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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, 2005

 ̈ 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.  ̈

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 $261,293.

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 6, 2006, as reported by the Over the Counter Bulletin Board was
$8,140,000.

At March 6, 2006, the registrant had 22,609,995 outstanding
shares of no par value common stock.

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TABLE OF CONTENTS

|Glossary of
      Significant Mining Terms | 3                                                                                                                    
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------
|                                           |                                                                                                                      
|                                           | PART I                                                                                                               
|                                           |                                                                                                                      
|Item 1.                                    | Description of Business                                                                                              
|Item 2.                                    | Description of Property                                                                                              
|Item 3.                                    | Legal Proceedings                                                                                                    
|Item 4.                                    | Submission of Matters to a Vote of Security
      Holders                                                            
|                                           |                                                                                                                      
|                                           | PART II                                                                                                              
|                                           |                                                                                                                      
|Item 5.                                    | Market for Common Equity and Related Stockholder
      Matters                                                       
|Item 6.                                    | Management's Discussion
      and Analysis of Financial Condition and Results of Operations                          
|Item 7.                                    | Financial Statements                                                                                                 
|Item 8.                                    | Changes In and Disagreements
      With Accountants on Accounting and Financial Disclosure                           
|Item 8A.                                   | Controls and Procedures                                                                                              
|                                           |                                                                                                                      
|                                           | PART III                                                                                                             
|                                           |                                                                                                                      
|Item 9.                                    | Directors, Executive Officers, Promoters
      and Control Persons; Compliance With Section 16(a) of the Exchange Act
|Item 10.                                   | Executive Compensation                                                                                               
|Item 11.                                   | Security Ownership of Certain Beneficial
      Owners                                                                
|Item 12.                                   | Certain Relationships and Related Transactions                                                                       
|Item 13.                                   | Exhibits and Reports on Form 8-K                                                                                     
|Item 14.                                   | Principal Accounting Fees and Services                                                                               
|                                           |                                                                                                                      
|Signatures                                 | 56                                                                                                                   

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GLOSSARY

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.

Bedrock- Solid rock underlying overburden.

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.

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 bubble.

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.

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 non-ore ore
sub-ore material is called an orebody.

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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 15% grades.

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.

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.

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

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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) 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 Significant Amount of Assets Not in the Ordinary Course of
Business.

There have been no material reclassifications, mergers,
purchases or sales of a significant amount of assets not in the ordinary course
of business 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: the New Jersey mine, the Silver
Strand mine, the Golden Chest mine, the CAMP project, the Lost Eagle project,
the Wisconsin-Teddy project, and the Silver Button project. The New Jersey mine,
the Golden Chest mine and the Silver Strand mine are the Company's development
stage properties while the other properties are exploration stage
properties.

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Dependence on One or a Few Major Customers

The Company currently ships about 11 dry tonnes of gold-bearing
pyrite concentrate per month to Barrick Goldstrike Mines, Inc., (BGMI) of
Carlin, Nevada. The Company has a purchase agreement with BGMI for 330 dry
tonnes. As of December 31,2005, the Company had delivered 75 dry tonnes of
concentrate. If BGMI were unable to purchase the concentrate, the Company would
have to find another buyer which could possibly cause a delay in receiving
revenue from gold sales. The Company is investigating the technical and economic
feasibility of processing its pyrite concentrate to reduce its reliance on a
single customer.

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 Bureau of Land Management or US Forest Service. 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 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 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 EPAs 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.

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 U.S. Bureau of Land Management (BLM),
requires a Plan of Operation to be submitted.

The Company submitted a Plan of Operation to the US Forest
Service (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. Before the Company can begin operations at the Silver
Strand, it must finalize a road use agreement and post a reclamation bond. The
current estimate by the USFS for the reclamation bond is $155,000. Water quality
monitoring at the Silver Strand is expected to cost about $2,000 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

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operating, MSHA performs a series of regular inspections to
verify compliance with mine safety laws, and can assess financial penalties for
unsafe practices or conditions.

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] The cyanidation process has
not been implemented at the New Jersey mine as of this date. The deposition of
tailings using paste technology is a unique part of the permit. Reclamation of
the tailings stack will be done concurrently with mining. The Cyanidation permit
requires quarterly surface and groundwater monitoring prior to startup of the
plant and monthly sampling once operations commence. The current water
monitoring program costs the Company about $2,000 on an annual basis. The
estimated annual cost for sampling, if cyanide leaching operations begin, is
about $25,000.

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 on the area disturbed
  by the open pit mine. An annual reclamation fee of $130 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 $12,500.

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 $2,000.
On 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 seven including
President Fred Brackebusch, Vice President Grant Brackebusch and Secretary Tina
Brackebusch. Tina C. Brackebusch works part-time for the Company. Exploration
work is currently performed by independent contractors hired by 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
2006. 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

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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.

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

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ITEM 2.

DESCRIPTION OF PROPERTIES



Figure 1 - Project Location Map

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NEW JERSEY MINE

Location

The New Jersey mine is located in the Gold Run Gulch area,
comprising about 15 square miles in the Coeur d'Alene Mining District. Located 2
miles east of Kellogg, Idaho, the New Jersey property area 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
U.S. Bureau of Land Management. The Coleman pit is located on the patented
mining claims.

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. Additional
royalties of 1% to 5% are due if the gold price exceeds $662 per ounce as of
December 31, 2005. 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% Net Smelter Return (NSR) royalty will be paid to the
lessors if production is achieved. However, the NSR shall not exceed 10% of the
net proceeds, except the NSR 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. The amount of
money spent from 1899 to 1910 appears to have been $500,000 to $1,000,000 in
1996 dollars. The operation was discontinued because of the difficulty in
recovering fine gold without cyanidation technology, because of the lower price
of gold relative to mining costs, and because of inadequate drilling and mining
technology. For example, the Coleman

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vein, a hard quartz vein, was so difficult to drill using hand
steel that drifts along the vein were not driven to any great lengths. A
considerable portion of the gold is in free grains, so there is a strong nugget
effect.

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 crushing plant was built and
commissioned in 1996. The grinding circuit was built in 1996, and the flotation
circuit was built in early 2004 and commissioned in September 2004. It consists
of five rougher cells and three cleaner cells all of which were purchased new in
2004. Flotation concentrate is dewatered by a pressure filter and dumped into a
bin. A ball mill is used to grind the crushed ore and is the limiting factor for
throughput. Currently, hourly throughput is limited to about 4.0 tonnes per
hour.

During 2001, the Company drilled two holes to explore a
geophysical anomaly detected in the autumn of 2000. One hole intercepted a broad
zone of arsenopyrite mineralization, named the Grenfel zone, which contained two
separate zones of anomalous gold content ( 0.70 grams per tonne gold over two
separate 10 meter intervals) In 2002, 1,317 meters of diamond drilling was
completed amongst 11 holes at the New Jersey mine. The drilling confirmed the
continuity of the Coleman vein system as nine of the holes intercepted the vein
system. Reserves were not increased as the drilling was too widely spaced. 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. Drilling was conducted at the Scotch
Thistle prospect, Enterprise prospect and northern Coleman vein in 2003. Silver,
lead and zinc mineralization was discovered at the Enterprise and a new zone of
gold mineralization was found at the Scotch Thistle. In 2004, two drillholes
were drilled at the Enterprise where base metal mineralization (lead, zinc &
silver) was intercepted. Also in 2004, a single hole was drilled at the Scotch
Thistle prospect and intercepted a gold zone that assayed 2.56 gpt over 6.6
meters extending the zone discovered a year earlier. No exploration work was
completed on the New Jersey mine property in 2005.

Exploration Plans

The Company has plans to do more exploratory core drilling at
the Enterprise and Scotch Thistle prospects. New road construction will be
required for the Enterprise drilling. An exploration crosscut is planned for the
2400 Level on the Coleman vein. All of these planned programs are dependent on
the Companys ability to raise capital and will not be completed until
sufficient funds are raised.

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 basin.
The Prichard formation is divided into nine rock units of alternating argillites
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. A fault was discovered by the 2001 drilling program. The fault
appears to be a fairly large east-west striking

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structure that may separate the Coleman veins from the Grenfel
zone. However, more information is required to confirm that hypothesis.

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 tetrahedrite,
galena, and sphalerite. Most commonly in the Coleman vein of the New Jersey mine
visible gold is associated with the tetrahedrite. Gold prospects are
concentrated in the New Jersey mine area possibly because of the presence of
lower Prichard stratigraphic members, an anticlinal structure, and/or the
existence of a gold source. 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
    4.56
    8,306Coleman Split (21+00 to 23+00
    21,320
    3.53
    2,420North Vein (21+00)
    2,990
    8.57
    825Total
    80,560
    4.45
    11,551


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 3.5 grams/tonne gold. The cutoff grade is
based on historical costs of a 100 tonne/day open pit operation with a
CIL/gravity mineral processing plant recovering 95% of the gold. Gold prices
used were those on December 31, 2005 or $16.50/gram ($513.00/troy ounce).

SILVER STRAND MINE

Location

The Silver Strand mine is located in Kootenai County, Idaho
about 12 miles east-northeast of Coeur d'Alene, Idaho. The property consists of
15 unpatented lode claims. 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 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

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royalty on the Silver Strand claims in July 2001. The royalty
is a 1.5% Net Smelter Return (NSR) capped at $50,000 after which the NSR
decreases to 0.5% .

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, Spokane Research
Center to conduct a mining research product 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

The Silver Strand mine is an underground mine that was mined
during the 1970's and early 1980's. No mining has taken place at the property
since that time. Since mining was suspended only limited exploration has taken
place at the Silver Strand including geochemical sampling and diamond drilling.
In 1997, Silver Trend Mining Company completed a four hole surface diamond
drilling program which totaled 795 meters. The mine is accessed by three
horizontal openings called levels: the No. 2 Level, the No. 225 Level and the
No. 3 Level which is the lowest level and is located at the creek bottom
adjacent to forest road No. 411. All three levels are accessible from the
surface via a network of dirt roads. The USBM installed a large culvert at the
portal of the No. 3 Level in order to stabilize that entrance. No surface
infrastructure presently exists at the Silver Strand. There is no energy
available at the site. Any electrical energy requirements would have to be
satisfied with an on-site generator.

During 2002, an exploration drilling program was completed at
  the Silver Strand. Also, rehabilitation of the 225 Level portal was started
  but not completed in 2002. The drilling was successful in extending the limits
  of the ore shoot below the No. 3 Level. In April 2003, the Company submitted
  a Plan of Operations (POO) to the USFS for a seasonal underground mining operation
  with a planned production rate of 1,000 tonnes per month. A geophysical exploration
  program was completed at the Silver Strand in 2004. Several anomalies were discovered
  and the largest merits exploration drilling.

In June 2005, the USFS affirmed their Finding of No Significant
Impact with respect to the Companys Plan of Operations after an environmental
group appealed their earlier decision. In essence, the Companys Plan was
approved by the USFS, though with 26 stipulations or amendments to the original
operating plan.

The startup of mining at the Silver Strand is planned for the
summer of 2006, however, the actual start of operations will be dependent upon
reaching an acceptable road use agreement with the USFS, and the receipt of
sufficient funding to post a reclamation bond and cover startup capital. The
cost of the reclamation bond is estimated at $155,000, and it is estimated by
the Company that another $150,000 will be required for startup capital.

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

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geology can be found from third party published reports by
Alfred L. Anderson of the Idaho Bureau of Mines and Geology (Pamphlet 53).

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 northerly (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 major intrusive
rocks near the Silver Strand mine. A major diabase dike 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 the 1997 diamond drilling
program. 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, tennatite, 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, a
minimum mining width of 1.5 meters, and the standard practices of the Coeur
dAlene Mining District. 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 a
flotation mineral processing plant recovering 75-80% of the silver and gold.
Silver and gold prices used were those on December 31, 2005 or $0.284/gram
($8.83/troy ounce) and $16.50/gram ($513.00/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.

GOLDEN CHEST

Location

The Golden Chest project is located in Reeder Gulch about 1.2
miles 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

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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 September 5, 2003, the Company signed an exploration agreement
  with an option to lease with Paymaster Resources Incorporated on the Golden
  Chest mine covering about 270 acres. In February 2004, Paymaster assigned its
  interest to Metaline Contact Mines of Murray, Idaho. 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). The Company completed a pre-feasiblity
  study on the open pit resource drilled by Newmont Mining 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 Net
  Smelter Royalty (NSR) of 3% is payable to the Lessors. An additional NSR 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. A copy of the mining lease was filed as an exhibit
  in the Companys 10-KSB for the year ending December 31, 2003.

Sliding Scale for Additional NSR Royalty

Price of Gold, $ / Troy Ounce (using
      December 2005 CPI-U)
    Additional NSR Royalty< $429
    None$429 to $482
    1.0%$482 to $536
    1.5%$536 to $589
    2.0%> $589
    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 Net Smelter Royalty (NSR) of
3% is payable to the Lessors. An additional NSR 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 a total of 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 11,133 feet of
drilling. Newmonts work

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identified a potential open pit with an inferred geologic
resource, not reserves, of 230,000 ounces of gold. Newmont dropped the property
in 1990, apparently because it did not meet their criterion of a 1 million ounce
open-pit resource. New Jersey Mining Company signed an exploration agreement
with an option to lease the property in June 2003.

Present Condition and Work Completed on the Property

During 2004, the Company completed an exploration ramp 152
meters long that intercepted the Katie vein, and the vein was drifted on for 40
meters to the northeast before intercepting an old stope. Chip sampling of the
vein was completed for each drill round or about every 2.5 meters. This data was
used to calculate a mine-able reserve for the Katie vein. Also during 2004, a
deep core drilling program comprised of 4 holes and 1,142 meters was completed
at the Golden Chest. The deepest hole, DDH04-06 intercepted 17.5 meters that
assayed 4.83 gpt gold including a higher grade section of 5.8 meters that
assayed 10.13 gpt gold.

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

During 2005, the Company commenced a small-scale underground
mining operation at the Golden Chest on the portion of the Katie vein exposed by
the previous years drifting. The Company mined 2,300 tonnes at an average grade
of 9.90 grams of gold per tonne from about 120 meters of stope development which
included a raise on the vein, and a series of sublevel I-drifts also on the
vein, and a northerly exploration drift. Ore is shipped from the Golden Chest in
Murray to the New Jersey mill in Kellogg, a trip of about 40 miles one-way. A
bulk sulfide flotation concentrate is made at the New Jersey mill and sold to
Barrick Goldstrike in Carlin, Nevada.

An exploration program consisting of four diamond drill holes
totaling 685 meters was completed in December 2005. Three holes were targeted to
extend gold mineralization on a deeper portion of the Idaho vein (200 meters
below surface) that was drilled in 2004. All three holes intercepted the Idaho
vein. Using the data from 4 drill holes into the Idaho vein which cover an area
of about 65 meters on strike by 75 meters on dip, calculations show an average
true thickness of 6.1 meters at an average gold grade of 6.61 gpt.

Development and Exploration Plans

The Company plans to continue mining from the Katie vein at a
rate of about 400 tonnes per month. About 75 meters of ramp will be driven to
access the Katie vein 10 meters below the current 965 Level. An exploration
drilling program is being planned for the deep Idaho vein. A series of holes
will be offset along strike and dip in an effort to increase the volume of gold
mineralization. Commencement of the exploration drilling will be dependent upon
the Companys ability to raise sufficient funding.

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.

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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.

Reserves

Ore grades and dimensions of the reserve are based on chip
sampling of the Katie vein underground and surface core drilling. Reserves were
calculated by the Companys geologist and engineer using a cutoff grade of 5
grams per tonne gold, a minimum mining width of 2 meters, and the standard
practices of the Coeur dAlene Mining District.

The cutoff grade was calculated using actual 2005 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 90% of the gold. Gold prices used were those
on December 31, 2005 or $16.50/gram ($513.00/troy ounce).

Classification
    Metric Tonnes
    Gold Grade(grams
      per tonne)
    Ounces of GoldProven & Probable
    5,870
    13.0
    2,454


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.

CAMP PROJECT

Location

The CAMP project is an underground exploration project without
known ore reserves. It is located south of the City of Osburn, Idaho, in the
approximate center of the silver belt of the Coeur d'Alene Mining District. The
CAMP is accessed by the Mineral Point mine road otherwise known as the McFarren
Gulch road. The CAMP project covers approximately 380 acres. The Company
controls 17.75% of the land in the CAMP. Merger Mines and Coeur d'Alene Mines
Corp. (CDE:NYSE) control the remainder. Coeur d'Alene Mines Corp. is the
operator of the property. The CAMP area extends from the surface to 900 feet
below sea level. Electrical power is available at the site.

Mineral Lease

As part of a July 26, 1978 lease agreement with Coeur d'Alene
Mines Corp. (Coeur), the Company will receive a 7.1% Net Profits Interest
(NPI),if the property is put into production. However, according to the
agreement, Coeur can retain 93.925% of the net profits until Coeur is reimbursed
in total for its advance payments and expenditures. The term of the lease is 61
years. The Agreement also calls for Coeur to spend $50,000 annually on
exploration. However, a December 18, 1992 Amendment to the Agreement allowed
Coeur to fulfill the exploration work requirement until August 2006 by applying
past work in the amount of $1,436,243 towards the work requirement.

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History

Originally the CAMP project was leased to ASARCO during the
period from 1969 through 1972. ASARCO developed an exploration drift on the 1400
level of the Coeur d'Alene mine (aka Mineral Point mine), before terminating the
drift 1000 feet short of its planned length. The drift extended 1,000 feet into
the CAMP project area before terminating. A series of diamond drill holes were
planned along the 1400 level drift, but ASARCO terminated the lease agreement
before any drilling could take place.

In 1978, Coeur signed a new lease agreement with Merger Mines
and Plainview Mining Co. Plainview Mining Co. was acquired by the Company in
February 1998. Coeur began an exploration program soon thereafter consisting of
geochemical soil sampling, trenching, an exploration tunnel and diamond drilling
(surface & underground). The exploration program continued through 1982.
Coeur spent a total of $1,436,243 on the project.

Geology

The CAMP area lies astride the Silver Belt of the Coeur d'Alene
Mining District. The north limb of the Big Creek anticline trends through the
CAMP area. Most of the silver orebodies in the Silver Belt are located in the
north limb of the Big Creek anticline. Prospective fault structures that trend
through the CAMP property include the Polaris fault, Silver Summit vein-fault,
Chester fault, and other structures. Favorable rock types are located in the
footwall of the Polaris fault including the St. Regis and Revett formation.

The property has not received any more exploration activity
since 1982 and, to the best of our knowledge, Coeur dAlene Mines has no plans
for exploration.

LOST EAGLE PROSPECT

Summary

The Lost Eagle is an exploration project without known ore
reserves. It is located in the West Fork of Eagle Creek near Murray, Idaho. The
outcrop of the Lost Eagle vein is located on the hillside above a USFS road.
Access to the outcrop is by foot only. Electrical power is not available at the
site. The Company's five lode claims cover 103 acres and are on public land
administered by the U.S. Forest Service. The project is a gold and silver
exploration project. The Lost Eagle vein is a quartz vein carrying sulfides that
outcrops in the Revett formation. The sulfide minerals found in the vein are
galena, pyrite, hessite and petzite. Hessite is a silver telluride mineral and
petzite is a gold-silver telluride mineral. The presence of tellurides is
thought to be significant as tellurides are usually associated with high-grade
gold deposits near alkaline-igneous bodies. However, no known igneous bodies are
mapped in the area. Historical workings included two short adits, about 5 meters
long, located along the strike of a quartz vein system. An upper adit
established by the old-timers exposes the vein where it is mineralized. Work
completed by the Company includes re-opening of the adit, channel sampling the
vein, geochemical soil sampling, and a geophysical survey.

In 2003, the Company completed two diamond drillholes each
about 185 meters in length. Both holes intercepted abundant alteration including
carbonate enrichment, potassic alteration, and a halo of specular hematite and
pyrite with occasional galena. Gold and silver values were only weakly
anomalous. Anomalous levels of molybdenum were also discovered by the 2003
drilling. No exploration work was completed on the property since 2003.
Exploration plans call for additional diamond drilling but the holes will be
collared closer to the outcrop by using a helicopter to place the drill.

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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. Bureau of Land Management. 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 was completed
since 2003 and there are no plans for additional exploration work in 2006.

SILVER BUTTON/ROUGHWATER PROSPECT

Summary

The Silver Button is an exploration project without known ore
reserves and covers an area of 20 acres and is located in the Clark Fork mining
district of northern Idaho. Clark Fork is about 60 miles 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
analyses and by 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 US Forest
Service (USFS). Modifications to the Plan of Operations were made after meeting
with the USFS in June of 2005. The USFS has yet to indicate when the Plan of
Operations may 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.

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 2005.

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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, 2005
    High Bid
    Low BidFirst Quarter
    $0.60
    $0.45Second Quarter
    $0.52
    $0.37Third Quarter
    $0.45
    $0.38Fourth Quarter
    $0.45
    $0.22Year Ending December 31, 2004
    High Bid
    Low BidFirst Quarter
    $0.75
    $0.57Second Quarter
    $0.75
    $0.51Third Quarter
    $0.73
    $0.65Fourth Quarter
    $0.75
    $0.49


Shareholders

As of March 6, 2006 there were 1,048 shareholders of record of
the Company's Common Stock. As of March 6, 2006 the Company had issued and
outstanding 22,609,995 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, 1602 E. Seltice Way #303, Post Falls, Idaho 83854.

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Recent Sales of Unregistered Securities

On September 1, 2005 the Company completed a non-brokered (i.e.
no commissions were paid to an underwriter or broker) replacement warrant offer
to existing shareholders. As an inducement to exercise existing warrants,
holders were offered the chance to exercise any un-expired warrant, no matter
the exercise price, for $0.40, and in exchange would receive an equal number of
warrants exercisable at $0.60 until June 1, 2010. A total of 195,250 warrants
were exercised resulting in $78,100 of proceeds. 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 October 12, 2005 the Company completed a non-brokered (i.e.
no commissions were paid to an underwriter or broker) sale of 100,000 units for
a price of $0.40 per unit which resulted in $40,000 of proceeds. Each unit
consists of one share of common stock plus one warrant. Each warrant is
exercisable into one share of common stock at a price of $0.40. The warrant
expires on June 1, 2010. 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 March 29, 2005 the Company completed a non-brokered (i.e. no
commissions were paid to an underwriter or broker) sale of 200,000 units for a
price of $0.40 per unit which resulted in $80,000 of proceeds. Each unit
consists of one share of common stock plus one warrant. Each warrant is
exercisable into one share of common stock at a price of $0.40. The warrant
expires on April 1, 2007. 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, 2005, the Company issued
577,345 shares of restricted common stock for management and directors fees,
equipment, services, exploration and a mining lease payment. A value of $249,572
(for an average value of $0.43 per share) was assigned to these fees, services,
and equipment. See the statement of shareholders equity for a detailed list.
The sales were strictly limited to persons in the United States who met certain
minimum financial (accredited investors) or sophistication requirements. These
issuances were 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.

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

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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 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 Company plans to continue exploration for
gold, silver and base metal deposits in the greater Coeur dAlene Mining
District of northern Idaho. The Company has three mines at which most
exploration is being conducted; the Golden Chest, the Silver Strand, and the New
Jersey. Production of gold ore is in progress at the Golden Chest mine.
Permitting has been completed and production of silver-gold ore is planned at
the Silver Strand mine in 2006. Production from lower grade reserves at the New
Jersey open pit mine may be conducted to fill up mill capacity.

The Companys highest ranked exploration project is the Idaho
vein at the Golden Chest mine. Three additional exploration drillholes were
drilled in late 2005 with all three intersecting the Idaho vein and some
additional hangingwall veins. This drilling has demonstrated the continuity of
the vein and the potential for discovering ore reserves on the Idaho vein. The
average thickness based on exploration drilling so far is 6.1 meters with an
average grade of 6.61 grams/tonne gold. More drilling will be conducted in 2006
contingent upon financing activities.

Mining operations on the Katie Dora vein at the Golden Chest
mine were conducted in 2005. Part of the ore reserves were mined with grade
meeting expectations. The ramp will be extended in early 2006 to access the
lower part of the known reserves. Other mineralized veins have been intersected
by the mining operations and these are being evaluated for reserve potential.

Management ranks its Silver Strand mine as the next most
promising exploration site ranking behind the Idaho vein. Operating permits have
been received for mining and exploration at the Silver Strand mine which is
located on unpatented claims on public land. Mining plans are to develop
infrastructure, drive a new adit, and mine a reserve block above the main adit
level in 2006. Drilling plans are to test geophysical anomalies which were found
in 2004. The progress of plans at the Silver Strand will depend upon
availability of financing.

Management also thinks exploration in the New Jersey mine area
has promising potential. Previous drilling has indicated higher grade
mineralization in the North Coleman vein area and at the Scotch Thistle
prospect, and interesting silver-base metal mineralization has been drilled at
the Enterprise prospect. It is planned to drive a crosscut at the lowest adit
level to test the North Coleman area, and further drilling may be conducted at
the Scotch Thistle and Enterprise prospects. The progress of exploration plans
at the New Jersey mine will depend upon availability of financing.

Finally, 2006 plans include adding a concentrate leach circuit
at the New Jersey mineral processing plant. Concentrate would be leached and a
gold-silver dore produced for sale. The reason for adding the concentrate leach
circuit will be 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.

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Financial Condition  The Company maintains a minimal 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 2005 is $16,863, and Figure 1 shows the corresponding
balances for previous accounting periods.



Results of Operations  Operations only commenced in the second
quarter of 2005 so comparisons to previous periods are not relevant. Revenue for
the year 2005 exceeded production costs by $18,811. Figure 2 shows the net loss
for the fourth quarter of 2005 of $190,812 and the net losses in previous
accounting periods. The net loss for 2005 was $590,485.



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Gold production in pyrite concentrates and bullion was 343
ounces in the fourth quarter and 848 ounces year to date. Gold production is
expected to range from 300 to 400 ounces per quarter during the next two
quarters and then to increase, along with silver production, when Silver Strand
ore processing starts. Revenues were $160,880 in the fourth quarter and $261,293
year to date. There are no comparisons to production for the prior year since
operations commenced in 2005.

Mining operations at the Golden Chest mine are projected to
continue for approximately 18 months based on existing ore reserves. Efforts are
being made to expand the amount of ore reserves in parallel veins and separate
ore shoots, but no assurance can be made at this time whether additional
reserves will be found.

Mining and mineral processing operations have continued through
the coldest winter months from mid-December to mid-February. Efforts to
winterize operations were successful. Mineral processing equipment was cleaned
out during December generating an inventory of gold of $44,850, which is being
sold in 2006.

Mining operations are planned to start at the Silver Strand
mine in 2006, however a capital expenditure of approximately $300,000 will be
required to bring the mine into production, although not all that amount will
have to be spent in 2006. No additional capital expenditures are required for
the mineral processing plant, however a concentrate leaching circuit, costing
about $200,000 is planned to increase revenues. The source of this additional
capital has not yet been determined. 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.

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 at the
Golden Chest mine and mineral processing plant for 18 months, but expanded
exploration activities will depend upon the results of financing activities.

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blank.]

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ITEM 7.

FINANCIAL STATEMENTS

| | DECORIA,                    
| | ----------------------------
| | MAICHEL                     
| | & TEAGUE                    
| | A PROFESSIONAL SERVICES FIRM

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, 2005 and 2004, and the related statements of operations, 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, 2005 and 2004, 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 9, 2006, except for Note 9 as to
which the date is March 28, 2006.

25

---

NEW JERSEY MINING COMPANY(A Development Stage
Company)TABLE OF CONTENTS



|                                                                                                                                                                                                       | Page  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------
|                                                                                                                                                                                                       |       
|Balance Sheets, December
      31, 2005 and 2004                                                                                                                                                       | 27    
|                                                                                                                                                                                                       |       
|Statements of Operations
      for the years ended December 31, 2005 and 2004 and from the date of inception
      on July 18, 1996 through December 31, 2005 (Unaudited)                              | 28    
|                                                                                                                                                                                                       |       
|Statement of Changes in
      Stockholders Equity for the years ended December 31, 2005 and 2004
      and for the period from inception on July 18, 1996 through December 31,
      2005 (Unaudited) | 29- 31
|                                                                                                                                                                                                       |       
|Statements of Cash Flows
      for the years ended December 31, 2005 and 2004 and from the date of inception
      on July 18, 1996 through December 31, 2005 (Unaudited)                              | 32    
|                                                                                                                                                                                                       |       
|Notes to Financial Statements                                                                                                                                                                          | 33-46 

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

26

---

New Jersey Mining Company(A Development Stage
Company)Balance SheetsDecember 31, 2005 and 2004

|                                                              |   |            |   |   |            |  
|------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                              |   | 2005       |   |   | 2004       |  
|                                                              |   |            |   |   |            |  
|**ASSETS**                                                    |  
|                                                              |   |            |   |   |            |  
|Current assets:                                               |   |            |   |   |            |  
|Cash and cash equivalents                                     | $ | 16,863     |   | $ | 151,764    |  
|Product inventory                                             |   | 68,810     |   |   | -          |  
|Other current assets                                          |   | -          |   |   | 2,346      |  
|Total current assets                                          |   | 85,673     |   |   | 154,110    |  
|                                                              |   |            |   |   |            |  
|Building and equipment, net of accumulated
      depreciation |   | 660,225    |   |   | 657,886    |  
|                                                              |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|Mineral properties, net of accumulated amortization           |   | 834,807    |   |   | 787,274    |  
|                                                              |   |            |   |   |            |  
|Total assets                                                  | $ | 1,580,705  |   | $ | 1,599,270  |  
|                                                              |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|LIABILITIES AND
      STOCKHOLDERS EQUITY                    |  
|                                                              |   |            |   |   |            |  
|Current liabilities:                                          |   |            |   |   |            |  
|Accounts payable                                              | $ | 97,271     |   | $ | 8,111      |  
|Accrued payroll and
      payroll-related expenses            |   | 9,001      |   |   | 5,715      |  
|Obligations under capital lease, current                      |   | 19,395     |   |   | 12,687     |  
|Total current liabilities                                     |   | 125,667    |   |   | 26,513     |  
|                                                              |   |            |   |   |            |  
|Obligations under capital lease, noncurrent                   |   | 53,432     |   |   | 57,388     |  
|Accrued reclamation costs                                     |   | 12,500     |   |   | 12,500     |  
|                                                              |   | 65,932     |   |   | 69,888     |  
|Total liabilities                                             |   | 191,599    |   |   | 96,401     |  
|                                                              |   |            |   |   |            |  
|Commitments and contingencies (Note 8)                        |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|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; 2005-22,602,495 and 2004-            |   |            |   |   |            |  
|21,520,800 shares issued and outstanding                      |   | 3,442,667  |   |   | 2,965,945  |  
|Accumulated deficit                                           |   | (2,053,561 | ) |   | (1,463,076 | )
|Total stockholders equity                                    |   | 1,389,106  |   |   | 1,502,869  |  
|                                                              |   |            |   |   |            |  
|Total liabilities and
      stockholders equity              | $ | 1,580,705  |   | $ | 1,599,270  |  

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

27

---

New Jersey Mining Company(A Development Stage
Company)Statements of Operations

|                                          |   |              |   |   |            |   |   | From Inception    |  
|----------------------------------------- | - | ------------ | - | - | ---------- | - | - | ----------------- | -
|                                          |   |              |   |   |            |   |   | (July 18, 1996)   |  
|                                          |   | December 31, |   |   | Through    |  
|                                          |   |              |   |   |            |   |   | December 31, 2005 |  
|                                          |   | 2005         |   |   | 2004       |   |   | (Unaudited)       |  
|Revenue:                                  |   |              |   |   |            |   |   |                   |  
|Sales of gold                             | $ | 9,280        |   | $ | -          |   | $ | 9,280             |  
|Sales of
      concentrate                |   | 252,013      |   |   | -          |   |   | 252,013           |  
|Total
      revenue                       |   | 261,293      |   |   | -          |   |   | 261,293           |  
|                                          |   |              |   |   |            |   |   |                   |  
|Costs and expenses:                       |   |              |   |   |            |   |   |                   |  
|Production costs                          |   | 242,482      |   |   | -          |   |   | 242,482           |  
|Depreciation and
      amortization       |   | 57,790       |   |   | -          |   |   | 57,790            |  
|General
      and administrative expenses |   | 454,052      |   |   | 404,895    |   |   | 1,206,703         |  
|Exploration                               |   | 132,242      |   |   | 517,006    |   |   | 770,632           |  
|Total costs and expenses                  |   | 886,566      |   |   | 921,901    |   |   | 2,277,607         |  
|                                          |   |              |   |   |            |   |   |                   |  
|Other (income) expense:                   |   |              |   |   |            |   |   |                   |  
|Timber sales                              |   | (51,695      | ) |   | -          |   |   | (51,695           | )
|Royalties, net and other                  |   | 9,391        |   |   | (2,663     | ) |   | (52,426           | )
|Interest expense                          |   | 7,516        |   |   | 3,317      |   |   | 20,418            |  
|Write-off
      of goodwill               |   | -            |   |   | -          |   |   | 30,950            |  
|Write-off of investment                   |   | -            |   |   | -          |   |   | 90,000            |  
|Total other (income) expense              |   | (34,788      | ) |   | 654        |   |   | 37,247            |  
|                                          |   |              |   |   |            |   |   |                   |  
|Net loss                                  | $ | 590,485      |   | $ | 922,555    |   | $ | 2,053,561         |  
|                                          |   |              |   |   |            |   |   |                   |  
|                                          |   |              |   |   |            |   |   |                   |  
|Net loss per common share-basic           | $ | 0.03         |   | $ | 0.05       |   | $ | 0.14              |  
|                                          |   |              |   |   |            |   |   |                   |  
|Weighted average common                   |   |              |   |   |            |   |   |                   |  
|shares outstanding-basic                  |   | 22,114,878   |   |   | 20,206,685 |   |   | 14,624,532        |  

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

28

---

NewJerseyMiningCompany(ADevelopmentStageCompany)StatementofChangesinStockholders'EquityFor the YearsEndedDecember31, 2004, and 2005, and for thePeriodFromInception(July 18, 1996)ThroughDecember31, 2005(unaudited)

TotalCommon Stock
    
    
    Accumulated
    
    
    Treasury
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Deficit
    
    
    Stock
    
    
    EquityIssuance of common stock for:Assets and liabilities of New
      Jersey Joint Venture
    
    10,000,000
    
    $
    207,968
    
    
    
    
    $
    
    
    $
    207,968Acquisition of
      Plainview Mining Company
    
    1,487,748
    
    
    148,000
    
    
    
    
    
    
    
    
    148,000Cash from sales
    
    228,816
    
    
    110,115
    
    
    
    
    
    
    
    
    110,115Services
    
    14,000
    
    
    -
    
    
    
    
    
    
    
    
    -Net loss
    
    
    
    
    
    
    $
    (44,174
    )
    
    
    
    
    (44,174
    )Balance, December 31, 1997
    
    11,730,564
    
    
    466,083
    
    
    (44,174
    )
    
    
    
    
    421,909Issuance of common stock for:Acquisition of
      Plainview Mining Company
    
    1,512,252
    
    
    152,000
    
    
    
    
    
    
    
    
    152,000Cash from sales
    
    117,218
    
    
    29,753
    
    
    
    
    
    
    
    
    29,753Services
    
    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
    )
    
    436,657Issuance 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
    )
    
    412,919Issuance of common stock for:Silver Strand
      property
    
    50,000
    
    
    68,750
    
    
    
    
    
    
    
    
    68,750Services
    
    62,100
    
    
    4,313
    
    
    
    
    
    
    
    
    4,313Net loss
    
    
    
    
    
    
    
    (20,492
    )
    
    
    
    
    (20,492
    )Balance, December 31, 2000
    
    13,569,434
    
    
    720,899
    
    
    (119,109
    )
    
    (136,300
    )
    
    465,490Issuance of common stock for:Grenfel lease
    
    1,000,000
    
    
    100,000
    
    
    
    
    
    
    
    
    100,000Lost Eagle
      property
    
    50,000
    
    
    5,000
    
    
    
    
    
    
    
    
    5,000Roughwater property
    
    255,000
    
    
    25,500
    
    
    
    
    
    
    
    
    25,500Services
    
    68,400
    
    
    6,840
    
    
    
    
    
    
    
    
    6,840Net loss
    
    
    
    
    
    
    
    (6,448
    )
    
    
    
    
    (6,448
    )Balance, December 31, 2001
    
    14,942,834
    
    
    858,239
    
    
    (125,557
    )
    
    (136,300
    )
    
    596,382


Theaccompanyingnotes are anintegralpart of thesefinancialstatements.

29

---

NewJerseyMiningCompany(ADevelopmentStageCompany)StatementofChangesinStockholders'Equity,continued:For the YearsEndedDecember31, 2004,
and 2005, and for thePeriodFromInception(July 18, 1996)ThroughDecember31, 2005(unaudited)

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


Theaccompanyingnotes are anintegralpart of thesefinancialstatements.

30

---

NewJerseyMiningCompany(ADevelopmentStageCompany)StatementofChangesinStockholders'Equity,continued:For the YearsEndedDecember31, 2004,
and 2005, and for thePeriodFromInception(July 18, 1996)ThroughDecember31, 2005(unaudited)

TotalCommon Stock
    
    
    Accumulated
    
    
    Treasury
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Deficit
    
    
    Stock
    
    
    EquityBalance, December 31, 2004
    
    21,520,800
    
    $
    2,965,945
    
    $
    (1,463,076
    )
    
    -
    
    $
    1,502,869Issuance of common stock for:Cash
    
    309,100
    
    
    125,000
    
    
    
    
    
    
    
    
    125,000Exercise of stock purchase
      warrants
    
    195,250
    
    
    78,100
    
    
    
    
    
    
    
    
    78,100Management and
      directors fees
    
    334,275
    
    
    132,725
    
    
    
    
    
    
    
    
    132,725Services
    
    82,170
    
    
    37,826
    
    
    
    
    
    
    
    
    37,826Exploration and
      lease
    
    149,400
    
    
    74,321
    
    
    
    
    
    
    
    
    74,321Equipment
    
    11,500
    
    
    4,700
    
    
    
    
    
    
    
    
    4,700Value of shares issued in
      prior years
    
    -
    
    
    24,050
    
    
    
    
    
    
    
    
    24,050Net loss
    
    
    
    
    
    
    
    (590,485
    )
    
    
    
    
    (590,485
    )Balance, December 31, 2005
    
    22,602,495
    
    $
    3,442,667
    
    $
    (2,053,561
    )
    
    -
    
    $
    1,389,106


Theaccompanyingnotes are anintegralpart of thesefinancialstatements.

31

---

New Jersey Mining Company(A Development Stage
Company)Statements of Cash FlowsFor the Years Ended
December 31, 2005 and 2004,And from Inception (July 18, 1996)
through December 31, 2005

|                                                      |   |              |   |   |                 |   |   | From Inception    |  
|----------------------------------------------------- | - | ------------ | - | - | --------------- | - | - | ----------------- | -
|                                                      |   | Years Ended  |   |   | (July 18, 1996) |  
|                                                      |   | December 31, |   |   | Through         |  
|                                                      |   |              |   |   |                 |   |   | December 31, 2005 |  
|                                                      |   | 2005         |   |   | 2004            |   |   | (Unaudited)       |  
|Cash flows from operating
      activities:           |   |              |   |   |                 |   |   |                   |  
|Net loss                                              | $ | (590,485     | ) | $ | (922,555        | ) | $ | (2,053,561        | )
|Adjustments to reconcile net loss to net cash         |   |              |   |   |                 |   |   |                   |  
|used by operating activities:                         |   |              |   |   |                 |   |   |                   |  
|Depreciation and amortization                         |   | 57,790       |   |   | -               |   |   | 57,790            |  
|Write-off of equipment                                |   | 11,272       |   |   | -               |   |   | 11,272            |  
|Write-off of goodwill and investment                  |   | -            |   |   | -               |   |   | 120,950           |  
|Stock issued for:                                     |   |              |   |   |                 |   |   |                   |  
|Management and directors fees                        |   | 148,625      |   |   | 90,754          |   |   | 397,474           |  
|Services                                              |   | 37,826       |   |   | 14,550          |   |   | 72,267            |  
|Exploration and lease                                 |   | 16,321       |   |   | 12,000          |   |   | 36,321            |  
|Change in:                                            |   |              |   |   |                 |   |   |                   |  
|Product inventory                                     |   | (68,810      | ) |   |                 |   |   | (68,810           | )
|Other assets                                          |   | 2,346        |   |   |                 |   |   | 1,722             |  
|Accounts payable                                      |   | 89,160       |   |   | (3,499          | ) |   | 94,301            |  
|Accrued payroll and related payroll expense           |   | 3,286        |   |   | 5,715           |   |   | 9,001             |  
|Accounts payable to related party                     |   | -            |   |   | (2,000          | ) |   |                   |  
|Accrued reclamation costs                             |   | -            |   |   | -               |   |   | 12,500            |  
|Net cash used by
      operating activities           |   | (292,669     | ) |   | (805,035        | ) |   | (1,308,773        | )
|                                                      |   |              |   |   |                 |   |   |                   |  
|Cash flows from investing
      activities:           |   |              |   |   |                 |   |   |                   |  
|Purchases of buildings
      and equipment            |   | (30,600      | ) |   | (294,734        | ) |   | (399,468          | )
|Purchases
      of mineral properties                 |   | -            |   |   | -               |   |   | (5,904            | )
|Cash of acquired
      companies                      |   | -            |   |   | -               |   |   | 38,269            |  
|Deferral
      of development costs                   |   | -            |   |   | -               |   |   | (225,535          | )
|Net cash used by investing
      activities           |   | (30,600      | ) |   | (294,734        | ) |   | (592,638          | )
|                                                      |   |              |   |   |                 |   |   |                   |  
|Cash flows from financing activities:                 |   |              |   |   |                 |   |   |                   |  
|Exercise
      of stock purchase warrants             |   | 78,100       |   |   | 398,750         |   |   | 677,600           |  
|Sales of common stock,
      net of issuance costs    |   | 125,000      |   |   | 511,440         |   |   | 1,323,807         |  
|Principal
      payments on capital lease             |   | (14,732      | ) |   | (4,925          | ) |   | (63,133           | )
|Payments on note payable
      to bank                |   | -            |   |   | -               |   |   | (20,000           | )
|Net cash provided by financing activities             |   | 188,368      |   |   | 905,265         |   |   | 1,918,274         |  
|                                                      |   |              |   |   |                 |   |   |                   |  
|Net change in cash                                    |   | (134,901     | ) |   | (194,504        | ) |   | 16,863            |  
|Cash, beginning of period                             |   | 151,764      |   |   | 346,268         |   |   | 0                 |  
|Cash, end of period                                   | $ | 16,863       |   | $ | 151,764         |   | $ | 16,863            |  
|                                                      |   |              |   |   |                 |   |   |                   |  
|Interest paid in cash                                 | $ | 7,516        |   | $ | 3,042           |   | $ | 10,558            |  
|Non-cash investing and financing activities:          |   |              |   |   |                 |   |   |                   |  
|Common stock issued for:                              |   |              |   |   |                 |   |   |                   |  
|Equipment                                             | $ | 5,850        |   | $ | 16,476          |   | $ | 22,326            |  
|Mineral
      properties                              | $ | 65,000       |   |   |                 |   | $ | 264,300           |  
|Acquisitions of
      companies, excluding cash       |   |              |   |   |                 |   | $ | 743,653           |  
|Capital lease obligation for
      equipment acquired | $ | 17,485       |   | $ | 75,000          |   | $ | 110,760           |  

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

32

---

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 EstimatesThe
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 RecognitionRevenue 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. The majority of the Companys gold concentrate sales are to one
customer, Barrick Goldstrike Mines of Carlin, Nevada.

33

---

New Jersey Mining Company(A Development Stage
Company)Notes to Financial Statements, continued:

|2. | Summary of Significant Accounting Policies,
      continued:
|-- | ------------------------------------------------------------

Inventory Dore' and
concentrate inventories are stated at the lower of cost or net realizable value
determined by using a weighted average method.

Income TaxesIncome 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.

Fair Values of Financial
Instruments The carrying amounts of financial instruments including cash
and cash equivalents, accounts payable, and accrued payroll and payroll-related
expenses approximated their fair values as of December 31, 2005 and 2004.

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, 2005 and 2004, 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.

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. 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.

34

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|2. | Summary of Significant Accounting Policies,
      continued:
|-- | ------------------------------------------------------------

Mineral Properties, continued:
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 operating expenses in the
period they occur, and capitalizes exploration costs on discrete mineralized
bodies that have proven reserves and are in development or production. Mine
development costs are capitalized after proven and probable reserves have been
identified and classified as deferred development costs until production ensues.
Amortization is calculated using the units-of-production method over the
expected life of the operation based on the estimated recoverable mineral
ounces.

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, existing metals prices, operating capital and costs, and
reclamations costs. All costs used in the carrying value analyses are
un-escalated. 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.

Reclamation and Remediation
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.

35

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|2. | Summary of Significant Accounting Policies,
      continued:
|-- | ------------------------------------------------------------

Reclamation and Remediation
continued: 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.

Common Stock Issued Other than for
Cash 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.

Recent Pronouncements In
November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No.
151, Inventory Costs, an Amendment of ARB No. 43, Chapter 4. SFAS 151 amends
ARB 43, Chapter 4, to clarify that abnormal amounts of idle facility expense,
freight, handling costs and wasted materials (spoilage) be recognized as
current period charges. It also requires that allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the
production facilities. SFAS 151 is effective for inventory costs incurred during
fiscal years beginning after June 15, 2005. The adoption of SFAS 151 is not
expected to have a material effect on the Companys financial statements.

36

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|2. | Summary of Significant Accounting Policies,
      continued:
|-- | ------------------------------------------------------------

Recent Pronouncements,
continued: In December 2004, the FASB issued SFAS No. 153, Exchanges of
Nonmonetary Assets, an Amendment of APB Opinion No. 29. The guidance in APB
Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the
principle that exchanges of nonmonetary assets should be measured based on the
fair value of the assets exchanged. The guidance in APB Opinion No. 29, however,
included certain exceptions to that principle. SFAS No. 153 amends APB Opinion
No. 29 to eliminate the exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
nonmonetary asset exchanges in fiscal periods beginning after June 15, 2005. The
adoption of SFAS No. 153 is not expected to have a material effect on the
Companys financial statements.

In December 2004, the FASB issued SFAS
No. 123(R), Share-Based Payment. This Statement is a revision to SFAS No. 123,
Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees. SFAS No. 123(R) requires the
measurement of the cost of employee services received in exchange for an award
of equity instruments based on the grant-date fair value of the award. The cost
will be recognized over the period during which an employee is required to
provide service in exchange for the award. No compensation cost is recognized
for equity instruments for which employees do not render service. When adopted,
the Company will be required to recognize compensation cost as expense for the
portion of outstanding unvested awards, based on the grant-date fair value of
those awards calculated using an option pricing model. Statement 123(R) is
effective for small business issuers at the beginning of the first interim or
annual period beginning after December 15, 2005. The Company is currently
evaluating the effect this new pronouncement will have on the financial
statements.

In March 2005, the FASB issued FASB
Interpretation No. 47 Accounting for Conditional Asset Retirement Obligations 
an Interpretation of SFAS No. 143. FIN No. 47 provides clarification of the
term conditional asset retirement obligation as used in paragraph A23 of SFAS
No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 applies to
legal obligations associated with the retirement of a tangible long-lived asset,
and states that an entity shall recognize the fair value of a liability for an
asset retirement obligation in the period in which it is incurred if a
reasonable estimate of fair value can be made.

37

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|2. | Summary of Significant Accounting Policies,
      continued:
|-- | ------------------------------------------------------------

Recent Pronouncements, continued:The term conditional asset retirement obligation refers to a legal
obligation to perform an asset retirement activity in which the timing and/or
method of settlement are conditional on a future event that may or may not be
within the control of the entity. The obligation to perform the asset retirement
activity is unconditional even though uncertainty exists about the timing and/or
method of settlement. Thus, the timing and/or method of settlement may be
conditional on a future event. Accordingly, an entity is required to recognize a
liability for the fair value of a conditional asset retirement obligation if the
fair value of the liability can be reasonably estimated. FIN No. 47 became
effective on January 1, 2006, although we do not expect the adoption to have a
material effect on our consolidated financial statements.

In June 2005, the FASB issued SFAS No.
154, Accounting Changes and Error Corrections. SFAS No. 154 changes the
accounting and reporting for voluntary changes in accounting principles, whereby
the effects will be reported as if the newly adopted principle has always been
used. SFAS No. 154 also includes minor changes concerning the accounting for
changes in estimates, correction of errors and changes in reporting entities.
SFAS No. 154 is effective for accounting changes and error corrections made in
fiscal years beginning after December 15, 2005.

|3. | Buildings and Equipment
|-- | -----------------------

Buildings and equipment at December 31,
2005 and 2004, consisted of the following:

2005
    
    
    2004Mill building at cost
    $
    55,689
    
    $
    51,223Milling equipment at cost
    
    549,093
    
    
    532,538Less
      accumulated depreciation
    
    (13,837
    )
    
    --Total mill
    $
    590,945
    
    $
    583,761Mine building and equipment at cost
    
    95,766
    
    
    74,125Less
      accumulated depreciation
    
    (26,486
    )
    
    --Total mine building and equipment
    
    69,280
    
    
    74,125Total
    $
    660,225
    
    $
    657,886


Buildings and equipment were placed in
service during 2005, so depreciation was taken.

38

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|3. | Buildings and Equipment,
  continued:
|-- | -------------------------------------

At December 31, 2005 and 2004, milling
equipment included assets under capital lease amounting to $92,485, and $75,000,
respectively. The leases have been amortized over the terms of the respective
lease. Accumulated amortization at December 31, 2005 was approximately $3,900.
Future minimum lease payments for the related obligations under capital lease
are $19,395 in 2006, $21,595 in 2007, $21,046 in 2008, and $10,791 in 2009.

|4. | Mineral Properties and Deferred Development
      Costs                
|-- | -----------------------------------------------------------------------
|   |                                                                        
|   | Mineral properties and deferred development costs are as
      follows:

December
        31, 2004DeferredProperties
      
      
      Costs
      
      
      TotalNew Jersey MineGrenfel
      $
      100,000
      
      $
      7,324
      
      $
      107,324Coleman
      
      265,000
      
      
      221,446
      
      
      486,446Silver Strand
      
      74,704
      
      
      58,300
      
      
      133,004CAMP
      
      30,000
      
      
      
      
      
      30,000Roughwater
      
      25,500
      
      
      
      
      
      25,500Lost Eagle
      
      5,000
      
      
      
      
      
      5,000Total
      $
      500,204
      
      $
      287,070
      
      $
      787,274


December
        31, 2005DeferredProperties
      
      
      Costs
      
      
      TotalNew Jersey MineGrenfel
      $
      100,000
      
      $
      7,324
      
      $
      107,324Coleman
      
      265,000
      
      
      221,446
      
      
      486,446Golden Chest
      
      65,000
      
      
      
      
      
      65,000Silver Strand
      
      74,704
      
      
      58,300
      
      
      133,004CAMP
      
      30,000
      
      
      
      
      
      30,000Roughwater
      
      25,500
      
      
      
      
      
      25,500Lost Eagle
      
      5,000
      
      
      
      
      
      5,000Less AccumulatedAmortization
      
      (17,467
      )
      
      
      
      
      (17,467
      )Total
      $
      547,737
      
      $
      287,070
      
      $
      834,807


39

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|4. | Mineral Properties and Deferred Development Costs,
      continued:
|-- | -------------------------------------------------------------------

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.
Deferred development costs at December 31, 2005 and 2004, consist primarily of
drilling and tunnel development expenditures.

ColemanThe 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.
Deferred development costs at December 31, 2005 and 2004, consist primarily of
drilling and tunnel development expenditures.

Silver StrandThe 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. The Company valued the
property at $74,704 which represented the estimated market value of the property
at the date of acquisition. Deferred development costs at December 31, 2005 and
2004, consist primarily of drilling and permitting expenditures.

CAMP The CAMP property was
acquired as part of the Companys acquisition of Plainview Mining Company in
1997. The CAMP property covers approximately 380 acres and is an underground
exploration project. The Company holds a 17.75% interest in the CAMP property;
the remaining ownership is held by various other mining companies, including
Coeur dAlene Mines Corporation, which acts as the operator. The Company
receives a $100 monthly advance royalty payment and will receive a 7.1% net
profits interest, if the property is put into production.

40

---

**NewJersey Mining Company**(A Development
Stage Company)**Notes to Financial Statements, continued:**

|4. | Mineral Properties and Deferred Development Costs,
      continued:
|-- | -------------------------------------------------------------------

Roughwater/Silver ButtonThe
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 EagleLost 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 TeddyThe 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. Bureau
  of Land Management. 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, 2005, the gold price that would cause additional
production royalties to be payable was $662 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 September 5, 2003, the Company entered into an exploration agreement and
  lease option with Paymaster Resources, Inc. (Paymaster) to explore
  the Golden Chest property. The exploration agreement, with option to lease,
  was subsequently assigned to Metaline Contact Mines (Metaline) in
  February 2004. The term of the exploration agreement was 21⁄2 years, commencing
  June 13, 2003. Pursuant to the terms of the agreement, the Company conducted
  an economic study of the Golden Chest open pit resource. As consideration for
  the agreement, the Company issued Paymaster (Metaline) 10,000 shares of its
  common stock during every six-month period of the exploration agreement.

41

---

**NewJersey Mining Company**(A Development
Stage Company)**Notes to Financial Statements, continued:**

|4. | Mineral Properties and Deferred Development Costs,
      continued:
|-- | -------------------------------------------------------------------

Golden Chest Mining Leases, continued:
  
  Under this exploration agreement, 20,000 shares were issued in both 2004 and
  2003. During 2004 and 2003, the Company recorded $12,000 and $8,000, respectively
  of exploration expense in connection with these issuances based upon its estimate
  of the fair value of the shares of common stock issued.

On November 7, 2003, the Company signed
an exploration agreement and lease option with Prichard Creek Resource Partners
LLC (Prichard) to explore Prichards property, which is adjacent to the Golden
Chest. The term of the exploration agreement is 21⁄2 years commencing June 13,
2003. On January 3, 2005, the Company exercised the Option to Lease the Golden
Chest mine in accordance with the exploration agreements with Metaline and
Prichard, thus terminating the exploration agreements. The terms of both lease
agreements are 15 years. The Company issued 130,000 shares of restricted common
stock upon the signing of these leases. Each lease requires the Company to pay
either Metaline or Prichard, depending on which claims the production came from,
a royalty of 3% of net smelter returns. Both leases also have an additional net
smelter royalty of up to another 3% tied to a sliding scale gold price indexed
to the June 2003 Consumer Price Index (CPI). Using the December 2004 CPI, the
gold trigger prices for additional net smelter royalties were as follows: less
than $429 = no additional royalty, $429 to $482 = 1.0%, $482 to $536 = 1.5%,
$536 to $589 = 2.0%, and greater than $589 = 3.0% . Thus, the maximum net
smelter royalty that can be paid is 6%. For the year ending December 31, 2005,
648.8 ounces of gold were sold and $10,089 in royalties were paid to Metaline.

In addition to the royalty, the Company
is obligated to pay 50,000 shares of its common stock to Metaline after each
successive increment of 10,000 troy ounces of gold sold from the property and a
one-time payment of 30,000 shares to Prichard upon commencement of commercial
production.

|5. | Income Taxes
|-- | ------------

The Company did not record an income
tax provision for the years ended December 31, 2005 or 2004, as it had no
taxable income. At December 31, 2005 and 2004, the Company had federal net
operating loss carry forwards available for income tax purposes of approximately
$2,000,000 and $1,400,000, respectively, which will expire through 2025, and
associated deferred tax assets of approximately $680,000 and $476,000,
respectively. The deferred tax assets were calculated assuming a 34% marginal
tax rate, and have been fully reserved for as management believes it is more
likely than not that the deferred tax assets will not be utilized.

42

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|5. | Income Taxes, continued:                                                
|-- | ------------------------------------------------------------------------
|   |                                                                         
|   | The Companys net operating loss carry forwards expire as
      follows:

Year
    Carry Forward2017
    $ 33,0002018
    27,0002021
    4,0002022
    36,0002023
    380,0002024
    930,0002025
    590,000$2,000,000


|6. | 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,
2005 or 2004.

Private Placements In
November 2003, the Company offered units consisting of shares of its common
stock and common stock purchase warrants, in a non-brokered private placement,
to certain investors pursuant to Regulation D, Rule 506. The Company offered
2,000,000 units at $0.40 per unit. Each unit consisted of one share of the
Company's restricted common stock and a one-half stock purchase warrant, whereby
each whole warrant could purchase one share of the Company's restricted common
stock at $0.70 per share until April 1, 2005. Through December 31, 2003, 795,000
units had been sold generating net proceeds of $318,000. On February 19, 2004,
the Company completed this placement, resulting in the sale of an additional
932,500 units that generated additional proceeds of approximately $372,000.

In November 2004, the Company offered
units consisting of shares of its common stock and common stock purchase
warrants, in a non-brokered private placement, to certain investors pursuant to
Regulation D, Rule 506. The Company offered 2,700,000 units at $0.55 per
unit.

43

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|6. | Equity, continued
|-- | -----------------

Private Placements, continued:
Each unit consisted of one share of the Company's restricted common stock
and a one-half stock purchase warrant, whereby each whole warrant could purchase
one share of the Company's restricted common stock at $0.85 per share until
April 1, 2006. Through December 31, 2004, 251,700 units had been sold generating
net proceeds of $137,940. On January 31 2005, the Company completed this
placement, resulting in the sale of an additional 9,100 units that generated
additional proceeds of approximately $5,000.

On March 29, 2005 the Company completed
an offering of units consisting of shares of its common stock and common stock
purchase warrants, in a non-brokered private placement, to certain investors
pursuant to Regulation D, Rule 506. The Company sold 200,000 units at $0.40 per
unit and generated $80,000 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 $0.60 per
share until April 1, 2007.

On October 12, 2005 the Company
completed an offering of units consisting of shares of its common stock and
common stock purchase warrants, in a non-brokered private placement, to certain
investors pursuant to Regulation D, Rule 506. The Company sold 100,000 units at
$0.40 per unit and generated $40,000 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
$0.60 per share until June 1, 2010.

Exercise of Warrants 
  During 2005 and 2004, 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 2005 and 2004,
  the Company issued 195,250 and 1,437,500 shares, respectively, of its restricted
  common stock at prices ranging from $0.25 to $.70 per share, generating net
  proceeds of $78,100 and $398,750, respectively, pursuant to the exercise of
  these warrants.

44

---

**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|6. | Equity, continued
|-- | -----------------

Stock Purchase Warrants OutstandingTransactions in common stock purchase warrants for the years ended
December 31, 2005, 2004, are as follows:

| |                                                       |  | Number of  |     |   | Exercise  | 
| | ----------------------------------------------------- |  | ---------- | --- | - | --------- | 
| |                                                       |  | Warrants   |     |   | Prices    | 
| | Balance, December 31, 2003                            |  | 1,747,500  |     | $ | 0.25-0.70 | 
| | Issued in connection with
      warrants exercised(1) |  | 547,500    |     |   | 0.70      | 
| | Issued in connection with private placement           |  | 731,475    |     |   | 0.60-0.85 | 
| | Exercised                                             |  | (1,437,500 | )   |   | 0.25-0.70 | 
| | Cancelled                                             |  | (83,750    | )   |   | 0.60-0.70 | 
| | Balance, December 31, 2004                            |  | 1,505,225  |     |   | 0.60-0.85 | 
| | Issued in connection with warrants
      exercised(1) |  | 195,250    |     |   | 0.60      | 
| | Issued in connection with
      private placement     |  | 309,550    |     |   | 0.60-0.85 | 
| | Exercised                                             |  | (195,250   | )   |   | 0.40      | 
| | Expired                                               |  | (750,625   | )   |   | 0.60-0.70 | 
| | Balance, December 31, 2005                            |  | 1,064,150  | (2) |   | 0.60-0.85 | 

| | (1) | During 2005 and 2004, the Company issued 195,250 and
      547,500 stock purchase warrants, respectively, to investors as an
      inducement to exercise warrants previously granted.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                       
| | (2) | These warrants expire as
follows:                                                                                                                                                     

Shares
    Price
    Expiration Date66,400
    $0.85
    April 1, 2006502,500
    $0.70
    September 1, 2006200,000
    $0.70
    April 1, 2007295,250
    $0.60
    June 1, 20101,064,150


Common Stock Issued for EquipmentDuring 2005 and 2004, the Company issued 11,500 and 28,650 shares,
respectively, of its restricted common stock to vendors for equipment purchased.
The Company recorded $4,700 and $16,476, respectively, during 2005 and 2004,
based upon the value of the equipment purchased and shares issued.

45

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**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements, continued:**

|6. | Equity, continued
|-- | -----------------

Common Stock Issued for Services
  During 2005 and 2004, the Company issued 82,170 and 26,750 shares,
respectively, of its restricted common stock for services rendered the Company.
The Company recorded $37,826 and $14,550, respectively, based upon the value of
the services rendered and the shares issued.

|7. | 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 notes 4 and 6, the Company had the following transactions with
  related parties:

| | During the years ended December 31, 2005 and 2004,
            the Company issued 274,275 and 75,700 shares, respectively, of its
            restricted common stock valued at $111,125 and $48,617, respectively,
            to Fred Brackebusch for management services. During 2004, the Company
            issued 7,760 shares of its restricted common stock, valued at $4,656,
            to Grant Brackebusch for management services.During the years ended December 31, 2005 and 2004,
            the Company issued 60,000 and 70,000 shares, respectively, of its
            restricted common stock to members of the Board of Directors for their
            services as directors. Fred, Grant and Tina Brackebusch each received
            10,000 shares as directors of the Company. These stock awards were
            recorded as directors' fees of $21,600 and $49,000, respectively,
            based upon the estimated value of the shares issued and services rendered.
        During the year ended December 31, 2005, the Company
            issued 11,700 shares of its restricted common stock valued at $4,500
            to Mine Systems Design, Inc. (MSD) for office rent, and also issued
            6,650 shares of its restricted common stock valued at $2,658 to MSD
            for equipment. The Company paid $1,500 to MSD for office rent in the
            first quarter of 2005. During the year ended December 31, 2004, the
            Company paid MSD $2,000 for equipment and $4,000 for rental of office
            equipment. The Company also issued MSD 9,200 shares of its restricted
            common stock valued at $5,520 for a vehicle.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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**New Jersey Mining Company**(A
Development Stage Company)**Notes to Financial Statements,
continued:**

|8. | Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | At December 31, 2005 and 2004, the Company had accrued
      $12,500 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 (CERCLA), and have entered into
      consent decrees with the Environmental Protection Agency 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|9. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On December 20, 2005 the Companys Board of Directors
      authorized a private placement of stock to raise funds for the Companys
      proposed exploration program. The offering consisted of 4,000,000 units at
      a price of $0.30 per unit with each unit consisting of one share of
      restricted common stock plus one full warrant whereby each whole warrant
      could purchase one share of the Company's restricted common stock at $0.50
      per share until March 1, 2008. The offering was made in a non-brokered
      private placement to certain investors pursuant to Regulation D, Rule 506.
      As of March 28, 2006, 1,430,000 units had been sold generating proceeds of
      $429,000.                                                                                                                                                                                                                                                                                                                                                 

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ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 8A.

CONTROLS AND PROCEDURES

An evaluation was performed by the Company's president and
principal accounting officer of the effectiveness of the design and operation of
the Companys disclosure controls and procedures. Based on that evaluation, the
president and principal accounting officer concluded that disclosure controls
and procedures were effective as of December 31, 2005, in ensuring that all
material information required to be filed in this annual report has been made
known to them in a timely fashion.

There has been no change in our internal control over financial
reporting during the year ended December 31, 2005, that has materially affected,
or is reasonably likely to materially affect, the Companys internal control
over financial reporting.

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PART III

ITEM 9.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Name & Address
    Age
    Position
    Date First ElectedFred W. Brackebusch P.O. Box 1019
      Kellogg, Idaho 83837
    61
    President, Director &
      Treasurer
    7/18/1996Grant A. Brackebusch P.O. Box 131
      Silverton, ID 83867
    36
    Vice President & Director
    7/18/1996Ivan R. Linscott 7150 Burke Road Wallace,
      ID 83873
    63
    Director
    9/21/2004William C. Rust (1) P.O. Box 648 Wallace,
      ID 83873
    59
    Director
    9/21/2004M. Kathleen Sims (1) 2745 Seltice Way
      Coeur dAlene, ID 83814
    61
    Director
    9/25/2003Tina C. Brackebusch P.O. Box 131
      Silverton, ID 83867
    36
    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 25 years of experience
in the Coeur d'Alene Mining District principally with Hecla Mining Co. He has
been the principal owner of Mine Systems Design, Inc., a mining consulting
business, since 1987. Mr. Brackebusch is also on the Board of Directors of
Mascot Silver-Lead Mines, Inc.

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 3 years. He also has worked with Mine
Systems Design, Inc. performing various engineering and geotechnical tasks. He
supervises the daily operations of New Jersey Mining Co. which include mine
operations, mill operations, management of contractors, construction,
engineering, and is also responsible for the Companys environmental monitoring
and permitting.

Ivan R. Linscott, PhDis 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

49

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the New Horizons Mission to encounter the planet Pluto. Dr.
Linscott has a strong interest in doing research on exploration techniques in
the Coeur dAlene Mining District.

William C. Rustis 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.

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 or 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

50

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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.

ITEM 10.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

Name & Principal
      Position
    Year
    Salary ($)
    Bonus ($)
    Other Annual Comp. ($)
    Restricted Stock Awards ($)
    Securities Underlying
      Options (#)
    LTIP Payouts ($)
    All Other Compensation ($)Fred Brackebusch President
    2003
    0
    0
    0
    75,564
    0
    0
    02004
    36,000
    0
    0
    41,754
    0
    0
    02005
    36,000
    0
    0
    114,725
    0
    0
    0Grant Brackebusch Vice
      Pres.
    2003
    0
    0
    0
    75,481
    0
    0
    02004
    72,000
    0
    0
    7,000
    0
    0
    02005
    72,000
    0
    0
    3,600
    0
    0
    0Ivan R. Linscott Director
    2003
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A2004
    0
    0
    0
    7,000
    0
    0
    02005
    0
    0
    0
    3,600
    0
    0
    0William C. Rust Director
    2003
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A2004
    0
    0
    0
    7,000
    0
    0
    02005
    0
    0
    0
    3,600
    0
    0
    0M. Kathleen Sims Director
    2003
    0
    0
    0
    1,200
    0
    0
    02004
    0
    0
    0
    7,000
    0
    0
    02005
    0
    0
    0
    3,600
    0
    0
    0Tina C. Brackebusch
      Secretary
    2003
    0
    0
    0
    1,200
    0
    0
    02004
    2,070
    0
    0
    7,000
    0
    0
    02005
    
    0
    0
    3,600
    0
    0
    0


At a Board of Directors meeting on December 9, 2003, the
Directors approved a compensation plan for the Board of Directors and
Management. For the Directors and the Secretary it was approved to increase the
annual compensation to 10,000 common shares of restricted stock, commencing in
2004. Also, as a result of the need for full time management the following
salaries were approved for 2004 by the Directors: Fred W. Brackebusch, $3,000
per month for management, Grant A. Brackebusch, $6,000 per month for management
and Tina C. Brackebusch, $12 per hour for secretarial work.

Officers and Directors were paid for their services with 3,000
shares of restricted common stock per year for the year 2003 and 10,000 shares
of restricted common stock in 2004 and 2005. A value of $0.40 per share was
ascribed to the shares in 2003, $0.70 per share in 2004, and $0.36 per share in
2005.

51

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ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

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 6, 2005.

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)
      577,075 direct
    37.56%Common
    Grant A. Brackebusch
      P.O. Box 131 Silverton, ID 83837
    918,793 indirect (b)
      259,136 direct
    5.21%Common
    Terry & Marguerite
      Tyson County Road U Lipscomb, TX 79056
    1,719,500 direct
      612,000 indirect
    10.31%Common
    Ivan R. Linscott,
      Director 7150 Burke Road Wallace, ID 83873
    20,000
    0.09%Common
    William C. Rust,
      Director P.O. Box 648 Wallace, ID 83873
    20,000
    0.09%Common
    M. Kathleen Sims,
      Director 2745 Seltice Way Coeur dAlene, ID 83814
    23,000
    0.10%Common
    Tina C. Brackebusch,
      Secretary P.O. Box 131 Silverton, ID 83867
    38,000
    0.17%Common
    All Directors and
      Officers as a group (6 individuals)
    9,771,761
    43.22%


(1)Based upon 22,609,995 outstanding shares of common stock at
March 6, 2006.

(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 have the right to acquire any
securities pursuant to options, warrants, conversion privileges or other rights.

(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 have the right to acquire any
securities pursuant to options, warrants, conversion privileges or other
rights.

None of the directors or officers have the right to acquire any
securities pursuant to options, warrants, conversion privileges or other rights.

52

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ITEM 12.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the years ended December 31, 2005 and 2004, the Company
issued 60,000 and 70,000 shares, respectively, 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 $21,600 and $49,000, respectively,
based upon the estimated value of the shares issued and services rendered. Fred,
Grant, and Tina Brackebusch each received 10,000 shares as Directors or Officers
in each respective year.

During the years ended December 31, 2005 and 2004, the Company
issued 274,275 and 75,700 shares, respectively, of its restricted common stock
valued at $111,125 and $48,617, respectively, to Fred Brackebusch for management
services. During 2004, the Company issued 7,760 shares of its restricted common
stock, valued at $4,656, to Grant A. Brackebusch for management services.

During the year ended December 31, 2005, the Company issued
11,700 shares of its restricted common stock valued at $4,500 to Mine Systems
Design, Inc. (MSD) for office rent, and also issued 6,650 shares of its
restricted common stock valued at $2,658 to MSD for equipment. The Company paid
$1,500 to MSD for office rent in the first quarter of 2005. During the year
ended December 31, 2004, the Company issued 9,200 shares of its restricted
common stock to MSD for a pickup valued at $5,520, and paid MSD $2,000 for
equipment and $4,000 for rent.

53

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ITEM 13.

EXHIBITS AND REPORTS ON FORM 8-K

(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 registration
          statement 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.(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-14(a)/15d-14(a) Certifications(31)(i)
      Certification
          of Fred W. Brackebusch(32)
      Section 1350 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.


Reports on Form 8-K

None.

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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 Companys annual
financial statements for the fiscal years ended December 31, 2005 and 2004 and
the review for the financial statements included in the Companys quarterly
reports on Form 10-QSB during those fiscal years were $17,755 and $19,148
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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55

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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 29, 2006 | By/s/FRED W. BRACKEBUSCH                                  
|-------------------- | ----------------------------------------------------------
|                     | Fred W. Brackebusch, President, Treasurer &
      Director
|                     |                                                           
|Date: March 29, 2006 | By/s/GRANT A. BRACKEBUSCH                                 
|                     | Grant A. Brackebusch, Vice President &
      Director     
|                     |                                                           
|Date: March 29, 2006 | By/s/IVAN R. LINSCOTT                                     
|                     | Ivan R. Linscott, Director                                
|                     |                                                           
|Date: March 29, 2006 | By/s/WILLIAM C. RUST                                      
|                     | William C. Rust, Director                                 
|                     |                                                           
|Date: March 29, 2006 | By/s/M. KATHLEEN SIMS                                     
|                     | M. Kathleen Sims, Director                                

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