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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(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, 2008

[ ] 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      | (I.R.S. employer identification No.)
|of incorporation or organization) |                                     

89 Appleberg Road, Kellogg, Idaho 83837(Address of principal executive offices) (zip code)

(208) 783-3331Registrants telephone
number, including area code

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

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X ]

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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-K 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-K
or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of large accelerated filer, accelerated
filer and small reporting company in Rule 12b-2 of the Exchange Act.

|Large Accelerated Filer ___ | Accelerated Filer ___        
|--------------------------- | -----------------------------
|Non-Accelerated Filer ___   | Smaller reporting company   X

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

The 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 June 30, 2008 was $9,960,000.

On March 10, 2009 there were 37,169,692 shares of the
registrants Common Stock outstanding.

1

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TABLE OF CONTENTS

|Glossary of Significant Mining Terms | 3                                                                                                   
|------------------------------------ | ----------------------------------------------------------------------------------------------------
|                                     |                                                                                                     
|                                     | PART I                                                                                              
|                                     |                                                                                                     
|Item 1.                              | Description of the Business                                                                         
|Item 2.                              | Description of Properties                                                                           
|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.                              | Selected Financial Data                                                                             
|Item 7.                              | Management's Discussion and
      Analysis of Financial Condition  and Results of Operations        
|Item 7A.                             | Quantitative and Qualitative Disclosures about Market Risk                                          
|Item 8.                              | Financial Statements                                                                                
|Item 9                               | Changes In and Disagreements
      With Accountants on Accounting and Financial Disclosure          
|Item 9A                              | Controls and Procedures                                                                             
|Item 9B                              | Other Information                                                                                   
|                                     |                                                                                                     
|                                     | PART III                                                                                            
|                                     |                                                                                                     
|Item 10.                             | Directors, Executive Officers, and Corporate                                                        
|Item 11.                             | Executive Compensation                                                                              
|Item 12.                             | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
|Item 13.                             | Certain Relationships and Related Transactions, and Director
      Independence                     
|Item 14.                             | Principal Accountant Fees and Services                                                              
|                                     |                                                                                                     
|                                     | PART IV                                                                                             
|                                     |                                                                                                     
|Item 15.                             | Exhibits                                                                                            
|                                     |                                                                                                     
|Signatures                           |                                                                                                     
|                                     |                                                                                                     
|Certifications                       |                                                                                                     

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GLOSSARY OF SIGNIFICANT MINING TERMS

Ag-Silver.

Au-Gold.

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

Argillites-Metamorphic rock containing clay minerals.

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

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

Bedrock-Solid rock underlying overburden.

Cu-Copper.

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

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

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

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

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

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

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

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

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

GPT-grams per metric tonne.

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

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

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

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

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

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

Pyrite-An iron sulfide. A common mineral associated with gold
mineralization.

Quartz-Crystalline silica (SiO2). An important
  rock-forming and gangue material in gold veins.

Quartzites-Metamorphic rock
  containing quartz.

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

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

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

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

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

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

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

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

Wallrock-Barren rock surrounding a vein.

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

Any Bankruptcy, Receivership or Similar
ProceedingsThere have been no bankruptcy, receivership, or
similar proceedings.

Any Material Reclassification, Merger, Consolidation, or
Purchase or Sale of a Significant Amount ofAssets Not in
the Ordinary Course of Business.There have been no material
reclassifications, mergers, consolidations, purchases, or sales for the past
three years.

BUSINESS OF THE COMPANY

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

The Company is executing a strategy of mineral exploration that
is focused on the Belt Basin area of northern Idaho and western Montana. See
Location Map. Our mineral processing plant has been processing ore and other
mineralized material from the Golden Chest, New Jersey, and Silver Strand
properties for the past four years. Our strategy is to produce some income from
these properties while we explore them at depth by driving ramps or drifts to
and along the mineralized structures. We can then mine and process any economic
material to help offset our exploration costs. We also conduct exploratory
diamond drilling and grassroots exploration in the area. Feed for the mill in
2008 was sourced from the Coleman vein at the New Jersey mine and from the Katie
and Clagett veins at the Golden Chest mine. Currently, the mill is not fully
utilized as it is operated four 10-hour days per week.

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

Competitive Business ConditionsThe
Company competes on several different fronts within the minerals exploration
industry. In the past year, the minerals exploration business has slowed
considerably due to the global economic crisis that occurred in the second half
of 2008. The crash in equity prices was also observed in the stock prices of
junior mining and exploration companies. As a result, it has become more
difficult to raise capital because of the limited capital available and the
relatively large number of junior mining companies. However, the Company is
focused on gold exploration and production and gold prices have remained at
attractive levels throughout the economic turmoil. This should help the Company
to compete for capital within the junior mining market.

We also compete with other mining companies for exploration
properties especially for gold properties. In the past year, there have been at
least three companies that have staked lode claims near the Companys Toboggan
Project which is a gold exploration joint venture with Newmont Mining
Corporation.

The competition for labor within the mining sector has lessened
in the past year as base metal prices have crashed causing mines to be shut down
and layoff miners and technical personnel. Mineral exploration activity,
specifically drilling, has declined substantially leaving a surplus of rigs and
qualified personnel.

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

Effect of Existing or Probable Governmental Regulations
on the BusinessAll operating and exploration plans have been
made in consideration of existing governmental regulations. Regulations that
most affect operations are related to water quality. A plan of operations
(POO) and a financial bond are usually required before exploration or mining
activities can be conducted on public land that is administered by the United
States Bureau of Land Management (BLM) or United States Forest Service
(USFS).

The New Jersey mine, the Silver Strand mine, and the Golden
Chest properties are part of the expanded Bunker Hill Superfund Site. Current
plans for expanded cleanup do not include any of our mines. There is no known
evidence that previous operations at the New Jersey mine prior to 1910 caused
any groundwater 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 current
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 Environmental
Protection Agencys (EPA) Record of Decision for the Bunker Hill Mining and
Metallurgical Complex Operating Unit 3 does not include any cleanup activities
at the Companys mines. NJMC has not received any notifications that it could be
liable for any environmental cleanup.

Estimate of the Amount Spent on Exploration for the Last
Two YearsDuring the years ending December 31, 2008 and 2007,
we have spent $570,549 and $508,139, respectively, on exploration activities.

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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 surface waters. Any exploration program
conducted by the Company on unpatented mining claims, usually administered by
the BLM or USFS, requires a POO to be submitted. Our exploration programs can be
delayed for significant periods of time (one to two years) because of the slow
NEPA permitting process applied by the USFS. We believe the USFS permitting
delays are caused by insufficient manpower, complicated regulations, misplaced
priorities, and sympathy for environmental groups who oppose any mining project.

The Company submitted a POO to the USFS in April 2003 for a
seasonal, underground mining operation at the Silver Strand mine. The USFS
conducted an Environmental Assessment (EA) of the plan and requested public
comments on the EA in September 2004. In June 2005, the USFS issued a final
Decision Notice and Finding of No Significant Impact which essentially approved
the Companys POO, but with 26 stipulations. The stipulations cover various
aspects of the plan including, but not limited to, the operating season, public
access through the site, water quality monitoring, development rock monitoring,
slope stability monitoring, and reclamation standards. In August 2006, both the
USFS and the Company signed the final operating plan or Decision Notice. The
Company posted a reclamation bond of $119,725 in June of 2007 to begin
operations at the Silver Strand. An additional bond of $32,075 is due once
surface disturbance exceeds a certain area which gives a total bond of $151,800
for the planned project. Permit compliance activities at the Silver Strand are
expected to cost about $3,500 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,
Golden Chest, and Silver Strand operations. When a mine or mill is operating,
MSHA performs a series of regular quarterly inspections to verify compliance
with mine safety laws, and can assess financial penalties for violations of MSHA
regulations. A typical mine citation order for a violation that is not
significant or substantial is about $200.

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

A surface mining reclamation plan for the New Jersey mine was
approved by the Idaho State Department of Lands in 1993. The plan calls for
grading of steep fill slopes and planting of vegetation on the area disturbed by
the open pit mine. An annual reclamation fee of $133 is paid to the Idaho
Department of Lands for surface disturbance associated with the New Jersey mine
open pit. The Company has estimated its costs to reclaim the New Jersey mine
site to be $20,300.

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

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

Number of Total Employees and Number of Full Time
EmployeesThe Company's total number of employees is 11
including President Fred Brackebusch, Vice President Grant Brackebusch and
Secretary Tina Brackebusch. Tina Brackebusch works part-time for the Company.

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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
2009. 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 and
10-Q 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 100 F Street, NE.,
Washington, D.C. 20549, on official business days during the hours of 10 a.m. to
3 p.m. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission and 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.

ITEM 2.

DESCRIPTION OF PROPERTIES



Figure 1 - Project Location Map

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NEW JERSEY MINE

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

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

Mineral LeasesA mineral lease from
William Zanetti in the New Jersey mill area contains about 60 acres. The lease
provides for the Company's exploration, development and mining of minerals on
fee land through October 2008 and thereafter as long as mining operations are
deemed continuous. The lessor may terminate the lease upon the Company's failure
to perform under the terms of the lease. The lease provides for royalties of 5%
of net sales of ores or concentrates less transportation also known as a Net
Smelter Return (NSR). Additional royalties of 1% to 5% are due, if the gold
price exceeds $698 per ounce as of December 31, 2008. This additional royalty
gold price is indexed to the Consumer Price Index (CPI) 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
lessor may terminate the lease upon the Company's failure to perform under the
terms of the lease. A 3% NSR royalty will be paid to the lessor if production is
achieved. However, the NSR royalty shall not exceed 10% of the net proceeds,
except the NSR royalty shall not be less than 1%. No advance royalties or other
advance payments are required by this lease.

HistoryThere 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.

Present Condition and Work Completed on the
PropertyA 100 tonne per day flotation mill has been built
and commissioned on the New Jersey mine property. A six foot by six foot ball
mill is used to grind crushed ore. The crushing plant and grinding circuit were
built in 1996, and the flotation circuit was built in 2004. Construction of a
CLP was started in mid-2006, and was completed in November of 2007. The CLP
plant uses cyanidation and direct electro-winning to produce a gold-silver dore
from gold-bearing pyrite concentrates. Based on leach cycles for the Golden
Chest pyrite concentrate, the capacity of the plant is about 10 tonnes per day.

Since 2001, the Company has drilled 14 holes for a total of
1,765 meters to explore the Coleman vein and associated zones of gold
mineralization. The drilling confirmed the continuity of the Coleman vein system
and discovered a broad zone of low grade (0.70 gpt gold) gold mineralization
known as the Grenfel zone. Reserves on the Coleman vein were not increased as
the drilling was too widely spaced to meet the criteria for a reserve
calculation. The best intercept was in DDH02-02 which assayed 2.76 gpt gold over
12.5 meters including 2.5

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meters of 6.80 gpt gold. In 2008, about 400 meters of drilling
was completed at the Scotch Thistle gold prospect revealing areas of silica
enrichment and alteration, but no economic intervals of gold mineralization.

In 2008, the Company completed an underground exploration
program of drifting on the Coleman vein on the 740 level. A total of 84 meters
of drifting were completed with 20 meters of that on the vein before it was
displaced by a fault. The remainder of the drifting was in waste material and
was directed at finding the down-dip projection of the vein found by DDH02-2.
The vein was not found, but a diamond drill station was established to allow for
underground drilling to probe for the vein. A total of 725 dry tonnes were mined
from the Coleman vein drifting and processed through the New Jersey mill in
2008.

As of December 31, 2008, the Company had a capital cost of
$1,120,845 associated with the mineral processing plant and a capitalized
development plus investment cost of $598,451 associated with the mine.

Exploration PlansThe Company plans to
diamond drill from the drill station established at the north end of 740 drift.
The target will be the down-dip extension of the vein found in DDH02-2. Timing
of the drill program will be dependent on the Companys ability to raise
funds.

Geology and ReservesThe 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.

GeologyThe 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 Prichard Formation is
divided into nine rock units of alternating argillites, siltites, and
quartzites, and the units exposed in the New Jersey mine area appear to belong
to the lower members. Gold mineralization is associated with sulfide-bearing
quartz veins which cut the bedding in Prichard argillite and quartzite.
Associated sulfides are pyrite, arsenopyrite, chalcopyrite, low-silver
tennatite, galena, and sphalerite.

ReservesThe reserves at the New
Jersey mine, as of this date, are those contained in an underground mine plan.
The designed stope block extends from the surface to the Keyhole Tunnel level.
Grade estimation for the block is based upon calculated head grades from
production from the Coleman vein over the past two years.

Underground Mine (Proven & Probable)

Ore Block
    Metric Tonnes
    Gold Grade (grams per tonne)
    Ounces (gold)Total
    51,604
    3.20
    5,310


The reserve tonnage is diluted. That is, the expected dilution
from underground mining is accounted for in the grade and tonnage of the reserve
block. The ounces stated in the above table are contained ounces. The cutoff
grade used was 1.5 grams/tonne gold. The cutoff grade is based on historical
costs of underground mining on the Coleman vein with a flotation processing
plant recovering 85% of the gold. Gold prices used are based upon a three year
average or $23.27/gram ($723.60/troy ounce). Proven and probable reserves are
combined as they cannot be readily separated.

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SILVER STRAND MINE

LocationThe Silver Strand mine is an
underground mine located in Kootenai County, Idaho, about 20 kilometers
east-northeast of Coeur d'Alene, Idaho. It is situated on Lone Cabin Creek, a
tributary of Burnt Cabin Creek and of the Little North Fork Coeur d'Alene River.
Primary access is from Coeur d'Alene via paved and dirt roads from Fernan Lake
to Lone Cabin Creek.

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

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

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

In May of 2007, the Company posted a reclamation bond of
$119,725 in order to begin work at the Silver Strand. An additional bond of
$32,075 is due once surface disturbance exceeds a certain level which gives a
total bond of $151,800 for the planned project. Work completed at the Silver
Strand in 2008 included the completion of the new No. 3 portal. No other work
was completed except for required water monitoring. No surface infrastructure
presently exists at the Silver Strand. There is no energy available at the site,
and electrical energy requirements are satisfied with an on-site generator.

As of December 31, 2008, the Company had a capitalized
development plus investment cost of $166,204 associated with the Silver Strand
mine.

Exploration and Development PlansThe
Company plans for the Silver Strand property to be idle in 2009 unless it can
raise sufficient working capital to commence mining ore. Usual environmental
compliance activities such as water monitoring will take place.

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

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

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

ReservesOre grades and dimensions of
the reserve blocks are based on chip sampling of the vein underground and
diamond drilling. Reserves were calculated using a gold equivalent cutoff grade
of 5 grams per tonne gold and a minimum mining width of 1.5 meters. The cutoff
grade is based on historical and estimated costs of a 1,000 tonne/month
underground mining operation, hauling ore to the Companys mineral processing
plant about 40 miles distant, and processing with flotation and recovering 75%
of the silver and gold. Silver and gold prices used are based upon a three year
average or $0.43/gram ($13.31/troy ounce) and $23.27/gram ($723.60/troy ounce),
respectively.

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


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

GOLDEN CHEST

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

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

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Sliding Scale for Additional NSR Royalty

Price of Gold, $ / Troy Ounce (using December 2008
      CPI-U)
    Additional NSR Royalty< $458
    None$458 to $515
    1.0%$515 to $572
    1.5%$572 to $629
    2.0%> $629
    3.0%


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

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

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

HistoryThe 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. NEL spent over
$500,000 on an exploration program at the Golden Chest in the late 1980s, which
consisted of soil and rock sampling, surface and underground mapping, and 3,390
meters of drilling. Newmonts work identified a potential open pit gold
resource. Newmont dropped the property in 1990, apparently because it did not
meet their criterion of a one million ounce open-pit resource. NJMC signed a
mining lease for the property in January 2005.

Present Condition and Work Completed on the
PropertyThe Company started work on the property in 2004. A
ramp 440 meters in length connecting the surface to the historic No. 3 level,
known as the North Ramp, was completed in the fourth quarter of 2008. The
Company has constructed a development rock storage site, a shop building,
improved the access road, and installed electrical power to the site during the
term of its lease. Currently, a three-man crew of miners is mining ore from
remnant pillars of the Katie vein and from a section of the recently found
Clagett vein at a rate of about 400 tonnes per month. This material is shipped
to the New Jersey mill for processing.

Every year since 2004, the Company has completed an exploration
core drilling program on the Golden Chest property. A total of 3,415 meters of
core drilling has been completed from the surface. The majority of these holes
have been targeted at extending the Idaho vein below the No. 3 level which is
the deepest level in the Idaho vein area. This drilling has been successful in
extending the Idaho vein at depth. As an example, DDH04-06 intercepted 17.5
meters of quartz veining that assayed 4.83 gpt gold and included a higher grade
section of 5.8 meters that assayed 10.13 gpt gold. Based on this intercept and
several others, a section of the Idaho vein was converted to proven and probable
reserves.

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

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As of December 31, 2008, the Company had a capitalized
development plus investment cost of $644,393 associated with the Golden Chest
mine.

Exploration and Development PlansAfter the connection of the North Ramp to the historic No. 3 level was
completed, the Company has been able to inspect and survey the No. 3 level to
where it intersects the Idaho vein. Based on this new information, the Company
has revised its plan to access the ore reserve block on the Idaho vein which
includes driving a new adit from the surface. This new adit would be driven a
distance of about 400 meters with an estimated cost of $700,000 and require
about six months to complete. The new adit would provide access to the Idaho
vein ore reserve block as well as a connection with the North Ramp which would
improve ventilation and provide a secondary escape-way. The Company will not be
able to complete the new adit until it raises sufficient capital through an
equity offering or other financing method.

Geology and ReservesCompany
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.

GeologyGold 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.

ReservesOre grades and dimensions of
the reserve block are based on ten diamond drillholes through the Idaho vein
with an average spacing of 40 meters and 30 drift samples. Reserves were
calculated by the Companys geologist and chief mine engineer using a polygonal
method with a cutoff grade of 2.0 gpt gold, and a minimum mining width of 2
meters.

The reserves were calculated using estimated costs and
operating parameters of a 100 tonne-per-day underground mining and mineral
processing operation. The estimated costs are based on the Companys costs of
mining and processing ore from the Golden Chest. Overall metallurgical recovery
of gold is expected to be 92% based on the Companys experience at the New
Jersey mill and CLP. Gold prices used are based upon a three year average or
$23.27/gram ($723.60/troy ounce).

Classification
    Metric Tonnes
    Gold Grade (grams per tonne)
    Ounces of GoldProven &
      Probable
    231,713
    5.08
    37,885


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

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NIAGARA PROJECT

LocationThe Niagara copper-silver
deposit is located near the forks of Eagle Creek about seven kilometers
northwest of the Company's Golden Chest operation. The property is without known
ore reserves, and consists of 39 unpatented claims that cover about 775 acres.
Access to the site is maintained through the use of a USFS road which is closed
to the general public. No electrical energy is present at the site.

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

As part of the terms of the Companys Toboggan Exploration
Joint Venture agreement with Newmont Mining Corporation, Newmont retains an
option to include the Niagara property into the Toboggan Project which is
exercisable starting March 20, 2009 and extending for two years. If Newmont
elects to include the Niagara property, it would be required to spend at least
another $1,000,000 or twice what NJMC spends on exploration of the Niagara,
whichever is greater, to earn its 51% interest

HistoryAn exploration program
completed by Earth Resources Company on the Niagara property in the 1970's
identified a large volume of copper-silver mineralization within the Revett
formation. Their exploration program included eight drill holes and six trenches
on the outcrop of the mineralized strata. Earth Resources also completed
metallurgical testwork that indicated conventional flotation will achieve
recoveries of 94% for copper and 90% for silver. Earth Resources also completed
preliminary economic studies on the deposit. Kennecott owned the claims that
cover the Niagara deposit for a period of time after Earth Resources. RMA
re-staked the property in 2004 after Kennecott dropped the claims.

Present Condition and Work Completed on the
PropertyDuring 2008, the Company completed five holes of
core drilling for a total of 1,062 meters at the Niagara project. Three of the
holes were targeted to intercept the copper-silver deposit in the Revett
formation and were successful. The drilling increased the area of copper-silver
mineralization of the Niagara deposit. As an example, drillhole 08-9 drilled
through 19.4 meters grading 0.51% copper, 25 gpt silver and 0.029 gpt gold. A
preliminary engineering study assessing the economic potential of open pit
mining at the Niagara was completed. Two holes for a cumulative total of 413
meters were drilled in the hanging wall of the Murray Peak fault in the Prichard
formation to investigate a gold-in-soil anomaly and magnetic high. Low level,
anomalous gold and tellurium mineralization were found by this drilling.

Also during 2008, the Company staked claims over an area of
gold-telluride mineralization near the Niagara deposit and known as the Progress
Prospect. Soil sampling indicates a gold anomaly 80 meters wide and 350 meters
long. A series of old prospect trenches and adits were found and sampled.

Exploration and Development PlansThe
Company has submitted a Plans of Operations (POO) to the USFS for a core
drilling program at the Progress gold prospect and to drill deep holes in the
Revett strata underneath the Niagara copper-silver deposit.

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The POO would likely be approved in late summer of 2009, and
the timing of the drilling will be dependent on the Companys ability to raise
funds.

As of December 31, 2008, the Company had an investment cost of
$31,500 associated with the Niagara project.

GeologyThe Niagara deposit occurs in
a section of mineralized upper Revett Formation near the axis of a north-south
striking syncline. The western limb of the syncline has been truncated by the
north-south striking Murray Peak fault, a steep, west dipping reverse fault.
Other faults offset the mineralized zone slightly. In the Niagara deposit, the
mineralization occurs in the upper Revett Formation, which here is a light gray,
massive quartzite with thin siltite interbeds. The mineralized horizon crops out
along the East Fork Eagle Creek and is approximately 30 meters below the contact
with the overlying St. Regis Formation. Copper minerals include bornite,
chalcopyrite, chalcocite, native copper, and some copper oxide minerals. Silver
minerals include stomeyerite and jalpaite. Pyrite and galena also occur in trace
amounts

TOBOGGAN PROJECT

LocationThe Toboggan project is an
exploration property without known ore reserves. The Toboggan project is a joint
venture with Newmont North American Exploration Limited, a subsidiary of Newmont
Mining Corporation (NYSE: NEM), to explore for gold deposits within a 38 square
mile area north of Murray, Idaho. The project consists of 382 unpatented lode
claims covering an area of approximately 7,257 acres in and near the East Fork
of Eagle Creek drainage. The Toboggan project consists of the following
prospects: Gold Butte, Mineral Ridge, Golden Reward, and Independence. The
claims can be accessed from May through November using a USFS dirt road. No
electrical energy is available at the site.

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

As part of the terms of the agreement, Newmont retains an
option to include the Niagara property into the Toboggan Project which is
exercisable starting March 21, 2009, and extends for two years. If Newmont
elects to include the Niagara property, it would be required to spend at least
another $1,000,000 or twice what NJMC spends on exploration of the Niagara,
whichever is greater, to earn its 51% interest.

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

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Present Condition and Work Completed on the
PropertyDuring 2008, Newmont completed a comprehensive early-stage
exploration program. Work completed included the staking of additional claims
significantly increasing the area of the joint venture, soil sampling, rock
sampling, geologic mapping, a ground-based geophysical survey at the Gold Butte,
and an airborne geophysical survey over the entire joint venture area. Newmont
spent approximately $690,000 in the first year of the agreement. NJMC assisted
Newmont in their exploration efforts with technical support and also completed
66 meters of core drilling to finish a hole that had been started in 2007.

Exploration and Development PlansNewmont has an exploration program planned for 2009 that includes core
drilling at various prospects in the Toboggan project. Plans also call for
geologic mapping, rock sampling, and soil sampling.

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

GIANT LEDGEThe Giant Ledge prospect is an
exploration project without known ore reserves. It lies about six kilometers
southeast of Murray, Idaho, in the Granite Creek drainage and is accessed by an
historic road that has been washed out in areas. No electrical power is present
at the site. The Companys land position consists of 29 wholly owned unpatented
lode claims covering an area of 586 acres. The property hosts polymetallic lead,
copper and gold mineralization in and along the contact of an igneous intrusive.

HistoryThe Giant Ledge prospect was
active in the 1920s when a 122 meter deep shaft was sunk and about 450 meters
of drift development was completed. A flotation mill was erected and a minor
amount of production was achieved. Bunker Hill Mining Company examined and
mapped the mine workings in the 1950s. Sunshine Mining Company conducted
exploration at the Giant Ledge in the mid-1980s and drilled two core holes.

Present Condition and Work Completed on the
Property NJMC was able to procure the core from Sunshines drilling
program, and the core was re-logged and assayed. The best of the mineralization
showed 4.6 meters of 0.908 gpt gold and 0.24% combined copper and lead. An
extensive soil sampling program was completed in conjunction with a VLF and
magnetometer survey. Results of the soil sampling show a 600 meter diameter gold
anomaly and the magnetometer survey shows a magnetic low coincident with the
gold anomaly.

Exploration and Development Plans If sufficient
funds are available, the Company will perform a ground-based geophysical survey
utilizing induced polarization (IP).

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MAC PROSPECT

The Mac prospect is an exploration project without known ore
reserves. It lies about three kilometers northwest of Murray, Idaho and is
accessed by USFS dirt roads. No electrical power is present at the site. The
Companys land position at the Mac Prospect consists of 32 wholly owned
unpatented lode claims covering an area of 528 acres. The Mac is a gold
exploration project hosted within the rocks of the Prichard formation and
geochemical analysis of the gold mineralization indicates anomalous levels of
tellurium similar to prospects within the Toboggan Joint Venture. Historic
placer and underground mining has taken place on the property, although it is
not well documented. Work completed by the Company in the past year includes
claim staking, soil sampling, geologic mapping and rock sampling. Exploration
plans are dependent on the Companys ability to raise funds, but may include
more soil sampling and geologic analysis to define core drilling targets.

COPPER CAMP

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

The Copper Camp showing is an early-stage copper and silver
exploration project, having been explored with limited drilling by previous
operators which include Kennecott, Cominco, and U.S. Borax. Previous operators
drilled core holes down dip from the outcrop and three holes penetrated the
favorable Revett Formation beds showing low-grade copper-silver mineralization.
At least three intercepts were made averaging 10 meters in thickness and grading
0.10% to 0.20% copper and 1.7 to 3.3 grams per tonne (gpt) silver. One short
0.18 meter interval at 173.2 meters of depth had structurally controlled bornite
mineralization grading 4.45% copper and 84.0 gpt silver. The Company has
submitted a POO to the USFS for a core drilling program at Copper Camp. Approval
of the POO is expected in late 2009. The timing of drilling will be dependent on
the Companys ability to secure adequate funding. An additional 13 unpatented
lode claims were also staked increasing the property area to about 440 acres.

WISCONSIN-TEDDY PROSPECT

SummaryThe 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 BLM. The
project is a base metal exploration project in the Prichard Formation. Several
tunnels with an aggregate length of 2,000 feet were driven on the property prior
to 1930. This development was related to two veins systems:a copper-gold vein
and a zinc-lead-silver vein. Work completed by the Company included the opening
of the Teddy underground workings, sampling on the surface and underground, and
geologic mapping. Two exploration holes were drilled in the summer of 2003 and
anomalous base metal mineralization was found. No exploration work has been
completed since 2003 and there are no plans for additional exploration work in
2009.

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SILVER BUTTON/ROUGHWATER PROSPECT

SummaryThe Silver Button is an
exploration project without known ore reserves, covers an area of 20 acres, and
is located in the Clark Fork mining district of northern Idaho. Clark Fork is
about 96 kilometers north of Kellogg, Idaho. The property was staked by the
Company in 2004 and is located in the Lightning Creek drainage. Float collected
from over a 100 m length of a vein subcrop on a talus slope contained silver
minerals as identified by microscopic and chemical analyses. Access to the site
is via foot trail and no electrical power is available at the site. Only
preliminary field sampling and claim staking have taken place at the prospect. A
POO for a helicopter-mobilized core-drilling program has been submitted to the
USFS. Modifications to the POO were made after meeting with the USFS in June of
2005. A site visit was made with USFS personnel in 2006, but the USFS has yet to
indicate if or when the POO will be approved. Exploration drilling will be
dependent on the Companys ability to raise sufficient funds and the receipt of
a permit from the USFS. As of December 31, 2008, the Company had an investment
cost of $25,500 associated with this property.

ITEM 3.

LEGAL PROCEEDINGS

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

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of shareholders during the
fourth quarter of 2008.

PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market InformationThe Company's
Common Stock currently trades on the Over the Counter Bulletin Board (OTCBB)
under the symbol "NJMC". The following table sets forth the range of high and
low bid prices as reported by the OTCBB for the periods indicated. These
quotations represent inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions.

Year Ending
      December 31, 2008
    High Bid
    Low BidFirst Quarter
    $0.72
    $0.45Second Quarter
    $0.50
    $0.33Third Quarter
    $0.51
    $0.25Fourth Quarter
    $0.36
    $0.13Year Ending
      December 31, 2007
    High Bid
    Low BidFirst Quarter
    $0.93
    $0.51Second Quarter
    $0.85
    $0.65Third Quarter
    $0.65
    $0.34Fourth Quarter
    $0.57
    $0.32


ShareholdersAs of March 10, 2009
there were approximately 1,100 shareholders of record of the Company's Common
Stock.

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

Securities Authorized for Issuance Under Equity
Compensation PlansThe Company has not adopted an equity
compensation plan for the award of options, warrants or rights to employees or
non-employees. However, in April of 2007, the Board of Directors approved a
compensation plan for our President, Fred W. Brackebusch, that states that any
time over 130 hours per month is compensated with restricted common stock at a
rate of $150 per hour. The number of shares is calculated quarterly using the
average bid price for the quarter as quoted by the OTC Bulletin Board. Also, the
Company has issued 2,000 shares to each employee, excluding management and
directors, three times per year after one year of service has been achieved.During the years ended December 31, 2008 and 2007, the Company issued
198,700 and 154,386 shares, respectively, of its restricted common stock valued
at $72,000 and $82,500, respectively, to Fred Brackebusch for management
services.

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

Recent Sales of Unregistered SecuritiesFor the year ending December 31, 2008, the Company issued 516,800 shares
of restricted common stock for management and directors fees, equipment,
services, exploration, and mining lease payments. A value of $181,990 (for an
average value of $0.35 per share) was assigned to these fees, services, and
equipment. See the statement of shareholders equity for a detailed list. The
transactions were strictly limited to persons in the United States who met
certain minimum financial (accredited investors) or sophistication requirements.
In managements opinion, the securities were issued pursuant to exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.

ITEM 6.

SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

ITEM 7

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

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

20

---

The Company has several properties at which most exploration is
being conducted; the Toboggan Project, the Niagara, the Golden Chest, the Silver
Strand, the Coleman, and the Giant Ledge. The Toboggan Project is a group of
prospects in the Murray, Idaho District that appear to be related to alkaline
magmatism and contain gold and silver telluride minerals. The Toboggan Project
is being explored by Newmont North America Exploration Limited under a joint
venture agreement. Newmont is conducting exploration in a 38 square mile area
centered on the prospects that the Company has staked previously and on new
claims staked by Newmont. During 2008 Newmont completed soil and stream sediment
sampling surveys, geological mapping, and geophysical surveys. Newmont has made
plans for drilling certain targets in 2009.

The Niagara copper-silver deposit, also located in the Murray,
Idaho area, in the Revett formation was drilled in the 1970s, and the Company
drilled 5 holes in 2008 which expanded the resource. Results of the 2008
drilling also indicate that gold would be a significant byproduct. The Company
will continue in-fill drilling on the known resource and is planning to drill to
intercept a deeper stratabound target in the Revett formation.

At the Golden Chest mine, during 2008, a ramp was being driven
to access a block of reserves discovered by drilling from the surface. Near the
end of the third quarter the ramp intersected the #3 level of the old workings
thus increasing access to potential drilling targets and providing quicker
potential for secondary and haulage access. The ramp development work was
suspended near yearend in order to conserve cash, and small scale production
from remnants was re-started. Permits are in place and development of
infrastructure has been completed in order to be able to begin production of
silver-gold ore at the Silver Strand mine in May 2009. At the Coleman
underground mine, a drift was completed to the vicinity of a drill intercept
which indicates the presence of higher grade gold-silver mineralization. Further
work at the Coleman will not be done until drilling is conducted to locate the
higher grade vein. The Giant Ledge is a new prospect which was staked in 2008.
Geophysical and geological studies were conducted during the year. Gold, lead
and copper mineralization is related to an intrusive stock.

The Company continued to conduct core drilling operations in
2008 with its own core drilling machine. Exploration drillholes were drilled
near the Coleman mine, at the Niagara deposit, and at the Golden Chest mine.
Also one drillhole was completed at the Toboggan Project. During the year, 12
drillholes were completed for a total drilling length of 1,916 meters.

The New Jersey mineral processing plant processed 1,400 tonnes
during the year as it was operated only part of the available time. Improvements
were made during the year by building a new ore feeder to facilitate cold
weather operation, installing a new concentrate filter, and making improvements
in the CLP. Near yearend the plant resumed operations on a regular schedule of 4
days per week, 10 hours per day, processing ore from the Golden Chest mine.

Changes in Financial ConditionThe
Company maintains an adequate cash balance by increasing or decreasing its
exploration expenditures as limited by availability of cash from operations or
from financing activities. The cash balance at the end of the year was $321,254,
and Figure 1 shows the corresponding balances for previous accounting periods.

21

---



The cash balance declined during the year from a highpoint of
$1,384,884 in the second quarter to the lower balance at the end of 2008 due to
exploration and development expenditures, lack of sales and financing
activities. Investment in a marketable equity security held by the Company
decreased from $391,872 to $16,328 during the year due to decline in the stock
price of that security. Figure 1 shows that the yearend cash balance has been
very similar for 2006 through 2008.

Results of OperationsIncome Earned
during the Development Stage (Revenue) for the year 2008 was $50,559 as compared
to $99,954 for 2007. Figure 2 shows losses in each quarter, which total
$1,423,829 in 2008 compared to an almost identical loss in 2007 of $1,453,268.



Gold production was 128 ounces in 2008 as compared to 108
ounces for 2007. Gold production in 2009 is expected to increase due to plans to
mine more tonnage in 2009.

Ore mining operations at the Golden Chest mine are expected to
be approximately 400 tonnes/month in the first half of 2009, probably declining
after that. If financing can be obtained, ramp access will be extended to the
Idaho vein reserves. Once the Idaho vein ramp development is completed there
will be enough reserves for many years of mining at the rate of 4,000
tonnes/year.

Ore production is scheduled at the Silver Strand mine in the
second quarter of 2009. Production could commence

22

---

in 30 days after mobilization in May 2009, depending on
weather. 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.

No large capital expenditures are planned at the New Jersey
mineral processing plant.

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

The Company has prepared a detailed POO assuming no funds are
produced by financing efforts. This detailed plan covers the first four months
of 2009. Actions taken under the plan include cutting management cash salaries
by 50%, reducing wages and laying off three employees, and deferring
expenditures that are not absolutely necessary to the plan. Production from
remnant pillars and the newly-found Clagett vein at the Golden Chest is feeding
the mineral processing plant at the rate of 400 tonnes/month. It is hoped to
maintain a cash balance of $150,000 to $200,000. If no financing is achieved by
April 30, 2009, the plan will be reviewed and a decision made to continue the
plan or to enter into a hibernation plan by laying off most employees and
cutting management costs further. Plans are being made for the Company to drill
for Newmont at the Toboggan Project on a contract basis during the summer
season, and a Service Contract has been signed. Newmont currently pays for all
exploration activities on the Toboggan Project.

As shown in the accompanying financial statements, the Company
has minimal revenue and incurred an accumulated deficit of $5,922,260 through
December 31, 2008. These factors raise substantial doubt about the Companys
ability to continue as a going concern. Management intends to seek additional
capital from new equity securities offerings and joint venture agreements that
will provide funds needed to increase liquidity, fund internal growth and fully
implement its business plan.

The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event
the Company cannot continue in existence.

Should the Company be unable to raise capital through future
private placements and/or joint venture agreements or achieve significant
revenues from its operations, its business, and, as a result, its financial
position, results of operations and cash flow will likely be materially
adversely impacted. We expect to receive cash flow from the gold sales and by
providing drilling services to Newmont on our joint venture (see note 8. Mining
Venture AgreementsNewmont Venture Agreement).

For 2009, the Company has plans to reduce its discretionary
exploration expenditures as well as its overhead expenses. With these
reductions, the Company believes it will only need an estimated $500,000 to
continue operations through the next twelve months.

Changes in Costs

Direct production costs, management costs, and exploration
costs in 2008 tracked 2007 costs fairly closely. General and administrative
costs increased significantly from 2007 due to employee related overhead costs
which increased due to an increase in the number and tenure of employees.
General and administrative costs also increased due to increased legal fees
which were incurred relating to the new SEC format along with proxy preparation
and for road access research relating to the Companys mining claims.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

23

---

ITEM 8.

FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting
Firm

Board of Directors

New Jersey Mining Company

We have audited the accompanying balance sheets of New Jersey
Mining Company (A Development Stage Company) (the Company) as of
December 31, 2008 and 2007, and the related statements of operations and
comprehensive income (loss), changes in stockholders equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, based on our audits, the financial statements
referred to above present fairly, in all material respects, the financial
position of New Jersey Mining Company as of December 31, 2008 and 2007, 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.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
3 to the financial statements, the Company has minimal revenue and accumulated
deficit that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

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

DeCoria, Maichel & Teague P.S. Spokane, Washington
March 18, 2009

24

---

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

|                                                                                                                                                                                                                | Page 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----
|                                                                                                                                                                                                                |      
|Balance Sheets, December
      31, 2008 and 2007                                                                                                                                                                | 26   
|                                                                                                                                                                                                                |      
|Statements of Operations
      and Comprehensive Income (Loss) for the years ended December 31, 2008 and
      2007 and from the date of inception on July 18, 1996 through December 31,
      2008 (Unaudited) | 27   
|                                                                                                                                                                                                                |      
|Statement of Changes in
      Stockholders Equity for the years ended December 31, 2008 and 2007
      and for the period from inception on July 18, 1996 through December 31,
      2008 (Unaudited)          | 28-31
|                                                                                                                                                                                                                |      
|Statements of Cash Flows
      for the years ended December 31, 2008 and 2007 and from the date of inception
      on July 18, 1996 through December 31, 2008 (Unaudited)                                       | 32   
|                                                                                                                                                                                                                |      
|Notes to Financial Statements                                                                                                                                                                                   | 33-46

25

---

|New Jersey Mining Company    
|-----------------------------
|(A Development Stage Company)
|Balance Sheets               
|December 31, 2008 and 2007   

|ASSETS                                                               |  
|-------------------------------------------------------------------- | -
|                                                                     |  
|Current assets:                                                      |  
|Cash and cash equivalents                                            | $
|Investment in marketable
      equity security at market             |  
|(cost-$6,531)                                                        |  
|Interest receivable                                                  |  
|Miscellaneous receivable                                             |  
|Prepaid expense                                                      |  
|Inventories                                                          |  
|Total current assets                                                 |  
|                                                                     |  
|Property, plant and equipment, net of
      accumulated depreciation |  
|Mineral properties, net of accumulated amortization                  |  
|Reclamation bonds                                                    |  
|Total assets                                                         | $
|                                                                     |  
|                                                                     |  
|LIABILITIES AND
      STOCKHOLDERS EQUITY                           |  
|                                                                     |  
|Current liabilities:                                                 |  
|Accounts payable                                                     | $
|Accrued payroll and related
      payroll expenses                   |  
|Obligations under capital lease-current
      portion                |  
|Notes payable-current portion                                        |  
|Total current liabilities                                            |  
|                                                                     |  
|Accrued reclamation costs                                            |  
|Obligations under capital lease-non-current                          |  
|Notes payable-non-current                                            |  
|Total non-current liabilities                                        |  
|                                                                     |  
|Total liabilities                                                    |  
|                                                                     |  
|Commitments and contingencies (Note 13)                              |  
|                                                                     |  
|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; 2008-37,160,392 and 2007-                         |  
|32,291,192
      shares issued and outstanding                       |  
|Deficit accumulated during the
      development stage               |  
|Accumulated other comprehensive income:                              |  
|Unrealized gain on marketable equity security                        |  
|Total stockholders equity                                           |  
|                                                                     |  
|Total
      liabilities and stockholders equity                     | $

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

26

---

|New Jersey Mining Company                                        
|-----------------------------------------------------------------
|(A Development Stage Company)                                    
|Statements of Operations and Comprehensive Income (Loss)         
|For the Years Ended December 31,2008 and 2007,                   
|And from Inception (July 18, 1996)through
      December 31, 2008

|                                                 |   |              |   |   |            |   |   | From Inception    |  
|------------------------------------------------ | - | ------------ | - | - | ---------- | - | - | ----------------- | -
|                                                 |   |              |   |   |            |   |   | (July 18, 1996)   |  
|                                                 |   | December 31, |   |   | Through    |  
|                                                 |   |              |   |   |            |   |   | December 31, 2008 |  
|                                                 |   | 2008         |   |   | 2007       |   |   | (Unaudited)       |  
|Income earned during the development stage:      |   |              |   |   |            |   |   |                   |  
|Sales of gold                                    | $ | 50,559       |   | $ | 49,447     |   | $ | 149,715           |  
|Sales of concentrate                             |   |              |   |   | 50,507     |   |   | 601,168           |  
|                                                 |   | 50,559       |   |   | 99,954     |   |   | 750,883           |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Costs and expenses:                              |   |              |   |   |            |   |   |                   |  
|Direct production costs                          |   | 184,163      |   |   | 189,342    |   |   | 949,537           |  
|Management                                       |   | 304,668      |   |   | 326,807    |   |   | 1,279,983         |  
|Exploration                                      |   | 570,549      |   |   | 508,139    |   |   | 2,169,274         |  
|Gain on sale of mineral property                 |   |              |   |   |            |   |   | (90,000           | )
|Gain on default of
      mineral                 |   |              |   |   |            |   |   |                   |  
|property
      sale (Note 8)                     |   | (270,000     | ) |   |            |   |   | (270,000          | )
|Depreciation and
      amortization              |   | 204,284      |   |   | 159,768    |   |   | 544,628           |  
|General and administrative expenses              |   | 517,413      |   |   | 434,767    |   |   | 2,126,372         |  
|Total operating expenses                         |   | 1,511,077    |   |   | 1,618,823  |   |   | 6,709,794         |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Other (income) expense:                          |   |              |   |   |            |   |   |                   |  
|Timber sales                                     |   |              |   |   | (487       | ) |   | (54,699           | )
|Timber expense                                   |   |              |   |   |            |   |   | 14,554            |  
|Royalties and other income                       |   | (1,500       | ) |   | (1,889     | ) |   | (71,703           | )
|Royalties expense                                |   | 656          |   |   | 6,541      |   |   | 34,273            |  
|Contract income                                  |   | (23,725      | ) |   |            |   |   | (23,725           | )
|Gain on sale of
      marketable equity security |   |              |   |   | (70,109    | ) |   | (70,109           | )
|Interest income                                  |   | (15,371      | ) |   | (26,969    | ) |   | (46,442           | )
|Interest expense                                 |   | 3,251        |   |   | 27,312     |   |   | 60,250            |  
|Write-off of goodwill                            |   |              |   |   |            |   |   | 30,950            |  
|Write-off of investment                          |   |              |   |   |            |   |   | 90,000            |  
|Total other
      (income) expense               |   | (36,689      | ) |   | (65,601    | ) |   | (36,651           | )
|                                                 |   |              |   |   |            |   |   |                   |  
|Net loss                                         |   | 1,423,829    |   |   | 1,453,268  |   |   | 5,922,260         |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Other Comprehensive income:                      |   |              |   |   |            |   |   |                   |  
|Unrealized (gain) loss
      on marketable       |   |              |   |   |            |   |   |                   |  
|equity
      security                            |   | 375,544      |   |   | 525,909    |   |   | (9,797            | )
|                                                 |   |              |   |   |            |   |   |                   |  
|Comprehensive loss                               | $ | 1,799,373    |   | $ | 1,979,177  |   | $ | 5,912,463         |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Net loss per common share-basic                  | $ | 0.04         |   | $ | 0.05       |   | $ | 0.32              |  
|                                                 |   |              |   |   |            |   |   |                   |  
|Weighted average common                          |   |              |   |   |            |   |   |                   |  
|shares outstanding-basic                         |   | 35,871,521   |   |   | 30,717,377 |   |   | 18,708,956        |  

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

27



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|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity                                       
|For the Years Ended December 31, 2007, and 2008
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2008
      (unaudited)         

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

Theaccompanyingnotes are anintegralpart of thesefinancialstatements.

28

---

|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity,
      continued:                     
|For the Years Ended December 31, 2007, and 2008
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2008
      (unaudited)         

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

Theaccompanyingnotes are anintegralpart of thesefinancialstatements.

29

---

|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity,
      continued:                     
|For the Years Ended December 31, 2007, and 2008
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2008
      (unaudited)         

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

Theaccompanyingnotes are anintegralpart of thesefinancialstatements.

30

---

|New Jersey Mining Company                                                          
|-----------------------------------------------------------------------------------
|(A Development Stage Company)                                                      
|Statement of Changes in Stockholders' Equity,
      continued:                     
|For the Years Ended December 31, 2007, and 2008
      (audited), and for the Period
|From Inception (July 18, 1996) Through December 31, 2008
      (unaudited)         

|                                                           |  |              |  |   |             |  |   |               |   |   | Accum. Other |   |   |               |  |   | Total      |  
|---------------------------------------------------------- |  | ------------ |  | - | ----------- |  | - | ------------- | - | - | ------------ | - | - | ------------- |  | - | ---------- | -
|                                                           |  | Common Stock |  |   | Accumulated |  |   | Comprehensive |   |   | Treasury     |   |   | Stockholders' | 
|                                                           |  | Shares       |  |   | Amount      |  |   | Deficit       |   |   | Income       |   |   | Stock         |  |   | Equity     |  
|                                                           |  |              |  |   |             |  |   |               |   |   |              |   |   |               |  |   |            |  
|                                                           |  |              |  |   |             |  |   |               |   |   |              |   |   |               |  |   |            |  
|Balance, December 31, 2006                                 |  | 27,586,485   |  | $ | 5,027,317   |  | $ | (3,045,163    | ) | $ | 911,250      |   | $ | 0             |  | $ | 2,893,404  |  
|Issuance of common stock for:                              |  |              |  |   |             |  |   |               |   |   |              |   |   |               |  |   |            |  
|Cash                                                       |  | 4,014,761    |  |   | 1,533,319   |  |   |               |   |   |              |   |   |               |  |   | 1,533,319  |  
|Exercise of warrants                                       |  | 200,000      |  |   | 120,000     |  |   |               |   |   |              |   |   |               |  |   | 120,000    |  
|Management and directors fees                              |  | 274,386      |  |   | 142,500     |  |   |               |   |   |              |   |   |               |  |   | 142,500    |  
|Services                                                   |  | 52,104       |  |   | 27,157      |  |   |               |   |   |              |   |   |               |  |   | 27,157     |  
|Exploration                                                |  | 52,200       |  |   | 32,560      |  |   |               |   |   |              |   |   |               |  |   | 32,560     |  
|Mineral property agreement                                 |  | 60,000       |  |   | 30,000      |  |   |               |   |   |              |   |   |               |  |   | 30,000     |  
|Property, plant and equipment                              |  | 20,756       |  |   | 10,239      |  |   |               |   |   |              |   |   |               |  |   | 10,239     |  
|Accounts payable                                           |  | 30,500       |  |   | 12,205      |  |   |               |   |   |              |   |   |               |  |   | 12,205     |  
|Unrealized gain (loss) in marketable equity
      security |  |              |  |   |             |  |   |               |   |   | (525,909     | ) |   |               |  |   | (525,909   | )
|Net loss                                                   |  |              |  |   |             |  |   | (1,453,268    | ) |   |              |   |   |               |  |   | (1,453,268 | )
|Balance, December 31, 2007                                 |  | 32,291,192   |  |   | 6,935,297   |  |   | (4,498,431    | ) |   | 385,341      |   |   | 0             |  |   | 2,822,207  |  
|Issuance of common stock for:                              |  |              |  |   |             |  |   |               |   |   |              |   |   |               |  |   |            |  
|Cash                                                       |  | 2,400        |  |   | 950         |  |   |               |   |   |              |   |   |               |  |   | 950        |  
|Exercise of warrants                                       |  | 4,350,000    |  |   | 1,740,000   |  |   |               |   |   |              |   |   |               |  |   | 1,740,000  |  
|Management and directors fees                              |  | 318,700      |  |   | 108,000     |  |   |               |   |   |              |   |   |               |  |   | 108,000    |  
|Services                                                   |  | 74,000       |  |   | 32,000      |  |   |               |   |   |              |   |   |               |  |   | 32,000     |  
|Exploration                                                |  | 35,100       |  |   | 15,390      |  |   |               |   |   |              |   |   |               |  |   | 15,390     |  
|Mineral property agreement                                 |  | 75,000       |  |   | 21,000      |  |   |               |   |   |              |   |   |               |  |   | 21,000     |  
|Property, plant and equipment                              |  | 14,000       |  |   | 5,600       |  |   |               |   |   |              |   |   |               |  |   | 5,600      |  
|Unrealized gain (loss) in marketable equity security       |  |              |  |   |             |  |   |               |   |   | (375,544     | ) |   |               |  |   | (375,544   | )
|Net loss                                                   |  |              |  |   |             |  |   | (1,423,829    | ) |   |              |   |   |               |  |   | (1,423,829 | )
|Balance, December 31, 2008                                 |  | 37,160,392   |  | $ | 8,858,237   |  | $ | (5,922,260    | ) | $ | 9,797        |   | $ | 0             |  | $ | 2,945,774  |  

Theaccompanyingnotes are anintegralpart of thesefinancialstatements.

31

---

|New Jersey Mining Company                                         
|------------------------------------------------------------------
|(A Development Stage Company)                                     
|Statements of Cash Flows                                          
|For the Years Ended December 31, 2008 and 2007,                   
|And from Inception (July 18, 1996) through December 31,
      2008

|                                                               |   |              |   |   |                 |   |   | From Inception    |  
|-------------------------------------------------------------- | - | ------------ | - | - | --------------- | - | - | ----------------- | -
|                                                               |   | Years Ended  |   |   | (July 18, 1996) |  
|                                                               |   | December 31, |   |   | through         |  
|                                                               |   |              |   |   |                 |   |   | December 31, 2008 |  
|                                                               |   | 2008         |   |   | 2007            |   |   | (Unaudited)       |  
|Cash flows from operating activities:                          |   |              |   |   |                 |   |   |                   |  
|Net loss                                                       | $ | (1,423,829   | ) | $ | (1,453,268      | ) | $ | (5,922,260        | )
|Adjustments to
      reconcile net loss to net cash            |   |              |   |   |                 |   |   |                   |  
|Used by operating
      activities:                            |   |              |   |   |                 |   |   |                   |  
|Depreciation and amortization                                  |   | 204,284      |   |   | 159,768         |   |   | 544,628           |  
|Write-off
      of equipment                                   |   |              |   |   |                 |   |   | 11,272            |  
|Write-off of goodwill and investment                           |   |              |   |   |                 |   |   | 120,950           |  
|Gain on
      sale of mineral property                         |   |              |   |   |                 |   |   | (90,000           | )
|Gain on default of mineral property sale                       |   | (270,000     | ) |   |                 |   |   | (270,000          | )
|Gain on
      sale of marketable equity securities             |   |              |   |   | (70,109         | ) |   | (70,109           | )
|Common stock issued
      for:                                 |   |              |   |   |                 |   |   |                   |  
|Management
      and directors fees                           |   | 108,000      |   |   | 142,500         |   |   | 775,037           |  
|Services and other                                             |   | 32,000       |   |   | 27,157          |   |   | 193,310           |  
|Exploration                                                    |   | 15,390       |   |   | 32,560          |   |   | 84,271            |  
|Mineral property agreement                                     |   |              |   |   | 15,000          |   |   | 15,000            |  
|Change in:                                                     |   |              |   |   |                 |   |   |                   |  
|Prepaid expense                                                |   | (572         | ) |   |                 |   |   | (572              | )
|Inventories                                                    |   | (9,575       | ) |   | 42,569          |   |   | (99,092           | )
|Miscellaneous receivable                                       |   | (5,516       | ) |   | 13,628          |   |   | (5,516            | )
|Interest
      receivable                                      |   | 953          |   |   | (1,277          | ) |   | (324              | )
|Other assets                                                   |   |              |   |   |                 |   |   | (778              | )
|Accounts
      payable                                         |   | (18,867      | ) |   | (36,884         | ) |   | 53,913            |  
|Accrued payroll and related payroll expense                    |   | 7,977        |   |   | 6,209           |   |   | 45,706            |  
|Accrued
      reclamation costs                                |   | 500          |   |   | 1,800           |   |   | 20,300            |  
|Net cash used by operating activities                          |   | (1,359,255   | ) |   | (1,120,347      | ) |   | (4,594,264        | )
|Cash flows from investing activities:                          |   |              |   |   |                 |   |   |                   |  
|Purchases of property,
      plant and equipment               |   | (101,924     | ) |   | (195,992        | ) |   | (1,079,856        | )
|Purchase of mineral property                                   |   | (3,000       | ) |   | (4,500          | ) |   | (17,904           | )
|Proceeds from sale of
      mineral property                   |   |              |   |   |                 |   |   | 120,000           |  
|Deposit received on sale of mineral
      property (Note 8)    |   | 270,000      |   |   |                 |   |   | 270,000           |  
|Purchase of reclamation
      bonds                            |   | 2,553        |   |   | (123,573        | ) |   | (123,520          | )
|Purchase of certificates of deposits                           |   |              |   |   |                 |   |   | (200,000          | )
|Proceeds from sales of
      certificates of deposits          |   |              |   |   | 200,000         |   |   | 200,000           |  
|Purchase of marketable equity security                         |   |              |   |   |                 |   |   | (7,500            | )
|Proceeds from sales of
      marketable equity securities      |   |              |   |   | 71,078          |   |   | 71,078            |  
|Cash of acquired companies                                     |   |              |   |   |                 |   |   | 38,269            |  
|Deferral of development
      costs                            |   | (343,107     | ) |   | (190,567        | ) |   | (759,209          | )
|Net cash used by investing activities                          |   | (175,478     | ) |   | (243,554        | ) |   | (1,488,642        | )
|Cash flows from financing activities:                          |   |              |   |   |                 |   |   |                   |  
|Exercise of stock purchase warrants                            |   | 1,740,000    |   |   | 120,000         |   |   | 2,537,600         |  
|Sales of common stock,
      net of issuance costs             |   | 950          |   |   | 1,533,319       |   |   | 4,226,576         |  
|Principal payments on capital lease                            |   | (36,940      | ) |   | (35,473         | ) |   | (156,832          | )
|Principal payments on
      notes payable                      |   | (119,496     | ) |   | (59,293         | ) |   | (203,184          | )
|Net cash
      provided by financing activities                |   | 1,584,514    |   |   | 1,558,553       |   |   | 6,404,160         |  
|Net change in cash and cash equivalents                        |   | 49,781       |   |   | 194,652         |   |   | 321,254           |  
|Cash and cash equivalents, beginning of period                 |   | 271,473      |   |   | 76,821          |   |   | 0                 |  
|Cash and cash equivalents, end of period                       | $ | 321,254      |   | $ | 271,473         |   | $ | 321,254           |  
|Supplemental disclosure of cash flow information               |   |              |   |   |                 |   |   |                   |  
|Interest paid in cash, net of amount
      capitalized         | $ | 3,251        |   | $ | 27,311          |   | $ | 50,886            |  
|Non-cash investing and financing activities:                   |   |              |   |   |                 |   |   |                   |  
|Common stock issued
      for:                                 |   |              |   |   |                 |   |   |                   |  
|Property,
      plant and equipment                            | $ | 5,600        |   | $ | 10,239          |   | $ | 50,365            |  
|Mineral properties                                             | $ | 21,000       |   | $ | 15,000          |   | $ | 315,300           |  
|Payment of
      accounts payable                              |   |              |   | $ | 12,205          |   | $ | 12,205            |  
|Acquisitions of companies, excluding cash                      |   |              |   |   |                 |   | $ | 743,653           |  
|Capital lease obligation incurred for
      equipment acquired |   |              |   |   |                 |   | $ | 178,588           |  
|Notes payable for
      property and equipment acquired        | $ | 36,235       |   | $ | 401,112         |   | $ | 482,634           |  

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 EnterpriseThe
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.

In conjunction with development stage disclosure required by
SFAS No. 7, inception to date figures are included in the financial statements.
These figures while labeled unaudited have all been audited by various
accounting firms in their respective years. However, they have not as a whole
been audited by the current auditing firm resulting in the unaudited
classification.

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

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

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

Contract IncomeRevenue received from
drilling and exploration contracts with third parties is recognized when the
contract has been established, the services are rendered and payment is deemed
probable. These services are not a part of normal operations.

33

---

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

2. Summary of Significant Accounting Policies,
continued:

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 InstrumentsEffective January 1, 2008, we adopted the provisions of SFAS No. 157,
Fair Value Measurements, for our financial assets and financial liabilities
without a material effect on our results of operations or financial position.
The effective date of SFAS No. 157 for non-financial assets and non-financial
liabilities has been deferred by FSP 157-2 to fiscal years beginning after
November 15, 2008, and we do not anticipate the impact of adopting SFAS 157 for
non-financial and non-financial liabilities to have a material impact on our
results of operations or financial position.

SFAS No. 157 expands disclosure requirements to include the
fair value measurement, and its fair value hierarchy level, for each major
category of assets and liabilities that are measured at fair value. Hierarchy
level is determined by segregating fair value measurements using quoted prices
in active markets for identical assets or liabilities (Level 1), significant
other observable inputs (Level 2), and significant unobservable inputs (Level
3).

The table below sets forth our financial asset that was
accounted for at fair value at December 31, 2008, and its respective hierarchy
level. We had no other financial assets or liabilities accounted for at fair
value at December 31, 2008.

Balance at December 31, 2008
    Balance at December 31, 2007
    Hierarchy LevelInvestments in marketable     
      equity securities
    $16,328
    $391,872
    Level 1Inventories
    99,092
    89,517
    Level 2


We also adopted the provisions of SFAS No. 159, The Fair Value
Option for Financial Liabilities, effective January 1, 2008. SFAS No. 159
permits entities to choose to measure many financial assets and financial
liabilities at fair value. The adoption of SFAS No. 159 has not had a material
effect on our financial position or results of operations as of and for the
periods ending December 31, 2007 and 2008. The carrying amounts of financial
instruments including cash and cash equivalents, reclamation bonds, investment
in marketable equity securities, accounts payable, obligations under capital
lease and notes payable are approximated at their fair values.

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

34

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

2. Summary of Significant Accounting Policies,
continued:

Net Loss Per ShareNet 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,
2008 and 2007, the effect of the Companys potential issuance of shares from the
exercise of warrants would have been anti-dilutive. Accordingly, only basic net
loss per share has been presented. Outstanding warrants are discussed in detail
in note 10 of the financial statements.

ReclassificationsCertain prior period
amounts have been reclassified to conform to the 2008 financial statement
presentation. These reclassifications have no effect on net loss as previously
reported.

Cash EquivalentsThe 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.

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

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

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

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

Property EvaluationsAnnually, or more
frequently as circumstances require, the Company evaluates the carrying amounts
of its mineral properties, including deferred development costs, to assess
whether such amounts are recoverable. Estimated undiscounted future net cash
flows from each mineral property are calculated using estimated future
production, three year average metals prices, operating capital and costs, and
reclamations costs. 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.

35

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

2. Summary of Significant Accounting Policies,
continued:

Asset Retirement Obligations (ARO) and Remediation
CostsMineral properties are subject to standards for mine
reclamation that have been established by various governmental agencies. A
liability is recorded for the present value of estimated reclamation costs and a
related asset is established. The liability is accreted and the asset is
depreciated over the life of the related asset. Adjustments are made 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. If there is an
impairment to an assets carrying value and a decision is made to permanently
close the property, changes to the liability are recognized and charged to the
provision for closed operations and environmental matters.

For non-operating properties, the Company accrues costs
associated with environmental remediation obligations when it is probable that
such costs will be incurred and they are reasonably estimable. Accruals for
estimated losses from environmental remediation obligations have historically
been recognized no later than completion of the remedial feasibility study for
such facility and are charged to provision for closed operations and
environmental matters. Costs of future expenditures for environmental
remediation are not discounted to their present value unless subject to a
contractually obligated fixed payment schedule. Such costs are based on
managements estimate of amounts expected to be incurred when the remediation
work is to be performed within current laws and regulations. Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed probable.

It is reasonably possible that, due to uncertainties associated
with defining the nature and extent of environmental contamination and the
application of laws and regulations by regulatory authorities and changes in
reclamation or remediation technology, the ultimate cost of reclamation and
remediation could change in the future. The Company periodically reviews accrued
liabilities for such reclamation and remediation costs as evidence becomes
available indicating that its liabilities have potentially changed.

Reclamation BondsVarious laws and
permits require that financial assurances be in place for certain environmental
and reclamation obligations and other potential liabilities. The reclamation
bond balance at December 31, 2008 represents an investment in U.S. government
agency bonds. The bonds are restricted to ensure that reclamation is performed
at certain properties where the Company is conducting mining and exploration
activities.

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

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

36

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

2. Summary of Significant Accounting Policies, continued:

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

In March 2008, the Financial Accounting Standards Board
(FASB) issued SFAS No. 161, "Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133 (SFAS No. 161), to
provide an understanding of how and why an entity uses derivative instruments,
how they are accounted for, and how they affect an entity's financial
statements. SFAS No. 161 is effective for both interim and annual reporting
periods beginning after November 15, 2008. We do not expect any material effect
to our financial statements from the enactment of SFAS No. 161.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles, which identifies the sources of
accounting principles and provides entities with a framework for selecting the
principles used in preparation of financial statements that are presented in
conformity with GAAP. SFAS 162 is effective for both interim and annual
reporting periods beginning after November 13, 2008. The adoption of SFAS No.
162 is not expected to have a material impact on our financial statements.

3. Going Concern

As shown in the accompanying financial statements, the Company
has minimal revenue and incurred an accumulated deficit of $5,922,260 through
December 31, 2008. These factors raise substantial doubt about the Companys
ability to continue as a going concern. Management intends to seek additional
capital from new equity securities offerings and joint venture agreements that
will provide funds needed to increase liquidity, fund internal growth and fully
implement its business plan.

The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event
the Company cannot continue in existence.

Should the Company be unable to raise capital through future
private placements and/or joint venture agreements or achieve significant
revenues from its operations, its business, and, as a result, its financial
position, results of operations and cash flow will likely be materially
adversely impacted. We expect to receive cash flow from the gold sales and by
providing drilling services to Newmont on our joint venture (see note 8. Mining
Venture AgreementsNewmont Venture Agreement).

37

---

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

3. Going Concern, continued:

For 2009, the Company has plans to reduce its discretionary
exploration expenditures as well as its overhead expenses. With these
reductions, the Company believes it will only need an estimated $500,000 to
continue operations through the next twelve months.

4. Property, Plant and Equipment

Property, plant and equipment at December 31, 2008 and 2007,
consisted of the following:

2008
    
    
    2007Mill building at cost
    $
    128,566
    
    $
    128,566Milling equipment at cost
    
    1,064,270
    
    
    981,402Less
      accumulated depreciation
    
    (71,991
    )
    
    (62,702
    )Total mill
    
    1,120,845
    
    
    1,047,266Land
    
    79,137
    
    
    79,137Building and equipment at cost
    
    638,795
    
    
    577,904Less accumulated
      depreciation
    
    (368,422
    )
    
    (179,844
    )Total building and equipment
    
    349,510
    
    
    477,197Total
    $
    1,470,355
    
    $
    1,524,463


For both years ending December 31, 2008 and 2007, milling and
other equipment include assets under capital lease amounting to $150,254. The
leases are being amortized over the terms of the respective lease. Accumulated
amortization at December 31, 2008 and 2007 was $96,829 and $66,999,
respectively. At December 31, 2008, the estimated future minimum lease payments
under capital leases were as follows:

Year ending December 31,2009
    $
    30,5322010
    
    11,8122011
    
    11,049Total
    
    53,393Less: Amounts representing interest costs
    
    (6,436
    )Net present values
    
    46,957Less: Capital lease obligations-current portion
    
    (26,665
    )Long-term capital lease obligations
    $
    20,292


38

---

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

5. Notes Payable

At December 31, 2008 and 2007, notes payable are as follows.

|                                                                             |   | 2008    |  |   | 2007    | 
|---------------------------------------------------------------------------- | - | ------- |  | - | ------- | 
|Dodge pick-up 60 month note payable, 0.00%
      interest rate;              |   |         |  |   |         | 
|collateralized by pick-up, monthly payments of $557                          | $ | 16,156  |  | $ | 22,842  | 
|Hagby Diamond Drill 48 month note payable,
      8.00% interest rate         |   |         |  |   |         | 
|payable monthly, collateralized by drill, monthly payments
      of          |   |         |  |   |         | 
|$4,093                                                                       |   | 110,968 |  |   | 149,520 | 
|Ingersoll Rand Compressor 36 month note payable, 4.90%
      interest        |   |         |  |   |         | 
|rate payable monthly, collateralized by
      compressor, monthly            |   |         |  |   |         | 
|payments of $670                                                             |   | 8,462   |  |   | 15,885  | 
|Caterpillar 305 Excavator 48 month note
      payable, 7.81% interest        |   |         |  |   |         | 
|rate payable monthly, collateralized by excavator, monthly                   |   |         |  |   |         | 
|payments of $956                                                             |   | 25,187  |  |   | 34,302  | 
|Kubota 5700 Tractor 36 month note payable, 0.00% interest
      rate,        |   |         |  |   |         | 
|collateralized by tractor, monthly payments
      of $674                    |   | 11,456  |  |   | 19,543  | 
|Property with shop 36 month note payable, 0.25% plus prime                   |   |         |  |   |         | 
|variable interest rate paid monthly, full
      principal of note due in one |   |         |  |   |         | 
|payment at end of term, monthly payments vary depending
      upon           |   |         |  |   |         | 
|interest rate                                                                |   | 60,000  |  |   | 60,000  | 
|Bobcat S250 50 month note payable, 0.00% interest rate                       |   |         |  |   |         | 
|collateralized by bobcat, monthly payments
      of $725                     |   | 34,786  |  |   |         | 
|Kubota RTV 36 month note payable, 0.00% interest rate;                       |   |         |  |   |         | 
|collateralized by RTV, monthly payments of
      $494                        |   |         |  |   | 5,436   | 
|Eimco Secoma Drill 24 month note payable, 12.76% interest
      rate         |   |         |  |   |         | 
|payable monthly, collateralized by drill,
      monthly payments of          |   |         |  |   |         | 
|$4,150                                                                       |   | 31,666  |  |   | 74,414  | 
|                                                                             |   |         |  |   |         | 
|Total notes payable                                                          |   | 298,681 |  |   | 381,942 | 
|Due within one year                                                          |   | 114,534 |  |   | 118,046 | 
|Due after one year                                                           | $ | 184,147 |  | $ | 263,896 | 

Maturities of debt outstanding at December 31, 2008 are as
follows: $114,534 in 2009, $136,212 in 2010, $39,239 in 2011, and $8,696 in
2012.

39

---

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

6. Mineral Properties

Mineral properties and deferred development costs are as
follows:

December 31, 2008DeferredProperties
    
    
    Development
    
    
    TotalNew Jersey MineGrenfel/Coleman
    $
    365,000
    
    $
    233,451
    
    $
    598,451Golden Chest
    
    65,000
    
    
    579,393
    
    
    644,393Silver Strand
    
    74,704
    
    
    91,500
    
    
    166,204Roughwater
    
    25,500
    
    
    
    
    
    25,500Lost Eagle
    
    5,000
    
    
    
    
    
    5,000Revett Niagara
    
    31,500
    
    
    
    
    
    31,500Copper Camp
    
    31,500
    
    
    
    
    
    31,500Less AccumulatedAmortization
    
    (58,647
    )
    
    (45,567
    )
    
    (104,214
    )Total
    $
    539,557
    
    $
    858,777
    
    $
    1,398,334


December 31, 2007DeferredProperties
    
    
    Development
    
    
    TotalNew Jersey MineGrenfel/Coleman
    $
    365,000
    
    $
    233,451
    
    $
    598,451Golden Chest
    
    65,000
    
    
    236,286
    
    
    301,287Silver Strand
    
    74,704
    
    
    58,300
    
    
    133,004Roughwater
    
    25,500
    
    
    
    
    
    25,500Lost Eagle
    
    5,000
    
    
    
    
    
    5,000Revett Niagara
    
    19,500
    
    
    
    
    
    19,500Copper Camp
    
    19,500
    
    
    
    
    
    19,500Less AccumulatedAmortization
    
    (55,954
    )
    
    (41,844
    )
    
    (97,798
    )Total
    $
    518,250
    
    $
    486,193
    
    $
    1,004,444


During the year ended December 31, 2008, the Company
capitalized interest charges of $28,722 as deferred development costs.

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.

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

40

---

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

6. Mineral Properties, continued:

Silver Strand The Silver Strand mine consists
of 15 unpatented claims and was acquired from Trend Mining Company (Trend) in
2000. The property was purchased in exchange for 50,000 shares of the Companys
common stock and a 1.5% NSR royalty initially capped at $50,000 and then
decreasing to 0.5% . In July of 2001, MSD assumed Trends position in the
agreement, and retained the NSR royalty interest. Deferred development includes
asset retirement costs of $33,200.

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

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

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

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

41

---

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

6. Mineral Properties, continued

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

Zanetti Mining Lease The Company has been
assigned a mining lease with William Zanetti. The lease provides for the
Company's exploration, development and mining of minerals on fee land through
October 2008 and thereafter, as long as mining operations are deemed continuous.
The lease provides for production royalties of 5% of net sales of ores or
concentrates. Additional production royalties of 1% to 5% are due if gold
exceeds a certain price per troy ounce as adjusted annually by the CPI. At
December 31, 2008, the gold price that would cause additional production
royalties to be payable was $697 per troy ounce. Also, advance royalties of $500
are required annually under the lease. These advance royalties are charged to
expense as incurred, but are still accumulated and will be credited against
production royalty obligations if and when production ensues. The lessor 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 LeasesOn January
3, 2005, the Company signed a mining lease on the Golden Chest with Metaline
Contact Mines (MTLI) and J.W. Beasley Interests, LLC (JWBI) that covers about
270 acres. The Company completed a pre-feasiblity study on an open pit resource
drilled by Newmont Exploration Limited and issued 50,000 shares of its
restricted common stock to both MTLI and JWBI to exercise the mining lease. The
term of the lease is fifteen years and as long thereafter as Leased Substances
are mined, processed or marketed from the property. A NSR royalty of 3% is
payable to the Lessors. An additional NSR royalty up to a maximum 3% is payable
based on a sliding scale of increasing gold prices adjusted by the CPI using
June 2003 (CPI = 183.7) as the base. See table below.

Sliding Scale for Additional NSR Royalty:

Price of Gold, $ / Troy Ounce (using December 2008
      CPI-U)
    Additional NSR Royalty< $458
    None$458 to $515
    1.0%$515 to $572
    1.5%$572 to $629
    2.0%> $629
    3.0%


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

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

42

---

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

7. Asset Retirement Obligation ARO

On January 1, 2008, the Company established an asset retirement
obligation of $27,350 associated with the ultimate closing of its Silver Strand
property. The estimated reclamation costs was discounted using a credit-adjusted
risk-free interest rate of 5.45% from the time the obligation was incurred until
the Company expects to pay the retirement obligation, or five years. During
2008, accretion of approximately $1,000 and an additional layer of reclamation
costs of approximately $4,750 were added to the obligation balance. At December
31, 2008, the balance of the asset retirement obligation is $33,200.

8. Mining Venture Agreements

Silver Star Venture AgreementThe
Company and Silverstar Mining Corp. ("Silverstar") entered into a Mining Venture
Agreement on April 1, 2008, relating to the Silver Strand Property. During the
three months ended June 30, 2008, Silverstar paid the Company $270,000 of
$500,000 to acquire a 50% mining rights and property interest in the Silver
Strand property. On July 31, 2008 Silverstar defaulted on the terms of the
agreement by not making the final payment when due on July 31, 2008. The Company
was not required to refund the initial $270,000 deposit and recognized it as
income in the third quarter of 2008.

Newmont Venture AgreementThe Company
entered into a venture agreement with Newmont North America Exploration Limited
("Newmont") in March 2008, relating to exploration of the Company's Toboggan
Project. Newmont is conducting exploration in a 38 square mile area centered on
the prospects that the Company has staked in the past two years. To earn a
participating interest in the Venture, Newmont is required to contribute
$2,000,000 in exploration expenditures as follows: $300,000 on or before March
2009, an additional $700,000 by March 2010, and an additional $1,000,000 by
March 2011.

9. Income Taxes

The Company did not record an income tax provision for the
years ended December 31, 2008 or 2007, as it had no taxable income. At December
31, 2008 and 2007, the Company had federal net operating loss carry forwards
available for income tax purposes of approximately $5,867,000 and $4,443,000,
respectively, which will expire through 2028, and associated deferred tax assets
of approximately $1,994,800 and $1,510,700, respectively. The deferred tax
assets were calculated assuming a 34% marginal tax rate, and have been fully
reserved as management believes it is more likely than not that the deferred tax
assets will not be utilized.

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

Years
    
    Carry Forwards2017
    $
    33,0002018
    
    27,0002021
    
    4,0002022
    
    36,0002023
    
    380,0002024
    
    930,0002025
    
    590,0002026
    
    990,0002027
    
    1,453,0002028
    
    1,424,000Total
    $
    5,867,000


43

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

10. 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, 2008 or 2007.

Private Placements

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

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

Exercise of Stock Purchase WarrantsDuring 2008 and 2007common 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 2008, the Company issued 4,350,000 shares of its restricted common stock
at $0.40 per share, generating net proceeds of $1,740,000 pursuant to the
exercise of these warrants. During 2007, the Company issued 200,000 shares of
its restricted common stock at $0.60 per share, generating net proceeds of
$120,000 pursuant to the exercise of these warrants.

Stock Purchase Warrants OutstandingTransactions in common stock purchase warrants for the years ended
December 31, 2008 and 2007, are as follows:

| |                                             |  | Number of  |   |   | Exercise  | 
| | ------------------------------------------- |  | ---------- | - | - | --------- | 
| |                                             |  | Warrants   |   |   | Prices    | 
| | Balance, December 31, 2006                  |  | 5,088,875  |   | $ | 0.50-0.60 | 
| | Issued in connection with private placement |  | 2,733,095  |   |   | 0.50-0.55 | 
| | Exercised                                   |  | (200,000   | ) |   | 0.60      | 
| | Balance, December 31, 2007                  |  | 7,621,970  |   |   | 0.50-0.60 | 
| | Exercised                                   |  | (4,350,000 | ) |   | 0.40      | 
| | Expired                                     |  | (1,595,293 | ) |   | 0.50-0.60 | 
| | Balance, December 31, 2008                  |  | 1,676,677  |   |   | 0.50-0.60 | 

These warrants expire as follows:

Shares
    Exercise Price
    Expiration Date1,451,427
    $0.50
    August 31, 2009225,250
    $0.60
    June 1, 20101,676,677


44

---

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

10. Equity, continued:

Common Stock Issued for Property, Plant and
EquipmentDuring 2008 and 2007, the Company issued 14,000 and
20,756 shares, respectively, of its restricted common stock for Property, Plant
and Equipment purchased. The Company recorded $5,600 and $10,239, respectively,
during 2008 and 2007, based upon the value of the equipment purchased and shares
issued.

Common Stock Issued for ServicesDuring 2008 and 2007, the Company issued 74,000 and 52,104 shares,
respectively, of its restricted common stock for services rendered the Company.
The Company recorded $32,000 and $27,157, respectively, based upon the value of
the services rendered and the shares issued.

11. Related Party Transactions

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

In addition to the related party transactions described in Note
6 and 12 the Company had the following transactions with related parties:

- During the years ended December 31, 2008 and 2007, the Company issued
  198,700 and 154,386 shares, respectively, of its restricted common stock
  valued at $72,000 and $82,500, respectively, to Fred Brackebusch for
  management services. During 2008 and 2007 the Company issued 20,000 and 20,000
  shares respectively, of its restricted stock valued at $6,000 and $10,000,
  respectively, to Tina Brackebusch for services as the Corporate Secretary.
- During each of the years ended December 31, 2008 and 2007, the Company
  issued 100,000 shares of its restricted common stock to members of the Board
  of Directors for their services as directors. These stock awards were recorded
  as directors' fees of $30,000 and $50,000, respectively, based upon the
  estimated value of the shares issued and services rendered. Fred and Grant
  Brackebusch each received 20,000 shares in both 2008 and 2007 as Directors of
  the Company.
- During each of the two years ended December 31, 2008 and 2007 the Company
  paid $6,000 to MSD for office rent.

12. Investment in Marketable Security

In 2006, the Company purchased 1,875,000 common shares of Gold
Crest Mines Inc for $7,500. In 2007 the Company sold 242,200 of those shares for
$71,078 which included a gain of $70,109, no additional shares were sold in
2008.

At December 31, 2008, the Company held 1,632,800 shares with a
market value of $0.01 per share, for a total market value of $16,328. At
December 31, 2008, the excess market value of $9,796 over the $6,531 remaining
cost basis of the shares was recognized as accumulated other comprehensive
income in the equity section of the Companys balance sheet.

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

45

---

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

13. Commitments and Contingencies

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

46

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ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A(T).

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

At December 31, 2008, our President who also serves as our
Chief Accounting Officer evaluated the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the
Securities Exchange Act of 1934 (the Exchange Act), which disclosure controls
and procedures are designed to insure that information required to be disclosed
by a company in the reports that it files under the Exchange Act is recorded,
processed, summarized and reported within required time periods specified by the
Securities & Exchange Commission rules and forms.

Based upon that evaluation, it was concluded that our
disclosure controls were effective as of December 31, 2008, to ensure timely
reporting with the Securities and Exchange Commission. Specifically, the
Companys corporate governance and disclosure controls and procedures provided
reasonable assurance that required reports were timely and accurately reported
in our periodic reports filed with the Securities and Exchange Commission.

Internal Control over Financial Reporting

Managements Annual Report on Internal Control Over
Financial Reporting

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

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

The management of New Jersey Mining Company has assessed the
effectiveness of the Companys internal control over financial reporting as of
December 31, 2008. To make this assessment, we used the criteria for effective
internal control over financial reporting described in Internal
Control-Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our assessment, we believe
that, as of December 31, 2008, the Companys internal control over financial
reporting is effective.

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

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

47

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Internal Control over Financial Reporting,
continued:

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

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

Changes in internal control over financial
reporting.

The President and Principal Accounting Officer conducted
evaluations of our internal controls over financial reporting to determine
whether any changes occurred during the quarter ended December 31, 2008 that
have materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting. There was no material
change in internal control over financial reporting in the quarter ended
December 31, 2008.

ITEM 9B

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE;

Name &
      Address
    Age
    Position
    Date First ElectedFred W. Brackebusch P.O. Box 1019 Kellogg, Idaho
      83837
    64
    President, Director & Treasurer
    7/18/1996Grant A. Brackebusch P.O. Box 131 Silverton, ID
      83867
    39
    Vice President & Director
    7/18/1996Ivan R. Linscott 7150 Burke Road Wallace, ID 83873
    66
    Director
    9/21/2004William C. Rust (1)P.O. Box 648
      Wallace, ID 83873
    62
    Director
    9/21/2004M. Kathleen Sims (1)2745 Seltice Way
      Coeur dAlene, ID 83814
    64
    Director
    9/25/2003Tina C. Brackebusch P.O. Box 131 Silverton, ID
      83867
    39
    Secretary
    1/1/1997


48

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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. has served as Chairman of the
Board, President, Chief Executive Officer and Treasurer of the Company since
1996. He has a B.S. and an M.S. in Geological Engineering both from the
University of Idaho. He is a consulting engineer with extensive experience in
mine development, mine backfill, mine management, permitting, process control,
and mine feasibility studies. He has over 35 years of experience in the Coeur
d'Alene Mining District, about half of which was with Hecla Mining Co. He has
been the principal owner of Mine Systems Design, Inc., a mining consulting
business which is a large shareholder in the Company, since 1987.

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

Ivan R. Linscott, PhD has served as a Director of the
Company since 2004. Heis a physicist at Stanford University. He is a
Senior Research Associate for radioscience spacecraft instrument development and
is Co-Investigator and Science Team Member for the New Horizons Mission to
encounter the planet Pluto. Dr. Linscott has a strong interest in doing research
on exploration techniques in the Coeur dAlene Mining District. He has made
significant contributions to the Companys exploration program through the
innovative use of geophysical techniques.

William C. Rust has served as a Director of the Company
since 2004. He is a metallurgical engineer with extensive experience in the
Silver Valley. He worked for Asarco as Chief Metallurgist. Later he worked for
CoCa mines at the Grouse Creek mine 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 has served as a Director of the Company
since 2004. She is a successful businesswoman who is majority owner of a Honda
car dealership in Coeur dAlene, Idaho. 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 the chairperson of the
Audit Committee.

Tina C. Brackebuschhas served as Secretary of the
Company since 1996. She has served as Office Manager for the Company since 1996.
She holds a B.S. in Secondary Education from the University of Idaho and teaches
English at Kellogg High School.

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

Legal ProceedingsNo Director or
Officer has been involved in any legal action involving the Company for the past
five years.

49

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Section 16(a) Beneficial Ownership Reporting
ComplianceUnder Section 16(a) of the Securities Exchange Act
of 1934, as amended, and the regulations thereunder, the Companys Directors,
Executive Officers and beneficial owners of more than 10% of any registered
class of the Companys equity securities are required to file reports of their
ownership of the Companys securities and any changes in that ownership with the
SEC. Based solely on its review of copies of these reports and any written
representations from such reporting persons, the Company believes that during
2008 such filing requirements were complied with.

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

Board CommitteeAt 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 11.

EXECUTIVE COMPENSATION

Compensation of Officers

A summary of cash and other compensation for Fred Brackebusch,
the Companys President and Chief Executive Officer, and Grant Brackebusch, the
Companys Vice President, (the Named Executive Officers), for the two most
recent years is as follows:

Executive Officer Compensation Table

Name & 
      Principal Position
    Year
    Salary 
      ($)
    Bonus 
      ($)
    Stock 
      Awards1($)
    Option 
      Awards ($)
    Nonequity 
      Incentive Plan Compensation ($)
    Nonqualified 
      Deferred Compensation Earnings ($)
    All Other 
      Compensation ($)Fred Brackebusch President
    2008
    84,000
    0
    0
    76,000
    0
    0
    02007
    75,000
    0
    0
    92,500
    0
    0
    0Grant Brackebusch Vice Pres.
    2008
    95,000
    0
    0
    6,000
    0
    0
    02007
    88,500
    0
    0
    10,000
    0
    0
  0


(1) Stock Awards include fees earned as
Directors.

There is no employment agreement between the Company and Fred
Brackebusch, and there is no employment agreement between the Company and Grant
Brackebusch. The compensation of the Named Executive Officers has been set by
disinterested members of the Board of Directors. The Board awarded Fred
Brackebusch restricted Common Stock in addition to his salary, for 2007 and
2008, for any hours worked over 130 hours per month at a rate of $150 per hour.
The number of shares to be awarded is calculated quarterly by using the average
bid price of the Companys Common Stock. Shares issued were 154,386 in 2007, and
198,700 in 2008. The shares were valued at an average price of $0.53 per share
in 2007, and $0.36 per share in 2008.

50

---

The Company does not have a retirement plan for its executive
officers and there is no agreement, plan or arrangement that provides for
payments to executive officers in connection with resignation, retirement,
termination or a change in control of the Company.

In January of 2009, the cash salaries of Fred Brackebusch and
Grant Brackebusch were reduced 50% from their 2008 level in an effort to
conserve the Companys cash.

Outstanding Equity Awards at Fiscal Year-endThe Company does not currently award the Named Executive Officers
options to purchase the Companys shares, and there were not outstanding equity
awards as of December 31, 2008.

Director Compensation

A summary of compensation for the Companys non-employee
Directors, including Ivan R. Linscott, William C. Rust and M. Kathleen Sims for
the two most recent years is as follows:

Director Compensation Table

Name 1
    Year
    Fees 
      Earned or Paid in Cash
      ($)
    Stock Awards ($)
    Option Awards ($)
    Nonequity 
      Incentive Plan 
      Compensation 
      ($)
    Nonqualified 
      Deferred  Compensation 
    Earnings 
    ($)
    All Other 
      Compensation 
      ($)
    Total ($)Ivan R. Linscott
    2008
    -
    6,000
    -
    -
    -
    -
    6,0002007
    -
    31,200
    -
    -
    -
    -
    31,200William C. Rust
    2008
    -
    6,000
    -
    -
    -
    -
    6,0002007
    -
    10,000
    -
    -
    -
    -
    10,000M. Kathleen Sims
    2008
    -
    6,000
    -
    -
    -
    -
    6,0002007
    -
    10,000
    -
    -
    -
    -
  10,000


(1) Directors Fred W. Brackebusch and
Grant A. Brackebusch are executive officers of the Company, therefore,
disclosure regarding their compensation as Directors is included in the
Executive Officer Compensative Table above

During 2007, each of the Directors of the Company were paid
20,000 shares of restricted Common Stock valued at $10,000. At a Board of
Directors meeting on May 27, 2008, the Directors approved a compensation plan
for the Board of Directors under which each Director receives 20,000 shares of
restricted Common Stock. In 2008 these shares were valued at $6,000. No
additional fees are paid for attendance at Board of Directors meetings,
committee membership or committee chairmanship. On occasion, Directors are
retained for consulting services unrelated to their duties as Directors. These
consulting services are either paid in cash or with restricted Common Stock
according to the Companys policy for share-based payment of services.

The Company does not have a retirement plan for its Directors
and there is no agreement, plan or arrangement that provides for payments to
Directors in connection with resignation, retirement, termination or a change in
control of the Company.

ITEM 12.

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

The following table sets forth information as of March 10, 2009
regarding the shares of Company Common Stock beneficially owned by: (i) each
person known by the Company to own beneficially more than 5% of the Companys
Common Stock; (ii) each Director of the Company; (iii) the CEO and CFO of the
Company (the Named Executive Officers); and (iv) all Directors and the Named
Executive Officers of the Company as a group. Except as noted below, each holder
has sole voting and investment power with respect to the shares of the Company
Common Stock listed as owned by that person.

51

---

Security Ownership of Certain Beneficial
Owners

Title of Class
    Name and Address Of Beneficial Owner
    Amount and Nature of Beneficial Owner
    Percent of Class1Common
    Fred W. Brackebusch P.O. Box 1019
      Kellogg, Idaho 83837
    7,915,757 indirect (a) 1,076,705
      direct
    24.19%Common
    Constance Meisel 105 East Atlantic Avenue
      Delray Beach, FL 33444
    3,158,607
    8.50%Common
    Terry & Marguerite Tyson County Road U
      Lipscomb, TX 79056
    1,608,528 direct 933,900 indirect
    6.84%Common
    William Ritger Ocean Royale Way Juno
      Beach, FL 33408
    1,930,000 (b)
    5.19%


(1)Based upon 37,169,692 outstanding shares of common stock at
March 10, 2009.

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

(b) William Ritger holds 600,000 warrants exercisable at a
price of $0.50 with an expiration date of August 31, 2009.

Security Ownership of Management

Title of Class
    Name and Address of Beneficial Owner
    Amount and Nature of Beneficial Owner
    Percent of Class1Common
    Fred W. Brackebusch 89 Appleberg Road
      Kellogg, Idaho 83837
    7,915,757 indirect (a) 1,076,705
      direct
    24.19%Common
    Grant A. Brackebusch 89 Appleberg Road
      Kellogg, Idaho 83837
    1,016,793 indirect (b) 337,920 direct
    3.64%Common
    Ivan R. Linscott, Director 7150 Burke Road
      Wallace, Idaho 83873
    110,500
    0.30%Common
    William C. Rust, Director P.O. Box 648
      Wallace, Idaho 83873
    70,000
    0.19%Common
    M. Kathleen Sims, Director 2745 Seltice Way
      Coeur dAlene, Idaho 83814
    83,000
    0.22%Common
    All Directors and Executive Officers as a
      group (5 individuals)
    10,610,675
    28.55%


(1) Based upon 37,169,692 outstanding shares of common stock at
March 10, 2009.

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

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

52

---

None of the Directors or Officers has the right to acquire any
securities pursuant to options, warrants, conversion privileges or other rights.
No shares are pledged as security.

Securities Authorized for Issuance under Equity
PlansThe Company does not have an equity compensation plan
for issuance of warrants, options or rights. However, the Board of Directors has
awarded Fred Brackebusch restricted Common Stock in addition to his salary, for
2007 and 2008, for any hours worked over 130 hours per month at a rate of $150
per hour. The number of shares to be awarded is calculated quarterly by using
the average bid price of the Companys Common Stock. The Company also
occasionally pays for goods or services with restricted Common Stock and uses
the average bid price of the stock at the time to determine the number of shares
to be issued.

Changes in ControlNone.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

Certain Relationships and Related TransactionsDuring each of the years ended December 31, 2008 and 2007, the Company
issued 120,000 shares of its restricted common stock to members of the Board of
Directors and Officers for their services. These stock awards were recorded as
directors' fees of $30,000 and $50,000, respectively, for directors and $6,000
and $10,000, respectively, for management based upon the estimated value of the
shares issued and services rendered. Fred, Grant, and Tina Brackebusch each
received 20,000 shares in 2008 and 20,000 shares in 2007 as Directors or
Officers in each respective year.

During the years ended December 31, 2008 and 2007, the Company
issued 198,700 and 154,386 shares, respectively, of its restricted common stock
valued at $72,000 and $82,500, respectively, to Fred Brackebusch for management
services.

During each of the two years ended December 31, 2008 and 2007,
the Company paid $6,000 to MSD for office rent.

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

Director IndependenceThe Board of
Directors has determined that each of the following Directors is an independent
director as such term is defined by the rules of the Financial Industry
Regulatory Authority (FINRA), and the Securities and Exchange Commission
(SEC): Ivan R. Linscott, William C. Rust, and M. Kathleen Sims. These three
Directors comprise a majority of the Board of Directors. The rules of FINRA and
the SEC generally provide that an independent director is a person other than
an officer or employee of the Company or any individual having a relationship
that, in the opinion of the Board of Directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
Director. The FINRA rules also provide specific criteria that, if met,
disqualify a director from being independent.

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

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ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit FeesThe aggregate fees billed
for professional services rendered by the Companys principal accountant for the
audit of the annual financial statements included in the Companys annual report
on Form 10-K for the fiscal year ended December 31, 2008 and Form 10-KSB for the
fiscal year ended December 31, 2007 and the review for the financial statements
included in the Companys quarterly reports on Form 10-Q during those fiscal
years, were $30,208 and $28,384 respectively.

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

Audit Committee Pre-Approval PoliciesThe 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.

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PART IV

ITEM 15.

EXHIBITS

(3)(i)
      Articles of Incorporation-Filed
          as an exhibit to the registrant's registration statement on Form 10-
          SB (Commission File No. 000-28837) and incorporated by reference herein.(3)(ii)
      Bylaws-Filed as an exhibit
          to the registrant's registration statement on Form 10-SB (Commission
          File No. 000-28837) and incorporated by reference herein.(10)(1)
      Lease Agreement with William
          Zanetti-Filed as an exhibit to the registrant's 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.(10)(7)
      Exploration Agreement and Option
          to Convert to Mining Agreement between RMA and New Jersey Mining Company.
          Filed as an exhibit to the registrants annual report on Form 10-KSB
          for the year ended December 31, 2006 and incorporated by reference herein.(10)(8)
      Exploration Agreement and Option
          to Convert to Mining Agreement between RMA and New Jersey Mining Company.
          Filed as an exhibit to the registrants annual report on Form 10-KSB
          for the year ended December 31, 2007.(14)
      Code of Ethics.-Filed as an
          exhibit to the registrants annual report on Form 10-KSB for the
          year ended December 31, 2003, and incorporated by reference herein.(16)
      Letter on Change in Certifying
          Accountant.-Filed as an 8-K report on December 10, 2003 and later filed
          as an 8-K/A on February 2, 2004, and incorporated by reference herein.(31)
      Rule
          13a-15(e)/15d-15(e) Certifications(31)(i)
      Certification
          of Fred W. Brackebusch(32)
      Section
          1350 and Rule 13a-15(d) Certifications(32)(i)
      Certification
          of Fred W. Brackebusch(99)(i)
      Audit Committee Pre-Approval
          Policies.-Filed as an exhibit to the registrants annual report
          on Form 10-KSB for the year ended December 31, 2003 and incorporated
          by reference herein.


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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 30,
      2009 | By | /s/ FRED W. BRACKEBUSCH                                   
|-------------------------- | -- | ----------------------------------------------------------
|                           |    | Fred W. Brackebusch, President,
      Treasurer & Director
|                           |    |                                                           
|Date: March 30,
      2009 | By | /s/ GRANT A. BRACKEBUSCH                                  
|                           |    | Grant A. Brackebusch, Vice
      President & Director     
|                           |    |                                                           
|Date: March 30,
      2009 | By | /s/ IVAN R. LINSCOTT                                      
|                           |    | Ivan R. Linscott,
      Director                          
|                           |    |                                                           
|Date: March 30,
      2009 | By | /s/ WILLIAM C. RUST                                       
|                           |    | William C. Rust,
      Director                           
|                           |    |                                                           
|Date: March 30,
      2009 | By | /s/ M. KATHLEEN SIMS                                      
|                           |    | M. Kathleen Sims, Director                                

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