FORM 10-QSB


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15 (d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934
          
                For the quarterly period ended September 30, 1998
                                       OR
[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

        For the transition period from ______________ to _______________


                          GOLDEN QUEEN MINING CO. LTD.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

  Province of British Columbia       0-21777               Not Applicable
-------------------------------  ----------------        -------------------
(State or other jurisdiction of  (Commission File         (IRS Employer
         incorporation)              Number)             Identification No.)


                          104 South Freya, Suite 211-A
                               Green Flag Building
                            Spokane, Washington 99202
                    ----------------------------------------
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (509) 535-4022
                                                           --------------

        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----

 Securities registered pursuant to section 12(g) of the Act: Common Stock, 
  without par value

Indicate by check mark whether the issuer (1) has filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

The number of  outstanding  shares of the  issuer's  common stock at October 30,
1998 was 34,796,641 shares.

Transitional Small Business Disclosure Format:   Yes [ ]    No [X]


<PAGE>


                          GOLDEN QUEEN MINING CO. LTD.
                QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTERLY
                         PERIOD ENDED SEPTEMBER 30, 1998


                                TABLE OF CONTENTS


SAFE HARBOR STATEMENT


PART I:  Financial Information                                              Page

       Item 1:  Consolidated Financial Statements  ..........................  1
       Item 2:  Management's Discussion and Analysis or Plan of Operations .. 10


Part II:  Other Information

       Item 1:  Legal Proceedings  .......................................... 14
       Item 2:  Changes in Securities ....................................... 14
       Item 3:  Defaults Upon Senior Securities ............................. 14
       Item 4:  Submission of Matters to a Vote of Security Holders ......... 14
       Item 5:  Other Information ........................................... 14
       Item 6:  Exhibits and Reports on Form 8-K ............................ 14

SIGNATURES .................................................................. 15

EXHIBIT NO. 27 .............................................................. 16



                                       i
<PAGE>


                              SAFE HARBOR STATEMENT


This report contains both historical and prospective  statements  concerning the
Company and its operations.  Historical statements are based on events that have
already happened; examples include the reported financial and operating results,
descriptions  of  pending  and  completed   transactions,   and  management  and
compensation matters.  Prospective  statements,  on the other hand, are based on
events that are reasonably  expected to happen in the future;  examples  include
the timing of projected  operations,  the likely  effect or  resolution of known
contingencies or other foreseeable events, and projected operating results.

Prospective  statements (which are known as  "forward-looking  statements" under
the Private Securities  Litigation Reform Act of 1995) may or may not prove true
with the passage of time  because of future risks and  uncertainties.  The risks
and  uncertainties  associated  with  prospective  statements  contained in this
report include, among others, the following:

THE LIKELIHOOD OF CONTINUED LOSSES FROM  OPERATIONS.  The Company has no revenue
from mining  operations and has incurred losses from inception through September
30, 1998 of approximately $3,660,000.  This trend is expected to continue for at
least the next two years and is expected to reverse only if, as and when gold is
produced from the Soledad Mountain Project.

THE NEED FOR SIGNIFICANT  ADDITIONAL FINANCING.  The Company anticipates that it
will need approximately  $77,600,000 in additional  financing to put the Soledad
Mountain  Project into production;  an anticipated  $66,300,000 will be used for
capital  expenditures  and  $11,300,000  will be used as working capital and for
start-up   expenditures.   The  Company  expects  to  finance  development  from
additional   sales  of  common  stock,   from  bank  or  other   borrowings  or,
alternatively,  through joint development with another mining company.  However,
it has no commitment  for bank financing or for the  underwriting  of additional
stock, and it is not a party to any agreement or arrangement providing for joint
development. Whether and to what extent financing can be obtained will depend on
a number of  factors,  not the least of which is the price of gold.  Gold prices
fluctuate  widely and are  affected by  numerous  factors  beyond the  Company's
control, such as inflation, the strength of the United States dollar and foreign
currencies,   global  and  regional  demand,  and  the  political  and  economic
conditions  of major  gold  producing  countries  throughout  the  world.  As of
September  30,  1998,  world gold prices were  approximately  $294 per ounce,  a
reduction  of  approximately  11% from  prices a year ago,  and a  reduction  of
approximately  26% from prices two years ago. If gold prices do not  strengthen,
it may not be  economical  for the Company to put the Soledad  Mountain  Project
into production.

RISKS AND  CONTINGENCIES  ASSOCIATED  WITH THE MINING  INDUSTRY  GENERALLY.  The
Company  is  subject  to all of  the  risks  inherent  in the  mining  industry,
including environmental risks, fluctuating metals prices,  industrial accidents,
labor disputes,  unusual or unexpected geologic formations,  cave-ins,  flooding
and periodic interruptions due to inclement weather. These risks could result in
damage to, or  destruction  of, mineral  properties  and production  facilities,
personal  injury,  environmental  damage,  delays,  monetary  losses  and  legal
liability.  The Company is also subject to the uncertainty  about its ability to
identify and address all Year 2000 issues. Although the Company maintains or can
be expected to maintain  insurance  within  ranges of coverage  consistent  with
industry  practice,  no  assurance  can be given  that  such  insurance  will be
available at economically  feasible  premiums.  Insurance against  environmental
risks (including pollution or other hazards resulting from the disposal of waste
products generated from exploration and production  activities) is not generally
available  to the Company or other  companies in the mining  industry.  Were the
Company subjected to environmental liabilities,  the payment of such liabilities
would reduce the funds available to the Company. Were the Company unable to fund
fully the cost of remedying an  environmental  problem,  it might be required to
suspend operations or enter into interim compliance  measures pending completion
of remedial activities.


                                       ii
<PAGE>


                                     PART I



ITEM 1.  FINANCIAL STATEMENTS


The unaudited  consolidated  financial statements of the Company for the periods
covered by this report are set forth at pages 2 through 9.










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



                                       1
<PAGE>


                                  GOLDEN QUEEN MINING CO. LTD.
                                 (a development stage company)
                                  Consolidated Balance Sheets
                                         (U.S. dollars)



<TABLE>
<CAPTION>
                                                   September 30, 1998        December 31, 1997
                                                       (unaudited)               (audited)
                                                 --------------------      -------------------
Assets
  Current assets:
<S>                                                   <C>                       <C>         
   Cash and cash equivalents                          $  1,794,723              $  1,127,234
   Receivables                                               7,250                    14,798
   Prepaid expenses and other current assets                69,192                    77,773
                                                      ------------              ------------
   Total current assets                                  1,871,165                 1,219,805

   Property and equipment, net                           1,106,435                 1,164,651
   Mineral properties                                   23,741,578                22,104,335
   Other assets                                            907,733                   892,928
                                                      ------------              ------------
                                                      $ 27,626,911              $ 25,381,719
                                                      ============              ============

Liabilities and Shareholders' Equity

  Current liabilities:
   Accounts payable                                   $     59,141              $    384,388
   Accrued liabilities                                      46,253                    69,427
   Current maturities of long-term debt                     52,723                    45,034
                                                      ------------              ------------
  Total current liabilities                                158,117                   498,849

  Long-term debt, less current maturities (Note 2a)        816,157                 1,857,189
                                                      ------------              ------------

  Total liabilities                                        974,274                 2,356,038
                                                      ------------              ------------

  Commitments and Contingencies

Shareholders' equity:
  Preferred shares, no par, 3,000,000 shares
   authorized; no shares outstanding
  Common shares, no par, 100,000,000 shares
   authorized; 34,796,641 and 25,708,400
   shares issued (Note 2)                               30,725,064                26,400,594
  Deficit accumulated during the development
   stage                                                (4,072,427)               (3,374,913)
                                                      ------------              ------------

  Total shareholders' equity                            26,652,637                23,025,681
                                                      ------------              ------------

  Liabilities and shareholders' equity                $ 27,626,911              $ 25,381,719
                                                      ============              ============
</TABLE>


                                               2
<PAGE>



                                   GOLDEN QUEEN MINING CO. LTD.
                                   (a development stage company)
                                  Consolidated Statements of Loss
                                          (U.S. dollars)

                                            (Unaudited)

<TABLE>
<CAPTION>

                                                                                        Cumulative
                                                                                      Amounts From
                                                                                 Date of Inception
                  Three Month Period Ended           Nine Month Period Ended         (November 21,
                -----------------------------     -------------------------------    1985) through
                September 30,   September 30,     September 30,      September 30,   September 30,
                   1998            1997              1998               1997              1998
--------------------------------------------------------------------------------------------------
<S>                <C>           <C>             <C>               <C>              <C>          
General and
 administrative
 expense           $  170,258    $     364,348   $      705,777    $     906,035    $   3,943,577
Interest expense           --           24,278           20,583           72,042          323,485
Interest income       (29,202)         (43,887)         (52,660)        (135,061)        (918,384)
Other expense, net     10,241            5,763           17,673            8,139           34,352
Write-off of
 mineral
 properties                --               --               --               --          277,251
                   ----------    -------------    -------------    -------------    -------------

Net loss           $ (151,297)   $    (350,502)   $    (691,373)   $    (851,155)   $  (3,660,281)
                   ==========    =============    =============    =============    =============

Net loss per
 share             $    (0.01)   $       (0.02)   $       (0.02)   $       (0.04)
                   ==========    =============    =============    =============

Weighted average
 shares
 outstanding       34,796,641       23,159,487       31,297,104       22,522,902
                   ==========    =============    =============    =============
</TABLE>



                                                3
<PAGE>



                        GOLDEN QUEEN MINING CO. LTD.
                        (a development stage company)
         Consolidated Statements of Changes in Shareholders' Equity
                               (U.S. dollars)

                                 (Unaudited)

From the Date of                                      Deficit
Inception                                         Accumulated
(November 21, 1985)                                During the
Through                        Common Shares      Development
September 30, 1998         Shares       Amount          Stage  Total Equity
---------------------------------------------------------------------------

November 21, 1985
Issuance of common
  shares for cash         1,425,001   $  141,313   $      --    $   141,313
Net loss for the year            --           --     (15,032)       (15,032)
                          ---------   ----------   ---------    -----------
Balance, May 31, 1986     1,425,001      141,313     (15,032)       126,281

Issuance of common
  shares for cash           550,000      256,971          --        256,971
Issuance of common
  shares for mineral
  property                   25,000       13,742          --         13,742
Net loss for the year            --           --     (58,907)       (58,907)
                          ---------   ----------   ---------    -----------
Balance, May 31, 1987     2,000,001      412,026     (73,939)       338,087

Issuance of common
  shares for cash         1,858,748    1,753,413          --      1,753,413
Net income for the year          --           --      38,739         38,739
                          ---------   ----------   ---------    -----------
Balance, May 31, 1988     3,858,749    2,165,439     (35,200)     2,130,239

Issuance of common
  shares for cash         1,328,750    1,814,133          --      1,814,133
Issuance of common
  shares for mineral
  property                  100,000      227,819          --        227,819
Net loss for the year            --           --    (202,160)      (202,160)
                          ---------   ----------   ---------    -----------
Balance, May 31, 1989     5,287,499    4,207,391    (237,360)     3,970,031

Issuance of common
  shares for cash         1,769,767    2,771,815          --      2,771,815
Issuance of common
  shares for mineral
  property                    8,875       14,855          --         14,855
Net loss for the year            --           --    (115,966)      (115,966)
                          ---------   ----------   ---------    -----------
Balance, May 31, 1990     7,066,141    6,994,061    (353,326)     6,640,735

Net income for the year          --           --      28,706         28,706
                          ---------   ----------   ---------    -----------
Balance, May 31, 1991     7,066,141    6,994,061    (324,620)     6,669,441

Net loss for the year            --           --    (157,931)      (157,931)
                          ---------   ----------   ---------    -----------
Balance, May 31, 1992     7,066,141    6,994,061    (482,551)     6,511,510


                                      4
<PAGE>


                            GOLDEN QUEEN MINING CO. LTD.
                            (a development stage company)
             Consolidated Statements of Changes in Shareholders' Equity
                                   (U.S. dollars)

                                     (Unaudited)


<TABLE>
<CAPTION>
From the Date of                                            Deficit
Inception                                               Accumulated
(November 21, 1985)                                      During the
Through                           Common Shares         Development
September 30, 1998             Shares       Amount             Stage   Total Equity
-----------------------------------------------------------------------------------

<S>                           <C>           <C>             <C>           <C>      
Net loss for the year                --            --       (285,391)      (285,391)
                             ----------   -----------    -----------    -----------
Balance, May 31, 1993         7,066,141     6,994,061       (767,942)     6,226,119

Issuance of common
  shares for cash             5,834,491     1,536,260             --      1,536,620
Share issue costs                    --            --        (18,160)       (18,160)
Issuance of common
  shares for mineral
  property                      128,493        23,795             --         23,795
Net loss for the year                --            --       (158,193)      (158,193)
                             ----------   -----------    -----------    -----------
Balance, May 31, 1994        13,029,125     8,554,116       (944,295)     7,609,821

Issuance of common
  shares for cash               648,900       182,866             --        182,866
Net loss for the year                --            --       (219,576)      (219,576)
                             ----------   -----------    -----------    -----------
Balance, May 31, 1995        13,678,025     8,736,982     (1,163,871)     7,573,111

Issuance of common
  shares for cash             2,349,160     2,023,268             --      2,023,268
Issuance of common
  shares for debt               506,215       662,282             --        662,282
Issuance of 5,500,000
  special warrants                   --     9,453,437             --      9,453,437
Special warrants issue
  cost                               --            --       (100,726)      (100,726)
Net loss for the year                --            --       (426,380)      (426,380)
                             ----------   -----------    -----------    -----------
Balance, May 31, 1996        16,533,400    20,875,969     (1,690,977)    19,184,992

Issuance of common
  shares for cash                18,000        10,060             --         10,060
Issuance of common
  shares for special
  warrants                    5,500,000            --             --             --
Special warrants issue
  cost                               --            --       (123,806)      (123,806)
Net loss for the period              --            --       (348,948)      (348,948
                             ----------   -----------    -----------    -----------
Balance, December 31, 1996   22,051,400    20,886,029     (2,163,731)    18,722,298
</TABLE>

                                         5
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (a development stage company)
           Consolidated Statements of Changes in Shareholders' Equity
                                 (U.S. dollars)

                                   (Unaudited)


From the Date of                                         Deficit
Inception                                            Accumulated
(November 21, 1985)                                   During the
Through                          Common Shares       Development
September 30, 1998            Shares      Amount           Stage   Total Equity
-------------------------------------------------------------------------------

Issuance of common
  shares for cash            157,000       157,050            --        157,050
Issuance of 3,500,000
  special warrants                --     5,287,315            --      5,287,315
Issuance of common
  shares for special
  warrants                 3,500,000            --            --             --
Options to non-
  employee directors              --        70,200            --         70,200
Special warrants issue
  cost                            --            --      (163,313)      (163,313)
Net loss for the year             --            --    (1,047,869)    (1,047,869)
                          -----------------------------------------------------
Balance, December 31,
  1997                    25,708,400    26,400,594    (3,374,913)    23,025,681

Issuance of common
  shares for warrants      1,834,300       857,283            --        857,283
Issuance of common
  shares through
  conversion of debt       2,017,941     1,000,000            --      1,000,000
Share issuance cost               --            --        (6,141)        (6,141)
Issuance of common
  shares for cash          5,236,000     2,439,753            --      2,439,753
Options and re-priced
  options to non-
  employee directors              --        27,434            --         27,434
Net loss for the period           --            --      (691,373)      (691,373)
                          -----------------------------------------------------
Balance, September 30,
  1998                    34,796,641   $30,725,064   $(4,072,427)  $ 26,652,637
                          ==========   ===========   ===========   ============

                                         6
<PAGE>


                                               GOLDEN QUEEN MINING CO. LTD.
                                              (a development stage company)
                                           Consolidated Statements of Cash Flow
                                                      (U.S. dollars)

                                                       (Unaudited)


<TABLE>
<CAPTION>
                                     Increase (Decrease) in Cash and Cash Equivalents

                                                                                                Cumulative Amounts
                                                                                                      From Date of
                                                Nine Month Period       Nine Month Period      Inception (November
                                                     Ended                    Ended              21, 1985) through
                                               September 30, 1998      September 30, 1997       September 30, 1998
                                              --------------------   ---------------------   ---------------------
Operating Activities
<S>                                                 <C>                    <C>                     <C>          
     Net loss                                       $  (691,373)           $  (851,155)            $ (3,660,281)
     Adjustments to reconcile net
       loss to cash used in operating
       activities:
       Write-off of mineral properties                       --                     --                  277,251
       Amortization and depreciation                     64,632                 48,586                  173,504
       Loss on disposition of property
        and equipment                                        --                     --                   10,949

     Options to directors                                27,434                 70,200                   97,634

     Changes in assets and liabilities:
       Receivables                                        7,548                112,045                   (7,250)
       Prepaid expenses and other
        current assets                                    8,581                (52,351)                 (69,192)
       Accounts payable and accrued
        liabilities                                    (348,421)              (303,957)                 105,394
                                                    -----------            -----------             ------------

     Cash used in operating activities                 (931,599)              (976,632)              (3,071,991)
                                                    -----------            -----------             ------------

Investment Activities:
  Deferred exploration and
   development expenditures                          (1,413,917)            (5,923,110)             (19,275,412)
  Deposits on mineral properties                        (14,805)              (503,122)                (907,733)
  Purchase of mineral properties                       (223,326)              (372,828)              (4,613,206)
  Purchase of property and
   equipment                                             (6,416)              (548,005)              (1,299,380)
  Proceeds from sale of property
   and equipment                                             --                     --                    8,492
                                                    -----------            -----------             ------------

Cash used in investment
  activities                                         (1,658,464)            (7,347,065)             (26,087,239)
                                                    -----------            -----------             ------------

Financing Activities:
Borrowing under long-term debt                               --                     --                3,766,502
Payment of long-term debt                               (33,343)              (160,138)              (1,085,340)
</TABLE>


                                                            7
<PAGE>


                                          GOLDEN QUEEN MINING CO. LTD.
                                          (a development stage company)
                                      Consolidated Statements of Cash Flow
                                                 (U.S. dollars)

                                                   (Unaudited)


                                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                                                             Cumulative Amounts
                                                                                                   From Date of
                                             Nine Month Period       Nine Month Period      Inception (November
                                                  Ended                    Ended              21, 1985) through
                                            September 30, 1998      September 30, 1997       September 30, 1998
                                           --------------------    --------------------    --------------------
<S>                                            <C>                        <C>                   <C>       
Issuance of common stock for
 cash                                          2,439,753                  157,050               13,086,902
Share issuance costs                              (6,141)                (134,162)                (412,146)
Issuance of special warrants                          --                5,299,189                       --
Issuance of common shares for
  warrants                                       857,283                       --               15,598,035
                                             -----------              -----------             ------------
Cash provided by (used in)
  financing activities                         3,257,552                5,161,939               30,953,953
                                             -----------              -----------             ------------

Net change in cash and cash
  equivalents                                    667,489               (3,161,758)               1,794,723

Cash and cash equivalents,
  beginning balance                            1,127,234                5,436,497                       --
                                             -----------              -----------             ------------

Cash and cash equivalents,
  ending balance                             $ 1,794,723              $ 2,274,739             $  1,794,723
                                             ===========              ===========             ============

Supplemental disclosures of cash
flow information:
Cash paid during period for:
  Interest                                   $   111,692              $   167,029             $    660,411
  Income taxes                               $        --              $        --             $         --

Non-cash financing and
  investing activities:
  Exchange of notes for common
   shares                                    $ 1,000,000              $        --             $  1,662,282
  Exchange of note for future
   royalty payments                          $        --              $        --             $    150,000
  Shares for mineral property                $        --              $        --             $    280,211
  Mineral property acquired
   through the issuance of long-
   term debt                                 $        --              $        --             $  1,084,833
</TABLE>


                                                       8
<PAGE>



                          GOLDEN QUEEN MINING CO. LTD.
                          (a development stage company)
                   Notes to Consolidated Financial Statements


                                   (Unaudited)


Note 1:  Significant Accounting Policies

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial information and the instructions to Form 10-QSB. Accordingly,  they do
not include all of the information and footnotes  required by generally accepted
accounting  principles for complete  financial  statements.  These  consolidated
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  and related notes thereto  included in the Company's 1997
annual report on Form 10-KSB.  In the opinion of  management,  all  adjustments,
consisting only of normal recurring  accruals,  considered  necessary for a fair
presentation  have been included.  Operating  results for the nine-month  period
ended September 30, 1998 are not necessarily  indicative of the results that may
be expected for the year ending December 31, 1998.


Note 2:  Share Capital

a)   On January 28, 1998,  the conversion  price of the Company's  debentures in
     the principal  amount of  US$1,000,000  was reduced from C$2.00 ($1.46) per
     share to C$0.68  ($0.50) per share.  The  conversion  price  reduction  was
     approved  by  The  Toronto  Stock  Exchange,  and on  March  18,  1998  the
     convertible debentures were converted to 2,017,941 common shares.

b)   On February 19,  1998,  the  exercise  price of the common  share  purchase
     warrants  issued by the  Company  pursuant  to a special  warrant  offering
     completed in May 1996 was reduced to C$0.68  ($0.49) per share from C$1.525
     ($1.07) per share. The exercise price reduction was approved by The Toronto
     Stock  Exchange.  1,834,300  warrants were  exercised at C$0.68 ($0.49) for
     1,834,300  common shares.  The Company received net proceeds of C$1,216,142
     ($857,283).

c)   On January  28,  1998,  additional  stock  options to purchase up to 25,000
     shares  of  common  stock  were  granted  to  each  of the  Company's  five
     non-employee directors.  The options are exercisable at the price of C$1.00
     ($0.69) and expire on January 28, 2003.  The resulting  charge to directors
     expense during the three month period ending March 31, 1998 was $10,900.

d)   On January 28, 1998, the exercise price of all outstanding  options held by
     directors and employees of the Company and its subsidiary  with an exercise
     price of more than C$1.00  ($0.69) per share was reduced to C$1.00  ($0.69)
     per share,  subject to the approval of the Toronto  Stock  Exchange and the
     Company's  shareholders.  The Toronto Stock Exchange approved the repricing
     of the options, and at the Annual General Meeting of shareholders,  held on
     June 2, 1998, the shareholders approved the repricing.

e)   On May 14, 1998 the  Company  completed a private  placement  of  5,236,000
     common  shares at an issue price of C$0.68  ($0.47) per share for aggregate
     net proceeds of C$3,560,480  ($2,439,753).  The net proceeds of the private
     placement  will  be  used  to  fund  ongoing  capital  expenditures  at the
     Company's Soledad Mountain Project and for general corporate purposes.



                                       9
<PAGE>


                          GOLDEN QUEEN MINING CO. LTD.
                          (a development stage company)
                   Notes to Consolidated Financial Statements


                                   (Unaudited)


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

RESULTS OF OPERATIONS.

OVERVIEW.  During the periods  indicated in the discussion  which  follows,  the
Company has been in the  exploration  stage of its  business and  therefore  has
earned no  revenue  from its  operations.  Variations  in the level of  expenses
between  periods  have been as a result of the  nature,  timing  and cost of the
activities  undertaken  in the  various  periods.  Financing  of  the  continued
exploration  of the  Soledad  Mountain  Project  during  such  periods  has been
obtained  through  the  sale  of  shares  of  common  stock  of the  Company  in
predominantly offshore transactions and through borrowings.

THREE MONTHS ENDED  SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 1997.

General and  administrative  expenses decreased to $170,000 for the three months
ended  September  30,  1998,  from  $364,000  for the  three-month  period ended
September  30, 1997.  The decrease is primarily  due to a reduction in marketing
expenditures  during the period,  and the  recognition of  compensation  cost on
repriced stock options issued to non-employee directors of the Company.

No interest expense was recognized for the three months ended September 30, 1998
compared  to  interest  expense  of $24,000  for the  three-month  period  ended
September 30, 1997, as a result of the conversion of convertible debentures into
common shares in March 1998. Interest incurred on debt relating to the Company's
investment in the Soledad  Mountain  Project is  capitalized  as part of mineral
properties.

Interest  income  decreased to $29,000 for the three months ended  September 30,
1998,  from  $44,000  for the three  month  period  ended  September  30,  1997,
primarily as a result of a decrease in the average balance of invested funds. As
a result of the foregoing  factors,  the Company incurred a net loss of $151,000
for the three months ended September 30, 1998, versus a net loss of $351,000 for
the three-month period ended September 30, 1997.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997.

General and  administrative  expenses  decreased to $706,000 for the nine months
ended  September  30,  1998,  from  $906,000  for the  nine-month  period  ended
September 30, 1997.  The decrease is primarily due to  recognizing  compensation
cost of stock  options  and  repriced  options to  non-employee  directors,  and
marketing expenditures.

Interest  expense  decreased to $21,000 for the nine months ended  September 30,
1998,  from $72,000 for the  nine-month  period ended  September  30, 1997, as a
result of the  conversion  of  convertible  debentures  that were  exchanged for
common shares in March 1998.

Interest  income  decreased to $53,000 for the nine months ended  September  30,
1998,  from  $135,000  for the  nine-month  period  ended  September  30,  1997,
primarily as a result of a decrease in the average balance of invested funds. As
a result of the foregoing  factors,  the Company incurred a net loss of $691,000
for the nine months ended September 30, 1998,  versus a net loss of $851,000 for
the nine-month period ended September 30, 1997.



                                       10
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES.

GENERAL.  The Company  acquired the Soledad Mountain Project in 1986. Since then
it has  solidified its land position,  conducted  several  drilling and sampling
programs  to  delineate  ore  reserves,  and taken  steps to secure  permits and
approvals needed for production activities. The Company previously reported that
it expected  to begin  producing  gold and silver  from the  project  during the
second half of 1998, once  permitting was completed.  Because of the downturn in
world gold prices during the second half of 1997,  however,  the Company has not
been able to obtain  financing for  construction.  As a consequence,  production
will be delayed until construction financing can be raised.

The Company has had no reported revenues from operations since inception, and is
in the  exploration  or  development  stage.  During the period  from  inception
through September 30, 1998, the Company used $3,072,000 in operating activities,
primarily as the result of cumulative  losses of $3,660,000 for the same period.
During the same period,  the Company used  $26,087,000 in investing  activities;
these consisted of $24,796,000 in expenditures  related to the Soledad  Mountain
Project and fixed asset  purchases of $1,299,000.  These operating and investing
activities were financed by net borrowings of $2,681,000 under various long-term
debt arrangements, and from the sale of $28,273,000 of equity securities.

At September 30, 1998, the Company held $1,795,000 in cash and cash equivalents.
As is  discussed  below  under the  heading  "Plan of  Operations",  significant
additional  funds  will be  needed  to put the  Soledad  Mountain  Project  into
production.  These funds are  expected to come from  additional  sales of common
stock and from bank or other borrowings.  Alternatively,  the Company may decide
to enter into a joint  development  or other  similar  arrangement  with another
mining  company to develop the  project.  The Company does not have a commitment
for bank financing or for the  underwriting  of additional  shares of its common
stock,  and is not a party to any  agreement or  arrangement  providing  for the
joint  development of the Soledad Mountain  Project.  Whether and to what extent
additional  or  alternative  financing  options are pursued by the Company  will
depend on a number of  important  factors,  including  the  results  of  further
development activities at the Soledad Mountain Project,  management's assessment
of the financial  markets,  the overall capital  requirements for development of
the  project,  and the  price of gold.  Gold  prices  fluctuate  widely  and are
affected by numerous  factors beyond the Company's  control,  such as inflation,
the  strength of the United  States  dollar and foreign  currencies,  global and
regional  demand,  and the  political  and  economic  conditions  of major  gold
producing  countries  throughout the world. As of September 30, 1998, world gold
prices were  approximately $294 per ounce, a reduction of approximately 11% from
prices a year ago,  and a reduction of  approximately  26% from prices two years
ago. The project may not be  economical at current world gold prices and may not
be economical until prices strengthen.


PLAN OF OPERATIONS.

The work program for 1998 has consisted of intense  geological  examination  and
interpretation  within the 22 kilometers of now-accessible  underground workings
comprising the Soledad  Mountain Project area. As a result of this work, the new
ore reserve upgrade reflects an increase in the estimated mineable reserve grade
at the Soledad Mountain  open-pit,  heap-leach  project to 1.0 grams of gold per
tonne and 14.4 grams of silver per tonne  contained  in 44.6  million  tonnes of
ore,  representing  increases of approximately  16% for gold and 13% for silver.
This ore reserve update  includes new  information  generated from ten months of
geologic  mapping  and  sampling  of  large  portions  of the 22  kilometers  of
underground  workings existing on the property,  much of which were re-opened in
1997 and 1998. Mine Reserves Associates (MRA) of Wheatridge, Colorado are in the
process of reviewing the ore reserve model and mineable reserve estimate for the
project.

The ore reserve update reflects the results of the 1998 sampling program as well
as factoring in a lower gold price.  Approximately  6,100 meters of new sampling
within  the  deposit  was  added to the data  base,  bringing  the total to over
100,000 meters of sample data. This additional  sampling provided  definition of
the mineralized structures further along strike and down dip as well as improved
continuity  along  the  high  grade  veins  within  the  mineralized  envelopes.
Furthermore,  the cut off grade was  increased to reflect a decrease in the gold
price used in the reserve  estimate  ($350/oz) to $325 per ounce. The net effect
of the changes is an 11% increase in estimated  mineable gold equivalent  ounces
from 1.56 million to 1.74  million.  At a  gold-equivalent  cut off grade of 0.4
grams per tonne, the 


                                       11
<PAGE>


estimated  mineralized  material  inventory  now totals 86.5 million  tonnes and
contains 2.43 million ounces of gold and 39.6 million ounces of silver.



                            SOLEDAD MOUNTAIN PROJECT
                         ESTIMATED MINEABLE ORE RESERVE

                                                                         UPDATED
                                     PREVIOUS ORE RESERVE            ORE RESERVE
                                   (M3 FEASIBILITY STUDY)               ESTIMATE
(US DOLLARS)                                  @$350/OZ AU            @$325/OZ AU
--------------------------------------------------------------------------------
Ore tonnes, millions                                 48.6                   44.6
Gold grade, g/t                                      0.86                    1.0
Silver grade, g/t                                   12.69                   14.4
Contained gold ounces                           1,344,000              1,426,000
Contained silver ounces                        19,828,000             20,658,000
Contained gold equivalent ounces                1,560,000              1,736,000
Waste-to-ore strip ratio                              4.1                    4.5

The   bankable-level   feasibility   study  by  M3  Engineering  and  Technology
Corporation,  released  earlier this year, is currently being amended to reflect
the  updated  ore  reserve  estimate.  This  improved  grade and size of the ore
reserve is expected to enhance the Company's ability to finance the project. The
estimated  total cash costs are  expected to be below the $182  per-ounce  level
projected in the M3 feasibility study.

Assuming  project  finance  can be obtained  and in place  within the next eight
months,  the current plan is to commence  construction of the project during the
first  half of 1999 and be in  production  during  the first  half of 2000.  The
Company intends to finance the project with a combination of debt and equity and
will begin the process of raising the project debt financing immediately.

The Company is  exploring  the  potential  for the Soledad  Mountain  Project to
provide aggregates to the Southern California market.  Soledad's heap residue is
ideally  suited  for the  manufactured  sands  component  of  superpave  mix - a
component  that is in very  short  supply  in  Southern  California  and will be
required in order to meet federal superpave specifications.  Because the cost of
beneficiation  will already be applied to extract the gold/silver values and due
to the project's  location next to major  north/south  and east/west rail lines,
the  tailings  material is  anticipated  to be  competitive  in the  surrounding
markets.  It is  expected  that there  will be a market  for a  majority  of the
manufactured sand produced each year.  Neither the feasibility  studies referred
to above nor any other  revenue and cost  figures  contained in this report take
such business into account.


PERMITTING.

All permitting  requirements  for the Soledad Mountain Project were completed in
late 1997.  Pending  the  procurement  of project  financing,  the  Company  can
commence construction of surface infrastructure and processing facilities,  and,
following  that,  can begin  commercial  production  of gold and silver from the
project.


YEAR 2000.

The "Year 2000" issue is the result of computer  systems that were programmed in
prior years using a two digit representation for the year. Consequently,  in the
Year 2000, date sensitive  computer programs may interpret the date "00" as 1900
rather than 2000 causing  varied and  uncertain  results.  The Company is in the
process of reviewing its business and  processing  systems and believes that the
majority  of its  systems are already  year 2000  compliant.  At this time,  the
internal exposure of the Company to the year 2000 problem,  due to the nature of
its  development  stage  


                                       12
<PAGE>


activities is limited to the use of computers  for  accounting,  computer  aided
design, and general office and clerical applications.  As of September 30, 1998,
the Company has incurred  less than $5,000 of costs related to year 2000 issues.
Management   believes  that  the  cost  of  completing  its   investigation  and
remediation activities in regard to the year 2000 issue will not exceed $25,000.

The Company has  initiated  formal  communications  with all of its  significant
suppliers and vendors,  including site utility providers and project contractors
to  determine  the extent to which the  Company's  systems  and  activities  are
vulnerable  to those third  parties'  failure to  remediate  their own Year 2000
issues.  While the  Company  believes  that the Year 2000  issue will not have a
material  adverse  effect on the  Company's  financial  position,  liquidity  or
results of operations, there is no guarantee that the systems of other companies
on which the Company's  systems rely will be timely converted and would not have
an adverse effect on the Company's systems.







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



                                       13
<PAGE>


                                     PART II


ITEM 1.  LEGAL PROCEEDINGS.

Neither the Company nor its subsidiary,  Golden Queen Mining Company, Inc., is a
party to, nor are they  threatened by, any material  legal  proceeding as of the
date of this report.


ITEM 2.  CHANGES IN SECURITIES.

None.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.


ITEM 5.  OTHER INFORMATION.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

EXHIBITS.  A financial  data schedule is filed as exhibit no. 27 to this report.
No other exhibits are filed as part of this report.

FORM 8-K  REPORTS.  The  Company  filed no  reports on Form 8-K during the third
quarter of 1998.



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<PAGE>


                                   SIGNATURES


In accordance  with section 13 or 15(d) of the Securities  Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



                                      Golden Queen Mining Co. Ltd.

                                       By: /s/ BERNARD F. GOODSON
                                          ---------------------------------
                                               Bernard F. Goodson, its Vice
                                               President of Administration
                                               and Controller


                                       15