24,050      |  |   |               |   |   |              |  |   |               |  |   | 24,050    |  
|Net loss                                            |  |              |  |   |             |  |   | (590,485      | ) |   |              |  |   |               |  |   | (590,485  | )
|Balance, December 31, 2005                          |  | 22,602,495   |  |   | 3,442,667   |  |   | (2,053,561    | ) |   |              |  |   |               |  |   | 1,389,106 |  
|Issuance of common stock for:                       |  |              |  |   |             |  |   |               |   |   |              |  |   |               |  |   |           |  
|Cash                                                |  | 4,521,250    |  |   | 1,368,500   |  |   |               |   |   |              |  |   |               |  |   | 1,368,500 |  
|Management and directors fees                      |  | 236,480      |  |   | 127,063     |  |   |               |   |   |              |  |   |               |  |   | 127,063   |  
|Services                                            |  | 162,860      |  |   | 56,137      |  |   |               |   |   |              |  |   |               |  |   | 56,137    |  
|Exploration                                         |  | 10,000       |  |   | 5,750       |  |   |               |   |   |              |  |   |               |  |   | 5,750     |  
|Lease                                               |  | 30,000       |  |   | 15,000      |  |   |               |   |   |              |  |   |               |  |   | 15,000    |  
|Equipment                                           |  | 23,400       |  |   | 12,200      |  |   |               |   |   |              |  |   |               |  |   | 12,200    |  
|Unrealized gain in marketable equity
      security |  |              |  |   |             |  |   |               |   |   | 911,250      |  |   |               |  |   | 911,250   |  
|Net loss                                            |  |              |  |   |             |  |   | (991,602      | ) |   |              |  |   |               |  |   | (991,602  | )
|Balance, December 31, 2006                          |  | 27,586,485   |  |   | 5,027,317   |  |   | (3,045,163    | ) |   | 911,250      |  |   | 0             |  |   | 2,893,404 |  

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

33

---

|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity,
      continued:                     
|For the Years Ended December 31, 2006, and 2007
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2007
      (unaudited)         

|                                                           |  |              |  |   |             |  |   |               |   |   | Accum. Other |   |   |               |  |   | Total      |  
|---------------------------------------------------------- |  | ------------ |  | - | ----------- |  | - | ------------- | - | - | ------------ | - | - | ------------- |  | - | ---------- | -
|                                                           |  | Common Stock |  |   | Accumulated |  |   | Comprehensive |   |   | Treasury     |   |   | Stockholders' | 
|                                                           |  | Shares       |  |   | Amount      |  |   | Deficit       |   |   | Income       |   |   | Stock         |  |   | Equity     |  
|                                                           |  |              |  |   |             |  |   |               |   |   |              |   |   |               |  |   |            |  
|                                                           |  |              |  |   |             |  |   |               |   |   |              |   |   |               |  |   |            |  
|Balance, December 31, 2006                                 |  | 27,586,485   |  | $ | 5,027,317   |  | $ | (3,045,163    | ) | $ | 911,250      |   | $ | 0             |  | $ | 2,893,404  |  
|Issuance of common stock for:                              |  |              |  |   |             |  |   |               |   |   |              |   |   |               |  |   |            |  
|Cash                                                       |  | 4,014,761    |  |   | 1,533,319   |  |   |               |   |   |              |   |   |               |  |   | 1,533,319  |  
|Exercise of warrants                                       |  | 200,000      |  |   | 120,000     |  |   |               |   |   |              |   |   |               |  |   | 120,000    |  
|Management and directors fees                              |  | 274,386      |  |   | 142,500     |  |   |               |   |   |              |   |   |               |  |   | 142,500    |  
|Services                                                   |  | 52,104       |  |   | 27,157      |  |   |               |   |   |              |   |   |               |  |   | 27,157     |  
|Exploration                                                |  | 52,200       |  |   | 32,560      |  |   |               |   |   |              |   |   |               |  |   | 32,560     |  
|Mineral property agreement                                 |  | 60,000       |  |   | 30,000      |  |   |               |   |   |              |   |   |               |  |   | 30,000     |  
|Buildings and equipment                                    |  | 20,756       |  |   | 10,239      |  |   |               |   |   |              |   |   |               |  |   | 10,239     |  
|Accounts payable                                           |  | 30,500       |  |   | 12,205      |  |   |               |   |   |              |   |   |               |  |   | 12,205     |  
|Unrealized gain (loss) in marketable equity
      security |  |              |  |   |             |  |   |               |   |   | (525,909     | ) |   |               |  |   | (525,909   | )
|Net loss                                                   |  |              |  |   |             |  |   | (1,453,268    | ) |   |              |   |   |               |  |   | (1,453,268 | )
|Balance, December 31, 2007                                 |  | 32,291,192   |  | $ | 6,935,297   |  | $ | (4,498,431    | ) | $ | 385,341      |   | $ | 0             |  | $ | 2,822,207  |  

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

34

---

|New Jersey Mining Company                                         
|------------------------------------------------------------------
|(A Development Stage Company)                                     
|Statements of Cash Flows                                          
|For the Years Ended December 31, 2007 and 2006,                   
|And from Inception (July 18, 1996) through December 31,
      2006

|                                                               |   |              |   |   |                 |   |   | From Inception    |  
|-------------------------------------------------------------- | - | ------------ | - | - | --------------- | - | - | ----------------- | -
|                                                               |   | Years Ended  |   |   | (July 18, 1996) |  
|                                                               |   | December 31, |   |   | through         |  
|                                                               |   |              |   |   |                 |   |   | December 31, 2007 |  
|                                                               |   | 2007         |   |   | 2006            |   |   | (Unaudited)       |  
|Cash flows from operating activities:                          |   |              |   |   |                 |   |   |                   |  
|Net loss                                                       | $ | (1,453,268   | ) | $ | (991,602        | ) | $ | (4,498,431        | )
|Adjustments to reconcile net loss to
      net cash            |   |              |   |   |                 |   |   |                   |  
|used
      by operating activities:                            |   |              |   |   |                 |   |   |                   |  
|Depreciation and amortization                                  |   | 159,768      |   |   | 122,785         |   |   | 340,343           |  
|Write-off of equipment                                         |   |              |   |   |                 |   |   | 11,272            |  
|Write-off
      of goodwill and investment                     |   |              |   |   |                 |   |   | 120,950           |  
|Gain on sale of mineral property                               |   |              |   |   | (90,000         | ) |   | (90,000           | )
|Gain on
      sale of marketable equity securities             |   | (70,109      | ) |   |                 |   |   | (70,109           | )
|Stock issued for:                                              |   |              |   |   |                 |   |   |                   |  
|Management
      and directors fees                           |   | 142,500      |   |   | 127,063         |   |   | 667,037           |  
|Services and other                                             |   | 27,157       |   |   | 56,137          |   |   | 161,311           |  
|Exploration                                                    |   | 32,560       |   |   | 5,750           |   |   | 68,881            |  
|Mineral property agreement                                     |   | 15,000       |   |   |                 |   |   | 15,000            |  
|Change in:                                                     |   |              |   |   |                 |   |   |                   |  
|Inventories                                                    |   | 42,569       |   |   | (63,276         | ) |   | (89,517           | )
|Accounts
      receivable                                      |   | 13,628       |   |   | (13,628         | ) |   |                   |  
|Interest Receivable                                            |   | (1,277       | ) |   |                 |   |   | (1,277            | )
|Other
      assets                                             |   |              |   |   | (2,500          | ) |   | (778              | )
|Accounts payable                                               |   | (36,884      | ) |   | 15,362          |   |   | 72,779            |  
|Accrued
      payroll and related payroll expense              |   | 6,209        |   |   | 22,520          |   |   | 37,730            |  
|Accrued reclamation costs                                      |   | 1,800        |   |   | 5,500           |   |   | 19,800            |  
|Net cash used by operating activities                          |   | (1,120,347   | ) |   | (805,889        | ) |   | (3,235,009        | )
|Cash flows from investing activities:                          |   |              |   |   |                 |   |   |                   |  
|Purchases of property, plant, and
      equipment              |   | (195,992     | ) |   | (384,972        | ) |   | (977,932          | )
|Purchase of mineral
      property                             |   | (4,500       | ) |   | (4,500          | ) |   | (14,904           | )
|Proceeds from sale of mineral property                         |   |              |   |   | 120,000         |   |   | 120,000           |  
|Purchase of reclamation
      bonds                            |   | (123,573     | ) |   |                 |   |   | (126,073          | )
|Purchase of certificates of deposits                           |   |              |   |   | (200,000        | ) |   | (200,000          | )
|Proceeds from sales of
      certificates of deposits          |   | 200,000      |   |   |                 |   |   | 200,000           |  
|Purchase of marketable equity security                         |   |              |   |   | (7,500          | ) |   | (7,500            | )
|Proceeds from sales of
      marketable equity securities      |   | 71,078       |   |   |                 |   |   | 71,078            |  
|Cash of acquired companies                                     |   |              |   |   |                 |   |   | 38,269            |  
|Deferral of development
      costs                            |   | (190,567     | ) |   |                 |   |   | (416,102          | )
|Net cash used by investing activities                          |   | (243,554     | ) |   | (476,972        | ) |   | (1,313,164        | )
|Cash flows from financing activities:                          |   |              |   |   |                 |   |   |                   |  
|Exercise of stock purchase warrants                            |   | 120,000      |   |   |                 |   |   | 797,600           |  
|Sales of common stock,
      net of issuance costs             |   | 1,533,319    |   |   | 1,368,500       |   |   | 4,225,626         |  
|Principal payments on capital lease                            |   | (35,473      | ) |   | (21,286         | ) |   | (119,892          | )
|Principal payments on
      notes payable                      |   | (59,293      | ) |   | (4,395          | ) |   | (83,688           | )
|Net cash
      provided by financing activities                |   | 1,558,553    |   |   | 1,342,819       |   |   | 4,819,646         |  
|Net change in cash and cash equivalents                        |   | 194,652      |   |   | 59,958          |   |   | 271,473           |  
|Cash and cash equivalents, beginning of period                 |   | 76,821       |   |   | 16,863          |   |   | 0                 |  
|Cash and cash equivalents, end of period                       | $ | 271,473      |   | $ | 76,821          |   | $ | 271,473           |  
|Supplemental disclosure of cash flow information               |   |              |   |   |                 |   |   |                   |  
|Interest paid in cash                                          | $ | 27,311       |   | $ | 9,766           |   | $ | 47,635            |  
|Non-cash investing and financing activities:                   |   |              |   |   |                 |   |   |                   |  
|Common stock issued
      for:                                 |   |              |   |   |                 |   |   |                   |  
|Property,
      plant, and equipment                           | $ | 10,239       |   | $ | 12,200          |   | $ | 44,765            |  
|Mineral properties                                             | $ | 15,000       |   | $ | 15,000          |   | $ | 294,300           |  
|Payment of
      accounts payable                              | $ | 12,205       |   |   |                 |   | $ | 12,205            |  
|Acquisitions of companies, excluding cash                      |   |              |   |   |                 |   | $ | 743,653           |  
|Capital lease obligation incurred for
      equipment acquired |   |              |   | $ | 67,828          |   | $ | 178,588           |  
|Notes payable for
      property and equipment acquired        | $ | 401,112      |   | $ | 45,287          |   | $ | 446,399           |  

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

35

---

|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

1. Description of Business

New Jersey Mining Company (the Company) was incorporated as
an Idaho corporation on July 18, 1996. The Company's primary business is
exploring for and developing gold, silver and base metal mineral resources in
the Greater Coeur dAlene Mining District of North Idaho and extending into
Western Montana.

The Company has started minor production from high grade
reserves located near the surface with the strategy to generate cash to be used
for additional exploration to discover major mineral resources on its
properties. The Company has not yet developed sufficient reserves to justify
investment in a major mine, thus it remains in the development stage.

2. Summary of Significant Accounting Policies

Development Stage Enterprise

The Company's financial statements are prepared pursuant to the
provisions of Statement of Financial Accounting Standards (SFAS) No. 7,
Accounting for Development Stage Enterprises, as it devotes substantially all
of its efforts to acquiring and developing mining interests that will eventually
provide sufficient net profits to sustain the Companys existence. Until such
interests are engaged in major commercial production, the Company will continue
to prepare its financial statements and related disclosures in accordance with
entities in the development stage.

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

Revenue Recognition

As a development stage company our revenue from operations is
referred to as income earned during the development stage. Revenue is recognized
when title and risk of ownership of metals or metal bearing concentrate have
passed and collection is reasonably assured. Revenue from the sale of metals may
be subject to adjustment upon final settlement of estimated metal prices,
weights and assays, and are recorded as adjustments to revenue in the period of
final settlement of prices, weights and assays; such adjustments are typically
not material in relation to the initial invoice amounts.

Inventory

Dore' and process inventories are stated at the lower of
average cost incurred or net realizable value.

Timber Sales

Revenue from harvest of raw timber is recognized when a
contract has been established, the timber has been shipped, and payment is
deemed probable. These sales of timber found on the Companys mineral properties
are not a part of normal operations.

36

---

|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

2. Summary of Significant Accounting Policies,
continued:

Income Taxes

Income taxes are accounted for under the liability method.
Under this method deferred income tax liabilities or assets at the end of each
period are determined using the tax rate expected to be in effect when the taxes
are expected to be paid or recovered. A valuation allowance is recorded to
reduce the deferred tax assets, if there is uncertainty regarding their
realization.

On January 1, 2007, the Company adopted Financial Accounting
Standards Board Interpretation No. 48 (FIN No. 48) Accounting for Uncertainty
in Income Taxes. FIN No. 48 clarifies the accounting for uncertainty in income
taxes recognized in accordance with SFAS No. 109 Accounting for Income Taxes,
prescribing a recognition threshold and measurement attribute for the
recognition and measurement of a tax position taken or expected to be taken in a
tax return. In the course of the assessment, the Company determined that we
could be subject to examination of income tax filings in the United States and
state jurisdictions for the 2004 through 2006 tax years. In the event that the
Company is assessed penalties and or interest, penalties will be charged to
other operating expense and interest will be charged to interest expense.

The Company adopted FIN No. 48 using the modified prospective
transition method, which requires the application of the accounting standard as
of January 1, 2007. There was no impact on the financial statements for the year
ended December 31, 2007 as a result of the adoption of FIN No. 48. In accordance
with the modified prospective transition method, the financial statements for
prior periods have not been restated to reflect, and do not include, the impact
of FIN No. 48.

Fair Values of Financial Instruments

The carrying amounts of financial instruments including cash
and cash equivalents, receivables, reclamation bonds, investment in marketable
equity securities, accounts payable, obligations under capital lease and notes
payable are approximated at their fair values as of December 31, 2007 and
2006.

Investment in Marketable Equity Security

In compliance with Statement of Financial Accountings Standards
No. 115, Accounting for Certain Investments in Debt and Equity Securities
(SFAS 115), marketable equity securities are classified as available for sale
and are valued at the market price, including securities for which sale is
restricted for a period less than one year. Realized gains and losses on the
sale of securities are recognized on a specific identification basis. Unrealized
gains and losses are included as a component of accumulated other comprehensive
income (loss), unless a permanent impairment in value has occurred, which would
then be charged to current period net income (loss).

37

---

|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

2. Summary of Significant Accounting Policies,
continued:

Net Loss Per Share

Net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding during the year. Diluted
net loss per share reflects the potential dilution that could occur from common
shares issuable through stock options, warrants, and other convertible
securities. For the years ended December 31, 2007 and 2006, the effect of the
Companys potential issuance of shares from the exercise of warrants would have
been anti-dilutive. Accordingly, only basic net loss per share has been
presented. Outstanding warrants are discussed in detail in note 7 of the
financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform
to the 2007 financial statement presentation. These reclassifications have no
effect on net loss as previously reported.

Cash Equivalents

The Company considers cash in banks and other deposits with an
original maturity of three months or less, that can be liquidated without prior
notice or penalty, to be cash and cash equivalents.

Buildings and Equipment

Buildings and equipment are stated at the lower of cost or
estimated net realizable value. Depreciation and amortization is based on the
estimated useful lives of the assets and is computed using straight-line and
units-of-production methods. The expected useful life of most of the Companys
buildings is up to 50 years and equipment life expectancy ranges between two and
ten years. When assets are retired or sold, the costs and related allowances for
depreciation and amortization are eliminated from the accounts and any resulting
gain or loss is reflected in operations.

Mineral Properties

Significant payments related to the acquisition of mineral
properties, mineral rights, and mineral leases are capitalized.

If a commercially mineable ore body is discovered, such costs
are amortized when production begins using the units-of-production method based
on proven and probable reserves. If no commercially mineable ore body is
discovered, or such rights are otherwise determined to have no value, such costs
are expensed in the period in which it is determined the property has no future
economic value.

Mine Exploration and Development Costs

The Company records exploration costs as such in the period
they occur. Mine development costs are capitalized as deferred development costs
after proven and probable reserves have been identified. Amortization is
calculated using the units-of-production method over the expected life of the
operation based on the estimated recoverable mineral ounces.

38

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

2. Summary of Significant Accounting Policies,
continued:

Property Evaluations

Annually, or more frequently as circumstances require, the
Company evaluates the carrying amounts of its mineral properties, including
deferred development costs, to assess whether such amounts are recoverable.
Estimated undiscounted future net cash flows from each mineral property are
calculated using estimated future production, three year average metals prices,
operating capital and costs, and reclamations costs. All numbers used in the
carrying value analyses are calculated using 2007 cost of dollars. Additionally,
in 2006, an operational certainty factor (OCF) calculation and comparative
sales evaluation were introduced. The OCF considers risk factors that may be
encountered in bringing a mineral property into production. The risk factors
include the probability of: acquiring necessary permits, certainty of tonnage
and grade, and technical and operating problems. The comparative sales analysis
estimates future value based upon a comparison of known reserves and sales
prices for comparable properties. An impairment loss is recognized when the
estimated future cash flows (undiscounted and without interest) expected to
result from the use of an asset are less than the carrying amount of the asset.
The Companys estimates of future cash flows are subject to risks and
uncertainties. It is reasonably possible that changes in estimates could occur
which may affect the expected recoverability of the Companys investments in
mineral properties.

Asset Retirement Obligations (ARO) and Remediation
Costs

The Companys mineral properties have been, and are subject to,
standards for mine reclamation that have been established by various
governmental agencies. The Company records a liability for the present value of
estimated environmental remediation costs and the related asset created with it.
The liability will be accreted and the asset will be depreciated over the life
of the related assets. Adjustments for changes resulting from the passage of
time and changes to either the timing or amount of the original present value
estimate underlying the obligation will be made. If there is a current
impairment of an assets carrying value and a decision is made to permanently
close the property, changes to the liability will be recognized currently and
charged to the provision for closed operations and environmental matters.

For non-operating properties, the Company accrues costs
associated with environmental remediation obligations when it is probable that
such costs will be incurred and they are reasonably estimable. Accruals for
estimated losses from environmental remediation obligations have historically
been recognized no later than completion of the remedial feasibility study for
such facility and are charged to provision for closed operations and
environmental matters. Costs of future expenditures for environmental
remediation are not discounted to their present value unless subject to a
contractually obligated fixed payment schedule. Such costs are based on
managements estimate of amounts expected to be incurred when the remediation
work is to be performed within current laws and regulations. Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed probable. It is reasonably possible that, due to
uncertainties associated with defining the nature and extent of environmental
contamination and the application of laws and regulations by regulatory
authorities and changes in reclamation or remediation technology, the ultimate
cost of reclamation and remediation could change in the future. The Company
periodically reviews accrued liabilities for such reclamation and remediation
costs as evidence becomes available indicating that its liabilities have
potentially changed.

39

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

2. Summary of Significant Accounting Policies,
continued:

Reclamation Bonds

Various laws and permits require that financial assurances be
in place for certain environmental and reclamation obligations and other
potential liabilities. The reclamation bond balance at December 31, 2007,
represents an investment in U.S. government agency bonds. The bonds are
restricted to ensure that reclamation is performed at certain properties where
the Company is conducting mining and exploration activities.

Share Based Compensation or Payments

All transactions in which goods or services are received for
the issuance of shares of the Companys common stock are accounted for based on
the fair value of the consideration received or the fair value of the common
stock issued, whichever is more reliably measurable as defined by SFAS No.
123(R).

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157 Fair Value
Measurements, which will become effective for us beginning January 1, 2008.
SFAS No. 157 defines fair value, establishes a framework for measuring fair
value and expands the related disclosure requirements. We are currently
evaluating the potential impact of this statement on our financial statements
and at this time we do not anticipate a material effect.

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities which establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities. The standard requires companies to provide additional
information that will help investors and other users of financial statements to
more easily understand the effect of the companys choice to use fair value on
its earnings. It also requires entities to display the fair value of those
assets and liabilities for which the company has chosen to use fair value on the
face of the balance sheet. This Statement will become effective for us beginning
January 1, 2008. The Company is currently evaluating the potential impact of
this statement on the financial statements and at this time does not anticipate
a material effect.

In December 2007, the FASB issued SFAS No. 141(R), Business
Combinations, or SFAS 141(R), which replaces SFAS 141. SFAS 141( R ) establishes
principles and requirements for how an acquirer in a business combination
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any controlling interest; recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase; and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141(R) is to be applied prospectively to business
combinations for which the acquisition date is on or after the entity's fiscal
year that begins after December 15, 2008. The Company will assess the impact of
SFAS 141(R) if, and when, a future acquisition occurs.

40

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

2. Summary of Significant Accounting Policies,
continued:

Recent Accounting Pronouncements; continued:

In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements-an amendment of
ARB No. 51, or SFAS 160. SFAS 160 establishes new accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. Specifically, this statement requires the
recognition of a noncontrolling interest (minority interest) as equity in the
consolidated financial statements and separate from the parent's equity. The
amount of net income attributable to the noncontrolling interest will be
included in consolidated net income on the face of the income statement. SFAS
160 clarifies that changes in a parent's ownership interest in a subsidiary that
do not result in deconsolidation are equity transactions if the parent retains
its controlling financial interest. In addition, this statement requires that a
parent recognize a gain or loss in net income when a subsidiary is
deconsolidated. Such gain or loss will be measured using the fair value of the
noncontrolling equity investment on the deconsolidation date. SFAS 160 also
includes expanded disclosure requirements regarding the interests of the parent
and its noncontrolling interest. SFAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. The Company does not have consolidated
financial statements, so does not anticipate any impact on its financial
statements from the adoption of SFAS 160.

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41

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

3. Buildings and Equipment

Buildings and equipment at December 31, 2007 and 2006, consisted
  of the following:

|                                    |   | 2007      |   |   | 2006      |  
|----------------------------------- | - | --------- | - | - | --------- | -
|Mill building at cost               | $ | 128,566   |   | $ | 128,566   |  
|Milling equipment at cost           |   | 981,402   |   |   | 844,877   |  
|Less accumulated
      depreciation |   | (62,702   | ) |   | (46,959   | )
|Total mill                          | $ | 1,047,266 |   | $ | 926,484   |  
|                                    |   |           |   |   |           |  
|Building and equipment at cost      |   | 657,041   |   |   | 186,992   |  
|Less accumulated
      depreciation |   | (179,844  | ) |   | (52,412   | )
|Total building and equipment        |   | 477,197   |   |   | 134,580   |  
|Total                               | $ | 1,524,463 |   | $ | 1,061,064 |  

For both years ending December 31, 2007 and 2006, milling and
  other equipment included assets under capital lease amounting to $150,254. The
  leases have been amortized over the terms of the respective lease. Accumulated
  amortization at December 31, 2007 and 2006 was $66,999 and $36,573, respectively.
  At December 31, 2007, the estimated future minimum lease payments under capital
  leases were as follows:

|Year                                            |   |         |  
|----------------------------------------------- | - | ------- | -
|2008                                            | $ | 44,922  |  
|2009                                            |   | 30,532  |  
|2010                                            |   | 11,812  |  
|2011                                            |   | 11,048  |  
|Total                                           |   | 98,314  |  
|Less: Amounts representing interest costs       |   | (14,418 | )
|Net present values                              |   | 83,896  |  
|Less: Capital lease obligations-current portion |   | (36,940 | )
|Long-term capital lease obligations             | $ | 46,956  |  

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42

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

4. Notes Payable

At December 31, 2007 and 2006, notes payable consisting of
equipment and property are as follows.

|                                                                             |   | 2007    |  |   | 2006   | 
|---------------------------------------------------------------------------- | - | ------- |  | - | ------ | 
|Dodge pick-up 60 month note payable, 0.00% interest rate;                    |   |         |  |   |        | 
|collateralized by pick-up, monthly payments
      of $557                    | $ | 22,842  |  | $ | 29,527 | 
|Hagby Diamond Drill 48 month note payable, 8.00% interest
      rate         |   |         |  |   |        | 
|payable monthly, collateralized by drill,
      monthly payments of          |   |         |  |   |        | 
|$4,093                                                                       |   | 149,520 |  |   |        | 
|Ingersoll Rand Compressor 36 month note
      payable, 4.90% interest        |   |         |  |   |        | 
|rate payable monthly, collateralized by compressor, monthly                  |   |         |  |   |        | 
|payments of $670                                                             |   | 15,885  |  |   |        | 
|Caterpillar 305 Excavator 48 month note payable, 7.81%
      interest        |   |         |  |   |        | 
|rate payable monthly, collateralized by
      excavator, monthly             |   |         |  |   |        | 
|payments of $956                                                             |   | 34,302  |  |   |        | 
|Kubota 5700 Tractor 36 month note payable,
      0.00% interest rate,        |   |         |  |   |        | 
|collateralized by tractor, monthly payments of $674                          |   | 19,543  |  |   |        | 
|Property with shop 36 month note payable,
      0.25% plus prime             |   |         |  |   |        | 
|variable interest rate paid monthly, full principal of note
      due in one |   |         |  |   |        | 
|payment at end of term, monthly payments
      vary depending upon           |   |         |  |   |        | 
|interest rate                                                                |   | 60,000  |  |   |        | 
|Eimco Secoma Drill 24 month note payable,
      12.76% interest rate         |   |         |  |   |        | 
|payable monthly, monthly payments of $4,150                                  |   | 74,414  |  |   |        | 
|Kubota RTV 36 month note payable, 0.00%
      interest rate;                 |   |         |  |   |        | 
|collateralized by equipment, monthly payments of $494                        |   | 5,436   |  |   | 11,366 | 
|                                                                             |   |         |  |   |        | 
|Total equipment notes payable                                                |   | 381,942 |  |   | 40,893 | 
|Due within one year                                                          |   | 118,046 |  |   | 12,615 | 
|Due after one year                                                           | $ | 263,896 |  | $ | 28,278 | 

Maturities of long term debt outstanding at December 31, 2007
are as follows: $105,838 in 2009, $127,515 in 2010, and $30,543 in 2011.

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43

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

5. Mineral Properties

Mineral properties and deferred development costs are as
follows:

|                 |   |            |   |   | December 31, 2007 |   |   |           |  
|---------------- | - | ---------- | - | - | ----------------- | - | - | --------- | -
|                 |   |            |   |   | Deferred          |   |   |           |  
|                 |   | Properties |   |   | Development       |   |   | Total     |  
|New Jersey Mine  |   |            |   |   |                   |   |   |           |  
|Grenfel/Coleman  | $ | 365,000    |   | $ | 233,451           |   | $ | 598,451   |  
|Golden Chest     |   | 65,000     |   |   | 236,286           |   |   | 301,287   |  
|Silver Strand    |   | 74,704     |   |   | 58,300            |   |   | 133,004   |  
|Roughwater       |   | 25,500     |   |   |                   |   |   | 25,500    |  
|Lost Eagle       |   | 5,000      |   |   |                   |   |   | 5,000     |  
|Revett Niagara   |   | 19,500     |   |   |                   |   |   | 19,500    |  
|Copper Camp      |   | 19,500     |   |   |                   |   |   | 19,500    |  
|Less Accumulated |   |            |   |   |                   |   |   |           |  
|Amortization     |   | (55,954    | ) |   | (41,844           | ) |   | (97,798   | )
|Total            | $ | 518,250    |   | $ | 486,193           |   | $ | 1,004,444 |  
|                 |   |            |   |   |                   |   |   |           |  
|                 |   |            |   |   | December 31, 2006 |   |   |           |  
|                 |   |            |   |   | Deferred          |   |   |           |  
|                 |   | Properties |   |   | Development       |   |   | Total     |  
|New Jersey Mine  |   |            |   |   |                   |   |   |           |  
|Grenfel/Coleman  | $ | 365,000    |   | $ | 233,451           |   | $ | 598,451   |  
|Golden Chest     |   | 65,000     |   |   | 45,718            |   |   | 110,718   |  
|Silver Strand    |   | 74,704     |   |   | 58,300            |   |   | 133,004   |  
|Roughwater       |   | 25,500     |   |   |                   |   |   | 25,500    |  
|Lost Eagle       |   | 5,000      |   |   |                   |   |   | 5,000     |  
|Revett Niagara   |   | 19,500     |   |   |                   |   |   | 19,500    |  
|Less Accumulated |   |            |   |   |                   |   |   |           |  
|Amortization     |   | (47,467    | ) |   | (33,736           | ) |   | (81,203   | )
|Total            | $ | 507,237    |   | $ | 303,733           |   | $ | 810,970   |  

Grenfel

The Company's Grenfel property is a leasehold interest covering
the mineral rights of 68 acres located at the New Jersey Mine area of interest.
The lease was acquired from Mine Systems Design ("MSD") in 2001 in exchange for
1,000,000 shares of the Companys common stock. The 1,000,000 shares were valued
at $0.10 per share, which approximated the market price for the restricted
common stock on the date of the lease. MSD is also a major shareholder of the
Company and is owned by Fred Brackebusch and Grant Brackebusch, officers and
directors of the Company. The lease has a fifteen year term, and includes a 3%
net smelter return (NSR) royalty that will be paid to MSD on any production
achieved from the property.

44

---

|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

5. Mineral Properties, continued:

Coleman

The Coleman property is located at the New Jersey Mine area of
interest and consists of 62 acres of patented mining claims, mineral rights to
108 acres of fee land, and approximately 130 acres of unpatented mining claims.
The Coleman property was acquired in October 2002, with the acquisition of Gold
Run Gulch Mining Company.

Silver Strand

The Silver Strand mine consists of 15 unpatented claims and was
acquired from Trend Mining Company (Trend) in 2000. The property was purchased
in exchange for 50,000 shares of the Companys common stock and a 1.5% NSR
royalty initially capped at $50,000 and then decreasing to 0.5% . In July of
2001, MSD assumed Trends position in the agreement, and retained the NSR
royalty interest.

Niagara Project

The Company signed an exploration agreement with Revett Metals
Associates (RMA) in December 2006. The exploration agreement has a term of
five years, beginning on December 2, 2006, and is for nine unpatented claims
that cover the deposit. In addition, the exploration agreement covers an area of
mutual interest within 1⁄2 mile of the property excluding properties which are
valued primarily for their gold mineralization. Upon signing the agreement, the
Company issued 30,000 shares of restricted common stock valued at $0.50 to RMA
and paid $4,500. At each anniversary of the signing, the Company has agreed to
pay $3,000 and issue 30,000 shares of restricted common stock to RMA. Any time
prior to the expiration of the exploration agreement, the Company can exercise
an option to convert the exploration agreement to a mining agreement. If
exercised, the mining agreement would have a term of 25 years, and the Company
would pay a NSR royalty to RMA of 3.0% on ores or concentrates mined on the
property. The Company is granted the option to purchase 90% of the NSR royalty
from RMA for $2,500,000 which would leave a remaining royalty of 0.3% .

Copper Camp

The Company signed an exploration agreement with RMA in
November 2007. The exploration agreement has a term of five years, beginning on
November 28, 2007, and is for nine unpatented claims that cover the prospect. In
addition, the exploration agreement covers an area of mutual interest within 1⁄2
mile of the property, excluding properties which are valued primarily for their
gold mineralization. Upon signing the agreement, the Company issued 30,000
shares of restricted common stock valued at $0.50 to RMA and paid $4,500. At
each anniversary of the signing, the Company has agreed to pay $3,000 and issue
30,000 shares of restricted common stock to RMA. Any time prior to the
expiration of the exploration agreement, the Company can exercise an option to
convert the exploration agreement to a mining agreement. If exercised, the
mining agreement would have a term of 25 years, and the Company would pay a NSR
royalty to RMA of 3.0% on ores or concentrates mined on the property. The
Company is granted the option to purchase 90% of the NSR royalty from RMA for
$2,500,000 which would leave a remaining royalty of 0.3% .

45

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

5. Mineral Properties, continued

Roughwater/Silver Button

The Silver Button claim is the remaining property of the ten
claims acquired from Roughwater Mining Company. During 2005, the other nine
Roughwater unpatented claims were dropped. In 2001, the Company purchased the
property through the issuance of 255,000 shares of its common stock to
Roughwater Mining Company. The shares were valued at $0.10 per share, for a
total acquisition cost of $25,500.

Lost Eagle

Lost Eagle is a gold and silver exploration project consisting
of five claims covering 100 acres of federal land administered by the U.S.
Forest Service. In 2001, the Company issued 50,000 shares of stock to an
individual to acquire the property. The shares were valued at $0.10 per share
for a total acquisition cost of $5,000.

Wisconsin Teddy

The Wisconsin Teddy is an exploration project that lies north
of the New Jersey Mine and covers 83 acres of unpatented claims on federal land
administered by the U.S. BLM. The project has no carrying value.

Zanetti Mining Lease

The Company has been assigned a mining lease with William
Zanetti. The lease provides for the Company's exploration, development and
mining of minerals on fee land through October 2008 and thereafter, as long as
mining operations are deemed continuous. The lease provides for production
royalties of 5% of net sales of ores or concentrates. Additional production
royalties of 1% to 5% are due if gold exceeds a certain price per troy ounce as
adjusted annually by the Consumer Price Index. At December 31, 2007, the gold
price that would cause additional production royalties to be payable was $697
per troy ounce. Also, advance royalties of $500 are required annually under the
lease. These advance royalties are charged to expense as incurred, but are still
accumulated and will be credited against production royalty obligations if and
when production ensues. The lessors may terminate the lease upon the Company's
failure to perform under the terms of the lease; and the Company has the right
to terminate the lease at any time.

Golden Chest Mining Leases

On January 3, 2005, the Company signed a mining lease on the
Golden Chest with Metaline Contact Mines (MTLI) and J.W. Beasley Interests, LLC
(JWBI) that covers about 270 acres. The Company completed a pre-feasiblity study
on an open pit resource drilled by Newmont Exploration Limited and issued 50,000
shares of its restricted common stock to both MTLI and JWBI to exercise the
mining lease. The term of the lease is fifteen years and as long thereafter as
Leased Substances are mined, processed or marketed from the Leased Premises. A
NSR royalty of 3% is payable to the Lessors. An additional NSR royalty up to a
maximum 3% is payable based on a sliding scale of increasing gold prices
adjusted by the Consumer Price Index (CPI) using June 2003 (CPI = 183.7) as the
base. See table below.

46

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

5. Mineral Properties, continuedGolden Chest
Mining Leases, continued

Sliding Scale for Additional NSR Royalty:

Price of Gold, $ / Troy Ounce (using December 2007
      CPI-U)
    Additional NSR Royalty< $457
    None$457 to $515
    1.0%$515 to $572
    1.5%$572 to $629
    2.0%> $629
    3.0%


Finally, the Company will issue 50,000 shares of restricted
common stock for each increment of 10,000 troy ounces of gold production.

On January 3, 2005, the Company signed a mining lease with
Prichard Creek Resource Partners, LLC that covers about 41 acres of unpatented
lode claims. Upon exercising the lease the Company issued 30,000 shares of
restricted common stock to Prichard Creek Resource Partners. The term of the
lease is fifteen years and as long thereafter as Leased Substances are mined,
processed or marketed from the Leased Premises. A NSR royalty of 3% is payable
to the Lessors. An additional NSR royalty is based on the same sliding scale,
presented in the table above, is also payable to Prichard Creek Resource
Partners. Finally, if commercial production is commenced from these claims a
one-time payment of 30,000 shares of the Companys common stock is payable to
Prichard Creek Resource Partners.

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47

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

6. Income Taxes

The Company did not record an income tax provision for the
years ended December 31, 2007 or 2006, as it had no taxable income. At December
31, 2007 and 2006, the Company had federal net operating loss carry forwards
available for income tax purposes of approximately $4,443,000 and $2,990,000,
respectively, which will expire through 2027, and associated deferred tax assets
of approximately $1,510,700 and $1,016,600, respectively. The deferred tax
assets were calculated assuming a 34% marginal tax rate, and have been fully
reserved as management believes it is more likely than not that the deferred tax
assets will not be utilized.

The Companys net operating loss carry forwards expire as
follows:

Years
    Carry
      Forwards2017
    $ 33,0002018
    27,0002021
    4,0002022
    36,0002023
    380,0002024
    930,0002025
    590,0002026
    990,0002027
    1,453,000Total
    $4,443,000


7. Equity

The Company has authorized 50,000,000 shares of no par common
stock. In addition, the Company has authorized 1,000,000 shares of no par
preferred stock, none of which had been issued at December 31, 2007 or 2006.

Private Placements

On February 12, 2007, the Company completed an offering of
units consisting of its common stock and common stock purchase warrants, in a
non-brokered private placement. The Company sold 2,684,584 units at $0.40 per
unit and generated $1,073,819 in net proceeds. Of this, 121,250 units and
$48,500 in net proceeds occurred in 2006. Each unit consisted of one share of
the Companys restricted common stock plus one half warrant, whereby each whole
warrant could purchase one share of the Companys restricted common stock at
$0.55 per share until December 31, 2008.

On November 13, 2007, the Company completed an offering of
units consisting of its common stock and common stock purchase warrants, in a
non-brokered private placement. The Company sold 1,451,427 units at $0.35 per
unit and generated $507,600 in net proceeds. Each unit consisted of one share of
the Companys restricted common stock plus one warrant, whereby each warrant
could purchase one share of the Companys restricted common stock at $0.50 per
share until August 31, 2009.

48

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

7. Equity, continued:

Exercise of Stock Purchase Warrants

During 2007 common stock purchase warrants were exercised by
warrant holders that had purchased units of common stock and common stock
purchase warrants during the Company's previous private placement offerings.
During 2007, the Company issued 200,000 shares of its restricted common stock at
$0.60 per share, generating net proceeds of $120,000 pursuant to the exercise of
these warrants. No warrants were exercised in 2006.

Stock Purchase Warrants Outstanding

Transactions in common stock purchase warrants for the years
ended December 31, 2007 and 2006, are as follows:

Number of
    
    
    ExerciseWarrants
    
    
    PricesBalance, December 31, 2005
    
    1,064,150
    
    $
    0.60-0.85Issued in connection with private placement
    
    4,593,625
    
    
    0.50-0.55Expired
    
    (568,900
    )
    
    0.70-0.85Balance, December 31, 2006
    
    5,088,875
    
    
    0.50-0.60Issued in connection with
      private placements
    
    2,733,095
    
    
    0.50-0.55Exercised
    
    (200,000
    )
    
    0.60Balance, December 31, 2007
    
    7,621,970
    
    
    0.50-0.60


These warrants expire as follows:

Shares
    Exercise Price
    Expiration Date4,533,000
    $0.50
    March 1, 20081,342,293
    $0.55
    December 31, 20081,451,427
    $0.50
    August 31, 2009295,250
    $0.60
    June 1, 20107,621,970


Common Stock Issued for Buildings and
Equipment

During 2007 and 2006, the Company issued 20,756 and 23,400
shares, respectively, of its restricted common stock for Buildings and Equipment
purchased. The Company recorded $10,239 and $12,200, respectively, during 2007
and 2006, based upon the value of the equipment purchased and shares issued.

Common Stock Issued for Services

During 2007 and 2006, the Company issued 52,104 and 162,860
shares, respectively, of its restricted common stock for services rendered the
Company. The Company recorded $27,157 and $56,138, respectively, based upon the
value of the services rendered and the shares issued.

49

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

8. Related Party Transactions

Fred Brackebusch is President, Treasurer, and a Director of the
Company. Grant Brackebusch, Fred Brackebusch's son, is the Vice-President and a
Director of the Company. Grant Brackebusch's wife, Tina Brackebusch, is the
Company's Corporate Secretary. Fred Brackebusch and Grant Brackebusch own 89.6%
and 10.4%, respectively of Mine Systems Design, Inc. ("MSD"), a firm that has
various related party transactions with the Company.

In addition to the related party transactions described in Note
5 and 10 the Company had the following transactions with related parties:

- During the years ended December 31, 2007 and 2006, the Company issued
  154,386 and 116,480 shares, respectively, of its restricted common stock
  valued at $82,500 and $61,063, respectively, to Fred Brackebusch for
  management services. During 2007 and 2006 the Company issued 20,000 and 20,000
  shares respectively, of its restricted stock valued at $10,000 and $11,000,
  respectively, to Tina Brackebusch for services as the Corporate Secretary.
- During the years ended December 31, 2007 and 2006, the Company issued
  100,000 and 100,000 shares, respectively, of its restricted common stock to
  members of the Board of Directors for their services as directors. These stock
  awards were recorded as directors' fees of $50,000 and $55,000, respectively,
  based upon the estimated value of the shares issued and services rendered.
  Fred and Grant Brackebusch each received 20,000 shares in 2007 and 20,000
  shares in 2006 as Directors of the Company.
- During each of the two years ended December 31, 2007 and 2006 the Company
  paid $6,000 to MSD for office rent.
- During the year ended December 31, 2007 the Company issued 30,500 shares of
  its restricted common stock valued at $21,200, based upon the estimated value
  of the shares issued and the services rendered, to Ivan Linscott, a Director,
  for exploration services.

9. Commitments and Contingencies

At December 31, 2007 and 2006, the Company had accrued $19,800
and $18,000 respectively relating to a reclamation liability at the New Jersey
Mine site based on management's estimate of the disturbed area existing at the
property and the related costs to reclaim the area. It is likely that in the
near-term the Company will become responsible for additional reclamation
liabilities as it continues in the development of its properties and eventually
begins commercial production.

The Company owns or leases several mineral properties located
in the Coeur dAlene River Basin. In recent years, certain other companies
involved in mining activities on property interests upland of the Coeur d' Alene
River Basin have been identified as potentially responsible parties under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980

50

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|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Notes to Financial Statements

9. Commitments and Contingencies continued:

(CERCLA), and have entered into consent decrees with the EPA
and the state of Idaho, concerning environmental remediation obligations and
damages to or loss of natural resources in the Coeur d' Alene River Basin. The
Company has not received any notification of a pending action or proceeding
against the Company relating to environmental claims or assessments. It is
possible, however, that the Companys obligation could change in the near or
longer term, and the resultant liability or claim for damages could have a
material adverse effect on the Company.

10. Investment in Marketable Security

In August of 2006, the Company purchased 1,875,000 common
shares of Niagara Mining and Development Inc. (Niagara) for $7,500. Also in
August 2006, Niagara was acquired by Gold Crest Mines, Inc. (Gold Crest) and
each outstanding common share of Niagara was exchanged for one common share of
Gold Crest. The exchanged shares were issued with a restriction, which
prohibited the sale of the shares on the open market for one year from the date
of issuance. The Company sold 242,200 of its Gold Crest shares for $71,078 which
included a gain of $70,109 in 2007, after the restriction expired.

At December 31, 2007, the Company still held 1,632,800 shares
with a market price of $0.24 per share, for a total market value of $391,872. At
December 31, 2007, the excess market value of $385,341 over the $6,531 remaining
cost basis of the shares was recognized as accumulated other comprehensive
income in the equity section of the Companys balance sheet.

The Companys president has been a director of Gold Crest since
2006. He resigned in February of 2008.

11. Subsequent Events

On March 25, 2008 the Company announced that it has signed a
definitive agreement with Newmont North American Exploration Limited, a
subsidiary of Newmont Mining Corporation (NYSE: NEM) under which the parties
created a joint venture to explore for gold deposits within a 38 square mile
area north of Murray, Idaho. The joint venture known as the Toboggan project,
covers all of the Companys mining claims within this area except the Niagara
property. Under the terms of the agreement Newmont can earn a 51% interest in
the joint venture by spending $2,000,000 over three years. Newmont can increase
its interest to 70% by spending an additional $10,000,000 or completing a
feasibility study in the years four through seven, whichever comes first.

As part of the terms of the agreement, Newmont retains an
option to include the Niagara property into the Toboggan Project which is
exercisable starting at the end of year one and extending to the end of year
three. If Newmont elects to include the Niagara property, it would be required
to spend at least another $1,000,000 or twice what NJMC spends on exploration of
the Niagara, whichever is greater, to earn its 51% interest.

51

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ITEM 8

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 8A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

At December 31, 2007, our President who also serves as our
Chief Accounting Officer evaluated the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the
Securities Exchange Act of 1934 (the Exchange Act), which disclosure controls
and procedures are designed to insure that information required to be disclosed
by a company in the reports that it files under the Exchange Act is recorded,
processed, summarized and reported within required time periods specified by the
Securities & Exchange Commission rules and forms.

Based upon that evaluation, it was concluded that our
disclosure controls were effective as of December 31, 2007, to ensure timely
reporting with the Securities and Exchange Commission. Specifically, the
Companys corporate governance and disclosure controls and procedures provided
reasonable assurance that required reports were timely and accurately reported
in our periodic reports filed with the Securities and Exchange Commission.

Internal Control over Financial Reporting

Managements Annual Report on Internal Control Over
Financial Reporting

The management of New Jersey Mining Company is responsible for
establishing and maintaining adequate internal control over financial reporting.
This internal control system has been designed to provide reasonable assurance
to the Companys management and Board of Directors regarding the preparation and
fair presentation of the Companys published financial statements.

All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.

The management of New Jersey Mining Company has assessed the
effectiveness of the Companys internal control over financial reporting as of
December 31, 2007. To make this assessment, we used the criteria for effective
internal control over financial reporting described in Internal
Control-Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our assessment, we believe
that, as of December 31, 2007, the Companys internal control over financial
reporting is effective.

This annual report does not include an attestation report of
the Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management's report in this annual report.

Fred Brackebusch, President, CEO and CFO New Jersey Mining
Company

52

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Internal Control over Financial Reporting,
continued:

Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within our Company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake.
Controls can also be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the controls. The
design of any system of controls is based in part upon certain assumptions about
the likelihood of future events, and any design may not succeed in achieving its
stated goals under all potential future conditions.

Over time, controls may become inadequate because of changes in
conditions or deterioration in the degree of compliance with policies or
procedures. Because of the inherent limitation of a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

Changes in internal control over financial
reporting.

The President and Principal Accounting Officer conducted
evaluations of our internal controls over financial reporting to determine
whether any changes occurred during the quarter ended December 31, 2007 that
have materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting. We have retained an
experienced CPA on an as needed basis for review and assistance in preparation
of the Companys financial statements and to provide assistance with complex and
non routine transactions and GAAP compliance. This was the only material change
in internal control over financial reporting in the quarter ended December 31,
2007.

ITEM 8B

OTHER INFORMATION

None.

53

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PART III

ITEM 9.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGEACT

Name & Address
      Age
      Position
      Date First ElectedFred W. Brackebusch 
        P.O. Box 1019 Kellogg, Idaho
      83837
      63
      President, Director & 
        Treasurer
      7/18/1996Grant A. Brackebusch 
        P.O. Box 131 Silverton, ID
      83867
      38
      Vice President & 
        Director
      7/18/1996Ivan R. Linscott 
        7150 Burke Road Wallace, ID 83873
      65
      Director
      9/21/2004William C. Rust (1) 
        P.O. Box 648 Wallace, ID 83873
      61
      Director
      9/21/2004M. Kathleen Sims (1) 
        2745 Seltice Way Coeur
      dAlene, ID 83814
      63
      Director
      9/25/2003Tina C. Brackebusch 
        P.O. Box 131 Silverton, ID
      83867
      38
      Secretary
      1/1/1997


(1) Member of the Audit Committee

Directors are elected by shareholders at each annual
shareholders meeting to hold office until the next annual meeting of
shareholders or until their respective successors are elected and qualified.

Fred W. Brackebusch, P.E. is the President and a
Director of the Company. He has a B.S. and an M.S. in Geological Engineering
both from the University of Idaho. He is a consulting engineer with extensive
experience in mine development, mine backfill, mine management, permitting,
process control and mine feasibility studies. He has over 35 years of experience
in the Coeur d'Alene Mining District about half of which was with Hecla Mining
Co. He has been the principal owner of Mine Systems Design, Inc., a mining
consulting business which is a large shareholder in the Company, since 1987.

Grant A. Brackebusch, P.E. is the Vice President and a
Director of the Company. He holds a B.S. in Mining Engineering from the
University of Idaho. He worked for Newmont Gold Co. on the Carlin Trend in open
pit mine planning and pit supervision for three years. He also has worked with
Mine Systems Design, Inc. performing various engineering and geotechnical tasks.
He has worked for New Jersey Mining Company since 1996; he supervises the daily
operations of the various mining operations, mill operations, performs various
engineering tasks, and coordinates environmental permitting.

Ivan R. Linscott, PhDis a director of the company. He
is a physicist at Stanford University. He is a Senior Research Associate for
radioscience spacecraft instrument development and is Co-Investigator and
Science Team Member for the New Horizons Mission to encounter the planet Pluto.
Dr. Linscott

54

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has a strong interest in doing research on exploration
techniques in the Coeur dAlene Mining District. He has made significant
contributions to the Companys exploration program through the innovative use of
geophysical techniques.

William C. Rustis a director of the company. He is a
metallurgical engineer with extensive experience in the Silver Valley. He worked
for Asarco as Chief Metallurgist. Later he worked for CoCa mines at Grouse Creek
in Central Idaho and for McCulley, Frick, and Gilman, an environmental
consulting firm. He was with Getchell Gold Inc. in Nevada where he was Mill
Manager and Senior Metallurgist for a 3,200 ton/day gold plant. Currently, Mr.
Rust is self-employed as a metallurgical engineering consultant. Mr. Rust is a
member of the Audit Committee.

M. Kathleen Sims is a director of the Company. She is a
successful businesswoman who is majority owner of a car dealership. She is a
former State Senator in the Idaho Legislature. She is a former member of the
State of Idaho Human Rights Commission and is active in the Idaho Republican
Party. She has extensive experience in starting a business with all the
necessary experience in financing, business plans and management. Ms. Sims is a
member of the Audit Committee.

Tina C. Brackebuschis Secretary of the Company. She has
served as Office Manager for the Company. She holds a B.S. in Secondary
Education from the University of Idaho.

Family Relationships

Fred W. Brackebusch is the father of Grant A. Brackebusch. Tina
C. Brackebusch is the wife of Grant A. Brackebusch.

Legal Proceedings

No Director or Officer has been involved in any legal action
involving the Company for the past five years.

55

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Section 16(a) Beneficial Ownership Reporting
Compliance

Based solely upon a review of forms 3 and 4 and amendments
thereto furnished to the Registrant pursuant to Section 240.16a -3 during the
most recent fiscal year, and Form 5 and amendments thereto furnished to the
Registrant with respect to the most recent fiscal year, no person who at any
time during the fiscal year was a director, officer, or beneficial owner of more
than ten percent of any class of equity securities of the Registrant registered
pursuant to Section 12 of the Exchange Act, or any other person subject to
Section 16 of the Exchange Act with respect to the Registrant because of the
requirements of Section 30 of the Investment Company Act or Section 17 of the
Public Utility Holding Company Act (A reporting person) failed to file on a
timely basis, as disclosed in the above Forms, reports required by Section 16(a)
of the Exchange Act during the most recent fiscal year.

Code of Ethics

The Company adopted a Code of Ethics at a Board of Directors
meeting on December 9, 2003, that applies to the Company's executive officers.
It can be found at the Companys website www.newjerseymining.com. The Company also adopted a
Code of Ethics for all employees at the Board of Directors meeting on February
18, 2008.

Board Committee

At a Board of Directors meeting on September 21, 2004, the
Directors approved an audit committee comprised of William C. Rust and M.
Kathleen Sims. Each member of the audit committee is deemed to be an independent
director as that term is defined in Rule 4200(a)(14) of the NASDs listing
standards. M. Kathleen Sims is the Audit Committee Financial Expert as defined
by Section 407 of the Sarbanes-Oxley Act. The Board adopted an audit committee
pre-approval policy. The audit committee is required to pre-approve the audit
and non-audit services performed by the independent auditor in order to assure
that the provision of such services do not impair the auditors
independence.

[The balance of this page has been intentionally left
blank.]

56

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ITEM 10.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

Name & Principal Position
    Year
    Salary ($)
    Bonus ($)
    Other Annual Comp. ($)
    Restricted Stock Awards ($)(2)
    Securities Underlying Options (#)
    LTIP Payouts ($)
    All Other Compensation ($)Fred Brackebusch President
    2005
    36,000
    0
    0
    114,725
    0
    0
    02006
    66,000
    0
    0
    72,063
    0
    0
    02007
    75,000
    0
    0
    92,500
    0
    0
    0Grant Brackebusch Vice Pres.
    2005
    72,000
    0
    0
    3,600
    0
    0
    02006
    84,000
    0
    0
    11,000
    0
    0
    02007
    88,500
    0
    0
    10,000
    0
    0
    0Ivan R. Linscott Director
    2005
    0
    0
    0
    3,600
    0
    0
    02006
    0
    0
    0
    11,000
    0
    0
    02007
    0
    0
    0
    31,200
    0
    0
    0William C. Rust Director
    2005
    0
    0
    0
    3,600
    0
    0
    02006
    0
    0
    0
    11,000
    0
    0
    02007
    0
    0
    0
    10,000
    0
    0
    0M. Kathleen Sims Director
    2005
    0
    0
    0
    3,600
    0
    0
    02006
    0
    0
    0
    11,000
    0
    0
    02007
    0
    0
    0
    10,000
    0
    0
    0Tina C. Brackebusch Secretary
    2005
    1,710(1)
    0
    0
    3,600
    0
    0
    02006
    1,752(1)
    0
    0
    11,000
    0
    0
    02007
    2,068(1)
    0
    0
    10,000
    0
    0
    0


(1) Tina Brackebuschs salary is for services performed as the
Companys payroll clerk.

(2) Officers and Directors were paid for their services with
10,000 shares of restricted common stock in 2005 and 20,000 shares of restricted
common stock in 2006 and 2007. A value of $0.36 per share was ascribed to the
shares in 2005, $0.55 per share in 2006, and $0.50 in 2007. Additional shares
were issued to Fred Brackebusch for management services during 2005 and 2006 for
any time over 25 hours per week at a rate of $125 per hour and during 2007 for
any time over 130 hours per month at a rate of $150 per hour. Shares issued were
274,275 in 2005, 116,480 in 2006, and 154,386 in 2007. The shares were valued at
an average price of $0.41 per share in 2005, $0.52 per share in 2006, and $0.53
per share in 2007.

[The balance of this page has been intentionally left
blank.]

57

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ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information on the ownership of
the Company's voting securities by Officers, Directors and major shareholders as
those who own beneficially more than five percent of the Company's common stock
through the most current date-March 10, 2008.

Security Ownership of Certain Beneficial Owners and
Management

Title of Class
    Name and Address Of Beneficial Owner
    Amount and Nature of Beneficial Owner
    Percent of Class (1)Common
    Fred W. Brackebusch P.O. Box 1019 Kellogg, Idaho
      83837
    7,915,757 indirect (a) 887,841 direct
    24.94%Common
    Grant A. Brackebusch P.O. Box 131 Silverton, ID
      83837
    918,793 indirect (b) 299,136 direct
    3.45%Common
    Terry & Marguerite Tyson County Road U
      Lipscomb, TX 79056
    1,622,000 direct(c) 933,900 indirect
    7.24%Common
    Ivan R. Linscott, Director 7150 Burke Road
      Wallace, ID 83873
    90,500
    0.26%Common
    Constance Meisel 105 East Atlantic Avenue
      Delray Beach, FL 33444
    3,333,333 (d)
    9.44%Common
    William Ritger Ocean Royale Way Juno Beach, FL
      33408
    1,330,000 direct (e) 1,265,000 indirect
    7.35%Common
    William C. Rust, Director P.O. Box 648
      Wallace, ID 83873
    50,000
    0.14%Common
    M. Kathleen Sims, Director 2745 Seltice Way
      Coeur dAlene, ID 83814
    63,000
    0.18%Common
    Tina C. Brackebusch, Secretary P.O. Box 131
      Silverton, ID 83867
    78,000
    0.22%Common
    All Directors and Officers as a group (6 individuals)
    10,303,027
    29.19%


(1)Based upon 35,296,358 outstanding shares of common stock at
March 10, 2008.

(a) Fred Brackebusch owns 89.6% of Mine Systems Design, Inc.
(MSD) which is an S corporation that owns 8,834,550 common shares of the
Company. Neither MSD nor Fred Brackebusch has the right to acquire any
securities pursuant to options, warrants, conversion privileges or other
rights.

58

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(b) Grant Brackebusch owns 10.4% of Mine Systems Design, Inc.
(MSD) which is an S corporation that owns 8,834,550 common shares of the
Company. Neither MSD nor Grant Brackebusch has the right to acquire any
securities pursuant to options, warrants, conversion privileges or other
rights.

(c) Terry and Marguerite Tyson hold 300,000 warrants
exercisable at a price of $0.55 until December 31, 2008.

(d) Constance Miesel holds 333,334 warrants exercisable at a
price of $0.55 with an expiration date of December 31, 2008.

(e) William Ritger holds 1,265,000 warrants exercisable at
prices ranging from $0.40 to $0.55 with expiration dates ranging from March 31,
2008 to August 31, 2009.

None of the Directors or Officers has the right to acquire any
securities pursuant to options, warrants, conversion privileges or other
rights.

ITEM 12.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

Certain Relationships and Related
Transactions

During each of the years ended December 31, 2007 and 2006, the
Company issued 120,000 shares of its restricted common stock to members of the
Board of Directors and Officers for their services. These stock awards were
recorded as directors' fees of $50,000 and $55,000, respectively, for directors
and $10,000 and $11,000, respectively, for management based upon the estimated
value of the shares issued and services rendered. Fred, Grant, and Tina
Brackebusch each received 20,000 shares in 2007 and 20,000 shares in 2006 as
Directors or Officers in each respective year.

During the years ended December 31, 2007 and 2006, the Company
issued 154,386 and 116,480 shares, respectively, of its restricted common stock
valued at $82,500 and $61,063, respectively, to Fred Brackebusch for management
services.

During each of the two years ended December 31, 2007, the
Company paid $6,000 to MSD for office rent.

During the year ended December 31, 2007 the Company issued
30,500 shares of its restricted common stock valued at $21,200 to Ivan Linscott,
a Director, for exploration services.

Director Independence

Directors Ivan R. Linscott, William C. Rust and M. Kathleen
Sims are deemed to be independent directors as that term is defined in Rule
4200(a)(14) of the NASDs listing standards. These three Directors comprise a
majority of the Board of Directors.

The Board of Directors does not have separately designated
nominating or compensation committees. The entire Board performs these
functions. At a Board of Directors meeting on September 21, 2004, the Directors
approved an audit committee comprised of William C. Rust and M. Kathleen Sims.
Each member of the audit committee is deemed to be an independent director as
that term is defined in Rule 4200(a)(14) of the NASDs listing standards. M.
Kathleen Sims is the Audit Committee Financial Expert as defined by Section 407
of the Sarbanes-Oxley Act.

59

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ITEM 13.

EXHIBITS

(3)(i)
      Articles of Incorporation-Filed
          as an exhibit to the registrant's registration statement on Form 10-SB
          (Commission File No. 000-28837) and incorporated by reference herein.(3)(ii)
      Bylaws-Filed as an exhibit
          to the registrant's registration statement on Form 10-SB (Commission
          File No. 000-28837) and incorporated by reference herein.(10)(1)
      Lease Agreement with William
          Zanetti-Filed as an exhibit to the registrant's registrationstatement on Form 10-SB (Commission
          File No. 000-28837) and incorporated by reference herein.(10)(2)
      Articles of Merger For Plainview
          Mining Company Inc. and New Jersey Mining Co.-Filed as an exhibit to
          the registrant's registration statement on Form 10-SB (Commission File
          No. 000-28837) and incorporated by reference herein.(10)(3)
      Lease Agreement with Mine Systems
          Design, Inc.-Filed as an exhibit to the registrant's annual report on
          Form 10-KSB for the year ended December 31, 2001 and incorporated by
          reference herein.(10)(4)
      Articles of Merger for Gold
          Run Gulch Mining Company and New Jersey Mining Co.- Filed as an exhibit
          to the registrant's annual report on Form 10-KSB for the year ended
          December 31, 2002 and incorporated by reference herein.(10)(5)
      Exploration Agreement and Option
          to Lease between Paymaster Resources, Inc. and New Jersey Mining Company
          with the approval of J.W. Beasley Interests LLC.-Filed as an exhibit
          to the registrants annual report on Form 10-KSB for the year ended
          December 31, 2003 and incorporated by reference herein.(10)(6)
      Exploration Agreement and Option
          to Lease between Prichard Creek Resource Partners LLC and New Jersey
          Mining Company.-Filed as an exhibit to the registrants annual
          report on Form 10-KSB for the year ended December 31, 2003 and incorporated
          by reference herein.(10)(7)
      Exploration Agreement and Option
          to Convert to Mining Agreement between RMA and New Jersey Mining Company.
          Filed as an exhibit to the registrants annual report on Form 10-KSB
          for the year ended December 31, 2006 and incorporated by reference herein.(10)(8)
      Exploration
          Agreement and Option to Convert to Mining Agreement between RMA and
          New Jersey Mining Company. Filed as an exhibit to the registrants
          annual report on Form 10-KSB for the year ended December 31, 2007.(14)
      Code of Ethics.-Filed as an
          exhibit to the registrants annual report on Form 10-KSB for the
          year ended December 31, 2003, and incorporated by reference herein.(16)
      Letter on Change in Certifying
          Accountant.-Filed as an 8-K report on December 10, 2003 and later filed
          as an 8-K/A on February 2, 2004, and incorporated by reference herein.(31)
      Rule 13a-15(e)/15d-15(e) Certifications(31)(i)
      Certification
          of Fred W. Brackebusch(32)
      Section 1350 and Rule 13a-15(d)
          Certifications(32)(i)
      Certification
          of Fred W. Brackebusch(99)(i)
      Audit Committee Pre-Approval
          Policies.-Filed as an exhibit to the registrants annual report
          on Form 10-KSB for the year ended December 31, 2003 and incorporated
          by reference herein.


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ITEM 14

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Board of Directors has adopted an audit committee
pre-approval policy. The audit committee is required to pre-approve the audit
and non-audit services performed by the independent auditor in order to assure
that the provision of such services do not impair the auditors
independence.

Audit Fees

The aggregate fees billed for professional services rendered by
the Companys principal accountant for the audit of the annual financial
statements included in the Companys annual report on Form 10-KSB for the fiscal
years ended December 31, 2007 and 2006 and the review for the financial
statements included in the Companys quarterly reports on Form 10-QSB during
those fiscal years, were $28,384 and $32,639 respectively.

Audit Related Fees

The Company incurred no fees during the last two fiscal years
for assurance and related services by the Companys principal accountant that
were reasonably related to the performance of the audit or review of the
Companys financial statements, and not reported under Audit Fees above.

Tax Fees

The Company incurred no fees during the last two fiscal years
for professional services rendered by the Companys principal accountant for tax
compliance, tax advice and tax planning.

All Other Fees

The Company incurred no other fees during the last two fiscal
years for products and services rendered by the Companys principal
accountant.

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SIGNATURES

In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

New Jersey Mining Company

|Date: | March 27, 2008 |  | By /s/ FRED W. BRACKEBUSCH                           | 
|----- | -------------- |  | ---------------------------------------------------- | 
|      |                |  | Fred W. Brackebusch, President, Treasurer & Director | 
|      |                |  |                                                      | 
|Date: | March 27, 2008 |  | By /s/ GRANT A. BRACKEBUSCH                          | 
|      |                |  | Grant A. Brackebusch, Vice President & Director      | 
|      |                |  |                                                      | 
|Date: | March 27, 2008 |  | By /s/ IVAN R. LINSCOTT                              | 
|      |                |  | Ivan R. Linscott, Director                           | 
|      |                |  |                                                      | 
|Date: | March 27, 2008 |  | By /s/ WILLIAM C. RUST                               | 
|      |                |  | William C. Rust, Director                            | 
|      |                |  |                                                      | 
|Date: | March 27, 2008 |  | By /s/ M. KATHLEEN SIMS                              | 
|      |                |  | M. Kathleen Sims, Director                           | 

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