---

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

FORM 20-F

(Mark One) ̈  REGISTRATION
  STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
  1934
  ORx  ANNUAL
  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  
  For the fiscal year ended April 30, 2005
  OR ̈  TRANSITION
  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-31328

PACIFIC RIM MINING CORP.
  (Exact name of Registrant as specified in its charter) British Columbia, Canada
  (Jurisdiction of incorporation or organization) Suite 410 - 625 Howe Street, Vancouver, B.C. V6C 2T6
  (Address of principal executive offices)

Securities registered or to be registered pursuant to Section
  12(b) of the Act:

|Title of each Class              | Name of each exchange on which registered
|-------------------------------- | -----------------------------------------
|Common Shares, Without Par Value | American Stock Exchange                  
|                                 | Toronto Stock Exchange                   

Securities registered or to be registered pursuant to Section
  12(g) of the Act: Common Shares, Without Par Value (Title of Class)

Securities for which there is a reporting obligation pursuant
  to Section 15(d) of the Act: Not Applicable(Title of Class)

Indicate the number of outstanding shares of each of the
  issuer’s classes of capital of common stock 
  as of the close of the period covered by this report, April 30, 2005:80,642,194
  Common Shares

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

Indicate by check mark which financial statement item the registrant
  has elected to follow. 
  Item 17 xItem
  18  ̈

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TABLE OF CONTENTS

|                                                |                                                                                                                                                                                                                                            | Page
|----------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|                                                |                                                                                                                                                                                                                                            |     
|NOTE REGARDING FORWARD LOOKING
      STATEMENTS | 1                                                                                                                                                                                                                                         
|                                                |                                                                                                                                                                                                                                            |     
|GLOSSARY OF TERMS                               | 2                                                                                                                                                                                                                                         
|                                                |                                                                                                                                                                                                                                            |     
|ITEM**1:**                                      | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
      AND ADVISERS                                                                                                                                                                                | 6   
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 2:                                         | OFFER STATISTICS AND EXPECTED TIMETABLE                                                                                                                                                                                                    | 6   
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 3:                                         | KEY INFORMATION                                                                                                                                                                                                                            | 6   
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 4:                                         | INFORMATION ON THE COMPANY                                                                                                                                                                                                                 | 16  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 5:                                         | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                                                                                                                                                                               | 35  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 6:                                         | DIRECTORS, SENIOR
      MANAGEMENT AND EMPLOYEES                                                                                                                                                                                           | 41  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 7:                                         | MAJOR SHAREHOLDERS AND RELATED PARTY
      TRANSACTIONS                                                                                                                                                                                    | 48  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 8:                                         | FINANCIAL INFORMATION                                                                                                                                                                                                                      | 49  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 9:                                         | THE OFFER AND LISTING                                                                                                                                                                                                                      | 50  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 10:                                        | ADDITIONAL INFORMATION                                                                                                                                                                                                                     | 51  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 11:                                        | QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK                                                                                                                                                                           | 63  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 12:                                        | DESCRIPTION OF SECURITIES OTHER THAN
      EQUITY SECURITIES                                                                                                                                                                               | 64  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 13:                                        | DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES                                                                                                                                                                                             | 64  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 14:                                        | MATERIAL MODIFICATIONS TO THE RIGHTS
      OF SECURITY HOLDERS AND USE OF PROCEEDS                                                                                                                                                         | 64  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 15:                                        | CONTROLS AND PROCEDURES                                                                                                                                                                                                                    | 64  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 16:                                        | AUDIT COMMITTEE FINANCIAL
      EXPERT; CODE OF ETHICS; PRINCIPAL ACCOUNTANT FEES AND SERVICES, EXEMPTIONS
      FROM LISTING STANDARDS FOR AUDIT COMMITTEES; PURCHASES OF EQUITY SECURITIES
      BY THE ISSUER AND AFFILIATED PURCHASERS | 65  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 17:                                        | FINANCIAL STATEMENTS                                                                                                                                                                                                                       | 72  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 18:                                        | FINANCIAL STATEMENTS                                                                                                                                                                                                                       | 73  
|                                                |                                                                                                                                                                                                                                            |     
|ITEM 19:                                        | EXHIBITS                                                                                                                                                                                                                                   | 73  
|                                                |                                                                                                                                                                                                                                           
|SIGNATURE                                       | 75                                                                                                                                                                                                                                        

NOTE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the
  meaning of Section 21E of the Securities Exchange Act of 1934 concerning the
  Corporation’s plans for its properties, operations and other matters.
  These statements relate to analyses and other information that are based on
  forecasts of future results, estimates of amounts not yet determinable and assumptions
  of management.

---

2

Statements concerning reserves, if any, and mineral resource
  estimates may also be deemed to constitute forward-looking statements to the
  extent that they involve estimates of the mineralization that will be encountered
  if the property is developed, and in the case of mineral reserves, such statements
  reflect the conclusion based on certain assumptions that the mineral deposit
  can be economically exploited. Any statements that express or involve discussions
  with respect to predictions, expectations, beliefs, plans, projections, objectives,
  assumptions or future events or performance (often, but not always, using words
  or phrases such as “expects” or “does not expect”, “is
  expected”, “anticipates” or “does not anticipate”,
  “plans”, “estimates” or “intends”, or stating
  that certain actions, events or results “may”, “could”,
  “would”, “might” or “will” be taken, occur
  or be achieved) are not statements of historical fact and may be “forward-looking
  statements.” Forward-looking statements are subject to a variety of risks
  and uncertainties, which could cause actual events or results to differ from
  those reflected in the forward-looking statements, including, without limitation:

| | • | risks related to gold price and other
        commodity price fluctuations;                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | risks and uncertainties relating to the
        interpretation of drill results, the geology, grade and continuity of
        mineral deposits;                                                                                       
| | • | risks related to the inherent uncertainty
        of production and cost estimates and the potential for unexpected costs
        and expenses;                                                                                       
| | • | results of initial feasibility, prefeasibility
        and feasibility studies, and the possibility that future exploration,
        development or mining results will not be consistent with the Corporation’s
        expectations;
| | • | mining and development risks, including
        risks related to accidents, equipment breakdowns, labour disputes or other
        unanticipated difficulties with or interruptions in production;                                    
| | • | the potential for delays in exploration
        or development activities or the completion of feasibility studies;                                                                                                                   
| | • | the uncertainty of profitability based
        upon the Corporation’s history of losses;                                                                                                                                              
| | • | risks related to failure to obtain adequate
        financing on a timely basis and on acceptable terms;                                                                                                                              
| | • | risks related to environmental regulation
        and liability;                                                                                                                                                                      
| | • | risks related to hedging activities;                                                                                                                                                                                                  
| | • | political and regulatory risks associated
        with mining and exploration; and                                                                                                                                                    
| | • | other risks and uncertainties related
        to the Corporation’s prospects, properties and business strategy.                                                                                                                       

Some of the important risks and uncertainties that could affect
  forward looking statements are described in this Annual Report under Item 3.D
  - “Risk Factors”. Should one or more of these risks and uncertainties
  materialize, or should underlying assumptions prove incorrect, actual results
  may vary materially from those described in forward-looking statements. Forward
  looking statements are made based on management’s beliefs, estimates and
  opinions on the date the statements are made and the Corporation undertakes
  no obligation to update forward-looking statements if these beliefs, estimates
  and opinions or other circumstances should change. Investors are cautioned against
  attributing undue certainty to forward-looking statements.

GLOSSARY OF TERMS

The following terms have the following meanings in this Annual Report on Form
  20-F:

|“Ag”   | Silver                     
|------ | ---------------------------
|       |                            
|“AMEX” | The American Stock Exchange

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3

|“Au”               | Gold                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“CIM”              | Canadian Institute of Mining, Metallurgy
        and Petroleum                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“Dore”             | A compound containing gold and silver
        metal and various impurities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“gpt”              | Grams per tonne. One gram per tonne equals
        0.02917 troy ounces per short ton.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“NI 43-101”        | National Instrument 43-101 - Standards
        of Disclosure for Mineral Projects. A rule developed by the Canadian Securities
        Administrators (an umbrella group of Canada’s provincial and territorial
        securities regulators) that governs public disclosure by mining and mineral
        exploration issuers. The rule establishes certain standards for all public
        disclosure of scientific and technical information concerning mineral
        projects.                                                                                                                                                                                                                                                                                                    
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“Ore”              | A natural aggregate of one or more minerals
        which, at a specified time and place, may be mined and sold at a profit,
        or from which some part may be profitably separated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“Qualified Person” | Conforms to that definition under NI
        43-101 for an individual (a) to be an engineer or geoscientist with at
        least five years experience in mineral exploration, mine development or
        operation or mineral project assessment, or any combination of these;
        (b) with experience relevant to the subject matter of the mineral project
        and the technical report and (c) is a member in good standing of a professional
        association that, among other things, is self-regulatory, has been given
        authority by statute, admits members based on their qualifications and
        experience, requires compliance with professional standards of competence
        and ethics and has disciplinary powers to suspend or expel a member.
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“SG”               | Specific gravity, a measurement of density.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“TSX”              | The Toronto Stock Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|“tpd”              | Tonnes per day. One tonne equals 1.10231
        tons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|NI 43-101       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Definitions     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|mineral reserve | The term “mineral reserve”
        refers to the economically mineable part of a measured or indicated mineral
        resource demonstrated by at least a preliminary feasibility study. The
        study must include adequate information on mining, processing, metallurgical,
        economic, and other relevant factors that demonstrate, at the time of
        reporting, that economic extraction can be justified. A mineral reserve
        includes diluting materials and allowances for losses that might occur

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4

|                             | when the material is mined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                             | Mineral Reserves are categorized
        as follows on the basis of the degree of confidence in the estimate of
        the quantity and grade of the deposit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|mineral resource*            | The term “mineral
        resource” refers to a concentration or occurrence of natural, solid,
        inorganic or fossilized organic material in or on the Earth’s crust
        in such form and quantity and of such a grade or quality that it has reasonable
        prospects for economic extraction. The location, quantity, grade, geological
        characteristics and continuity of a mineral resource are known, estimated
        or interpreted from specific geological evidence and knowledge.                                                                                                                                                                                                                                                                        
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                             | The terms “Mineral
        Resource”, “Measured Mineral Resource”, “Indicated
        Mineral Resource”, “Inferred Mineral Resource” used
        in this Report are Canadian mining terms as defined in accordance with
        National Instrument 43- 101 under the guidelines set out in the CIM Standards.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|measured mineral  resource*  | The term “measured
        mineral resource” refers to that part of a mineral resource for
        which quantity grade or quality, densities, shape and physical characteristics
        are so well established that they can be estimated with confidence sufficient
        to allow the appropriate application of technical and economic parameters,
        to support production planning and evaluation of the economic viability
        of the deposit. The estimate is based on detailed and reliable exploration,
        sampling and testing information gathered through appropriate techniques
        from locations such as outcrops, trenches, pits, workings and drill holes
        that are spaced closely enough to confirm both geological and grade continuity.
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|indicated mineral  resource* | The term “indicated
        mineral resource” refers to that part of a mineral resource for
        which quantity, grade or quality, densities, shape and physical characteristics
        can be estimated with a level of confidence sufficient to allow the appropriate
        application of technical and economic parameters, to support mine planning
        and evaluation of the economic viability of the deposit. The estimate
        is based on detailed and reliable exploration and testing information
        gathered through appropriate techniques from locations such as outcrops,
        trenches, pits, workings and drill holes that are spaced closely enough
        for geological and grade continuity to be reasonably assumed.                        
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|inferred mineral  resource*  | The term “inferred
        mineral resource” refers to that part of a mineral resource for
        which quantity and grade or quality can be estimated on the basis of geological
        evidence and limited sampling and reasonably assumed, but not verified,
        geological and grade continuity. The estimate is based on limited information
        and sampling gathered through appropriate techniques from locations such
        as outcrops, trenches, pits, workings and drill holes.                                                                                                                                                                                                                                                                                 

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5

|Proven Mineral  Reserve   | ‘Proven Mineral Reserve’
        means, in accordance with CIM Standards, for the part of a deposit which
        is being mined, or which is being developed and for which there is a detailed
        mining plan, the estimated quantity and grade or quality of that part
        of a measured mineral resource for which the size, configuration and grade
        or quality and distribution of values are so well established, and for
        which economic viability has been demonstrated by adequate information
        on engineering, operating, economic and other relevant factors, so that
        there is the highest degree of confidence in the estimate. This definition
        for differs from the standards in the United States, where proven or measured
        reserves are defined as reserves which (a) quantity is computed from dimensions
        revealed in outcrops, trenches, workings or drill holes; (b) grade and/or
        quality are computed from the results of detailed sampling and (c) the
        sites for inspection, sampling and measurement are spaced so closely and
        the geographic character is so well defined that size, shape, depth and
        mineral content of reserves are well established.
|------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Probable Mineral  Reserve | ‘Probable Mineral Reserve’
        means, in accordance with CIM Standards, the estimated quantity and grade
        or quality of that part of an indicated mineral resource for which economic
        viability has been demonstrated by adequate information on engineering,
        operating, economic and other relevant factors, at a confidence level
        which would serve as a basis for decisions on major expenditures. This
        definition for differs from the standards in the United States, where
        probable mineral reserves are defined as reserves for which quantity and
        grade and/or quality are computed from information similar to that of
        proven reserves (under United States standards), but the sites for inspection,
        sampling, and measurement are further apart or are otherwise less adequately
        spaced, and the degree of assurance, although lower than that for proven
        mineral reserves, is high enough to assume continuity between points of
        observation. The degree of assurance, although lower than that for proven
        mineral reserves, is high enough to assume continuity between points of
        observation.                                             

Cautionary Note to U.S. Investors concerning estimates
  of Measured and Indicated Resources and Inferred Resources: We advise U.S.
  Investors that while the terms “mineral resource,” “measured
  mineral resource,” “indicated mineral resource,” and “inferred
  mineral resource” are recognized and required to be reported by Canadian
  regulations, the U.S. Securities and Exchange Commission does not recognize
  them. As such, information contained in this Report concerning descriptions
  of mineralization and resources under Canadian standards may not be comparable
  to similar information made public by U.S. companies subject to the reporting
  and disclosure requirements of the Securities and Exchange Commission. “Indicated
  mineral resource” and “inferred mineral resource” have a great
  amount of uncertainty as to their existence and a great uncertainty as to their
  economic and legal feasibility. It cannot be assumed that all or any part of
  an “indicated mineral resource” or “inferred mineral resource”
  will ever be upgraded to a higher category. U.S. investors are cautioned
  not to assume that any part or all of an inferred resource exists, or is economically
  or legally mineable.

SEC Industry Guide 7 Definitions

|reserve* | The term “reserve”
        refers to that part of a mineral deposit which could be economically and
        legally extracted or produced at the time of the reserve determination.
        Reserves must be supported by a feasibility study done to bankable standards
        that demonstrates the economic extraction. (“Bankable standards”
        implies that the confidence attached to the costs and achievements developed
        in the study is sufficient for the project to be eligible for external
        debt financing.) A reserve includes adjustments to the in-situ tonnes
        and
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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6

|                     | grade to include diluting materials and
        allowances for losses that might occur when the material is mined.                                                                                                                                                                                                                                                                                                                                                                          
|-------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|proven reserve       | The term “proven reserve”
        refers to reserves for which (a) quantity is computed from dimensions
        revealed in outcrops, trenches, workings or drill holes; 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
        the geologic character is so well defined that size, shape depth and mineral
        content of reserves are well-established.
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Probable reserve     | The term “probable reserve”
        refers to reserves for which quantity and grade and/or quality are computed
        from information similar to that used for proven (measured) reserves,
        but the sites for inspection, sampling, and measurement are farther apart
        or are otherwise less adequately spaced. The degree of assurance, although
        lower than that for proven reserves, is high enough to assume continuity
        between points of observation.  
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|mineralized material | The term “mineralized material”
        refers to material that is not included in the reserve as it does not
        meet all of the criteria for adequate demonstration for economic or legal
        extraction.                                                                                                                                                                                                                                                                         
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|non-reserves         | The term “non-reserves” refers
        to mineralized material that is not included in the reserve as it does
        not meet all of the criteria for adequate demonstration for economic or
        legal extraction.                                                                                                                                                                                                                                                                     
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|exploration stage    | An “exploration stage” prospect
        is one which is not in either the development or production stage.                                                                                                                                                                                                                                                                                                                                                                                  
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|development stage    | A “development stage” project
        is one which is undergoing preparation of an established commercially
        mineable deposit for its extraction but which is not yet in production.
        This stage occurs after completion of a feasibility study.                                                                                                                                                                                                                              
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|production stage     | A “production stage” project
        is actively engaged in the process of extraction and beneficiation of
        mineral reserves to produce a marketable metal or mineral product.                                                                                                                                                                                                                                                                                                       

*It is the U.S. Securities and Exchange Commission staff’s position
  that:

| | • | A “final” or “bankable”
        feasibility study is required to meet the requirements to designate reserves
        under Industry Guide 7.                              
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                           
| | • | The historic three year average price
        is to be used in any reserve or cash flow analysis to designate reserves.                                                   
| |   |                                                                                                                                                                           
| | • | To meet the “legal” part
        of the reserve definition, the primary environmental analysis or document
        should have been submitted to governmental authorities.

ITEM 1:          IDENTITY
  OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2:          OFFER
  STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3:          KEY
  INFORMATION

3 A.          SELECTED
  FINANCIAL DATA

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7

The following table sets forth selected historical data regarding
  the Company’s consolidated operating results and financial position. The
  data set forth below is stated in thousands of U.S. dollars (except per share
  amounts). This selected financial data has been prepared in accordance with
  Canadian generally accepted accounting principles (“Canadian GAAP”),
  which differs in many respects from generally accepted accounting principles
  in the United States (“U.S. GAAP”). A discussion of differences
  between Canadian GAAP and U.S. GAAP is contained in Note 16 to the audited Consolidated
  Financial Statements. The following table should be read in conjunction with
  Item 5 - “Operating and Financial Review and Prospects”, and the
  consolidated financial statements and notes thereto included in Item 17 of this
  Annual Report.

|                         |   | Year Ending April 30 |   |   | Four Months |   |   | Year Ending December |  
|------------------------ | - | -------------------- | - | - | ----------- | - | - | -------------------- | -
|                         |   |                      |   |   |             |   |   |                      |  
|                         |   |                      |   |   |             |   |   |                      |  
|In ‘000’s, except share  |   | 2005                 |   |   | 2004        |   |   | 2003                 |  
|amounts:                 |   |                      |   |   |             |   |   |                      |  
|Income Statement         |   |                      |   |   |             |   |   |                      |  
|Data                     |   |                      |   |   |             |   |   |                      |  
|Metal sales              | $ | 11,868               |   | $ | 12,140      |   | $ | 12,509               |  
|Interest income          |   | 120                  |   |   | 182         |   |   | 175                  |  
|Gain on Sale of Mineral  |   |                      |   |   |             |   |   |                      |  
|Properties               |   | -                    |   |   | -           |   |   | 922                  |  
|Net Income (Loss) from   |   |                      |   |   |             |   |   |                      |  
|Operations               |   | 2,027                |   |   | (1,348      | ) |   | (844                 | )
|Net Income (Loss)        |   | (4,634               | ) |   | (6,859      | ) |   | (2,800               | )
|Loss per share – basic   |   |                      |   |   |             |   |   |                      |  
|and
      diluted        |   | (0.06                | ) |   | (0.09       | ) |   | (0.04                | )
|                         |   |                      |   |   |             |   |   |                      |  
|Balance Sheet Data       |   |                      |   |   |             |   |   |                      |  
|Working capital          | $ | (135                 | ) | $ | 3,033       |   | $ | 7,633                |  
|Total assets             |   | 8,618                |   |   | 14,033      |   |   | 21,447               |  
|Net assets               |   | 5,539                |   |   | 9,618       |   |   | 14,960               |  
|Long-term debt           |   | -                    |   |   | -           |   |   | 1,640                |  
|Shareholders equity      |   | 5,539                |   |   | 9,618       |   |   | 14,960               |  
|Capital stock            |   | 57,435               |   |   | 57,364      |   |   | 56,173               |  
|Outstanding
      shares |   | 80,642,194           |   |   | 80,483,994  |   |   | 78,528,594           |  
|Dividends declared       |   | -                    |   |   | -           |   |   | -                    |  
|                         |   |                      |   |   |             |   |   |                      |  

Had the Consolidated Financial Statements of the Company been
  prepared in accordance with U.S. GAAP, certain selected financial data would
  have been reported as follows, (in thousand of U.S. dollars except per share
  amounts):

|                      |   | Year Ending April 30 |   |   | Four Months |   |   | Year Ending |  
|--------------------- | - | -------------------- | - | - | ----------- | - | - | ----------- | -
|                      |   |                      |   |   |             |   |   |             |  
|                      |   |                      |   |   |             |   |   |             |  
|                      |   | 2005                 |   |   | 2004        |   |   | 2003        |  
|                      |   |                      |   |   |             |   |   |             |  
|Income Statement Data |   |                      |   |   |             |   |   |             |  
|Net Income (Loss)     | $ | (4,634               | ) | $ | (6,859      | ) | $ | (2,800      | )
|Net Income (Loss)     |   |                      |   |   |             |   |   |             |  
|per
      share       |   | (0.06                | ) |   | (0.09       | ) |   | (0.04       | )

---

8

|Balance Sheet Data   |   |       |  |   |        |  |   |        |  |   |        |  |   |        |  |   |        | 
|-------------------- | - | ----- |  | - | ------ |  | - | ------ |  | - | ------ |  | - | ------ |  | - | ------ | 
|Total assets         | $ | 8,618 |  | $ | 14,033 |  | $ | 21,447 |  | $ | 25,402 |  | $ | 24,583 |  | $ | 28,563 | 
|Shareholders’ equity |   | 5,539 |  |   | 9,618  |  |   | 14,960 |  |   | 17,801 |  |   | 17,041 |  |   | 20,369 | 

Unless otherwise specified, all dollar amounts in this Annual
  Report are in U.S. dollars; however, certain of the information included in
  this Report is presented in Canadian dollars ("Cdn$”). The following
  table sets forth (i) the rates of exchange for the Canadian dollar, expressed
  as Canadian dollars per U.S. dollar, in effect at the end of each of the periods
  indicated, (ii) the average of exchange rates in effect on the last day of each
  month during such periods, and (iii) the high and low exchange rates during
  each period, in each case based on the noon buying rate as reported by the Federal
  Reserve Bank of New York:

|           |                             |              |                     | For the Four |              |      
|---------- | --------------------------- | ------------ | ------------------- | ------------ | ------------ | -----
|           | For the Year Ended April 30 | Months Ended | For the Years Ended
|           |                             |              |                     | April 30,    | December 31,
|           | 2005                        | 2004         | 2003                | 2002         | 2001         | 2000 
|High       | 1.3970                      | 1.4221       | 1.5963              | 1.6125       | 1.494        | 1.438
|Low        | 1.1775                      | 1.2923       | 1.4336              | 1.5632       | 1.602        | 1.557
|Period End | 1.2568                      | 1.3711       | 1.4336              | 1.5681       | 1.593        | 1.500
|Average    | 1.2699                      | 1.3439       | 1.5335              | 1.5913       | 1.549        | 1.486

The high and low exchange rates based on the noon buying rate
  in New York City for cable transfer in Canadian dollars as certified for customer
  purposes by the Federal Reserve Bank of New York for each month during the previous
  six months are as follows:

|Month         | High   | Low   
|------------- | ------ | ------
|June 2005     | 1.2578 | 1.2256
|May 2005      | 1.2703 | 1.2373
|April 2005    | 1.2568 | 1.2146
|March 2005    | 1.2463 | 1.2017
|February 2005 | 1.2562 | 1.2294
|January 2005  | 1.2422 | 1.1982

On July 18, 2005, the noon buying rate in New York City for
  cable transfer in Canadian dollars as certified for customer purposes by the
  Federal Reserve Bank of New York was $1.00 = Cdn$1.2154. Except as otherwise
  provided, all dollar amounts are in United States dollars.

3 B.          CAPITALIZATION
  AND INDEBTEDNESS

Not Applicable

3 C.          REASONS
  FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

3 D.          RISK
  FACTORS

An investment in the Common Shares of the Company involves
  a high degree of risk and must be considered highly speculative due to the nature
  of the Company’s business and the present stage of exploration and development
  of its mineral resource properties. In particular, the following risk factors
  apply:

---

9



History of Losses

The Company has a history of losses and may continue to incur
  losses for the foreseeable future. The Company incurred losses during each of
  the following periods:

| | • | $4.634 million for the year ended April  30,  2005
| | - | --------------------------------------------------
| | • | $6.859 million for the year ended April  30,  2004
| | • | $2.8 million for the year ended April 30, 2003    

As of April 30, 2005, the Company had an accumulated deficit
  of $52.706 million.

Pacific Rim’s sole source of operating revenue is derived
  from its interest in Denton-Rawhide, which provided revenues from bullion (gold
  and silver) sales of $12.5 million, $12.1 million and $11.9 million
  provided in each of the periods fiscal years ended April 30, 2003, April 30,
  2004 and April 30, 2005, respectively. Production at Denton-Rawhide decreased
  during the past fiscal year and is expected to continue to decline as the operation
  progresses through the residual leach phase. Because of uncertainties as to
  the total amount of recoverable gold on the Denton-Rawhide heap leach pile,
  the ultimate vs. projected recovery rate and other factors beyond the Company’s
  control, the Company is unable to reliably estimate its share of gold production
  from Denton-Rawhide for fiscal 2006. There can be no assurance that the Company
  will realize revenue growth or achieve profitability.

Financing Risks

The Company anticipates that expected cash generated from
  leaching activities at Denton-Rawhide, together with funds derived from the
  sale of assets (see “Other Properties, Andacollo Mine, Chile”),
  will be sufficient to fund the Company’s cash requirements and exploration
  activities through April 30, 2006. See Item 5 for particulars of liquidity,
  capital resources and financial condition. In each of the 12-month periods ending
  April 30, 2003, April 30, 2004 and April 30, 2005, the Company has spent approximately
  $3.2 million, $4.5 million and $5.6 million, respectively, on work
  programs to advance the El Dorado property in El Salvador. Beyond April 30,
  2006, the Company intends to rely on accumulated cash reserves, if any; cash
  generated from operations, if any; collaborative agreements, if any; a reduction
  in exploration activities as necessary, and public and private financing, which
  may be highly dependent on the results of the Company’s exploration programs.
  There can be no assurance that the Company’s exploration programs will
  result in locating commercially exploitable mineral ores or that the Company’s
  properties will be successfully developed. Further, there can be no assurance
  that the underlying assumed levels of expenses will prove to be accurate.

Pacific Rim has limited financial resources and had a working
  capital deficit of $0.135 million as of fiscal year end April 30, 2005.
  There is no assurance that operating cash flow from Denton-Rawhide will continue
  to be sufficient (See “Metal Price Volatility and Production Risks”),
  or that additional funding will be available to it to further exploration and
  development of its projects or to fulfill its obligations under any applicable
  agreements. Although the Company has been successful in the past in obtaining
  financing through the sale of its securities, there can be no assurance that
  it will be able to obtain adequate financing in the future or that the terms
  of such financing will be favourable. Failure to obtain such additional financing
  could result in delay or indefinite postponement of further exploration and
  development of its projects with a possible loss of some properties.

---

10

Exploration Risks

Resource exploration, development, and operations is a highly
  speculative business, characterized by a number of significant risks including,
  among other things, unprofitable efforts resulting not only from the failure
  to discover mineral deposits but from finding mineral deposits which, though
  present, are insufficient in quantity and quality to return a profit from production.
  Few properties that are explored are ultimately developed into producing mines.
  As described under Item 4, except for the Denton-Rawhide Mine, which has
  ceased production and is in a residual leaching phase and the El Dorado Property
  which contains geological mineral resources, none of the Company’s properties
  have a known body of ore and any proposed exploration programs are an exploratory
  search for ore.

The Company’s principal exploration property is located
  in El Salvador which country imposes certain requirements and obligations on
  the owners of exploratory properties including application requirements, periodic
  reporting requirements, limited terms and certain fees and royalty payments.
  See “Item 4. Business Overview – El Salvador Mining Regime.”
  The Company may acquire interests in properties in other Latin or North and
  Central American countries that may place substantial restrictions on the Company’s
  exploratory and development activities. The Company believes it has and will
  continue to carefully evaluate the political and economic environment in considering
  properties for acquisition. There can be no assurance that additional significant
  restrictions will not be placed on the Company’s properties or its operations.
  Such restrictions may have a materially adverse effect on the Company’s
  business and results of operation.

Mining operations generally involve a high degree of risk.
  Hazards such as unusual or unexpected geological formations and other conditions
  may be encountered in the mining process. The Company may become subject to
  liability for pollution, accidents or injury to employees, cave-ins or hazards
  against which it cannot insure or against which for economic reasons it may
  elect not to insure. The payment of such liabilities may have a material adverse
  effect on the Company’s financial position. In addition, there are a number
  of uncertainties inherent in any mining activity as to the location of economic
  ore reserves, the development of appropriate metallurgical processes, the receipt
  of necessary governmental permits, the construction of mining and processing
  facilities, and the appropriate financing thereof. There can be no assurance
  that the Company’s exploration and acquisition programs will yield new
  reserves to expand current resources. The development of the Company’s
  properties will require the commitment of substantial financial resources to
  conduct the time-consuming exploration and development of properties. There
  can be no assurance that the Company will generate any additional revenues or
  achieve profitability.

Although mineral resource figures included in this Annual
  Report have been carefully prepared by the Company, or, in some instances, have
  been prepared, reviewed or verified by independent mining experts who are Qualified
  Persons, these amounts are estimates only and no assurance can be given that
  any particular level of recovery of gold and/or silver from mineral resources
  will in fact be realized or that an identified mineral resource will ever qualify
  as a commercially mineable (or viable) ore body which can be legally and economically
  exploited. Estimates of mineral resources and production costs can also be affected
  by such factors as environmental permitting regulations and requirements, weather,
  environmental factors, unforeseen technical difficulties, unusual or unexpected
  geological formations and work interruptions. In addition, the grade of ore
  ultimately mined may differ from that indicated by drilling results. There can
  be no assurance that the percentage of gold recovered in small scale laboratory
  tests will be duplicated in large scale tests under on-site conditions or in
  production scale heap leaching.

Uncertainty of Mineralization Estimates

Although the Company has assessed the mineral reserve and
  mineral resource estimates presented herein and believes that the methods used
  to estimate such mineral reserves and mineral resources are

---

11

appropriate, such figures are estimates. As well, estimates
  of mineral reserves and mineral resources are inherently imprecise and depend
  to some extent on statistical inferences drawn from limited drilling, which
  may prove unreliable. Furthermore, no assurances can be given that the indicated
  level of recovery of gold or other minerals will be realized. Market price fluctuations
  of gold or other minerals may render reserves and deposits containing relatively
  lower grades of mineralization uneconomic. Moreover, short-term operating factors
  relating to the mineral reserves, such as the need for orderly development of
  the deposits or the processing of new or different grades, may cause mining
  operations to be unprofitable in any particular period.

Title to Properties

The Company’s exploration properties may be subject
  to prior unregistered agreements or transfers or local land claims and title
  may be affected by undetected defects. As part of its investigations, Pacific
  Rim has investigated and believes it has good title to its properties. However,
  Pacific Rim cannot guarantee that adverse claims to title will not arise in
  the future, nor can it express an opinion on how difficult the resolution of
  such claims would be under the laws of foreign jurisdictions. The Company is
  in the process of converting its exploration licenses in El Salvador to an exploitation
  concession and has made the necessary applications and carried out the studies
  requested by the authorities, including an environmental impact study. The approval
  of the environmental impact study by the environmental ministry is a requirement
  for approval of the exploitation concession by the economic ministry. The Company
  cannot say with certainty when or if the authorities in El Salvador will approve
  the environmental impact study and conversion of the exploitation licences to
  an exploitation concession.

Metal Price Volatility

The Company’s ability to generate profits from its residual
  leach operations at Denton-Rawhide or any future mining operations is directly
  related to the international price of gold, which is not within the control
  of the Company. The gold price has a history of extreme volatility and there
  can be significant upward or downward movements in price in a short period of
  time. During the year ended April 30, 2005 the annual high and low prices for
  gold per ounce for the 10:30 a.m. fixings on the London Bullion Market were
  $455.75 and $373.50, respectively. On July 15, 2005 the 10:30 a.m. fixing
  on the London Bullion Market was $421.60 and last spot market price of gold
  on the New York Commodities Exchange was $420.60per ounce.

Gold prices historically have fluctuated widely and are influenced
  by a number of factors beyond the control or influence of the Company. Some
  factors that affect the price of gold include:

|• | industrial and jewelry demand;                                                                                                  
|- | --------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                 
|• | central bank lending or purchases or sales of gold
      bullion;                                                               
|  |                                                                                                                                 
|• | forward or short sales of gold by producers and
      speculators;                                                              
|  |                                                                                                                                 
|• | future level of gold production; and                                                                                            
|  |                                                                                                                                 
|• | rapid short-term changes in supply and demand due
      to speculative or hedging activities by producers, individuals or funds.

Gold prices are also affected by macroeconomic factors including:

|• | confidence in the global monetary system;                                    
|- | -----------------------------------------------------------------------------
|  |                                                                              
|• | expectations of the future rate of inflation;                                
|  |                                                                              
|• | the availability and attractiveness of alternative investment
      vehicles;

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12

|• | the general level of interest
        rates;                                                                                                                
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                             
|• | the strength of, and confidence
        in the U.S. dollar, the currency in which the price of gold is generally
        quoted, and other major currencies;
|  |                                                                                                                                                             
|• | global and regional political
        or economic events; and                                                                                               
|  |                                                                                                                                                             
|• | costs of production of other
        gold producing companies whose costs are denominated in currencies other
        than the U.S. dollar.                 

All of the above factors can, through their interaction, affect
  the price of gold by increasing or decreasing the demand for or supply of gold.

While gold production, sales and prices are by far the most
  significant factor affecting the financial performance of the Company, approximately
  14% of the Company’s sales revenues are derived from silver. Silver prices
  are determined in the international marketplace through the interaction of supply
  and demand for this metal. The Company has no influence over the price it receives
  from the sale of silver.

Government Law, Environmental and Other Regulatory Requirements
  The Company’s main exploration property, the El Dorado property, is located
  in El Salvador. In addition it holds or seeks to acquire properties for exploration
  in other South American countries. Mineral exploration and mining activities
  in foreign countries are subject to risks normally associated with the conduct
  of business in foreign countries and in addition its business activities may
  be affected in varying degrees by political stability and government regulations
  as these evolve in sovereign nations. These risks may include foreign labour
  disputes, invalidation of governmental orders, uncertain political and economic
  environments, war or civil disturbances, changes in laws, changes in foreign
  exchange rates, regulations and policies of governments, changes in foreign
  tax laws, delays in obtaining necessary permits, limitations on the repatriation
  of earnings and original investments and increased costs of and difficulty in
  obtaining financing.

The management of Pacific Rim uses its collective experience
  in international mineral exploration and development to assess the risks that
  exist in various countries. When determining whether or not to proceed with
  an investment in a particular country, management compares the potential benefits
  of a country’s geological potential with the long-term political and economic
  risks. However, as with all other types of international business operations,
  currency fluctuations, exchange controls, change to tax regimes and political
  action could impair the value of the Company’s assets in such foreign
  jurisdictions.

Mining operations have inherent risks and liabilities associated
  with possible pollution of the environment and with the disposal of waste products
  occurring as a result of mineral exploration or the production of metals from
  producing mines. Laws and regulations involving the protection and remediation
  of the environment and governmental policies and regulations for the implementation
  of such laws and regulations are constantly changing and are, in general, becoming
  more restrictive and more costly to abide by. There may be costs and delays
  associated with compliance with these laws or regulations that could prohibit
  the Company from the development or expansion of a mine. Mine closure and reclamation
  cost requirements could change from current estimates. The Company strives to
  ensure, and to the best of the Company’s knowledge, it is operating in
  compliance with all applicable environmental and closing regulations.

---

13

Hedging ActivitiesThe Company’s primary business is the acquisition, exploration and
  development of gold and silver properties and its revenue to date has almost
  entirely been derived from proceeds from, or related to, the sale of gold and
  silver. (See “Risk Factors – Risks Associated with Mining –
  Metal Price Volatility”). Gold and silver prices are subject to significant
  volatility and these changes, to the extent that the Company’s production
  is unhedged, can significantly affect the Company’s profitability and
  cash flow. Gold prices declined steadily since the latter part of 1996, culminating
  in August 1999 with the lowest price in twenty-one years, and until the spring
  of 2002 essentially remained near or below $300 per ounce. Monthly prices
  over the past financial year for gold have averaged from $383 to $439
  per ounce. Silver prices also have been volatile.

The Company may utilize forward selling (“hedging”)
  to protect the selling price of a portion of its gold production. Silver production
  is sold in the spot market. The market risk to the Company’s cash flow
  from hedging relates to the possible failure of the counter-parties to honor
  their commitment to purchase the gold when the price exceeds the appropriate
  spot price at maturity. Counter-parties to any hedge contracts are large international
  credit worthy institutions. The market risk to the Company of any gold forward
  sale contracts would relate to the possibility that the Company may not produce
  sufficient gold at the appropriate time to meet the obligations as they arise.

Dependence on ManagementThe success of the operations and activities of the Company is dependent
  to a significant extent on the efforts and abilities of its management team.
  See Item 6 for details of Company’s current management. Investors must
  be willing to rely to a significant extent on their discretion and judgment.
  The Company does not maintain key employee insurance on any of its employees.

Conflicts of InterestThe Company’s directors and officers may serve as directors or officers
  of other resource companies or have significant shareholdings in other resource
  companies and, to the extent that such other companies may participate in ventures
  in which the Company may participate, the directors of the Company may have
  a conflict of interest in negotiating and concluding terms respecting the extent
  of such participation. In the event that such a conflict of interest arises
  at a meeting of the Company’s directors, a director who has such a conflict
  will abstain from voting for or against the approval of such participation or
  such terms. From time to time several companies may participate in the acquisition,
  exploration and development of natural resource properties thereby allowing
  for their participation in larger programs, permitting involvement in a greater
  number of programs and reducing financial exposure in respect of any one program.
  It may also occur that a particular company will assign all or a portion of
  its interest in a particular program to another of these companies due to the
  financial position of the company making the assignment. In accordance with
  the laws of the British Columbia, the directors of the Company are required
  to act honestly, in good faith and in the best interests of the Company. In
  determining whether or not the Company will participate in a particular program
  and the interest therein to be acquired by it, the directors will primarily
  consider the degree of risk to which the Company may be exposed and its financial
  position at that time. See Item 6. Directors, Senior Management and Employees.

---

14

Competition for Other AssetsSignificant and increasing competition exists for the limited number of
  gold acquisition opportunities available in Canada, the U.S., Central and South
  America and elsewhere. As a result of this competition, some of which is with
  large established mining companies having substantial capabilities and substantially
  greater financial and technical resources than the Company, the Company may
  be unable to acquire future potential gold mining properties on terms it considers
  acceptable. The Company also competes with other mining companies in the recruitment
  and retention of qualified employees.

Currency Fluctuations May Affect the Costs of Doing Business
  The Company’s activities are currently located in, Canada, the United
  States, Argentina, El Salvador and Chile. Gold and silver are sold in international
  markets at prices denominated in U.S. dollars. However, some of the costs associated
  with the Company’s activities in Canada, Chile and El Salvador may be
  denominated in currencies not directly related to the price of the U.S. dollar.
  Any appreciation of these currencies vis a vis the U.S. dollar could increase
  the Company’s cost of doing business in these countries. The Company does
  not utilize hedging programs to any degree to mitigate the effect of currency
  movements.

The Company’s Insurance Coverage May Be Inadequate
  The mining industry is subject to significant risks that could result in:

|• | damage to or destruction of property and facilities;       
|- | -----------------------------------------------------------
|  |                                                            
|• | personal injury or death;                                  
|  |                                                            
|• | environmental damage and pollution;                        
|  |                                                            
|• | delays in production; or                                   
|  |                                                            
|• | expropriation of assets and loss of title to mining claims.

While where applicable the Company has purchased property,
  business interruption (Rawhide only) and liability insurance that it believes
  is appropriate for the level of risk incurred, it does not carry insurance for
  political risk, nor environmental damage or pollution because such coverage
  cannot be purchased at reasonable costs. This lack of insurance coverage could
  result in material economic harm to the Company if a significant claim against
  the Company should occur.

Changes to the General Mining Law of 1872
  The majority of the Denton-Rawhide Mine’s processing activities are located
  on unpatented lode and millsite claims located on U.S. federal public lands.
  The right to use such claims are granted under the General Mining Law of 1872.
  Unpatented mining claims are unique property interests in the United States,
  and are generally considered to be subject to greater title risk than other
  real property interests because the validity of unpatented mining claims is
  often uncertain. This uncertainty arises, in part, out of the complex federal
  and state laws and regulations under the General Mining Law and the interaction
  of the General Mining Law and other federal and state laws, such as those enacted
  for the protection of the environment. Unpatented mining claims are subject
  to possible challenges of third parties or contests by the federal government.
  The validity of an unpatented mining claim, in terms of both its location and
  maintenance, is dependent on strict compliance with a complex body of federal
  and state statutory or decisional law. In addition, there are few public records
  that definitively control the issues of validity and ownership of unpatentable
  mining claims. In recent years, the U.S. Congress has considered a number of
  proposed amendments to the General Mining Law. If adopted, such legislation
  could, among other things:

---

15

|• | impose a royalty on the production of metals or minerals from
      unpatented mining claims;                
|- | -------------------------------------------------------------------------------------------------------------
|  |                                                                                                              
|• | reduce or prohibit the ability of a mining company to expand
      its operations; and                       
|  |                                                                                                              
|• | require a material change in the method of exploiting the
      reserves located on unpatented mining claims.

All of the foregoing could adversely affect the economic and
  financial viability of operations at Denton-Rawhide.

Reclamation Risks at Denton-Rawhide
  The Denton-Rawhide Mine is an open pit heap leach operation that ceased active
  mining in October 2002. The final reclamation and closure plan for Denton-Rawhide
  has been submitted to the Bureau of Land Management and the Nevada Department
  of Environmental Protection for approval. The Coordinating Committee of the
  Denton-Rawhide Mine determined, for the purposes of the Reclamation Trust, total
  reclamation and severance costs for the Denton-Rawhide Mine at $9.8 million
  of which 49% are to the account of the Company, and contributed to the Trust.
  This determination of reclamation and severance costs is for the purposes of
  the Reclamation Trust only and although believed to be sufficient to handle
  all remaining closing costs may not be a true reflection of actual reclamation
  and closure costs of the Denton-Rawhide Mine. See Item 4 - Other Properties
  – Denton-Rawhide for additional information.

Increased Costs and Compliance Risks as a Result of Being
  a Public Company.
  Legal, accounting and other expenses associated with public company reporting
  requirements have increased significantly in the past few years. The Company
  anticipates that costs may continue to increase with recently adopted corporate
  governance requirements, including requirements under the Sarbanes-Oxley Act
  of 2002, as well as new rules implemented by the Securities and Exchange Commission,
  the American Stock Exchange and the Toronto Stock Exchange. The Company expects
  these rules and regulations, in particular Section 404 of the Sarbanes-Oxley
  Act of 2002, to significantly increase its legal and financial compliance costs
  and to make some activities more time-consuming and costly. Like many smaller
  public companies, the Company faces a significant impact from required compliance
  with Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires management
  of public companies to evaluate the effectiveness of internal control over financial
  reporting and the independent auditors to attest to the effectiveness of such
  internal controls and the evaluation performed by management. The SEC has adopted
  rules implementing Section 404 for public companies as well as disclosure requirements.
  The Public Company Accounting Oversight Board, or PCAOB, has adopted documentation
  and attestation standards that the independent auditors must follow in conducting
  the attestation under Section 404. The Company is currently preparing for compliance
  with Section 404; however, there can be no assurance that the Company will be
  able to effectively meet all of the requirements of Section 404 in the required
  timeframe. Any failure to effectively implement new or improved internal controls,
  or to resolve difficulties encountered in their implementation, could harm our
  operating results, cause us to fail to meet reporting obligations or result
  in management being required to give a qualified assessment of our internal
  controls over financial reporting or the Company’s independent auditors
  providing an adverse opinion regarding management’s assessment. Any such
  result could cause investors to lose confidence in our reported financial information,
  which could have a material adverse effect on our stock price.

The Company also expects these new rules and regulations may
  make it more difficult and more expensive for it to obtain director and officer
  liability insurance, and we may be required to accept reduced policy limits
  and coverage or incur substantially higher costs to obtain the same or similar
  coverage. As a result, it may be more difficult for us to attract and retain
  qualified individuals to serve on our board of directors or as executive officers.

---

16

If the Company fails to maintain the adequacy of its internal
  controls, the Company’s ability to provide accurate financial statements
  and comply with the requirements of the Sarbanes-Oxley Act of 2002 could be
  impaired, which could cause the Company stock price to decrease substantially.

ITEM 4:          INFORMATION
  ON THE COMPANY

4 A.          HISTORY AND DEVELOPMENT
  OF THE COMPANY

The legal and commercial name of the Company is Pacific Rim
  Mining Corp.

The Company was formed by the amalgamation (the “Amalgamation”)
  of Dayton Mining Corporation (“Dayton”) and Pacific Rim Mining Corp.
  (“PacRim”) (together the “Predecessor Companies”) on
  April 11, 2002. The Amalgamation received shareholder approval of both Dayton
  and PacRim on April 3, 2002 and approval of the Supreme Court of British Columbia
  on April 10, 2002.

On March 29, 2004, the British Columbia legislature enacted
  the Business Corporations Act (the “New Act”) and repealed
  the former act, which previously governed the Company. The New Act removed many
  of the restrictions contained in the former act, including restrictions on the
  residency of directors, the place of annual general meetings and limits on authorized
  share capital. The New Act also uses new forms and terminology. Under the New
  Act, every company incorporated, amalgamated or continued under the former act
  must complete a mandatory transition rollover under the New Act to substitute
  a Notice of Articles for its Memorandum within two years of March 29, 2004,
  after which existing articles could be altered to take advantage of new provisions
  contained in the New Act. Under the New Act, the directors of the Company were
  permitted to approve and complete this mandatory transition rollover, and accordingly
  the Company filed a transition application with the Registrar of Companies effective
  July 26 2004. At an annual general meeting held on September 22, 2004, the Company’s
  shareholders approved, by a three-quarter majority vote cast by those shareholders
  of the Company who, being entitled to do so, vote in person or by proxy at the
  Meeting in respect of such resolutions, the removal of pre-existing company
  provisions that applied to the Company relating to restrictions in the former
  act and no longer required under the New Act, and certain amendments to its
  Notice of Articles and to its authorized share capital. In addition, the shareholders
  approved new articles (the “New Articles”) to bring the Company’s
  charter documents into line with the New Act and, as permitted by the New Act,
  altered the authorized capital of the Company from 1,000,000,000 common shares
  without par value to an unlimited number of common shares without par value
  and the alteration of the Notice of Articles. The changes were effected and
  the Registrar issued a new Notice of Articles on January 20, 2005.

The Company is domiciled in British Columbia, Canada and is
  a valid company in good standing and operating under the British Columbia Company
  Act. The Company’s principal place of business is located at Suite 410,
  625 Howe Street, Vancouver, British Columbia, V6C 2T6, telephone (604) 689-1976.
  The Company through its subsidiaries has administration offices in Argentina;
  Nevada, USA; Chile and El Salvador.

See Item 5 – Operating and Financial Review and Prospects
  for important events that have occurred in the development of the Company’s
  business during the last full financial year from May 1, 2004 to April 30, 2005,
  and subsequent thereto to June 30, 2005, being the latest practicable date.
  Also see Item 5 for information on the Company’s principal capital expenditures
  and divestures during the past three years and current capital expenditures.
  Other than the ongoing drill programs in El Salvador, there are no major capital
  expenditures or divestitures in progress.

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17

The Company anticipates spending $6 million or more during
  the next year for project development in El Salvador in connection with the
  assessment and design of a mine and processing plant, upon completing financing
  from the sale of assets or shares.

There has not been any indication of any public takeover offers
  by third parties in respect of the Company’s shares or by the Company
  in respect of other companies shares during the last or current financial year.

4 B.          BUSINESS
  OVERVIEW

The Company is a British Columbia based mineral resource corporation
  engaged, through its subsidiaries, in the acquisition, exploration and, if warranted,
  development of precious metals properties, primarily gold and silver.

The Company’s principal activities are exploration activities
  currently chiefly focused in El Salvador. The Company continues to explore for
  projects to acquire in the Americas that warrant drilling.

The Company’s principal property currently is the El
  Dorado gold property (“El Dorado Property”) located in El Salvador.
  Predecessor Dayton acquired the two exploration licenses comprising the El Dorado
  Property through the acquisition of Mirage Resource Company, in April 2000.

In addition, the Company, through its wholly owned subsidiary,
  Dayton Mining (U.S.) Inc., holds a 49% joint venture interest in the Denton
  Rawhide Mine, Nevada, an open pit gold-silver heap leach residual leach operation.
  Ore extraction at Denton-Rawhide ceased in May 2003 and residual leaching of
  stockpiled ore is expected to continue for several years. Predecessor Dayton
  acquired the 49% interest in the Denton-Rawhide property through the issue of
  shares in 2000.

In each of the 12 month periods ending April 30, 2003, April
  30, 2004 and April 30, 2005, the Company has spent approximately $3.2 million,
  $4.5 million and $5.6 million respectively on work programs to advance
  the El Dorado property in El Salvador.

The Company has financed its exploration programs during the
  past three years from cash on hand derived from the sale of marketable securities
  and net cash proceeds from its 49% interest share in production at Denton Rawhide.
  In each of the periods April 30, 2003, April 30, 2004 and April 30, 2005, revenues
  from bullion (gold and silver) sales totalled $12.5 million, $12.1 million
  and $11.9 million, respectively. The average price of gold received, per
  ounce, was $321 in 2003, $385 in 2004 and $412 in 2005.

Equipment used for exploration or drilling is rented or contracted
  as needed.

See Item 3D – in particular (i) Risks Associated with
  Foreign Operations and (ii) Title to Properties.

See Item 4D – Property Plant and Equipment, for an overview
  of the Company’s properties.

See Item 5 - Operating and Financial Review and Prospectus,
  for an overview of the Company’s financial position and past revenues
  and expenditures.

El Salvador Mining Regime

Under the laws of El Salvador, the government owns all mineral
  rights. All uncultivated private and government-owned lands are open to exploration
  and are available through application for an exploration

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18

license, which can subsequently be converted, to an exploitation
  concession upon compliance with certain conditions. An exploration permit is
  held by payment of an annual fee, compliance with the environmental laws of
  the country and fulfillment of the technical exploration program, which may
  be modified on an annual basis. El Salvadorian mining laws do not discriminate
  between nationals and foreigners.

In mid 2001 the government of El Salvador enacted several
  modifications to the Salvadorian Mining Law. The most significant of these changes
  included an extension from 5 years to 8 years for the time before which the
  holder of an exploration license must convert the licence into an exploitation
  concession. This revision provided the Company an additional three years in
  which to advance the El Dorado project to the development stage and then apply
  to the government for an exploitation concession. The application to convert
  an exploration licence to a 30 year (or longer) exploitation concession must
  be accompanied by, among other things, a feasibility study, a development work
  program and an approved environmental impact study. Under the old laws the maximum
  size for exploitation concession was 10 square kilometres. This arbitrary size
  restriction has been removed. A final and important change was that the royalty
  levied on mineral production was reduced to 2% from 4% of net smelter returns.

Pacific Rim is continuing exploration and has submitted the
  technical documentation required to convert its exploration licences to an exploitation
  concession. In accordance with the environmental law, there is a permitting
  procedure established that must be followed in the development of the El Dorado
  Property. Pacific Rim hired an independent contractor to prepare the environmental
  impact study for the project and work began with field investigations and public
  meeting in February 2004. In April 2004, Pacific Rim formally entered the environmental
  impact study process with the presentation of the necessary forms detailing
  the development and operation of the proposed project. In July 2004 the Company
  received the Terms of Reference for the environmental impact study from the
  Environmental and Natural Resources Ministry (“MARN”). The completed
  study was presented to MARN in September 2004 for approval. Earlier in 2004
  the Company hired an independent consulting company to prepare a pre-feasibility
  study to form the basis for the feasibility study required for the conversion
  of the exploration licenses to an exploitation concession which was completed
  January 2005, however Pacific Rim commissioned the translation of the October
  draft of the prefeasibility study in order to have the documents required for
  the formal presentation of the conversion request in December 2004. Pacific
  Rim has undertaken the steps necessary to have and has presented in a timely
  manner all of the required documents for the conversion of the licences with
  the exception of the approved environmental impact study, which is still in
  revision, and has received assurances from the El Salvadoran Division of Mines
  and Hydrocarbons (Ministry of Economy) that the Company’s rights for the
  conversion of the exploration licenses to an exploitation concession will not
  be affected in waiting for approval of the environmental impact study.

4 C.          ORGANIZATIONAL
  STRUCTURE

The following is a listing of the Company’s significant
  subsidiaries including name, country of incorporation or residence, the Company’s
  respective proportion of ownership interest and, if different, proportion of
  voting power held.

| | (1) | Pacific Rim Exploration Inc., Nevada, USA, 100%
        directly owned by the Company.                                                                                                                  
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) | Dayton Mining (U.S.) Inc. 100% directly owned by
        the Company. This subsidiary holds the 49% interest in the Denton-Rawhide
        joint venture.                                               
|
| | (3) | Pacific Rim El Salvador S.A. de C.V., El Salvador.
        Held by Pac Rim Cayman, 100% directly owned by the Company. This subsidiary
        holds the Company’s interest in the El Salvador Property.

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19

In this Annual Report, unless the context otherwise indicates,
  all references to “the Company” include the Company and its subsidiaries.

4 D.          PROPERTY,
  PLANT AND EQUIPMENT

The following is a description of the Company’s properties
  and the nature of the Company’s interests in such properties.

El Salvador ProjectThe Company’s most advanced property in El Salvador is the El Dorado
  Property, which consists of two exploration licences, which the Company, indirectly
  through its wholly owned subsidiaries, holds as to a 100% interest.

El Dorado Property, El SalvadorPredecessor Dayton upon its acquisition of Mirage acquired the El Dorado
  Property. Mirage initially acquired the El Dorado Property by option agreement
  dated June 23, 1993 from Zinc Metal Company (“ZMC”) of Toronto,
  and its wholly owned subsidiary New York and El Salvador Mining Company (“NYESMC”).
  The option was exercised on August 25, 1994 in accordance with its terms by
  payment of $175,000 to ZMC and by the parties having incurred aggregate
  expenditures in excess of $800,000. Pursuant to the terms of the option
  agreement the El Dorado Property is subject to annual advance minimum royalty
  payments, which is the greater of $50,000 per year or a 3% net smelter return
  royalty in favour of ZMC. The Company has the right to purchase the royalty
  from ZMC for $4,000,000 ($1,000,000 for the first one-half and $3,000,000
  for the second one half) provided that at least one-half of the royalty is acquired
  within six months of the commencement of commercial production. In addition,
  the government of El Salvador is entitled to a 2% net smelter return royalty.

To provide surface rights, the Company entered into a two
  year lease with option to purchase agreement dated April 2, 2004 to acquire
  approximately 100 hectares of land near the El Dorado Property, for total consideration
  of $1,000,000 of which $14,391 was paid as the initial lease payment,
  and $14,391 was paid April 1, 2005. The Company may exercise the option
  to purchase the property by giving six months prior written notice before the
  end of the two-year term; the balance will then be due and payable. In addition
  the Company has agreed to drill a new water well for the owner and construct
  an access bridge across the San Francisco River. The Company is acquiring additional
  smaller tracts of lands in the area for the purpose of access at nominal amounts.

Although the El Dorado Property contains geological mineral
  resources, none of the Company’s properties in El Salvador, including
  the El Dorado Property, contain known ore reserves (under SEC Guide 7) and all
  work programs are exploratory searches for ore grade mineralization.

Property Description and Location

Two exploration licenses, covering in total 7,499.96 hectares,
  make up the El Dorado Property. The licenses have a nominal expiry date of January
  1, 2004, which was extended to January 1, 2005. The Company continues to hold
  the area beyond that date as it has declared its intention to convert the Exploration
  Licenses to Exploitation Concessions, which have a term of 30 years and may
  be extended if warranted. (See above, El Salvador Mining Regime). The cost to
  hold the licenses is a rental of $300 per square kilometre, amounting to
  $22,500 per year. The Company is up to date with the regulatory obligations
  required to maintain the licenses in good standing and is awaiting final approval
  of the conversion of the licences to concessions.

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20

In addition to its mineral rights, the Company owns approximately
  69 hectares of real estate in the central part of the El Dorado Property and
  an option to acquire an additional 100 hectares.

Part of the El Dorado license area was the scene of mining
  by another company between 1948 and 1953. The Company and its environmental
  consultants believe that there are no existing environmental liabilities on
  the project related to that earlier period of production nor to the exploration
  activities of the Company and its predecessor companies.

The exploration license area contains several prospects and
  deposits. Their stage of exploration and development ranges from recently discovered
  veins that have never been drilled to deposits that have resource estimates.
  The Company’s permanent installations on the property at the present time
  consist of a laboratory for crushing rock samples and core storage warehouses
  with facilities for describing and sampling drill core. None of the mid-20th
  century mine workings are accessible at present.

The El Dorado Property is in the Department of Cabañas,
  approximately 74 kilometers northeast of San Salvador, the capital city of the
  nation, and 10 kilometers southwest of the town of Sensuntepeque.

Accessibility, Climate, Local Resources, Infrastructure
  and Physiography

The El Dorado Property is accessible by a paved road that
  crosses the El Dorado Property. The travel time from the project site to downtown
  San Salvador is approximately one hour, depending on traffic levels.

The area has a large rural population and Sensuntepeque is
  a moderate sized town of approximately 40,000 people. Unskilled labour and persons
  with general business and technical skills should be readily available. El Salvador
  does not have an indigenous mining industry, so personnel with exploration and
  mining skills need to be trained or come from elsewhere.

The usual public utilities are available in Sensuntepeque.
  The communication infrastructure, including telephone and internet, is serviceable.
  The existing buildings on the project site are connected to the national electrical
  grid, but the power supply is not considered reliable enough to service a mine.

The terrain in the El Dorado License area is one of moderate
  relief surrounded by higher hills to the north, east, and west. Elevations range
  between 200 m and 800 m above sea level. A tropical climate prevails, with a
  pronounced wet season from May to October and a dry season the remainder of
  the year. The project area contains shallow topsoils and volcanic subsoils that
  are cultivated for seasonal crops. Five perennial streams or rivers traverse
  the El Dorado License area. Water levels vary with the seasons with good flows
  being maintained during the wet season.

History

The colonial Spanish discovered gold in the district in the
  early 1500’s, and there was sporadic, largely unrecorded small-scale production
  until the late 1800’s. In the period from 1948 to 1953, the New York and
  El Salvador Mining Company operated an underground mine, producing approximately
  270,000 tonnes of ore yielding about 72,500 troy ounces (2,250 kilograms) of
  gold.

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21

Extensive exploration since 1993 has included surface geological
  mapping, rock sampling and prospecting, campaigns of hand and bulldozer trenching,
  core drilling, and minor reverse circulation drilling.

Geological Setting

El Salvador can be divided into four morphological-geological
  units: Coastal Plains, Coastal Ranges, Great Interior Valley, and the Northern
  Mountain Ranges. El Dorado is situated in the Great Interior Valley, underlain
  by Eocene felsic to mafic volcanic rocks; in other words, dark to light coloured
  volcanic rocks in the order of 38 to 55 million years old.

Mineralization on the El Dorado Property consists of gold
  and silver bearing quartz veins that are contained within the volcanic rocks.
  The gold and silver bearing veins of the El Dorado district, of which at least
  36 exceed 1 m in width, occur over an area exceeding 50 square kilometers. Vein
  mineralization is dominated by quartz and calcite and ranges in width between
  1 m and 15 m in surface exposures. The vein systems are up to 3 km in length,
  dip steeply, and generally form ridges.

The mineralization fits the model of the low sulphidation
  epithermal type of mineralization, also referred to as the adularia-sericite
  type. A number of deposits around the world that belong to this type are being
  profitably mined.

In terms of its structure and mineral deposits the Exploration
  License Area can be divided into 3 districts, Central, Northern, and Southern.
  The three districts are separated from each other by northwest trending regional
  scale faults whose primary displacement was lateral. Within each district, deposits
  are contained within quartz veins that formed along fractures that opened under
  tension. The mineralized veins are for the most part within about 30 degrees
  of vertical and trend generally north-south, but there is considerable variation
  both within and between districts.

Exploration

The long history of recent exploration on the El Dorado Property
  includes extensive mapping of mineralized structures, lithogeochemical sampling,
  trenching and drilling. There have been numerous ancillary studies including
  environmental base line work.

Geological mapping to varying levels of detail, done by the
  Company and its predecessors, covers approximately 2,000 hectares of the 7,500
  hectare property. Digital maps have been generated at scales ranging from 1:1,000
  to 1:10,000. In addition, the project archives contain numerous individual maps
  of trenches, veins and target areas at various scales.

The geological mapping is continuing, along with lithogeochemical
  sampling and prospecting.

The geological mapping is accompanied by frequent sampling
  of the rocks on the surface. The samples are variously described as channel
  samples, chip channel samples, selected chips, random chips and grab samples.

Mineralization

The El Dorado License area contains many deposits, prospects
  and occurrences in veins, hot spring deposits and hydrothermal breccias. They
  are found in three districts, north, central and south, that are distinguished
  from each other by the dominant vein orientations and the level of the hydrothermal
  system that is exposed on the present-day surface. The veins have complex, multi-stage
  histories of formation.

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22

In a 1999 “Summary of Exploration Activities”,
  geologists working for Mirage Resource Corp. organized their descriptions of
  the deposits and zones into 33 targets, many of which comprise multiple veins.
  In terms of their exploration and development status, the veins range from newly
  discovered, untested prospects to three deposits sufficiently advanced that
  their contained resources can be estimated. The dimensions of mineralized veins
  are as varied as their exploration status, ranging from those known only in
  single outcrops to those that have been traced on the surface over lengths of
  between one and two kilometers. Systems of related veins are up to three kilometers
  long. In those veins that have been mined or extensively drilled, mineralization
  has been demonstrated to exist over vertical intervals of up to 300 meters.
  (In considering vein lengths and vertical dimensions it is important to note
  that at a detailed level mineralization in this type of system is highly variable).

Drilling

Several campaigns of drilling have been mounted on the El
  Dorado Property throughout the last decade. As of May 30, 2005 the Company’s
  drill hole database contained records of 387 drill holes comprising 113,796.17
  meters of drilling. Since becoming operator in mid 2002 up to the completion
  of hole P05-373 in May 2005, the Company had drilled 172 of these holes comprising
  66,203.55 meters.

At present core drilling is done using HQ equipment that produces
  63.5 millimeter diameter core. If it is necessary to reduce to a smaller diameter
  to overcome drilling difficulties, NQ equipment is used, producing 47.625 millimeter
  diameter core. Core recovery is measured at the drill site and loaded core boxes
  are trucked to the Company’s core logging, sampling and storage facility
  on the property. Core is logged by Company geologists and split for sampling
  using a rock saw.

Drilling on the project ranges from resource delineation and
  step-out drilling in the vicinity of the old mine to pure exploration drilling
  on veins that have as yet received little or no exploration.

Sampling and Analysis

The sampling method used by the Company field personnel varies
  with the purpose of the sample. Geologists doing initial reconnaissance or prospecting
  may collect selected grab samples from new discoveries. Such samples would be
  intended only to determine if minerals of interest are present, not to estimate
  grades for any volume of material.

For more systematic sampling, outcrops are cleaned off and
  in some cases shallow hand trenches are dug. Continuous chip samples are collected
  over intervals selected by a geologist. In many cases local labourers do the
  sampling, under a geologist’s supervision. The manner of sampling is recorded
  in field notes and is entered into the digital database of surface samples.

Intervals from drill core to be sampled are selected by the
  geologist logging the core. All vein material and visibly mineralized material
  is sampled, with enough immediately adjacent, apparently unmineralized material
  sampled to make sure that all intervals are adequately tested. Sampling is done
  after logging is complete. The core is sawn in half along its axis. The Company’s
  immediate predecessor as operator, Dayton, also used a rock saw for sampling
  core from 13 holes it drilled in 2000. Operators prior to Dayton used a percussion
  core splitter.

Core recovery, which affects the degree to which samples are
  representative, is very good in the current drilling. In mineralized intervals
  it averages better than 98%. In past drilling, prior to the Company becoming
  operator, resource estimators found local problems with core recovery, finding
  that it averaged as low as 76% in some mineralized veins.

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23

The Company collected a large quantity of unmineralized material
  from a site in the region. This material is used as sample “blanks”
  that are inserted into the sample stream at a rate of one into every batch of
  25 samples, as a quality control measure.

All of the Company’s samples are analyzed at the laboratory
  of Inspectorate America in Sparks, Nevada. About 25% of the samples are analyzed
  in duplicate by selecting a batch of material already pulverized by Inspectorate
  and sending it to another lab, American Assay. Once the results of the re-analysis
  are received, about 15% to 20% of the duplicated samples are selected for re-analysis
  starting with the coarse reject material.

All samples which return gold results exceeding 3 g Au/tonne
  in the initial analysis are analyzed again using a fire assay preparation with
  a gravimetric finish.

Security of Samples

All sampling is done by the Company’s employees, either
  geologists or labourers supervised by geologists. Once collected, samples are
  kept at the Company’s on-site facility until they are picked up by employees
  of Inspectorate America’s Guatemalan affiliate. They are transported by
  road to the Guatemalan laboratory, where they are prepared and trans-shipped
  to Nevada for analysis. Some of the samples may, from time to time, be opened
  and inspected by border officials at the border crossing from El Salvador to
  Guatemala.

Metallurgy

Metallurgical test work has shown the El Dorado mineralization
  responds well to milling and cyanide leaching. Recoveries of over 92% for gold
  and over 88% for silver are expected. Historic recoveries during past production
  ranged from 87% to 91.5% for gold and 77.7% for silver.

Minita Pre-feasibility Study

Pacific Rim commissioned and received a pre-feasibility study;
  entitled “Final Pre-Feasibility Report El Dorado Project, El Salvador”,
  prepared by SRK Consulting of Colorado, USA, Project Number 151401, and dated
  January 21, 2005. The pre-feasibility study considered all aspects of a proposed
  operation at the Minita deposit, including an underground mine plan, metallurgy
  and processing, tailings impoundment, environmental matters, and capital and
  operating costs, and offered an economic evaluation of the Minita reserves.
  It furthermore converted the measured and indicated Minita gold resource outlined
  in the October 2003 resource estimate to proven and probable reserves. The pre-feasibility
  study focused on the Minita deposit alone, and did not include other resources
  currently defined on the El Dorado project, nor did it include the newly discovered
  South Minita and Nance Dulce gold zones, which are yet to be defined with resource
  estimates.

The results of the pre-feasibility study were economically
  encouraging, indicating operating costs of $163 per gold equivalent ounce,
  which is in the lowest quartile for operating costs on a worldwide basis. The
  development of an underground operation at the Minita deposit will require pre-production
  capital expenditures of approximately $47.9 million, and sustaining capital
  expenditures of $19.0 million. Operating costs per gold equivalent ounce
  are expected to average $163 over the 6.2 -year expected mine life, with
  operating costs of approximately $140 and $137 per gold equivalent ounce
  in the first two years of production, respectively.

At prices of $400 per ounce for gold and $6.00 per
  ounce for silver, the Minita deposit is expected to generate $43.6 million
  in free cash flow over a 6.2 -year mine life. The undiscounted Net Present Value

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24

(“NPV”) is expected to be approximately $43.6
  million and the Internal Rate of Return (“IRR”) is anticipated to
  be 18.1% . The Minita pre-feasibility study results are summarized in the following
  table:

|PRODUCTION SUMMARY                               |                                                     
|------------------------------------------------ | ----------------------------------------------------
|Mining and Processing Rate                       | 750 tonnes per day                                  
|Run of Mine Ore to Mill                          | 1,630,889 tonnes at 9.5 g/t gold and 60.3 g/t silver
|Metal to Mill                                    | 497,101 ounces gold, 3.2 million ounces silver      
|Recovery                                         | 92% gold, 88.3% silver                              
|Average Production                               | 80,497 gold equivalent ounces                       
|Peak Production                                  | 98,576 gold equivalent ounces                       
|Mine Life (production)                           | 6.2 years                                           
|Gross Revenue (at $400 gold and $6.00 silver)    | $199.3 million                                      
|Net Smelter Return                               | $197.8 million                                      
|Royalties (2% government, 1.5% underlying owner) | $6.3 million                                        
|Gross Income from Mining                         | $191.5 million                                      
|OPERATING COSTS                                  |                                                     
|Mining                                           | $44.3 million                                       
|Processing                                       | $22.8 million                                       
|Administrative                                   | $13.9 million                                       
|Total                                            | $81.0 million                                       
|Average Cash Cost per gold equivalent ounce      | $163 million                                        
|CAPITAL COSTS                                    |                                                     
|Equipment                                        | $30.5 million                                       
|Capitalized costs                                | $36.4 million                                       
|Total                                            | $66.9 million                                       
|Pre-production portion                           | $47.9 million                                       
|On-going portion                                 | $19.0 million                                       
|FINANCIAL ANALYSIS                               |                                                     
|Payback (from start of milling)                  | 3.5 years                                           
|Net Present Value (undiscounted)                 | $43.6 million                                       
|Internal Rate of Return                          | 18.1%                                               

The conversion of measured and indicated resources to proven
  and probable reserves at Minita was based on the stope outlines and dimensions
  for resources at or above a diluted 5 g/t equivalent gold cut-off grade, where
  dilution was calculated on a block by block basis to account for the variations
  in the vein thickness. The Minita reserve estimate eliminated those resources
  contained within the unrecoverable portions of the crown and sill pillars and
  incorporates planned dilution, unplanned dilution, backfill dilution and production
  losses. The total proven and probable reserve for the Minita deposit is 1,604,883
  tonnes at an average grade of 9.51 g/t gold and 60.82 g/t silver for a total
  of 490,758 ounces of gold and 3,138,016 ounces of silver, or 535,586 gold equivalent
  ounces.

|         | Tonnes  | Grade    | Ounces  | Grade    | Ounces    | Grade      | Ounces 
|-------- | ------- | -------- | ------- | -------- | --------- | ---------- | -------
|         |         | (g Au/t) | (Au)    | (g Ag/t) | (Ag)      | (g AuEq/t) | (AuEq) 
|Proven   | 711,949 | 10.09    | 230,908 | 68.30    | 1,563,425 | 11.06      | 253,242
|Probable | 892,934 | 9.05     | 259,850 | 54.85    | 1,574,591 | 9.84       | 282,344

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25

|Total | 1,604,883 | 9.51 | 490,758 | 60.82 | 3,138,016 | 10.38 | 535,586
|----- | --------- | ---- | ------- | ----- | --------- | ----- | -------

|1) | El Dorado Project proven and probable reserves at
        5 g/t equivalent gold cut-off grade.       
|-- | -----------------------------------------------------------------------------------------------------
|2) | Reserves derived from cutoff grades based upon $350/oz
        gold and $5.00/oz silver market price.
|3) | Values
        shown in table are diluted and do account for mining recovery.                        

These reserves have been calculated in accordance with
  National Instrument 43-101, which differs significantly from the requirements
  for reserve disclosure under SEC Industry Guide 7. Industry Guide 7 requires
  a “final” or “bankable” feasibility study to make reserve
  disclosure. The NI 43-101 Proven & Probable Reserves reported above are
  not considered reserves under SEC Industry Guide 7. Readers are referred to
  the Cautionary Note to U.S. Investors.

Exploration in Past Year

Early in the fiscal year ended April 30, 2005 Pacific Rim
  made two new important discoveries as a result of its ongoing exploration drilling
  program on the El Dorado project: the South Minita and Nance Dulce gold zones.

The South Minita gold zone is located roughly 500 meters south
  of the Minita deposit in the Central District of the El Dorado project and occurs
  within the Minita vein system; the same structural zone that hosts the 490,000-ounce
  Minita deposit immediately to the north. Pacific Rim’s drilling efforts
  have concentrated solely on South Minita since February 2005, as the Company
  works toward defining the dimensions and grade of this discovery.

South Minita consists of a number of parallel, mineralized
  structures. Drilling to date has delineated 3 veins that have gold-grade continuity
  over a cumulative strike length of 650 meters. Individual drill holes commonly
  encounter a number of mineralized vein intersections lending upside to the potential
  tonnage of the South Minita gold zone. Drilling to date has extended the productive
  interval at the South Minita gold zone to roughly 200 vertical meters, with
  the deepest holes returned to date successfully testing the gold zone at elevations
  of approximately 50 m above sea level. At this elevation, the strike length
  of South Minita is over 300 meters long, whereas the Minita orebody to the north
  “necks” down to less than 100 meters of strike length at this same
  elevation. Pacific Rim believes that the top and bottom of the productive interval
  at South Minita are at lower elevations than at the Minita deposit. South Minita
  remains open to depth and along strike to the south and north, and the Company
  is currently drill testing the zone at and below sea level (roughly 450 meters
  below surface, or 250 meters below the top of the productive interval) and filling
  in areas that require additional drill testing to enable a resource estimate,
  which the Company expects to commission in the first half of fiscal 2006. Once
  the South Minita resource is defined, Pacific Rim plans to amend its pre-feasibility
  study of the Minita deposit to reflect the additional resources.

The Nance Dulce gold zone is located roughly 4.5 km south
  of the Minita deposit in the South District of the El Dorado project, and occurs
  within a northwest-trending structure that intersects the 6+ km long Minita
  structure at it’s southern end. As defined by the drill holes to have
  tested Nance Dulce to date, the discovery measures roughly 500 meters in strike
  length and has a vertical extent of roughly 100 meters, with potential for greater
  vertical dimension along strike where the gold zone is untested. In comparison
  to the Minita deposit, gold grades at Nance Dulce are higher but the vein widths
  are narrower. When diluted to mineable widths, the gold grades at Nance Dulce
  are comparable to Minita. In February 2005 Pacific Rim elected to temporarily
  discontinue drilling at Nance Dulce in favor of moving both the drill rigs under
  contract onto the South Minita gold zone to expedite the definition-drilling
  program on that discovery.

---

26

The following are drill results to date since disclosure in
  the Company’s annual report on Form 20-F for the year ended April 30,
  2004.

|Hole
      No. | Vein or
      System
      Tested | UTM
      Northing/Easting | Drill hole
      azimuth
      /dip
      (degrees) | From
      (meters
      down
      hole)                               | To
      (meters
      down
      hole)                                 | Inter-
      section
      (meters)                         | True
      Width
      (meters)                             | Gold  (g/t)                                                           | Silver
      (g/t)                                    
|-------------- | --------------------------------- | -------------------------- | --------------------------------------------------- | ----------------------------------------------------------------------- | ----------------------------------------------------------------------- | ----------------------------------------------------------- | ----------------------------------------------------------- | --------------------------------------------------------------------- | ------------------------------------------------------
|P04-319        | Nance 
      Dulce                | 297533 / 533505            | 232 / 50                                            | 185.35                                                                  | 185.75                                                                  | 0.40                                                        | 0.35                                                        | 37.178                                                                | 139                                                   
|P04-320        | South Minita                      | 300141 / 534297            | 270 / 50                                            | No Significant Results                                                 
|P04-321        | Nance
      Dulce                 | 297758 / 533084            | 052 / 55                                            | No Significant Results                                                 
|P04-322        | Nance
      Dulce                 | 297809/ 533122             | 232 / 55                                            | 199.05                                                                  | 199.20                                                                  | 0.15                                                        | 0.10                                                        | 8.720                                                                 | 104                                                   
|P04- 323       | South Minita                      | 300141 / 534299            | 270 / 70                                            | 180.95
      188.55                                                     | 181.10
      188.65                                                     | 0.15
      0.10                                             | 0.10
      0.10                                             | 12.262
      9.418                                                    | 26
      14                                           
|P04-324        | Nance
      Dulce                 | 297686 / 533160            | 052 / 60                                            | 183.35                                                                  | 183.55                                                                  | 0.20                                                        | 0.15                                                        | 14.851                                                                | 89                                                    
|P04-325        | Nance
      Dulce                 | 297683 / 533160            | 232 / 70                                            | No Significant Results                                                 
|P04-326        | Nance
      Dulce                 | 297544 / 533291            | 052 / 50                                            | 132.85                                                                  | 133.70                                                                  | 0.85                                                        | 0.40                                                        | 37.107                                                                | 225                                                   
|P04- 327       | South
      Minita                | 299904 / 534384            | 270 / 50                                            | 304.20
      388.50                                                     | 304.45
      388.80                                                     | 0.25
      0.30                                             | 0.20
      0.25                                             | 10.727
      39.114                                                   | 21
      95                                           
|P04-328        | Nance
      Dulce                 | 297447 / 533579            | 232 / 50                                            | No Significant Results                                                 
|P04-329        | South Minita                      | 300391 / 534259            | 270 / 50                                            | 240.40                                                                  | 243.90                                                                  | 3.50                                                        | 3.00                                                        | 17.528                                                                | 76                                                    
|P04-330        | Nance
      Dulce                 | 297366 / 533632            | 232 / 50                                            | No Significant Results                                                 
|P04-331        | South Minita                      | 300390 / 534260            | 250 / 50                                            | 225.55
      230.00
      242.30
      257.10
      258.15
      261.60 | 225.65
      230.35
      242.55
      257.90
      259.95
      261.90 | 0.10
      0.35
      0.25
      0.80
      1.80
      0.30 | 0.10
      0.35
      0.20
      0.75
      1.50
      0.30 | 53.527
      6.814
      13.327
      9.404
      19.129
      23.017 | >200
      36
      107
      78
      141
      .>200
|P04-332        | Nance
      Dulce                 | 297278 / 533697            | 270 / 50                                            | Results Pending                                                        
|P04- 333       | South Minita                      | 300983 / 534289            | 260 / 60                                            | 229.10
      302.75                                                     | 230.20
      303.45                                                     | 1.10
      0.70                                             | 1.05
      0.60                                             | 14.439  6.848                                                         | na
      na                                           
|P04-334        | Nance
      Dulce                 | 297279 / 533699            | 90 / 60                                             | Results Pending                                                        
|P04-335        | South Minita                      | 300577 / 534237            | 270 / 60                                            | 167.20                                                                  | 169.95                                                                  | 2.75                                                        | 2.50                                                        | 12.500                                                                | na                                                    
|P04-333*       | South Minita                      | 300983 / 534289            | 260 / 60                                            | 229.10
      259.40
      302.75
      343.05                           | 230.20
      259.50
      303.45
      343.40                           | 1.10
      0.10
      0.70
      0.35                       | 1.05
      0.10
      0.60
      0.30                       | 14.44
      18.91
      6.85
      9.96                               | 176
      200
      42
      58                       

---

27

|Hole
      No. | Vein or
      System
      Tested | UTM
      Northing/Easting | Drill hole
      azimuth
      /dip
      (degrees)                                        | From
      (meters
      down
      hole)                                                                                                                                      | To
      (meters
      down
      hole)                                                                                                                                        | Inter-
      section
      (meters)                                                                                                                  | True
      Width
      (meters)                                                                                           | Gold  (g/t)                                                                                                                        | Silver
      (g/t)                                                                                                          
|-------------- | --------------------------------- | -------------------------- | ------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------
|P04- 335*      | South Minita                      | 300577 / 534237            | 270 / 60                                                                                   | 52.45
      167.20                                                                                                                                                             | 52.60
      169.95                                                                                                                                                             | 0.15
      2.75                                                                                                                                      | 0.102.50                                                                                                                  | 15.5612.50                                                                                                                         | 61
      162                                                                                                                
|P04-337        | South Minita                      | 300215 / 534285            | 270 / 60                                                                                   | 105.40
      305.05
      306.20                                                                                                                                               | 105.90
      305.45
      306.45                                                                                                                                               | 0.50
      0.40
      0.25                                                                                                                           | 0.50
      0.40
      0.20                                                                                                | 6.56
      9.83
      14.40                                                                                                        | 29
      74
      30                                                                                                        
|P04-339        | South Minita                      | 302280/ 534326             | 270 / 65
      including
      and
      and                                               | 292.65
      339.85
      341.90
      344.40
      346.15
      347.30                                                                                                        | 294.30
      340.20
      347.65
      344.80
      346.85
      347.65                                                                                                        | 1.65
      0.35
      5.75
      0.40
      0.70
      0.35                                                                                          | 1.50
      0.255.40 0.30
      0.50
      0.35                                                                            | 6.94
      6.097.39 16.62
      10.96
      18.02                                                                                  | 37
      54
      50
      169
      71
      119                                                                           
|P04-343        | South Minita                      | 300922 / 534352            | 260/58
      including                                                                     | 52.50
      135.40
      148.40
      219.25
      391.85
      404.90
      404.90
      443.55
      453.30
      459.95                                                     | 53.60
      135.55
      148.50
      220.00
      392.10
      408.90
      406.40
      445.00
      453.40
      460.15                                                     | 1.10
      0.15
      0.10
      0.75
      0.25
      4.00
      1.50
      1.45
      0.10
      0.20                                              | 0.90
      0.10
      0.10
      0.70
      0.203.30 1.10
      1.10
      0.10
      0.20                                | 9.190
      14.16
      35.08
      8.49
      6.506.73 11.54
      7.52
      12.97
      6.44                                    | 10
      66
      11
      35
      4
      47
      9
      20
      31
      22                                           
|P04-346        | South Minita                      | 300856 / 534391            | 255 / 60                                                                                   | 271.20
      286.60
      291.00
      414.35
      420.45                                                                                                                     | 271.55
      286.85
      291.70
      414.45
      421.20                                                                                                                     | 0.35
      0.25
      0.70
      0.10
      0.70                                                                                                     | 0.30
      0.20
      0.60
      0.100.70                                                                                 | 11.89
      6.53
      6.65
      17.5228.58                                                                                       | 99
      44
      35
      89
      197                                                                                     
|P04-348        | South Minita                      | 300641 / 534287            | 253 / 65                                                                                   | 313.55
      344.75                                                                                                                                                            | 314.15
      345.65                                                                                                                                                            | 0.60
      0.90                                                                                                                                      | 0.50
      0.70                                                                                                           | 7.74
      7.40                                                                                                                    | 23
      12                                                                                                                 
|P04-349        | South Minita                      | 300495 / 534303            | 250 / 65
      including
      and
      including
      and
      and
      and
      and | 93.90
      175.45
      209.65
      220.35
      290.85
      290.85
      292.45
      353.80
      353.80
      355.30
      356.60
      363.00
      363.75
      369.80 | 94.65
      175.65
      209.95
      221.05
      293.00
      291.45
      293.00
      364.00
      354.10
      355.70
      357.00
      363.30
      364.00
      369.90 | 0.75
      0.20
      0.30
      0.70
      2.15
      0.60
      0.55
      10.20
      0.30
      0.40
      0.40
      0.30
      0.25
      0.10 | 0.70
      0.15
      0.25
      0.652.00 0.60
      0.509.24 0.30
      0.20
      0.40
      0.30
      0.20
      0.10 | 17.65
      10.75
      6.85
      7.4218.10 24.02
      43.826.15 6.44
      12.53
      36.12
      22.77
      39.74
      7.79 | 13
      115
      78
      35
      109
      200
      200
      17
      31
      20
      64
      121
      38
      69
|P04-350        | South Minita                      | 300533 / 534215            | 270 / 55                                                                                   | No significant results                                                                                                                                                        
|P04-351        | South Minita                      | 300577 / 534237            | 260 / 71                                                                                   | 50.00
      191.85                                                                                                                                                             | 50.10
      192.15                                                                                                                                                             | 0.10
      0.30                                                                                                                                      | 0.100.25                                                                                                                  | 8.2667.86                                                                                                                          | 24
      321                                                                                                                
|P04-352        | South Minita                      | 300533 / 534215            | 270 / 76
      including                                                                   | 187.55
      191.10
      289.10
      292.10                                                                                                                                  | 187.65
      192.55
      292.85
      292.85                                                                                                                                  | 0.10
      1.30
      3.80
      0.75                                                                                                                | 0.10
      1.302.90 0.60                                                                                                  | 20.85
      9.7420.12 52.55                                                                                                        | 83
      41
      86
      193                                                                                              

---

28

*partial results previously released

Drill holes P04-332, -334, -336, -338, -340, and -341 were
  designed to test the strike extensions of the Nance Dulce gold zone and a limited
  number of holes (P04-342, -344, -345 and -347) tested the vertical continuity
  of the Nance Dulce gold zone locally. These holes delivered no significant results.
  Nance Dulce remains a high-priority target, however, with limited drill capacity,
  Pacific Rim has elected to move the Nance Dulce drill onto the South Minita
  target to expedite the definition drilling program and fast-track the commencement
  of a resource estimate for South Minita, anticipated in the spring of 2005.

|Hole
      No. | Vein or
      System
      Tested | UTM
      Northing/Easting | Drill hole
      azimuth
      /dip
      (degrees) | From
      (meters
      down
      hole)                                | To
      (meters
      down
      hole)                                  | Inter-
      section
      (meters)                          | True
      Width
      (meters)                                       | Gold  (g/t)                                                      | Silver
      (g/t)                                
|-------------- | --------------------------------- | -------------------------- | --------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------------------------ | ------------------------------------------------------------ | --------------------------------------------------------------------- | ---------------------------------------------------------------- | --------------------------------------------------
|P04-353        | South Minita                      | 300350 / 534273            | 267/50                                              | No Significant Results                                                  
|P04-354        | South Minita                      | 300450 / 534200            | 275/71                                              | No Significant Results                                                  
|P04- 355       | South Minita                      | 300350 / 534273            | 269/70                                              | 268.55
      274.60
      280.50
      294.20                            | 269.15
      275.40
      281.00
      295.90                            | 0.60
      0.80
      0.50
      1.70                        | 0.50
      0.80
      0.50
      1.30                                 | 35.20
      17.77
      13.08
      21.40                        | 275
      129
      144
      153                 
|P04-356        | South Minita                      | 300450 / 534300            | 271/58                                              | 190.20                                                                   | 190.35                                                                   | 0.15                                                         | 0.10                                                                  | 8.54                                                             | 38                                                
|P04- 357       | South Minita                      | 300354/ 534277             | 254 / 60                                            | 255.90
      259.50                                                      | 256.65
      262.35                                                      | 0.75
      2.85                                              | 0.70
      2.80                                                       | 8.19
      18.84                                                 | 69
      43                                       
|P04- 358       | South Minita                      | 300214 / 534284            | 270/63                                              | 310.50
      311.20                                                      | 310.90
      311.60                                                      | 0.40
      0.40                                              | 0.30
      0.30                                                       | 16.30
      51.27                                                | 119
      368                                     
|P04- 359       | South Minita                      | 300392 / 534284            | 278/61                                              | 211.95
      218.85 
      241.40
      251.00
      256.45
      259.85 | 212.25
      219.00
      241.95 
      251.55
      257.05
      260.00 | 0.30
      0.15 
      0.55
      0.55
      0.60
      0.15 | 0.30
        0.15
        0.55
        0.50
        0.50
        0.10 | 24.04
      25.81
      15.75
      12.55
      7.77
      24.52 | 190
      184
      69
      69
      49
      154
|P04-360        | South Minita                      | 300912 / 534016            | 097/60                                              | 183.70                                                                   | 189.95                                                                   | 6.25                                                         | 3.20                                                                  | 6.07                                                             | 16                                                
|P04-361        | South Minita                      | 300493 / 534304            | 273/70
      including                              | 160.30
      295.70
      296.60                                         | 160.45
      297.50
      297.50                                         | 0.15
      1.80
      0.90                                   | 0.15
      1.75
      0.85                                            | 8.54
      10.25
      16.41                                     | 73
      71
      119                             
|P04-362        | South Minita                      | 300753 / 534070            | 083/70                                              | 52.55
      326.00                                                       | 54.10
      327.75                                                       | 1.55
      1.75                                              | 0.90
      1.75                                                       | 8.49
      11.73                                                 | 14
      103                                      
|P04-363        | South Minita                      | 300375 / 534323            | 274/69                                              | 132.50
      254.55
      319.85
      329.45
      322.05
      330.35  | 133.70
      254.75
      320.20
      329.55
      323.05
      330.55  | 1.20
      0.20
      0.35
      0.10
      1.00
      0.20  | 1.10
      0.20
      0.35
      0.10
      1.00
      0.20           | 6.81
      10.89
      10.66
      6.76
      17.76
      7.61   | 32
      116
      109
      30
      127
      26

---

29

|Hole
      No. | Vein or
      System
      Tested | UTM
      Northing/Easting | Drill hole
      azimuth
      /dip
      (degrees) | From
      (meters
      down
      hole)                                                         | To
      (meters
      down
      hole)                                                           | Inter-
      section
      (meters)                                                | True
      Width
      (meters)                                                   | Gold  (g/t)                                                                           | Silver
      (g/t)                                                 
|-------------- | --------------------------------- | -------------------------- | --------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------------------
|P04-364        | South Minita                      | 300242 / 534385            | 270/65
      including
      and
      including    | 230.20
      230.20
      230.65
      400.60
      411.65
      416.20
      422.50
      426.05 | 231.05
      230.50
      231.05
      402.90
      412.00
      417.15
      427.25
      427.25 | 0.85 
      0.30
      0.40
      2.30
      0.35
      0.95
      4.75
      1.20 | 0.80
      0.25
      0.35
      2.20
      0.25
      0.75
      4.00
      0.90 | 11.67
      19.73
      9.68
      7.65
      11.51
      6.44
      9.78
      22.26 | 65
      117
      48
      47
      40
      56
      65
      159

Environmental Impact Study

In September 2004, the Company submitted an Environmental
  Impact Study (“EIS”), for a 1,000 tonne per day operation, to El
  Salvadoran regulatory agencies and plans to commence the permitting process
  for the construction of an access / haulage ramp upon regulatory approval of
  the EIS and formal granting of the El Dorado Exploitation Concession. The ramp
  will provide access to the Minita vein system for underground definition drilling
  required for a full feasibility study, and for production haulage.

Summary

The El Dorado project remains the cornerstone of Pacific Rim’s
  strategy for growth. Of the $6.4 million spent on exploration during the
  fiscal year ended April 30, 2005, $5.6 million was expended on the El Dorado
  project, primarily on the on-going drill program, pre-feasibility study and
  environmental studies.

La Calera Gold Project, El Salvador

In April 2004 Pacific Rim commenced a Phase 2 reverse circulation
  drill program on its La Calera gold project that was designed to follow up on
  results generated by a fiscal 2004 Phase 1 core drilling program and ground
  magnetic survey that suggested the presence of a potentially bulk-mineable gold
  target. The results from this program were generally lower grade and less continuous
  than hoped, and did not, in the Company’s opinion, justify further work
  expenditures under the existing option agreement. As a result, during the fiscal
  year ended April 30, 2005 Pacific Rim terminated its option on the La Calera
  gold project.

Santa Rita Gold Project, El Salvador

There are no known ore reserves on the Santa Rita property
  and all work programs on the property are exploratory searches for ore grade
  mineralization.

The Santa Rita project is a 48.6 square kilometer (4,860 hectare)
  Exploration License in central El Salvador applied for by Pacific Rim in June
  2005. Santa Rita, located roughly 8 km from the Company’s flagship El
  Dorado gold project, is an epithermal quartz-calcite vein system that was discovered
  as a result of reconnaissance-style sampling of float, sub-crop and outcrop.
  The results of this sampling program indicate the presence of high-grade gold
  at Santa Rita. Thirty percent of the 39 samples collected to date have assayed
  greater than 3 g/t gold and 10% assayed greater that 8 g/t gold. One sub-crop
  sample from a vein at least 0.5 meters wide assayed 36.3 g/t gold. The Santa
  Rita project provides excellent exploration blue sky within El Salvador that
  will both complement and benefit from the Company’s on-going El Dorado
  exploration.

---

30

Other Properties

Nevada, USA

Denton-Rawhide Mine (49%)

The Company acquired its interest in the Denton-Rawhide Mine
  on April 6, 2000 pursuant to an acquisition agreement dated February 13, 2000
  (the “Acquisition Agreement”) between Dayton, Kinross Gold Company
  (“Kinross”), Kinross Rawhide Mining Company (“Kinross Rawhide”)
  and Kinross Fallon Inc. (“Kinross Fallon”). The Company holds a
  49% interest and Kennecott Minerals Company, owns the remaining 51% and is the
  operator.

The Acquisition Agreement was negotiated on an arm’s
  length basis by Dayton and Kinross, and provided, among other things, that:

|(a) | Kinross Rawhide and Kinross Fallon assigned all
        of their 49% interest in the Denton-Rawhide Mine, including all of their
        rights under the Rawhide Joint Venture Agreement (as described below),
        to the Company in exchange for 7,235,500 common shares at a deemed price
        of Cdn $2.26 per share for a total acquisition price of Cdn $16,352,230.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Kinross Rawhide agreed to keep in place a $1,297,356
        reclamation letter of credit posted by it in connection with the Denton-Rawhide
        Mine until March 31, 2002. The Company agreed to pay to Kinross Rawhide
        a standby fee equal to the cost to Kinross Rawhide of the letter of credit
        plus a support fee equal to 1.75% per annum, payable on the first day
        of January, April, July and October in each year. In January 2001, the
        reclamation letter of credit was replaced on behalf of the joint venture
        by a surety provided by Kennecott Rawhide Mining Company (“Kennecott
        Rawhide”), an indirect wholly–owned subsidiary of Rio Tinto
        Plc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(c) | Kinross Fallon and Kinross USA Inc. (“Kinross
        USA”) agreed to keep in place a $1,246,780 surface management
        surety bond posted by them in connection with the Denton-Rawhide Mine
        until March 31, 2001. The Company agreed to pay to Kinross Fallon a standby
        fee equal to the cost to Kinross Fallon of the surety bond (which is currently
        0.40%) plus a support fee equal to 1.75% per annum, payable on the first
        day of January, April, July and October in each year. In January 2001,
        the surety bond described in (c) was replaced on behalf of the joint venture
        by a surety provided by Kennecott Rawhide Mining Company (“Kennecott
        Rawhide”), an indirect wholly–owned subsidiary of Rio Tinto
        Plc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(d) | Kinross Fallon and Kinross Rawhide assigned all
        of their interest in the revocable reclamation and severance trust agreement
        dated effective January 1, 1999 (the “Reclamation Trust Agreement”)
        among Kennecott Rawhide Mining Company (“Kennecott Rawhide”),
        Kinross, Kinross Rawhide, Kinross USA and Bank of America, as trustee,
        to the Company for an amount equal to $2,118,403 (being the amount
        held in the trust created thereby for the benefit of Kinross Rawhide and
        Kinross Fallon). Pursuant to promissory notes dated April 6, 2000, the
        Company agreed to pay to Kinross an amount equal to the amount held in
        the trust at that time, by no later than December 31, 2004, provided that
        the Company made minimum annual prepayments on December 31st in each year
        equal to 25% of the net internal cash flow received by the Company from
        its 49% interest in the Denton-Rawhide Mine. As part of the final reconciliation
        of working capital amounts, the amount outstanding on the promissory note
        was reduced to $1,848,863. An amount of $1,021,000 was repaid
        on December 31, 2003 and the balance of $0.828 million was paid on
        December 31, 2004, from general corporate cash flows.

---

31

The ownership, management and operation of the Denton-Rawhide
  Mine is governed by a construction and post-construction operating agreement
  dated as of June 23, 1989, as amended by a first amendment agreement dated as
  of December 15, 1992, (the “Rawhide Joint Venture Agreement”) between
  Kennecott Rawhide and Dayton (as assignee of interest from Kinross Rawhide and
  Kinross Fallon). The Rawhide Joint Venture Agreement provides, among other things,
  that:

|(a) | Kennecott Rawhide holds a 51% interest in the Denton-Rawhide
        Mine;                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | the Company holds a 49% interest in the Denton-Rawhide
        Mine;                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(c) | Kennecott Rawhide shall be the operator of the Denton-Rawhide
        Mine; and                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(d) | the operation of the Denton-Rawhide Mine shall be
        overseen by a coordinating committee comprised of three members nominated
        by Kennecott Rawhide and two members nominated by the Company, and the
        parties to the Rawhide Joint Venture Agreement are required to establish
        a trust as security for the payment of reclamation and severance costs
        resulting from the eventual closure of the Denton-Rawhide Mine. (See “Reclamation
        – Denton Rawhide” below).

Operations

A leach solution is circulated through the heaps to dissolve
  the gold and silver. These precious metals are then precipitated from the solution
  with either the addition of zinc oxide or by absorption onto carbon. Dore is
  produced on site and the dore bars are then refined into gold and silver bullion
  at an independent refinery.

Gold and Silver Production

Pacific Rim’s share of production from the Denton-Rawhide
  mine during the fiscal year ended April 30, 2005 was 22,056 ounces of gold and
  212,075 ounces of silver at a total cash production cost (as calculated using
  industry standards) of $329 per ounce of gold produced. A portion of this
  production includes $250 per ounce of non-cash ‘heap leach” inventory
  “drawdown” costs. Actual cash expended per ounce of gold produced
  in the fiscal year ended April 30, 2005 was $219 per ounce. During fiscal
  2004 and 2003, Pacific Rim’s share of production was 29,687 ounces of
  gold and 238,124 ounces of silver at total cash production costs of $372
  per ounce (actual cash cost of $115 per ounce), and 35,731 ounces of gold
  and 302,383 ounces of silver at total cash production costs of $209 per
  ounce (actual cash cost of $268 per ounce), respectively. Gold prices improved
  during the fiscal year ended April 30, 2005, from $388.50 per ounce at May
  3, 2004 (the first trading day in the fiscal year ended April 30, 2005) to $427.90
  per ounce at April 30, 2005, reaching a high of $455.75 per ounce on December
  4, 2004.

The Company uses certain non-GAAP performance measures including
  “total cash production costs” and “actual cash production
  costs” that do not have any standardized meaning prescribed by GAAP and
  may not be comparable to similar measures presented by other companies. Pacific
  Rim believes that these measures are commonly used, in conjunction with conventional
  GAAP measures, by certain investors to enhance their understanding of the Company’s
  performance. The Company’s use of these non-GAAP measures is intended
  to provide additional information that should not be considered in isolation
  or as a substitute for performance measures prepared in accordance with GAAP.

The following table provides selected operating data for the
  Denton-Rawhide Mine (49%):

|Fiscal 2004 (twelve months ended April 30, 2004) | Total Cash Production Cost | Actual Cash Production Cost
|------------------------------------------------ | -------------------------- | ---------------------------
|Operating costs                                  | $12,193                    | $12,193                    
|Silver credits realized                          | $(1,162)                   | $(1,162)                   

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|Inventory change                                        | n/a                        | $(7,595)                   
|------------------------------------------------------- | -------------------------- | ---------------------------
|Cost base for calculation                               | $11,031                    | $3,436                     
|Gold ounces produced                                    | 29,687                     | 29,687                     
|Cost base per gold ounce produced                       | $372                       | $116                       
|Fiscal 2005  (twelve months ended April
      30, 2005) | Total Cash Production Cost | Actual Cash Production Cost
|Operating costs                                         | $8,963                     | $8,963                     
|Silver credits realized                                 | $(1,706)                   | $(1,706)                   
|Inventory change                                        | n/a                        | $(2,430)                   
|Cost base for calculation                               | $7,257                     | $4,827                     
|Gold ounces produced                                    | 22,056                     | 22,056                     
|Cost base per gold ounce produced                       | $329                       | $219                       

The fiscal year ended April 30, 2005 production from Denton-Rawhide
  was roughly 26% lower than in fiscal 2004. This slowdown in production represents
  the natural decline in recovery that occurs in the residual leach phase of a
  heap leach operation. Production was further affected by the temporary closure
  of sections of the heap leach pile as the mine operators began re-contouring
  the pile, which when finalized is expected to result in a short-term boost in
  production. Production is anticipated to continue through the fiscal year ended
  April 30, 2006, although recoveries are expected to decline further as the residual
  leaching process continues. For the purposes of internal budgeting, the Company’s
  projections for Denton-Rawhide production look forward in roughly 6-month increments
  as production is expected to decline at an unpredictable rate until economic
  recoveries cease.

Hedging

In order to lock in a certain amount of revenue that Pacific
  Rim requires to fund its ongoing exploration activities, the Company has a short-term
  hedging program, where, from time to time, it will sell forward up to 50% of
  its estimated gold production from Denton-Rawhide in monthly contracts for future
  periods of up to six months. At May 1, 2004, Pacific Rim had 6,000 ounces of
  gold sold forward at an average price of $410.93 per ounce. A further 12,000
  ounces of gold were sold forward during the course of the fiscal year ended
  April 30, 2005 at prices ranging from $402.66 per ounce to $450.25 per
  ounce. At April 30, 2005, 3,000 ounces remain sold forward at an average price
  of $442.50 per ounce in contracts of 1,000 ounces per month with maturity
  dates extending to July 2005. Pacific Rim’s hedging program is a cash
  management strategy.

Reclamation – Denton-Rawhide

The final reclamation and closure plan for Denton-Rawhide
  has been submitted to the Bureau of Land Management and the Nevada Department
  of Environmental Protection for approval which is under review. Reclamation
  and closing activities have been proceeding for the past three years and the
  Company’s 49% share of the total funded reclamation and closure costs
  is estimated at approximately $4.8 million of which the Company has paid
  approximately $3.0 million. Between April 2000 and December 31, 2001 the
  Company contributed $39,090 per month into a trust fund to meet its reclamation
  and closure obligations. No monthly contributions have been required from the
  Company since 2002 as it was agreed the fund was adequate and further reclamation
  costs would be provided from mine operating cash flow. The closure trust funds
  are held in a trust managed by a Trustee that is a large North American banking
  institution. The trust funds are invested in mutual funds composed of U.S. Government
  guaranteed fixed income securities with maturities of one to five years. The
  fair market value of the funds at April 30, 2005 was approximately $3.3
  million (cost $3.1 million). The closure trust funds are provided as security
  to the mine operator for the estimated closure liabilities.

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Landfill Agreement

On October 28, 2004, Pacific Rim and Kennecott, Denton-Rawhide
  joint venture partners (“Rawhide Joint Venture”), signed a Property
  Purchase and Sale Agreement with Nevada Resource Recovery Group LLC (“NRRG”)
  of Reno, NV to utilize the Denton-Rawhide open pits as a landfill for non-hazardous
  municipal waste in return for tipping fees, which are estimated will provide
  Pacific Rim with $103.6 million in cash over the 40+ year term of the agreement.
  The agreement includes a provision whereby NRRG can buy-out future tipping fees
  according to a net present value formula. Upon signing of the agreement, NRRG
  placed a security deposit of $0.5 million in trust and must make another
  payment of $1 million upon closing.

Closing of this agreement is expected to occur on or before
  October 31, 2006 and is subject to three key conditions: the successful purchase
  by the Rawhide Joint Venture of a number of small parcels of federal land contained
  within the proposed landfill site; the securing of municipal waste contracts
  by NRRG; and, the approval by the State of Nevada granting NRRG permission to
  use the site for municipal waste. NRRG is required to reach certain time and
  tonnage disposal milestones. Redeveloping the Denton-Rawhide mine as a municipal
  solid waste landfill is expected to provide a number of jobs, local and state
  tax revenues and a local community host fee over the 40+-year term of the agreement.
  There can be no assurance that all of the conditions for the landfill will be
  satisfied in a timely manner, if at all.

The executed agreement provides the Rawhide Joint Venture
  the right to continue to produce gold through residual leaching of the heap
  leach pads at Denton-Rawhide, and restart mining activities, if warranted, on
  land adjacent to the land conveyed to NRRG. The Rawhide Joint Venture will retain
  certain obligations related to mining on the property conveyed to NRRG, whilst
  NRRG will accept all obligations and liabilities related to the future impact
  of the landfill.

Argentina

San Francisco Property, Argentina

There are no known ore reserves on the San Francisco property
  and all work programs on the property are exploratory searches for ore grade
  mineralization.

During 1997 and 1998, the Company identified and acquired
  by staking a project known as the San Francisco Project. The Company staked
  and registered a 3,600 hectare claim block in the Province of Jujuy covering
  a 500 meter wide by 3,500 meter long alteration system that the Company believes
  is related to a porphyry system. The 100% owned property is located five kilometers
  from a major highway.

Surface rock sampling, ground geophysics, geologic mapping
  and 13 reverse circulation drill holes have been completed to date. The quartz-pyrite
  cap was intercepted in a number of holes and is approximately 30 to 40 meters
  thick and contains 0.3 -0.4 g/t gold mineralization. Deeper RC drill holes intersected
  narrow but rich vein intervals including: SF-6 which intercepted two meters
  averaging 266 g/t Ag; SF-12 which intercepted a 21 meter interval averaging
  45 g/t Ag and 3.3% Zinc.

The Company does not have a further drilling program planned
  at this time. The Company is looking for a partner to explore this property
  further.

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34

Rosalito Copper Project, Argentina

There are no known ore reserves on the Rosalito property
  and all work programs on the property are exploratory searches for ore grade
  mineralization.

The Rosalito project in Santa Cruz province, Argentina is
  a 10,000-hectare exploration claim staked by Pacific Rim during the fiscal year
  ended April 30, 2005 to cover a potential supergene enrichment blanket related
  to a porphyry copper system. Rosalito comprises iron oxide-stained, bleached
  rhyolite tuffs and volcaniclastics that surround a leached sulfide breccia.
  This porphyry copper-style alteration system occurs along the edge of a range
  front with adjacent alluvial-covered areas. A 0.5 -meter wide sulfide vein that
  crosscuts the breccia returned 9.57% zinc, 2.1% copper and 47 g/t silver. Porphyry
  copper systems are known to occur in the same geological environments as the
  epithermal gold systems Pacific Rim is seeking, and it is not uncommon to find
  one in the search for the other. As Pacific Rim is focused on epithermal gold
  systems, the Company plans to option or joint venture the Rosalito project to
  a suitable partner.

Chile

Carrera and Colina Gold Projects, Chile

There are no known ore reserves on the Carrera and Colina
  gold projects and all work programs on the property are exploratory searches
  for ore grade mineralization.

Pacific Rim has staked two new properties totalling 81 square
  kilometres (8,100 hectares) in XI Region in southern Chile. The Carrera project
  (8 concessions totalling 2,300 hectares) and the Colina project (20 concessions
  totalling 5,800 hectares) occur within an epithermal gold belt that hosts Coeur
  d’Alene Mines Corp.’s Cerro Bayo gold Mine and Meridians Esquel
  Project. Both properties expose the highest parts of an epithermal system, above
  the boiling zone within which bonanza gold grades normally occur. Pacific Rim
  discovered anomalous levels of gold mineralization in chalcedonic quartz veinlets,
  which led to the staking of these claims. The Carrera and Colina projects will
  be explored further by Pacific Rim during fiscal 2006 in preparation for drill
  targeting.

Andacollo Mine, Chile

The Andacollo Mine in Chile was permanently closed in December
  2000. In order to facilitate this closure and the orderly disposal of all assets,
  the Company’s subsidiary Compañia Minera Dayton Contractual Minera
  (“CMD”), which owns the Andacollo Mine, applied to the courts for
  protection against its unsecured creditors. This application to the courts resulted
  in a loss of control over the assets of CMD and as such the Company ceased consolidating
  the results of CMD effective December 1, 2000.

This application included a plan for paying off all the unsecured
  creditors of the mine, including the Company, from the sale of gold production
  and assets and the plan was approved by the creditors and the courts in Chile
  in May of 2001 and was to remain in effect until May 15, 2005. The plan remained
  in effect until May 11, 2005, at which time a settlement was reached with the
  creditors. At the time of the settlement, the balance of the unpaid principal
  totalled $1,1657,248, based on the May 11 exchange rate of $1 = Chilean
  Peso$573.66. The creditors agreed to accept a lump sum payment of $1,300,000
  and relinquished any rights that they may have been granted by the Creditors’
  Agreement. The settlement with the creditors was made with a short-term line
  of credit secured by the reclamation fund. Pacific Rim’s share of the
  settlement totalled $463,856.

The holder of a 2% net smelter return royalty on the production
  from the Andacollo Mine had initiated an action against CMD in which it claimed
  that due to the insolvency of CMD an amount of $1.4 million in

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35

guaranteed royalty payments had become immediately due with
  interest. CMD petitioned and made presentations to the Court rejecting the claims.
  The Court of La Serena issued a resolution in June of 2004 concluding I) the
  holder was not admitted as a party to the plan as it did not exercise its rights
  to intervene at the proper time; ii) the injunction was over-ruled so equipment
  can be disposed of; and iii) the request to exclude assets from the creditors
  agreement or pay the holder as a preferred creditor are denied. CMD has continued
  to comply with the terms of the terms of the royalty agreement and there is
  approximately $1.05 million of guaranteed royalty payments remaining.

CMD has completed reclamation of the mine area (including
  pits, dumps, ore stockpiles (excluding leach pads) and the associated roads).
  The reclamation activities have been conducted in accordance with the closure
  plan for the mine and crushing plant areas presented by CMD and approved by
  the Chilean government on June 17, 2002. As the crushing plant had not been
  sold, no reclamation activities were initiated in this area. CMD stopped adding
  cyanide to the heap in February of 2005. As this marked the end of productive
  operations, CMD requested and received permission from the Creditor’s
  Oversight Committee to begin drawing upon the resources of the closure fund.
  As of April 2005 the heap closure fund had a cash balance of $1.7 million.
  In May 2005, CMD used these funds to settle with the creditors and proposes
  to sell the mine and / or its assets.

A letter of intent was entered into June 20, 2005, wherein
  Trend Mining Company proposes to acquire shares of one or more of the Company’s
  subsidiaries, at its election, to hold CMD and the Andacollo Mine, for a total
  purchase price of $5.4 million payable over 2 years. Closing of the purchase
  and sale is expected to close no later than August 20, 2005, subject to due
  diligence and entering into of definitive agreements.

ITEM 5:          OPERATING
  AND FINANCIAL REVIEW AND PROSPECTS

Results of operations

For the fiscal year ended April 30, 2005, Pacific Rim recorded
  a loss of $4.6 million or $0.06 per share, compared to a loss of $6.9
  million or $0.09 per share for the fiscal year ended April 30, 2004 and
  $2.8 million or $0.04 per share for the fiscal year ended April 30,
  2003. The decrease in loss for the fiscal year ended April 30, 2005, despite
  higher exploration and general and administrative expenditures compared to the
  previous two periods, is primarily due to substantially decreased mine operating
  costs at the Company’s Denton-Rawhide residual leach gold operation. The
  Company received $0.3 million in creditor repayments in the fiscal year
  ended April 30, 2005 (compared to $0.5 million in each of fiscal 2004 and
  fiscal 2003) from CMD related to residual leach activities at the Andacollo
  operation.

Revenue

Revenue, consisting entirely of the sale of gold from the
  Denton-Rawhide mine, was $11.9 million in fiscal 2005, compared to $12.1
  million in fiscal 2004 and $12.5 million in fiscal 2003. Revenue for 2005
  was lower than the previous two periods, despite improvements in the realized
  gold price ($412 per ounce for the fiscal year ended April 30, 2005 compared
  to $385 per ounce for the fiscal year ended April 30, 2004 and $321
  per ounce for the fiscal year ended April 30, 2003), due to a decrease in precious
  metal production during the fiscal year ended April 30, 2005 (22,056 ounces
  of gold in the fiscal year ended April 30, 2005 compared to 29,687 ounces of
  gold in fiscal 2004 and 35,731 ounces of gold in fiscal 2003).

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36

Mine operating expenses were $9.8 million in the fiscal
  year ended April 30, 2005, compared to $13.5 million in fiscal 2004 and
  $13.4 million in fiscal 2003. The sharp decrease is a result of a decrease
  in direct mine operating costs for the fiscal year ended April 30, 2005 ($9.0
  million for the fiscal year ended April 30, 2005 compared to $12.2 million
  for the fiscal year ended April 30, 2004 and $9.0 million for the fiscal
  year ended April 30, 2003) resulting from lower administration costs and less
  “heap leach” inventory “drawdown” costs, as well as
  lower depreciation, depletion and amortization costs as Denton-Rawhide nears
  the end of its projected life and the value of its assets diminishes ($0.9
  million for the fiscal year ended April 30, 2005 compared to $1.3 million
  for the fiscal year ended April 30, 2004 and $3.1 million for the fiscal
  year ended April 30, 2003). In addition, a $1.3 million write-down in Denton-Rawhide’s
  carrying value in fiscal 2003, for which there is no comparable item in fiscal
  2004 or the fiscal year ended April 30, 2005, negatively impacted the cost of
  sales for fiscal 2003. As a result, there was a $2.0 million mine operating
  income in the fiscal year ended April 30, 2005, compared to a loss of $1.3
  million in fiscal 2004 and a loss of $0.8 million in fiscal 2003.

Expenses

Net non-operating expenses increased during the fiscal year
  ended April 30, 2005 to $6.9 million, compared to $6.0 million for fiscal
  2004 and $2.5 million for fiscal 2003. The current year’s expenses
  reflect higher exploration expenditures ($6.4 million for the fiscal year
  ended April 30, 2005 compared to $5.2 million for the fiscal year ended
  April 30, 2004 and $3.3 million for the fiscal year ended April 30, 2003)
  related primarily to on-going drilling costs and expenses related to the Minita
  pre-feasibility study on the El Dorado gold project, as well as drilling costs
  on the La Calera gold project and new project generation. General and administrative
  expenses increased from $0.9 million for the fiscal year ended April 30,
  2003 and $1.2 million for the fiscal year ended April 30, 2004 to $1.6
  million for the fiscal year ended April 30, 2005, reflecting an increase in
  regulatory and legal costs associated with recently introduced United States
  and Canadian reporting and regulatory requirements. General and administrative
  expenses were also impacted by a $0.4 million stock-based compensation expense
  during the fiscal year ended April 30, 2005 (compared to $0.3 million for
  fiscal 2004 and nil for fiscal 2003) in compliance with generally accepted accounting
  standards that the Company adopted in fiscal 2004. The Company realized a gain
  on sale of Rawhide property, plant and equipment of $0.8 million during
  the fiscal year ended April 30, 2005 compared to $0.03 million for fiscal
  2004 and $nil for fiscal 2003). Lastly, the Company realized a gain on the
  sale of mineral properties of $0.9 million in fiscal 2003, and a gain on
  the sale of marketable securities of $1.0 million in fiscal 2003, for which
  there are no comparable items in fiscal 2004 or the fiscal year ended April
  30, 2005.

Summary of quarterly results and fourth quarter review

Summary of Quarterly Results* (all amounts in thousands
  of US dollars, except per share amounts)

|2005                                            | 4thQuarter | 3rdQuarter | 2ndQuarter | 1stQuarter
|----------------------------------------------- | ---------- | ---------- | ---------- | ----------
|Revenue                                         | $2,925     | $2,675     | $2,828     | $3,440    
|Net income (loss)                               | $(277)     | $(637)     | $(2,382)   | $(1,338)  
|Net income (loss) per share - basic and diluted | $(0.00)    | $(0.01)    | $(0.03)    | $(0.02)   

|2004                                            | 4thQuarter | 3rdQuarter | 2ndQuarter | 1stQuarter
|----------------------------------------------- | ---------- | ---------- | ---------- | ----------
|Revenue                                         | $2,237     | $3,318     | $3,562     | $3,023    
|Net income (loss)                               | $(2,451)   | $(1,336)   | $(1,743)   | $(1,329)  
|Net income (loss) per share - basic and diluted | $(0.03)    | $(0.02)    | $(0.02)    | $(0.02)   

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37

- TrendsThe Company does not experience any material seasonality in its revenues.
  Revenues are a function of production levels from the Denton-Rawhide gold mine,
  which have generally declined over the last eight quarters, and the price of
  gold, which has generally risen, albeit with volatility, over the past eight
  quarters. Net income (loss) has been relatively stable until the final two quarters
  of fiscal 2005 at which time it improved notably. This is due to improved mine
  operating income (loss) as expenses at the Denton-Rawhide operation are reduced.
  The improvement in mine operating income has offset increases in exploration
  and general and administrative expenditures, which have trended higher over
  the past eight quarters. Variability in net income (loss) is otherwise a function
  of unusual or extraordinary events and expenses within the quarter.

Liquidity, capital resources and financial condition

- LiquidityDuring the fiscal year ended April 30, 2005 Pacific Rim’s cash and
  cash equivalents decreased by $0.7 million, from $1.5 million at April
  30, 2004 to $0.8 million at April 30, 2005. This reflects net cash flow
  from Denton-Rawhide of $7.3 million ($6.5 million from operations plus
  $0.8 million from the disposition of property plant and equipment), plus
  $0.3 million from the recoupment of funds from CMD and $0.1 million
  in proceeds from the exercise of stock options, offset by cash outlays totaling
  $8.4 million ($6.4 million in direct exploration expenditures, $1.2
  million in direct general and administrative expenses and $0.8 million in
  loan repayments).

- Cash flow (used for) operating activitiesCash flow used for operating activities was $(1.7) million in the fiscal
  year ended April 30, 2005 compared to $(1.1) million in fiscal 2004 and
  $(4.0) million in fiscal 2003. The increase in cash flow used for operating
  activities, despite an improvement in the fiscal year ended April 30, 2005,
  is primarily due to the net cash receipts from the Rawhide mine being offset
  by increasing exploration and administrative expenditures during the fiscal
  year ended April 30, 2005 compared to fiscal 2004 and fiscal 2003.

- Cash Flow Provided by Investing ActivitiesCash flow provided by investing activities was $0.9 million during the
  fiscal year ended April 30, 2005, compared to $0.3 million in fiscal 2004
  and nil in fiscal 2003. This reflects an increase in proceeds from the disposition
  of property, plant and equipment for the fiscal year ended April 30, 2005 compared
  to the previous two fiscal periods, partially offset by purchases of property,
  plant and equipment in each year and supplemented by reclamation sinking fund
  withdrawals of $0.1 million and $0.5 million in the fiscal year ended
  April 30, 2005 and fiscal 2004, respectively.

- Cash Flow Provided by Financing ActivitiesDuring the fiscal year ended April 30, 2005, cash flow provided by financing
  activities totaled $0.1 million, substantially reduced from the $1.2
  million provided in fiscal 2004 and $2.6 million provided in fiscal 2003.
  The fiscal 2004 financing cash flow related to the issuance of 1.9 million shares
  upon the exercise of stock options (at an average price of $0.60 per share).
  The $2.6 million from financing activities during fiscal 2003 is primarily
  from proceeds on the sale of marketable securities related to the sale of the
  Company’s Diablillos property.

-Capital Resources and Financial ConditionPacific Rim’s cash, cash equivalents and bullion (in the Company’s
  view, bullion is closely equivalent to cash, being immediately available to
  cover short-term cash requirements) decreased from $2.8 million at April
  30, 2004 to $0.8 million at April 30, 2005. The bulk of this decrease is
  the reduction in bullion in process, which decreased from $1.3 million at
  the end of fiscal 2004 to $0.02 million at the end of the

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38

fiscal year ended April 30, 2005. Inventories, comprised mainly
  of gold in process production costs, were substantially reduced, to $0.3
  million at April 30, 2005, from $2.7 million at April 30, 2004, as gold
  was recovered from the heap leach pile over the course of the year and the accounting
  inventory of gold in process in the heap leach pile was drawn down to $nil.
  Supplies inventories were reduced to $nil during the 2005 fiscal year. At
  April 30, 2005, the book value of Pacific Rim’s total assets stood at
  $8.6 million, compared to $14.0 million at April 30, 2004. This decrease
  is primarily due to the reduction in cash and cash equivalents, bullion “heap
  leach” inventories and the net carrying value of property, plant and equipment.

At year-end 2005, Pacific Rim had current liabilities of $1.3
  million, compared to $2.6 million at year-end 2004. April 30, 2005 current
  liabilities include $1.2 million in accounts payable, compared to $1.8
  million at April 30, 2004. In addition, a short-term loan was repaid to Kinross
  Gold Corporation on December 31, 2004 that was related to the Company’s
  purchase of 49% of the Denton-Rawhide mine. Currently, Pacific Rim has no short-
  or long-term debt.

A $0.7 million reduction in cash, $1.3 million reduction
  in bullion, and $2.6 million reduction in current inventories, offset in
  part by a $1.5 million decrease in current liabilities, were the main contributors
  to the $3.1 million reduction in working capital, from $3.0 million
  at the end of fiscal 2004, to ($0.1) at the end of the fiscal year ended
  April 30, 2005. Exploration expenditures increased during the fiscal year ended
  April 30, 2005 due to Minita pre-feasibility activities, which are now completed,
  and increased drilling activity. The Company’s El Dorado exploration plans
  for fiscal 2006 call for continuation of the on-going drill program and commissioning
  of a South Minita resource estimate and an amended economic analysis of the
  El Dorado project. Exploration expenditures for fiscal 2006 are anticipated
  to be approximately the same as the fiscal year ended April 30, 2005. For the
  purposes of internal exploration budgeting, Pacific Rim forecasts production
  levels, revenue and cash flow from the Denton-Rawhide gold mine roughly six
  months in advance due the variability in recoveries that are inherent in a residual
  heap leach operation, and the volatility in gold price. Although the Company’s
  working capital at the end of the fiscal year ended April 30, 2005 is negative,
  Pacific Rim anticipates having sufficient cash flow during the first half of
  fiscal 2006 from continued gold production at Denton-Rawhide and from the sale
  of the Andacollo mine to continue its planned exploration programs if there
  are no significant capital outlays beyond its ongoing drilling program. If the
  Company decides to commence development activities at El Dorado during the coming
  fiscal year, including construction of an access / haulage ramp at El Dorado,
  additional financing will be required.

Off-balance sheet arrangements

Pacific Rim, as a creditor of CMD, was repaid $0.1 million
  during the fiscal year ended April 30, 2005. This compares to a $0.2 million
  repayment during fiscal 2004 and $0.5 million during fiscal 2003. In May
  2005, subsequent to the end of the fiscal year ended April 30, 2005, the Andacollo
  creditors plan was concluded and Pacific Rim was repaid $0.4 million owing
  to it under the plan. As the recovery of these funds was uncertain at the end
  of the fiscal year ended April 30, 2005, this off-balance sheet arrangement
  has not been recorded as a receivable of the Company as at April 30, 2005.

Research and development, patents and licenses, etc.

The Company does not conduct research and development, nor
  does it hold patents and licenses in its business.

Critical Accounting Policies

The details of Pacific Rim’s accounting policies are
  presented in Note 2 to the consolidated financial statements. The following
  policies are considered by management to be essential to understanding the

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39

processes and reasoning that go into the preparation of the
  Company’s financial statements and the uncertainties that could have a
  bearing on its financial results:

Property, Plant and Equipment:Property, plant and
  equipment is stated at estimated fair value as at the date of acquisition, less
  accumulated depreciation and accumulated write-downs. Reviews are undertaken
  annually to evaluate the carrying values of operating mines and exploration
  and development properties. Pacific Rim capitalizes costs incurred on mineral
  properties only after it has been established that the property contains mineral
  reserves. Expenditures on exploration properties, including those with mineral
  resources, are expensed as incurred.

During fiscal 2004, Pacific Rim adopted the Canadian Institute
  of Charter Accountants (“CICA”) standard 3063 “Impairment
  of Long-Lived Assets”, which requires that an impairment loss be recognized
  if the carrying value of a long-lived asset exceeds its fair market value. An
  estimate of fair market value is undertaken annually and the impairment loss,
  if any, is recorded. There were no impairment losses recorded during fiscal
  2004. Management’s estimates of resources, inventories and reclamation
  costs are subject to risks and uncertainties that may affect its assessment
  of the recoverability of mineral property costs.

Environmental Expenditures and Closure Costs:During
  fiscal 2004 Pacific Rim adopted CICA standard 3110 “Asset Retirement Obligations”,
  whereby the Company prospectively recognizes the fair market value of asset
  retirement obligations in the period in which they are incurred.

Stock-based Compensation: For fiscal 2004, Pacific
  Rim prospectively adopted CICA standard 3870 “Stock-based Compensation
  and Other Stock-based Payments”, which requires fair value accounting
  for all stock options issued during the year.

Revenue Recognition:Revenues from the sale of all
  precious metal bullion are recognized when title to the bullion passes to the
  buyer.

Use of Estimates:The preparation of financial statements
  in conformity with Canadian GAAP requires management to make estimates and assumptions
  that affect the reported amounts of assets and liabilities and disclosures of
  contingent assets and liabilities at the date of the financial statements and
  the reported amounts of revenues and expenses during the reporting period. Actual
  results could differ from those estimates.

Pacific Rim utilizes the following key estimates in the preparation
  of its consolidated financial statements:

Resources:The carrying value of the El Dorado property
  reflects its acquisition cost, which was based on an estimate of the property’s
  resources at the time of the acquisition. The resource estimate was filed as
  a National Instrument 43-101 (“NI 43-101”)-compliant technical report
  in February 2002. It has been superseded by the Company’s October 2003
  resource estimate (see NI 43-101 disclosure).

Inventories:The inventories recorded in Pacific Rim’s
  consolidated financial statements represent the Company’s portion of gold
  in process production inventory and supplies inventories at the Denton-Rawhide
  gold mine. The value of these inventories was estimated by Pacific Rim’s
  joint venture partner and Denton-Rawhide mine operator, Kennecott Minerals Company
  (“Kennecott”). The inventory estimate is based on the tonnage and
  grade of ore placed on the heap leach pile less the amount of gold already recovered
  from the heap leach pile all at estimated recovery rates based on historical
  results.

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40

Closure costs:Closure costs associated with the Denton-Rawhide
  gold mine are estimated by Kennecott and based on standard reclamation procedures
  employed at comparable sites and under comparable conditions. Closure costs
  are addressed in Note 8 to the consolidated financial statements.

Effect of Inflation

In the Company’s view, at no time during any of the
  last three fiscal years have inflation or changing prices had a material impact
  on the Company’s sales, earnings or losses from operations, or net earnings,
  other than the price of gold.

See Item 3D “Risk Factors” and Item 4 “Information
  on the Company” and “Business Overview” for additional risk
  and trend information

Tabular disclosure of contractual obligations

The Company is committed to payments under operating leases
  for office premises, a vehicle and a photocopier, through to 2009, of approximately
  $0.1 and $0.0 per year as set out in Note 12 to the 2005 financial statements.
  The following table lists as of April 30, 2005, information with respect to
  the Company’s known contractual obligations.

|                                         | Payments due by period
|---------------------------------------- | ----------------------
|                                         | Total                 
|Debt Obligations                         | 0                     
|Operating Lease Obligations              | $174                  
|Accounts payable and accrued liabilities | $1,214                
|Accrued closure costs                    | $1,865                
|Total                                    | $3,253                

Safe Harbor

Certain statements contained in the foregoing Results of Operations
  and elsewhere in this Form 20-F constitute forward-looking statements. Such
  forward-looking statements involve a number of known and unknown risks, uncertainties
  and other factors which may cause the actual results, performance or achievements
  of the Company to be materially different from any future results, performance
  or achievements expressed or implied by such forward-looking statements. Readers
  are cautioned not to place undue reliance on these forward-looking statements,
  which speak only as of the date the statements were made and readers are advised
  to consider such forward-looking statements in light of the risks set forth
  below.

Risk factors that could affect the Company's future results
  include, but are not limited to, risks inherent in mineral exploration activities
  and other operating and development risks, competition, environmental regulations,
  changes to reclamation requirements, volatility and sensitivity to market prices
  for base metals the impact of changes in foreign currencies' exchange rates,
  political risk, changes in government regulation and policies including trade
  laws and policies, demand for base metals, replacement of reserves and production,
  receipt of permits and approvals from governmental authorities.

---

41

ITEM 6.          DIRECTORS,
  SENIOR MANAGEMENT AND EMPLOYEES

A.         
  DIRECTORS AND SENIOR MANAGEMENT

Each of the Company’s directors is elected by the Company’s
  shareholders at an annual general meeting to serve until the next annual general
  meeting of shareholders, scheduled to be held September 7, 2005, or until a
  successor is elected or appointed. The current members of the Board have been
  nominated for reelection at the next annual general meeting by management. The
  Board of Directors appoints the Company’s executive officers annually
  after each annual general meeting, to serve at the discretion of the Board of
  Directors.

The following table discloses the name, age and function with
  the Company (and the Predecessor Companies) of its directors and executive officers
  as of July 15, 2005, together with business experience, principal business activities
  performed outside of the Company (including in the case of directors other principal
  directorships).

Thomas C. Shrake (51) - Chief Executive Officer and
  Director of PacRim since 1997. Member of the Environmental Committee. Master
  of Science (Economic Geology) and Bachelor of Arts (Geology) . From 1993 to
  1996 Vice President, Exploration for Gibraltar Mines Limited and from 1990 to
  1993 Exploration Manager with Placer Dome Inc., both publicly traded mining
  companies.

Catherine McLeod-Seltzer (45) - President and Director
  of PacRim since 1997. Business Degree. From 1993 to 1996 President, Chief Executive
  Officer and Director of Arequipa Resources Ltd., a publicly traded mining company.
  From 1985 to 1993 employed by Yorkton Securities Inc., a Canadian investment
  dealer, initially as an institution trader followed by three years as a broker.
  Previously a director of Corriente Resources Inc. from November 1996 to June
  2003 and director of Francisco Gold Corp. from July 1993 to June 2002; Currently
  also a director of Silver Standard Resources Inc. since March 2002 , director
  of Madison Enterprises Inc. since April 1997, director of Bear Creek Mining
  Corporation (formerly Eveolution Ventures Inc.) since April 2000, Miramar Mining
  Corp. since 2001, director of Stornoway Ventures Ltd. since 2001 and director
  of Peru Copper Inc. since 2003.

Anthony J. Petrina, P.Eng.(70) - Director of PacRim
  since 1997. Member of the Audit and Environmental Committees. Bachelor of Science
  (Mining Engineering). From 1960 to 1992 employed by Placer Dome Inc., a publicly
  traded mining company, most recently President, Chief Executive Officer and
  Vice-Chairman until his retirement in 1992. Currently also a director of Miramar
  Mining Corp. since January 1995 and Bear Creek Mining Corporation since April
  2003.

William H. Myckatyn, P.Eng. (55) –Director of
  PacRim since 1998. Director and Chairman of the Company since April 2002. Member
  of the Compensation and Environmental Committees. Bachelor of Applied Science
  (Mineral Engineering). From 1993 to 1996 President and Chief Executive Officer
  and from 1991 to 1993 Mine Manager for Gibraltar Mines Limited, a publicly traded
  mining company. From 1997 to 1998 President and Chief Executive Officer of Princeton
  Mining Corporation. From June of 1998 to April 2002, director, Chairman and
  Chief Executive Officer of Dayton. From April 2002 to date, director and Chief
  Executive Officer of Quadra Mining Ltd., a private company which became a publicly
  traded mining company in April of 2004.

David K. Fagin, P.Eng. (67 ) – Director of the
  Company and member of the Audit Committee and the Compensation Committee. Investor.
  Formerly President of Homestake Mining Company. Director of Golden Star Resources
  Ltd. from 1992 to present. Director of Canyon Resources Corporation from 2000
  to present. Director of all public mutual funds of T.Rowe Price Group (a mutual
  fund company) 1987 to present. Former director and Chairman of Western Exploration
  and Development Ltd. 1997 to 2000.

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42

Paul B. Sweeney, CGA (55) - Director of the Company
  since July 2003. Vice President and Chief Financial Officer of Canico Resource
  Corp. since February 2002. Chief Financial Officer and Corporate Secretary of
  Manhattan Minerals Corp. from 1999 to May 2001. Vice President Finance and Chief
  Financial Officer of Sutton Resources Ltd. from 1998 to 1999.

F. John Norman, CA(66) – Master of Applied Science
  (Geology U of T). Controller of Dayton since 2000. Chief Financial Officer of
  the Company since August 2003.

Kathryn A. Church (50) - Corporate Secretary and Vice-President
  of Administration of PacRim since 1997. From 1994 to 1996 Corporate Administrator
  for Eldorado Gold Corporation and HRC Development Corporation, publicly traded
  mining companies. From 1987 to 1994 securities legal assistant with prominent
  Vancouver law firm.

Barbara Henderson (40) – Master of Science (Geology).
  Vice President Investor Relations of the Company since August 2002. Manager
  of Investor Relations for Pac Rim since 1998. Investor Relations Manager for
  Zen International Resources Ltd. from 1998 to 1998, for Baramundi Gold Ltd.
  in 1997 and Noble Peak Resources Ltd. from 1996 to 1997.

There are no family relationships between any of the above.
  Neither is there any arrangement or understanding with major shareholders, customers,
  suppliers or others, pursuant to which any person referred to above was selected
  as a director or member of senior management.

6 B.          COMPENSATION
  OF DIRECTORS AND OFFICERSSummary Compensation Table

For the three most recently completed financial years ended
  April 30, 2005, April 30, 2004 and April 30, 2003 in respect of the Chief Executive
  Officer (“CEO”), the Chief Financial Officer (“CFO”)
  and for each of the Company’s three most highly compensated executive
  officers as at April 30, 2005 (other than the CEO and CFO), whose total salary
  and bonus exceeds Cdn.$150,000, if any, and any other additional individuals
  for whom disclosure would have been provided but for the fact that the individual
  was no longer an executive officer as at April 30, 2005 (the "Named Executive
  Officers" or “NEO”), the annual and long-term compensation and bonus
  is set out below. (Note: Dollar amounts below are in Canadian currency. Mr.
  Shrake received his salary in US dollars, which amounts have been converted
  at average exchange rates for the applicable year, and on the basis of $1.25
  Canadian for $1 US for the last completed fiscal year ).

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43

|                                                                                    |                              | Annual Compensation                      | Long Term Compensation  |                                                            
|----------------------------------------------------------------------------------- | ---------------------------- | ---------------------------------------- | ----------------------- | -----------------------------------------------------------
|                                                                                    | Awards                       | Payouts                                 
|NEO
      Name and
      Principal
      Position                                   | Year                         | Salary
      (Cdn.$)                     | Bonus 
      ($)        | Other 
      Annual 
      Compensa- 
      tion 
      ($)
|SHRAKE,  
      Thomas  
      Chief Executive  
      Officer and  
      Director | 2005 
      2004 
      2003 | $176,600
      $180,200
      $190,000   | Nil
      Nil
      Nil | Nil
      Nil
      Nil                                    
|NORMAN, F.John  
      Chief Financial  
      Officer                              | 2005 
      2004 
      2003 | $130,000 
      $130,000 
      $127,083 | Nil
      Nil
      Nil | Nil
      Nil
      Nil                                    
|MCLEOD- SELTZER  
      Catherine,  
      President and  
      Director           | 2005 
      2004 
      2003 | $Nil (3) $Nil (2) $132,383               | Nil
      Nil
      Nil | Nil
      Nil
      Nil                                    

| | (1) | These amounts include benefits and contributions
        made by the Company on behalf of the Named Executive Officers to a retirement
        compensation arrangement and/or a group or individual RSP.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Ms. McLeod-Seltzer was on maternity leave during
        this period.                                                                                                                                    
| | (3) | Ms. McLeod-Seltzer voluntarily waived her salary
        during this period.                                                                                                                             

Options Granted in Financial Year Ended April 30, 2005
  
  The following stock options were granted to Named Executive Officers during
  the most recently completed financial year:

|NEO Name                        | Securities Under Options Granted (#) | % of Total Options Granted to Employees in Financial Year(1) | Exercise Price ($/Security) | Market Value of Securities Underlying Options on the Date of Grant ($/Security) | Expiration Date  
|------------------------------- | ------------------------------------ | ------------------------------------------------------------ | --------------------------- | ------------------------------------------------------------------------------- | -----------------
|Thomas Shrake, 
      CEO       | 200,000                              | 19%                                                          | $0.75                       | $0.75                                                                           | February 18, 2010
|F. John Norman, 
      CFO      | 75,000                               | 7%                                                           | $0.75                       | $0.75                                                                           | February 18, 2010
|Catherine 
      McLeod-Seltzer | 200,000                              | 19%                                                          | $0.75                       | $0.75                                                                           | February 18, 2010

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44

Aggregated Option Exercises in Last Financial Year and
  Financial Year-End Option ValuesThe following table sets forth details of all exercises of stock options
  during the most recently completed financial year ended April 30, 2005, if any,
  by the Named Executive Officers and the financial year-end value of unexercised
  options on an aggregated basis:

|Name                             | Securities
      Acquired
      on
      Exercise
      (#) | Aggregate
      Value
      Realized
      (Cdn.$) (1) | Unexercised Options
      at Financial
      Year-End
      (#)
      Exercisable/
      Unexercisable | Value of Unexercised
      In-the-Money Options
      at Financial Year-End
      (Cdn.$) (1) Exercisable/
      Unexercisable
|-------------------------------- | ----------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------
|Thomas Shrake,  
      CEO       | Nil                                                         | Nil                                                    | 1,007,000/200,000                                                                                      | $168,060/0                                                                                                                    
|F. John  Norman, 
      CFO      | Nil                                                         | Nil                                                    | 288,333/56,667                                                                                         | $26,588/0                                                                                                                     
|Catherine  
      McLeod-Seltzer | Nil                                                         | Nil                                                    | 1,096,200/200,000                                                                                      | $193,156/0                                                                                                                    

|(1) | The value of exercised and unexercised in-the-money
        options is calculated using the closing price of common shares of the
        Company on The Toronto Stock Exchange (the “TSX”) on the exercise
        or financial year end date respectively, less the exercise price.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Termination of Employment, Change in Responsibilities
  and Employment Contracts 
  Mr. Thomas Shrake, Chief Executive Officer, has employment agreements dated
  February 14, 1997 with the Company and one of its wholly owned subsidiaries
  respecting his employment, pursuant to which Mr. Shrake receives an annual salary
  of $141,250 and regular benefits. The agreements provide that in the event
  that Mr. Shrake’s employment is terminated for reasons other than just
  cause, Mr. Shrake will be entitled to receive a severance package comprising
  a payment equal to 12 months salary plus one month’s salary for each year
  of completed service after one year to a maximum total of 24 months salary,
  together with benefits for the severance period. In addition Mr. Shrake would
  be entitled to exercise all incentive stock options held by him up to the close
  of business on the 30th day following termination.

Ms. Catherine McLeod-Seltzer, President of the Company, has
  an employment agreement with the Company dated September 15, 1997, as amended,
  pursuant to which she may receive an annual salary of Cdn$159,330 plus reimbursement
  of general expenses not to exceed Cdn.$2,000 per month and regular benefits.
  The agreement provides that in the event the Company terminates Ms. McLeod-Seltzer’s
  employment for reasons other than just cause, Ms. McLeod-Seltzer will be entitled
  to receive a severance package comprising a payment equal to 18 months salary
  plus one month’s salary for each year of completed service after August
  1, 1997 to a maximum total of 24 months salary, together with benefits for the
  severance period. In addition, Ms. McLeod-Seltzer would be entitled to exercise
  all incentive stock options held by her at the time of such termination up to
  the last day of the last day of business of the term of any share option agreement.

Mr. F. John Norman, Chief Financial Officer of the Company,
  has an employment agreement with the Company dated August 15, 2002, pursuant
  to which he receives an annual salary of Cdn.$130,000 and regular benefits.
  The agreement provides that in the event the Company terminates Mr. Norman’s
  employment for reasons other than just cause he will be entitled to a severance
  package comprising a payment equal to 12 months salary on a change of control
  or six months salary for any other termination event, together with benefits
  or an amount equal to the value of the benefits for the severance period. Mr.
  Norman will have 30 days from the date of termination to exercise any vested
  incentive stock options held by him at the time of termination.

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45

6 C.          BOARD PRACTICES

The Company’s Board of Directors is currently comprised of six persons,
  all of whom were elected at the annual general meeting of shareholders on September
  22, 2004. The current term of office for all the directors will expire at the
  next annual general meeting. The Company has scheduled the next annual general
  meeting to be held September 7, 2005, at which time all six of the current directors
  will be nominated for re-election. The position of Chairman of the Board of
  the Company is separate from that of the CEO. The incumbent Chairman is not
  a member of the Company’s management. See Item 6A Directors and Senior
  Management.

The Board holds meetings on a regular basis to review the Company’s
  business plans and strategy as well as to consider and approve particular matters.
  In addition routine matters are approved by consent resolutions in writing which
  require unanimous consent of all directors. All matters of strategic importance
  require prior review and approval of the Board as well as any material expenditures
  or legal commitments, debt or equity financings, acquisitions and divestitures,
  financial statements and major disclosure documents.

There are no service contracts between the Company or any of its directors
  for benefits upon termination of employment, except as disclosed in Item 6B
  above with respect to the employment contracts of Mr. Shrake, CEO, and Ms. McLeod-Seltzer,
  President.

Board Committees

The committees of the Board presently consist of an Audit Committee, a Compensation
  Committee, an Environmental Committee and a Nominating Committee. The TSX guidelines
  recommend that board committees be composed exclusively of outside directors
  (non-management directors) the majority of which are unrelated Directors. AMEX
  rules require all committee members to be independent directors. Where possible,
  given the size of the Company’s Board, the Company endeavours to comply
  with all governing rules and regulations. All of the Company’s committees
  have Board approved Terms of Reference which set out the duties of the respective
  committees.

- Audit CommitteeThe Audit Committee is currently composed of three independent directors,
  Messrs. Fagin (Chair), Sweeney and Petrina. All members of the Audit Committee
  are financially literate. The Audit Committee is authorized to review and approve
  the financial statements of the Company and the overall scope and results of
  the audit and internal financial controls of the Company. The Audit Committee
  communicates with the external auditors and meets with them at least once a
  year. The Audit Committee meets at least four times a year. The terms of reference
  of the Audit Committee are set out in their entirety under Item 16A –
  Audit Committee Financial Expert.

- Compensation CommitteeThe Compensation Committee is currently composed of three independent directors,
  Messrs. Sweeney (Chair), Myckatyn and Fagin. The overall purpose of the Compensation
  Committee is to make recommendations to the Board for executive compensation,
  human resources and compensation policies and to implement and oversee same
  if the Board approves the recommendations for the Company.

- Environmental CommitteeThe Environmental Committee is composed of three directors, Messrs. Myckatyn
  (Chair), Shrake and Petrina, the majority of which are independent directors.
  The Environmental Committee has the responsibility for reviewing the Company’s’
  environmental policy and for ensuring the Company’s operations are operated
  in a manner consistent with the environmental policy and also for ensuring the
  Company’s operations are run in a manner that does not unduly expose its
  employees to unnecessary risk of accident or death.

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46

- Nominating Committee
  The Nominating Committee is composed of three independent directors, Messrs.
  Petrina (Chair), Sweeney and Myckatyn. The Nominating Committee has the responsibility
  for recommending to the Board the nominees to fill vacancies on the Board or
  to be proposed by any member of the Board as candidates for election as directors
  at the annual general meeting. The Nominating Committee also recommends to the
  Board a desirable balance of expertise among the Board members, seeks out possible
  candidates to fill Board positions and aids in attracting qualified candidates
  to the Board. In addition, the Nominating Committee’s responsibilities
  include reviewing and monitoring the orientation of new Board members; reviewing
  and approving officers’ directorships in other companies and reviewing
  directors’ relationships with outside entities with regard to potential
  conflicts of interest.

- Other
  The Board may from time to time appoint a special committee of one or more directors
  which committee may engage outside advisors at the Company’s expense in
  order to assist the committee in fulfilling its responsibilities.

6 D.          EMPLOYEES

As at June 30, 2005 the Company had five full time employees
  in Canada, four full time employees in Reno, 52 full time and 12 part time employees
  in El Salvador. There were 39 full time employees at the Andacollo Mine in Chile.
  The employees at Denton-Rawhide are not employees of the Company. The Company
  may employ additional part-time employees or consultants as required to assist
  with its ongoing exploratory work program in El Salvador or work on other acquired
  properties. The Company is not subject to any collective bargaining agreements
  and believes its relationship with employees to be good.

6 E.          SHARE
  OWNERSHIP

As at June 30, 2005 the share ownership in the Company of
  those persons listed in Item 6B above is as follows: Thomas Shrake, 77,100 shares;
  Catherine McLeod-Seltzer, 623,000 shares; Anthony Petrina, nil; William Myckatyn,
  49,660, shares; David Fagin, 50,000; Paul Sweeney, nil; John Norman, nil; Kathryn
  Church 300 shares and Barbara Henderson, 9,000. The shares held by the directors
  and management aggregate less than 1% of the Company’s issued and outstanding
  shares. Details of options on the Company’s shares held by each of the
  aforenamed persons are set out below. The aggregate number of options held represents
  approximately 4% of the Company’s share capital on a fully diluted basis.

Stock Option Plans

In connection with the amalgamation approved by shareholders
  of the Predecessor Companies on April 3, 2002, the TSX approved the rolling
  over of outstanding options, such options to be governed by the plan under which
  they were originally granted (“Pre-Amalgamation Options”). The TSX
  ruled that any Pre-Amalgamation Options that were surrendered, terminated or
  expired without exercise would not be available for the grant of new options.
  Pre-Amalgamation Options are outstanding exercisable to purchase up to 973,000
  common shares, representing less than 1% of the Company’s issued and outstanding
  share capital, at $0.29 expiring July 2006.

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47

Those persons listed in Item 6B above and other employees
  of the Company hold Pre-Amalgamation Options to purchase Common Shares of the
  Company, as at July 15, 2005, as follows:

|                          | Number of | Exercise Price |             
|------------------------- | --------- | -------------- | ------------
|                          | Common    | per Common     | Expiry Date 
|Optionees                 | Shares    | Share Cdn.$(1) | of Option   
|                          |           |                |             
|McLeod-Seltzer, Catherine | 441,000   | $0.29          | July 4, 2006
|                          |           |                |             
|Shrake, Thomas            | 387,000   | $0.29          | July 4, 2006
|                          |           |                |             
|Church, Kathryn           | 13,000    | $0.29          | July 4, 2006
|                          |           |                |             
|Henderson, Barbara        | 10,000    | $0.29          | July 4, 2006
|                          |           |                |             
|Employees/Others          | 122,000   | $0.29          | July 4, 2006
|                          |           |                |             
|TOTAL:                    | 973,000   |                |             

|(1) | Exercise prices were determined by the board of
        directors of the respective Predecessor Companies in accordance with the
        rules and policies of the TSX. All options were granted for a five year
        term and vested as to one-third of the options on the day of grant and
        one-third on each of the two subsequent anniversaries. All the Pre-Amalgamation
        Options are vested.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2002 the Compensation Committee of the Company reviewed
  and recommended to the Board of Directors adoption of the 2002 Incentive Stock
  Option and Bonus Plan (the “2002 Plan”) a new plan to govern all
  post-amalgamation options, which the Board approved. The shareholders subsequently
  approved the 2002 Plan on October 10, 2002. The 2002 Plan is divided into two
  components: a stock option component (“Option Plan”), under which
  up to 6,000,000 common shares are reserved for grant to eligible persons at
  the discretion of the directors from time to time, and a stock bonus component
  (“Bonus Plan”) under which up to 367,000 common shares are reserved
  for grant to eligible persons at the discretion of the directors from time to
  time. Under the terms of the 2002 Plan the exercise price of options is fixed
  as the closing price of the Company’s shares on the TSX on the day prior
  to grant

As of July 15, 2005, the following options are outstanding
  under the 2002 Plan as follows:

|                          | Number of | Exercise Price |               
|------------------------- | --------- | -------------- | --------------
|                          | Common    | per Common     | Expiry Date   
|Optionees                 | Shares    | Share Cdn.$(1) | Of Option     
|                          |           |                |               
|McLeod-Seltzer, Catherine | 420,000   | $0.62          | April 18, 2007
|                          | 200,000   | $0.85          | Oct. 08, 2008 
|                          | 200,000   | $0.75          | Feb.18, 2010  
|                          |           |                |               
|Shrake, Thomas            | 420,000   | $0.62          | April 18, 2007
|                          | 200,000   | $0.85          | Oct. 08, 2008 
|                          | 200,000   | $0.75          | Feb. 18, 2010 
|                          |           |                |               
|Petrina, Anthony          | 130,000   | $0.62          | April 18, 2007
|                          | 75,000    | $0.85          | Oct. 08, 2008 
|                          | 75,000    | $0.75          | Feb. 18, 2010 

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48

|                   | Number of | Exercise Price |               
|------------------ | --------- | -------------- | --------------
|                   | Common    | per Common     | Expiry Date   
|Optionees          | Shares    | Share Cdn.$(1) | Of Option     
|                   |           |                |               
|Myckatyn, William  | 130,000   | $0.62          | April 18, 2007
|                   | 75,000    | $0.85          | Oct. 08, 2008 
|                   | 75,000    | $0.75          | Feb.18, 2010  
|                   |           |                |               
|Sweeney, Paul B.   | 130,000   | $0.43          | July 23, 2008 
|                   | 75,000    | $0.85          | Oct. 08, 2008 
|                   | 75,000    | $0.75          | Feb. 18, 2010 
|                   |           |                |               
|Fagin, David       | 50,000    | $0.85          | Oct. 08, 2008 
|                   | 75,000    | $0.75          | Feb. 18, 2010 
|                   |           |                |               
|Norman, John       | 130,000   | $0.62          | April 18, 2007
|                   | 40,800    | $0.43          | July 23, 2008 
|                   | 20,000    | $0.85          | Oct. 08, 2008 
|                   | 75,000    | $0.75          | Feb. 18, 2010 
|                   |           |                |               
|Church, Kathryn    | 65,000    | $0.62          | April 18, 2007
|                   | 40,000    | $0.85          | Oct. 08, 2008 
|                   | 50,000    | $0.75          | Feb. 18, 2010 
|                   |           |                |               
|Henderson, Barbara | 65,000    | $0.62          | April 18, 2007
|                   | 40,000    | $0.85          | Oct. 08, 2008 
|                   | 75,000    | $0.75          | Feb. 18, 2010 
|                   |           |                |               
|Employees/Others   | 430,000   | $0.62          | April 18, 2007
|                   | 455,000   | $0.85          | Oct. 08, 2008 
|                   | 430,000   | $0.75          | Feb. 18, 2010 
|TOTAL:             | 4,520,800 |                |               

Generally the options vest cumulatively as to one-third on
  the grant date and one-third upon each of the following two anniversaries of
  the grant date. Options granted to non-management outside directors are vested
  100% at the issue date. Of the total options outstanding 1,161,933 are not vested
  as at July 15, 2005.

ITEM 7:          MAJOR
  SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7 A.          MAJOR
  SHAREHOLDERS

To the best of the knowledge and belief of the directors and
  senior officers of the Company, no persons or companies beneficially own, directly
  or indirectly or exercise control or direction over shares carrying more than
  5% of the voting rights attached to all outstanding shares of the Company as
  at June 30, 2005.

There has been no significant change in the percentage ownership
  held by the major shareholders during the past three years, except that (a)
  in or about December of 2003 Kinross Gold Corporation holding approximately
  17,606,049 common shares, representing approximately 22.4% of the issued and
  outstanding shares announced it had arranged to divest itself of its shareholding
  and subsequently sold all of its shareholdings; and (b) in or about May of 2004
  Dundee Precious Metals Inc. reduced its holdings of

---

49

approximately 7,827,258 common shares representing approximately
  9% of the Company’s issued and outstanding shares. Major shareholders
  of the Company do not have any different voting rights from other shareholders
  of the Company.

As of June 30, 2005, Computershare reported that there were
  81,239,494 common shares issued and outstanding. Of those common shares issued,
  11,050,916 shares were registered to United States residents to 157 holders
  of record.

To the best of management’s knowledge the Company is
  not directly or indirectly owned or controlled by another corporation, by any
  foreign government or by any other natural or legal person. There are no arrangements
  known the operation of which may at a subsequent date result in a change of
  control of the Company.

7 B.          RELATED
  PARTY TRANSACTIONS

The directors, senior officers and principal shareholders
  of the Company and associates or affiliates of the foregoing have had no material
  interest, direct or indirect, in any transactions in which the Company has participated
  within the three year period prior to the date hereof which will materially
  affect the Company or any of its subsidiaries, except as stated elsewhere in
  this Annual Report or as indicated below. Also see Items 4B, 6B and 6C.

There are no outstanding loans or guarantees made by the Company
  to or for the benefit of any of the directors or senior officers of the Company,
  any member beneficially owning shares carrying more than 10% of the voting rights
  attached to the shares of the Company nor an associate or affiliate of any of
  the foregoing persons, or any other persons, other than as specifically stated
  elsewhere in this document.

In connection with the amalgamation completed April 11, 2002,
  Ms. McLeod-Seltzer was a director of Dayton and a director and officer of PacRim
  and Mr. Myckatyn was a director of PacRim and a director and officer of Dayton.
  Mr. Myckatyn received a severance package totalling $0.56 million in accordance
  with his employment agreement, upon termination of his employment as President
  and CEO resulting from the amalgamation.

7 C.
  Not applicable.

ITEM 8:          FINANCIAL
  INFORMATION

8 A:          Consolidated
  Statements and Other Financial Information

See “Item 17” for details of the Company’s
  consolidated financial statements which have been prepared by independent auditors
  and are accompanied by audit reports, including comparative financial statements
  for the latest three financial years audited in accordance with a comprehensive
  body of auditing standards.

The financial year end of the Company is April 30.

Also see Item 5 Operating and Financial Review and Prospects.

The Company has not paid any dividends on its common shares
  since its incorporation. The Company has no present intention of paying dividends
  on its common shares as it anticipates that all available funds will be invested
  to finance the growth of its business.

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50

8 B:          Significant Changes

No significant changes have occurred since the date of the
  financial statements included in this Annual Report.

ITEM 9:          THE
  OFFER AND LISTING

9 A.          OFFER
  AND LISTING DETAILS

The Company’s post-amalgamation shares were called for
  trading on the TSX and AMEX on April 15, 2002 as “PMU”. Prior to
  April 15, 2002 Dayton’s shares traded as “DAY” on the TSX
  and AMEX and PacRim’s shares traded as “PFG” on the TSX. The
  price range of the Company’s Common Shares and prior to April 11, 2002,
  Dayton’s common shares on the TSX and the AMEX during the periods indicated
  below were as follows:

|Financial  Year  Ended                                                                                                                                                                                                        | Financial  Period(1)                                                                                                                                                                                                                                                                                                                               | TSX (2)(3)  (Cdn$)                                                                                                                                                                                                                            | AMEX (2)(3)  ($)                                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                    | High                                                                                                                                                                                                                                          | Low                                                                                                                                                                                                                                       
|Dec.2000  
      Dec.2001  
      Apr. 2002  
      Apr. 2003  
      Apr. 2004  
      Apr. 2004  
      Apr. 2005  
      Jan. 2005  
      Feb. 2005  
      Mar. 2005  
      Apr 2005  
      May 2005  
      June 2005 | Annual  
      Annual  
      Four Months(3)  
      Annual  
      Annual  
      First Quarter  
      Second Quarter  
      Third Quarter  
      Fourth Quarter  
      First Quarter  
      Second Quarter  
      Third Quarter  
      Fourth Quarter  
      Month  
      Month  
      Month  
      Month  
      Month  
      Month | 2.30  
      .68  
      1.40  
      1.46  
      2.39  
      0.62  
      1.15  
      2.39  
      1.75  
      1.08  
      1.00  
      0.89  
      0.96  
      0.70  
      0.80  
      0.96  
      0.83  
      0.69  
      0.85 | .23  
      .21  
      .37  
      .40  
      0.36  
      0.36  
      0.58  
      0.88  
      0.95  
      0.72  
      0.60  
      0.56  
      0.62  
      0.56  
      0.62  
      0.69  
      0.63  
      0.54  
      0.67

| | (1) | The fiscal year end of the Company was changed from
        December 31 to April 30 in 2002.                                                                      
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The trading prices for shares of Predecessor Company
        DAY are shown as the historical figures based on Dayton’s historical
        year end of December 31.
| | (3) | The shares of the Company were called for trading
        under the new symbol “PMU” on April 15, 2002. Historical prices
        are for Predecessor Company DAY.

Amex Corporate Governance

Section 110 of the AMEX company guide permits AMEX to consider
  the laws, customs and practices of foreign issuers in relaxing certain AMEX
  listing criteria, and to grant exemptions from AMEX listing criteria based on
  these considerations. A company seeking relief under these provisions is required
  to provide written certification from independent local counsel that the non-complying
  practice is not prohibited by home country law. A description of the significant
  ways in which the Company’s governance practices differ from those followed
  by domestic companies pursuant to AMEX standards is as follows:

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51

Shareholder Meeting Quorum Requirement:
  The AMEX minimum quorum requirement for a shareholder meeting is one-third of
  the outstanding shares of common stock. In addition, a company listed on AMEX
  is required to state its quorum requirement in its bylaws. The Company’s
  quorum requirement is set forth in its Articles. A quorum for a meeting of members
  of the Company is one person present who is a shareholder or who is a duly appointed
  proxyholder for one or more shareholders.

Proxy Delivery Requirement: AMEX
  requires the solicitation of proxies and delivery of proxy statements for all
  shareholder meetings, and requires that these proxies shall be solicited pursuant
  to a proxy statement that conforms to SEC proxy rules. The Company is a “foreign
  private issuer” as defined in Rule 3b-4 under the 1934 Act, and the equity
  securities of the Company are accordingly exempt from the proxy rules set forth
  in Sections 14(a), 14(b), 14(c) and 14(f) of the Securities Exchange Act of
  1934, as amended. The Company solicits proxies in accordance with applicable
  rules and regulations in Canada.

The foregoing is consistent with the laws, customs and practices
  in Canada.

9 B.          PLAN
  OF DISTRIBUTION

Not Applicable

9 C.          MARKETS

The Company’s Common Shares are listed and traded in
  Canada on the TSX under the symbol “PMU”. In addition, the Common
  Shares are listed and traded in the United States on the AMEX under the symbol
  “PMU”. The Company has received advice that its shares are listed
  and have traded since June 14, 2002 on the Berlin Stock Exchange under the symbol
  PRM, German Cusip Number 577332 and in the Regulated Unofficial Market (Freiverkehr)
  on the Frankfurt Stock Exchange on Xetra, the Deutsche Borse AG electronic trading
  system since May 31, 2002.

ITEM 10:          ADDITIONAL
  INFORMATION

10 A.          SHARE
  CAPITAL

Not applicable for Annual Report.

10 B.          MEMORANDUM
  AND ARTICLES OF ASSOCIATION

The Company was formed on April 11, 2002 (#645547) upon the
  amalgamation of Dayton and PacRim under the laws of the Province of British
  Columbia, Canada. The Company’s objects and purposes are unrestricted.

On March 29, 2004, the British Columbia legislature enacted
  the Business Corporations Act (the “New Act”) and repealed
  the Company Act (the “Former Act”), which previously governed
  the Company.

Under the New Act, a mandatory transition rollover to substitute
  a Notice of Articles for its Memorandum was completed by the Company effective
  July 26, 2004, which enabled the Company to alter its articles to be in line
  with the new provisions contained in the New Act. Subsequently, at the annual
  meeting of shareholders held September 22, 2004, shareholders approved removal
  of pre-existing company provisions relating to restrictions contained in the
  Former Act no longer required under the New Act, and

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52

approved new articles (the “New Articles”) by
  special resolutions approved by a three-quarter majority vote cast by those
  shareholders of the Company who, being entitled to do so, vote in person or
  by proxy at the Meeting in respect of such resolutions.

The Company’s Notice of Articles does not prescribe
  any extraordinary limits on the business or purpose of the Company.

Under the Articles, directors of the Company: 1) who hold
  a disclosable interest in a contract or transaction into which the Company has
  entered or proposes to enter are not entitled to vote on any directors’
  resolution to approve that contract or transaction, unless all the directors
  have a disclosable interest in that contract or transaction, in which case any
  or all of those directors may vote on such resolution; 2) are entitled to set
  their own compensation by resolution establishing the same and may be counted
  in the quorum at the meeting where such a transaction is considered for approval
  whether or not the director votes on all or any of the resolutions considered
  at the meeting; 3) may authorize the Company to borrow money in amounts, on
  the security, from the sources and issue bonds, debentures and other debt obligations,
  on terms and conditions they consider appropriate; guarantee the repayment of
  money; and mortgage, charge, grant a security interest in or give other security
  on the whole or any part of the present and future assets and undertaking of
  the Company; 4) are not required to retire on an age limit and 5) are not required
  to hold any share in the capital of the Company to become, act or continue to
  act as a director of the Company.

All of the authorized shares of common stock of the Company
  are of the same class and, once issued, rank equally as to dividends, voting
  powers, and participation in assets and in all other respects, on liquidation,
  dissolution or winding up of the Company, whether voluntary or involuntary,
  or any other distribution of the assets of the Company among its shareholders
  for the purpose of winding up its affairs after the Company has paid out it
  liabilities. The issued Common Shares are not subject to call or assessment
  rights or any pre-emptive or conversion rights. The holders of Common Shares
  are entitled to one vote for each Share on all matters to be voted by the shareholders.
  There are no provisions for redemption, purchase for cancellation, surrender
  or purchase funds.

The rights of the holders of issued shares of the Company
  may be altered only with the approval of the holders of 3⁄4 or more of
  the shares of the Company voted at a meeting of the shareholders of the Company.

General Meetings are to be held annually. All Directors are
  subject to re-election at each annual general meeting. Directors may call an
  extraordinary meeting of shareholders. All registered shareholders or persons
  who hold powers of attorney or proxies given to them by registered shareholders
  may attend at meetings of shareholders.

There are no limitations on the right to own securities, imposed
  by foreign law or by the charter or other constating document of the Company.
  There are no provisions in the Company’s Articles or charter documents
  that would have the effect of delaying, deferring or preventing a change in
  the control of the Company, or that would operate with respect to any proposed
  merger, acquisition or corporate restructuring involving the Company or any
  of its subsidiaries.

There are no provisions in the Company’s Articles requiring
  share ownership to be disclosed. Securities legislation in Canada requires that
  shareholder ownership must be disclosed once a person owns beneficially or has
  control or direction over greater than 10% of the issued shares of the Company.
  This threshold is higher than the 5% threshold under U.S. securities legislation
  at which shareholders must report their share ownership.

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53

There are no conditions imposed by the Company’s Articles
  governing changes in the capital where such conditions are more stringent that
  is required by the law of British Columbia. All common shareholders share equally
  in the profits of the Company.

10 C.          MATERIAL
  CONTRACTS

Other than contracts entered into in the ordinary course of
  business, as described in this Form 20F, neither the Company nor any member
  of the group, is a party to any material contracts within the two years preceding
  the publication of this document.

10 D.          EXCHANGE
  CONTROLS

Other than as provided in the Investment Canada Act (Canada)
  (the “Investment Act”), there are currently no limitations imposed
  by Canadian laws, decrees or regulations that restrict the import or export
  of capital, including foreign exchange controls, or that affect the remittance
  of dividends to non-resident holders of the Company’s securities. However,
  any such remittances of dividends paid to United States residents are subject
  to withholding tax at a rate equal to a maximum of 15% of the amount paid (see
  Item 10E - “Taxation”).

The following discussion summarizes the material features
  of the Investment Act, in its present form, for a non-resident of Canada who
  proposes to acquire Common Shares of the Company.

The Investment Act regulates the acquisition of control of
  a Canadian business by a “non-Canadian” as defined under the Investment
  Act. With respect to the Company, an acquisition of control is considered to
  be the acquisition of the majority of its Common Shares. However, if a non-Canadian
  acquires more than one-third of the voting shares of the Company, but less than
  a majority, there is a presumed acquisition of control unless it can be established
  that the Company is not controlled in fact by the acquirer. All acquisitions
  of control of a Canadian business are notifiable (which requires that a notification
  form be submitted to Investment Canada within thirty days after the implementation
  of the investment) unless the investment is reviewable. If the investment is
  reviewable, the investment may not be implemented until the Minister responsible
  for the Investment Act is, or has been deemed to be, satisfied that the investment
  is likely to be of net benefit to Canada.

Where either the acquirer is, or the Company is presently
  controlled by, a WTO investor (as that term is defined in the Investment Act),
  a direct acquisition of control of the Company will only be reviewable if the
  value of the Company’s assets, as shown on its audited financial statements
  for the most recently completed fiscal year, is equal to or greater than (Cdn)
  $223 million. This amount varies each year based on the rate of growth in
  Canadian gross domestic product. Other direct acquisitions of control are reviewable
  if the value of the assets of the Company, as calculated above, is equal to
  or greater than (Cdn) $5 million. The (Cdn) $5 million threshold for
  review also applies with respect to the acquisition of control of any Canadian
  business that provides any financial services or transportation services, is
  a cultural business, or is engaged in the production of uranium and owns an
  interest in or producing uranium property in Canada.

Indirect acquisitions of control (acquisitions of control
  of an entity which in turn controls the Company) are not reviewable under the
  Investment Act if the acquirer is a WTO investor or if the Company is controlled
  by a WTO investor. Otherwise, an indirect acquisition will be reviewable if
  the value of the Company’s assets is $50 million or more, or if the
  value of the Company’s assets acquired in the total transaction is in
  Canada or the acquisition is not effected through the acquisition of control
  of a foreign corporation.

---

54

Certain types of transactions are exempt from application
  of the Investment Act including acquisitions of control of the Company:

|(a) | by the acquisition of voting shares or the voting
        interests by any person in the ordinary course of that person’s
        business as a trader or dealer in securities;                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | in connection with the realization of security granted
        for a loan or other financial assistance and not for any purpose related
        to the Investment Act;                                                                      
|   
|(c) | for facilitating its financing and not for any purpose
        related to the Investment Act on the condition that the acquirer divest
        control within two years after control was acquired; and                                     
|   
|(d) | by reason of an amalgamation, merger, consolidation
        or corporate reorganization following which the ultimate or indirect control
        in fact of the Company through the ownership of voting interests remains
        unchanged.

There are currently no limitations on the right of foreign
  or non-resident owners of Common Shares to hold or vote such securities imposed
  by Canadian law or the Company’s charter or other constituent documents.

There are no family relationships between any of the directors
  and executive officers of the Company.

10 E.          TAXATION

Certain Canadian Federal Income Tax Consequences

The discussion under this heading summarizes the material
  Canadian federal income tax consequences of acquiring, holding and disposing
  of Common Shares of the Company for a shareholder of the Company who is not
  resident in Canada but is resident in the United States and who will acquire
  and hold Common Shares of the Company as capital property for the purpose of
  the Income Tax Act (Canada) (the “Tax Act”). This summary does not
  apply to a shareholder who carries on business in Canada through a “permanent
  establishment” situated in Canada or performs independent personal services
  in Canada through a fixed base in Canada if the shareholder’s holding
  in the Company is effectively connected with such permanent establishment or
  fixed base.

This summary is based on the provisions of the Tax Act and
  the regulations thereunder and on the Company’s understanding of the administrative
  practices of Canada Revenue Agency and takes into account all specific proposals
  to amend the Tax Act or regulations made by the Minister of Finance of Canada
  to April 30, 2005. It has been assumed that there will be no other relevant
  amendment of any governing law although no assurance can be given in this respect.
  This discussion is general only and is not a substitute for independent advice
  from a shareholder’s own Canadian and U.S. tax advisors.

The provisions of the Tax Act are subject to income tax treaties
  to which Canada is a party, including the Canada-United States Income Tax Convention
  (1980) (the “Convention”) and the Protocols to the Convention.

Dividends on Common Shares

Under the Tax Act, a non-resident of Canada is generally subject
  to Canadian withholding tax at the rate of 25% on dividends paid or deemed to
  have been paid to him by a corporation resident in Canada. The Convention limits
  the rate to 15% if the shareholder is resident in the United States and the
  dividends are

---

55

beneficially owned by and paid to him, and to 5% if the shareholder
  is a corporation that beneficially owns at least 10% of the voting shares of
  the payor corporation.

The Convention generally exempts from Canadian income tax
  dividends paid to a religious, scientific, literary, educational or charitable
  organization or to an organization constituted and operated exclusively to administer
  a pension, retirement or employee benefit fund or plan, if the organization
  is resident in the United States and is exempt from income tax under the laws
  of the United States.

The tax payable on dividends is to be withheld at source by
  the company or personnel acting on its behalf. The Company is liable for the
  amount of the tax if it fails to so withhold. The taxpayer is liable in any
  event if the Company fails to withhold.

Disposition of Common Shares

Under the Tax Act, a taxpayer’s capital gain or capital
  loss from a disposition of Common Shares of the Company is the amount, if any,
  by which his proceeds of disposition exceed (or are exceeded by, respectively)
  the aggregate of his adjusted cost base of the share and reasonable expenses
  of disposition. One-half of a capital gain (the “taxable capital gain”)
  is included in income, and one-half of a capital loss in a year (the “allowable
  capital loss”) is deductible from taxable capital gains realized in the
  same year. The amount by which a shareholder’s allowable capital loss
  exceeds the taxable capital gain in a year may be deducted from a taxable capital
  gain realized by the shareholder in the year or in the three previous or any
  subsequent year, subject to certain restrictions in the case of a corporate
  shareholder.

In the case of a shareholder that is a corporation, the amount
  of any capital loss otherwise determined may be reduced, in certain circumstances,
  by the amount of dividends previously received in respect of the shares disposed
  of, unless the corporation owned the shares for at least 365 days prior to sustaining
  the loss and (together with corporations, persons and other entities with whom
  the corporation was not dealing at arm’s length) did not, at the time
  the dividends were received, own more than 5% of the shares of any class of
  the capital stock of the corporation from which the dividend was received. These
  loss limitation rules may also apply where a corporation is a member of a partnership
  or a beneficiary of a trust that owned the shares disposed of.

A non-resident of Canada is not subject to tax under the Tax
  Act in respect of a capital gain realized upon the disposition of shares unless
  the shares represent “taxable Canadian property”. Common Shares
  of the Company will not generally constitute taxable Canadian property. Common
  Shares of the Company will constitute taxable Canadian property of a shareholder
  at a particular time if the shareholder holds the shares as “capital property”
  and used the shares in carrying on a business in Canada, or if at any time in
  the five years immediately preceding the disposition the shareholder owned,
  either alone or with persons with whom the shareholder did not deal at arm’s
  length, 25% or more of the issued shares of any class of the capital stock of
  the Company.

Where a United States resident realizes a capital gain on
  a disposition of shares that constitute “taxable Canadian property”,
  the Convention relieves the United States resident from liability for Canadian
  tax on such capital gains unless:

|(a) | the value of the shares is derived principally from
        “real property” in Canada, including the right to explore
        for or exploit natural resources and rights to amounts computed by reference
        to production,
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | the shareholder was resident in Canada for 120 months
        during any period of 20 consecutive years preceding the disposition, was
        resident in Canada at any time during the 10 years immediately                    

---

56

|    | preceding the disposition and the shares were owned
        by him when he ceased to be resident in Canada, or                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(c) | the shares formed part of the business property
        of a “permanent establishment” or pertained to a fixed base
        used for the purpose of performing independent personal services that
        the shareholder has or had in Canada within the 12 months preceding the
        disposition.

At the present time the value of the Common Shares of the
  Company is not derived principally from real property in Canada.

Notwithstanding the potential exemption from Canadian tax
  provided under the Convention, where a nonresident of Canada disposes of shares
  of Common Shares of the Company that are “taxable Canadian property”,
  the non-resident is required to file a Canadian income tax return in respect
  of any such dispositions.

U.S. Federal Income Tax Consequences

The following is a summary of the anticipated material U.S.
  federal income tax consequences to a U.S. Holder (as defined below) arising
  from and relating to the acquisition, ownership, and disposition of common shares
  of the Company (“Common Shares”).

This summary is for general information purposes only and
  does not purport to be a complete analysis or listing of all potential U.S.
  federal income tax consequences that may apply to a U.S. Holder as a result
  of the acquisition, ownership, and disposition of Common Shares. In addition,
  this summary does not take into account the individual facts and circumstances
  of any particular U.S. Holder that may affect the U.S. federal income tax consequences
  of the acquisition, ownership, and disposition of Common Shares. Accordingly,
  this summary is not intended to be, and should not be construed as, legal or
  U.S. federal income tax advice with respect to any U.S. Holder. Each U.S. Holder
  should consult its own financial advisor, legal counsel, or accountant regarding
  the U.S. federal, U.S. state and local, and foreign tax consequences of the
  acquisition, ownership, and disposition of Common Shares.

Scope of this Disclosure

Authorities

This summary is based on the Internal Revenue Code of 1986,
  as amended (the “Code”), Treasury Regulations (whether final, temporary,
  or proposed), published rulings of the Internal Revenue Service (“IRS”),
  published administrative positions of the IRS, the Convention Between Canada
  and the United States of America with Respect to Taxes on Income and on Capital,
  signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”),
  and U.S. court decisions that are applicable and, in each case, as in effect
  and available, as of the date of this Annual Report. Any of the authorities
  on which this summary is based could be changed in a material and adverse manner
  at any time, and any such change could be applied on a retroactive basis. This
  summary does not discuss the potential effects, whether adverse or beneficial,
  of any proposed legislation that, if enacted, could be applied on a retroactive
  basis.

U.S. Holders

For purposes of this summary, a “U.S. Holder”
  is a beneficial owner of Common Shares that, for U.S. federal income tax purposes,
  is (a) an individual who is a citizen or resident of the U.S., (b) a corporation,
  or any other entity classified as a corporation for U.S. federal income tax
  purposes, that is created or organized in or under the laws of the U.S. or any
  state in the U.S., including the District of Columbia,

---

57

(c) an estate if the income of such estate is subject to U.S.
  federal income tax regardless of the source of such income, or (d) a trust if
  (i) such trust has validly elected to be treated as a U.S. person for U.S. federal
  income tax purposes or (ii) a U.S. court is able to exercise primary supervision
  over the administration of such trust and one or more U.S. persons have the
  authority to control all substantial decisions of such trust.

Non-U.S. Holders

For purposes of this summary, a “non-U.S. Holder”
  is a beneficial owner of Common Shares other than a U.S. Holder. This summary
  does not address the U.S. federal income tax consequences of the acquisition,
  ownership, and disposition of Common Shares to non-U.S. Holders. Accordingly,
  a non-U.S. Holder should consult its own financial advisor, legal counsel, or
  accountant regarding the U.S. federal, U.S. state and local, and foreign tax
  consequences (including the potential application of and operation of any tax
  treaties) of the acquisition, ownership, and disposition of Common Shares.

U.S. Holders Subject to Special U.S. Federal Income Tax
  Rules Not Addressed

This summary does not address the U.S. federal income tax
  consequences of the acquisition, ownership, and disposition of Common Shares
  to U.S. Holders that are subject to special provisions under the Code, including
  the following U.S. Holders: (a) U.S. Holders that are tax-exempt organizations,
  qualified retirement plans, individual retirement accounts, or other tax-deferred
  accounts; (b) U.S. Holders that are financial institutions, insurance companies,
  real estate investment trusts, or regulated investment companies; (c) U.S. Holders
  that are broker-dealers, dealers, or traders in securities or currencies that
  elect to apply a mark-to-market accounting method; (d) U.S. Holders that have
  a “functional currency” other than the U.S. dollar; (e) U.S. Holders
  that are liable for the alternative minimum tax under the Code; (f) U.S. Holders
  that own Common Shares as part of a straddle, hedging transaction, conversion
  transaction, constructive sale, or other arrangement involving more than one
  position; (g) U.S. Holders that acquired Common Shares in connection with the
  exercise of employee stock options or otherwise as compensation for services;
  (h) U.S. Holders that hold Common Shares other than as a capital asset within
  the meaning of Section 1221 of the Code; or (i) U.S. Holders that own, directly
  or indirectly, 10% or more, by voting power or value, of the outstanding shares
  of the Company. U.S. Holders that are subject to special provisions under the
  Code, including U.S. Holders described immediately above, should consult their
  own financial advisor, legal counsel or accountant regarding the U.S. federal,
  U.S. state and local, and foreign tax consequences of the acquisition, ownership,
  and disposition of Common Shares.

If an entity that is classified as partnership (or “pass-through”
  entity) for U.S. federal income tax purposes holds Common Shares, the U.S. federal
  income tax consequences to such partnership (or “pass-through” entity)
  and the partners of such partnership (or owners of such “pass-through”
  entity) generally will depend on the activities of the partnership (or “pass-through”
  entity) and the status of such partners (or owners). Partners of entities that
  are classified as partnerships (or owners of “pass-through” entities)
  for U.S. federal income tax purposes should consult their own financial advisor,
  legal counsel or accountant regarding the U.S. federal income tax consequences
  of the acquisition, ownership, and disposition of Common Shares.

Tax Consequences Other than U.S. Federal Income Tax Consequences
  Not Addressed

This summary does not address the U.S. state and local, U.S.
  federal estate and gift, or foreign tax consequences to U.S. Holders of the
  acquisition, ownership, and disposition of Common Shares. Each U.S. Holder should
  consult its own financial advisor, legal counsel, or accountant regarding the
  U.S. state and local, U.S. federal estate and gift, and foreign tax consequences
  of the acquisition, ownership, and disposition of Common Shares. (See “Taxation—Certain
  Canadian Federal Income Tax Consequences” above).

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58

U.S. Federal Income Tax Consequences of the Acquisition,
  Ownership, and Disposition of Common Shares

Distributions on Common Shares

General Taxation of Distributions

A U.S. Holder that receives a distribution, including a constructive
  distribution, with respect to the Common Shares will be required to include
  the amount of such distribution in gross income as a dividend (without reduction
  for any Canadian income tax withheld from such distribution) to the extent of
  the current or accumulated “earnings and profits” of the Company.
  To the extent that a distribution exceeds the current and accumulated “earnings
  and profits” of the Company, such distribution will be treated (a) first,
  as a tax-free return of capital to the extent of a U.S. Holder’s tax basis
  in the Common Shares and, (b) thereafter, as gain from the sale or exchange
  of such Common Shares. (See more detailed discussion at “Disposition of
  Common Shares” below).

Reduced Tax Rates for Certain Dividends

For taxable years beginning after December 31, 2002 and before
  January 1, 2009, a dividend paid by the Company generally will be taxed at the
  preferential tax rates applicable to long-term capital gains if (a) the Company
  is a “qualified foreign corporation” (as defined below), (b) the
  U.S. Holder receiving such dividend is an individual, estate, or trust, and
  (c) such dividend is paid on Common Shares that have been held by such U.S.
  Holder for at least 61 days during the 121-day period beginning 60 days before
  the “ex-dividend date” (i.e., the first date that a purchaser of
  such Common Shares will not be entitled to receive such dividend).

The Company generally will be a “qualified foreign corporation”
  under Section 1(h)(11) of the Code (a “QFC”) if (a) the Company
  is incorporated in a possession of the U.S., (b) the Company is eligible for
  the benefits of the Canada-U.S. Tax Convention, or (c) the Common Shares are
  readily tradable on an established securities market in the U.S. However, even
  if the Company satisfies one or more of such requirements, the Company will
  not be treated as a QFC if the Company is a “passive foreign investment
  company” (as defined below) for the taxable year during which the Company
  pays a dividend or for the preceding taxable year. In 2003, the U.S. Department
  of the Treasury (the “Treasury”) and the IRS announced that they
  intended to issue Treasury Regulations providing procedures for a foreign corporation
  to certify that it is a QFC. Although these Treasury Regulations were not issued
  in 2004, the Treasury and the IRS have confirmed their intention to issue these
  Treasury Regulations. It is expected that these Treasury Regulations will obligate
  persons required to file information returns to report a distribution with respect
  to a foreign security issued by a foreign corporation as a dividend from a QFC
  if the foreign corporation has, among other things, certified under penalties
  of perjury that the foreign corporation was not a “passive foreign investment
  company” for the taxable year during which the foreign corporation paid
  the dividend or for the preceding taxable year.

As discussed below, the Company does not believe that it was
  a “passive foreign investment company” for the taxable year ended
  April 30, 2005. (See more detailed discussion at “Additional Rules that
  May Apply to U.S. Holders” below). However, there can be no assurance
  that the IRS will not challenge the determination made by the Company concerning
  its “passive foreign investment company” status or that the Company
  will not be a “passive foreign investment company” for the current
  or any future taxable year. Accordingly, although the Company expects that it
  may be a QFC, there can be no assurances that

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59

the IRS will not challenge the determination made by the Company
  concerning its QFC status, that the Company will be a QFC for the current or
  any future taxable year, or that the Company will be able to certify that it
  is a QFC in accordance with the certification procedures issued by the Treasury
  and the IRS.

If the Company is not a QFC, a dividend paid by the Company
  to a U.S. Holder, including a U.S. Holder that is an individual, estate, or
  trust, generally will be taxed at ordinary income tax rates (and not at the
  preferential tax rates applicable to long-term capital gains). The dividend
  rules are complex, and each U.S. Holder should consult its own financial advisor,
  legal counsel, or accountant regarding the dividend rules.

Distributions Paid in Foreign Currency

The amount of a distribution paid to a U.S. Holder in foreign
  currency generally will be equal to the U.S. dollar value of such distribution
  based on the exchange rate applicable on the date of receipt. A U.S. Holder
  that does not convert foreign currency received as a distribution into U.S.
  dollars on the date of receipt generally will have a tax basis in such foreign
  currency equal to the U.S. dollar value of such foreign currency on the date
  of receipt. Such a U.S. Holder generally will recognize ordinary income or loss
  on the subsequent sale or other taxable disposition of such foreign currency
  (including an exchange for U.S. dollars).

Dividends Received Deduction

Dividends paid on the Common Shares generally will not be
  eligible for the “dividends received deduction.” The availability
  of the dividends received deduction is subject to complex limitations that are
  beyond the scope of this discussion, and a U.S. Holder that is a corporation
  should consult its own financial advisor, legal counsel, or accountant regarding
  the dividends received deduction.

Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other
  taxable disposition of Common Shares in an amount equal to the difference, if
  any, between (a) the amount of cash plus the fair market value of any property
  received and (b) such U.S. Holder’s tax basis in the Common Shares sold
  or otherwise disposed of. Any such gain or loss generally will be capital gain
  or loss, which will be long-term capital gain or loss if the Common Shares are
  held for more than one year. Gain or loss recognized by a U.S. Holder on the
  sale or other taxable disposition of Common Shares generally will be treated
  as “U.S. source” for purposes of applying the U.S. foreign tax credit
  rules. (See more detailed discussion at “Foreign Tax Credit” below).

Preferential tax rates apply to long-term capital gains of
  a U.S. Holder that is an individual, estate, or trust. There are currently no
  preferential tax rates for long-term capital gains of a U.S. Holder that is
  a corporation. Deductions for capital losses and net capital losses are subject
  to complex limitations. For a U.S. Holder that is an individual, estate, or
  trust, capital losses may be used to offset capital gains and up to U.S.$3,000
  of ordinary income. An unused capital loss of a U.S. Holder that is an individual,
  estate, or trust generally may be carried forward to subsequent taxable years,
  until such net capital loss is exhausted. For a U.S. Holder that is a corporation,
  capital losses may be used to offset capital gains, and an unused capital loss
  generally may be carried back three years and carried forward five years from
  the year in which such net capital loss is recognized.

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60

Foreign Tax Credit

A U.S. Holder who pays (whether directly or through withholding)
  Canadian income tax with respect to dividends paid on the Common Shares generally
  will be entitled, at the election of such U.S. Holder, to receive either a deduction
  or a credit for such Canadian income tax paid. Generally, a credit will reduce
  a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar
  basis, whereas a deduction will reduce a U.S. Holder’s income subject
  to U.S. federal income tax. This election is made on a year-by-year basis and
  applies to all foreign taxes paid (whether directly or through withholding)
  by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including
  the general limitation that the credit cannot exceed the proportionate share
  of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s
  “foreign source” taxable income bears to such U.S. Holder’s
  worldwide taxable income. In applying this limitation, a U.S. Holder’s
  various items of income and deduction must be classified, under complex rules,
  as either “foreign source” or “U.S. source.” In addition,
  this limitation is calculated separately with respect to specific categories
  of income (including “passive income,” “high withholding tax
  interest,” “financial services income,” “general income,”
  and certain other categories of income). Dividends paid by the Company generally
  will constitute “foreign source” income and generally will be categorized
  as “passive income” or, in the case of certain U.S. Holders, “financial
  services income.” However, for taxable years beginning after December
  31, 2006, the foreign tax credit limitation categories are reduced to “passive
  income” and “general income” (and the other categories of
  income, including “financial services income,” are eliminated).
  The foreign tax credit rules are complex, and each U.S. Holder should consult
  its own financial advisor, legal counsel, or accountant regarding the foreign
  tax credit rules.

Information Reporting; Backup Withholding Tax

Payments made within the U.S., or by a U.S. payor or U.S.
  middleman, of dividends on, and proceeds arising from certain sales or other
  taxable dispositions of, Common Shares generally will be subject to information
  reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a)
  fails to furnish such U.S. Holder’s correct U.S. taxpayer identification
  number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification
  number, (c) is notified by the IRS that such U.S. Holder has previously failed
  to properly report items subject to backup withholding tax, or (d) fails to
  certify, under penalty of perjury, that such U.S. Holder has furnished its correct
  U.S. taxpayer identification number and that the IRS has not notified such U.S.
  Holder that it is subject to backup withholding tax. However, U.S. Holders that
  are corporations generally are excluded from these information reporting and
  backup withholding tax rules. Any amounts withheld under the U.S. backup withholding
  tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal
  income tax liability, if any, or will be refunded, if such U.S. Holder furnishes
  required information to the IRS. Each U.S. Holder should consult its own financial
  advisor, legal counsel, or accountant regarding the information reporting and
  backup withholding tax rules.

Additional Rules that May Apply to U.S. Holders

If the Company is a “controlled foreign corporation”
  or a “passive foreign investment company” (each as defined below),
  the preceding sections of this summary may not describe the U.S. federal income
  tax consequences to U.S. Holders of the acquisition, ownership, and disposition
  of Common Shares.

Controlled Foreign Corporation

The Company generally will be a “controlled foreign
  corporation” under Section 957 of the Code (a “CFC”) if more
  than 50% of the total voting power or the total value of the outstanding shares
  of the Company is owned, directly or indirectly, by citizens or residents of
  the U.S., domestic partnerships, domestic corporations, domestic estates, or
  domestic trusts (each as defined in Section 7701(a)(30) of the Code), each of
  which own, directly or indirectly, 10% or more of the total voting power of
  the outstanding shares of the Company (a “10% Shareholder”).

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61

If the Company is a CFC, a 10% Shareholder generally will
  be subject to current U.S. federal income tax with respect to (a) such 10% Shareholder’s
  pro rata share of the “subpart F income” (as defined in Section
  952 of the Code) of the Company and (b) such 10% Shareholder’s pro rata
  share of the earnings of the Company invested in “United States property”
  (as defined in Section 956 of the Code). In addition, under Section 1248 of
  the Code, any gain recognized on the sale or other taxable disposition of Common
  Shares by a U.S. Holder that was a 10% Shareholder at any time during the five-year
  period ending with such sale or other taxable disposition generally will be
  treated as a dividend to the extent of the “earnings and profits”
  of the Company that are attributable to such Common Shares. If the Company is
  both a CFC and a “passive foreign investment company” (as defined
  below), the Company generally will be treated as a CFC (and not as a “passive
  foreign investment company”) with respect to any 10% Shareholder.

The Company does not believe that it has previously been,
  or currently is, a CFC. However, there can be no assurance that the Company
  will not be a CFC for the current or any future taxable year.

Passive Foreign Investment Company

The Company generally will be a “passive foreign investment
  company” under Section 1297 of the Code (a “PFIC”) if, for
  a taxable year, (a) 75% or more of the gross income of the Company for such
  taxable year is passive income or (b) 50% or more of the assets held by the
  Company either produce passive income or are held for the production of passive
  income, based on the fair market value of such assets (or on the adjusted tax
  basis of such assets, if the Company is not publicly traded and either is a
  “controlled foreign corporation” or makes an election). “Passive
  income” includes, for example, dividends, interest, certain rents and
  royalties, certain gains from the sale of stock and securities, and certain
  gains from commodities transactions.

For purposes of the PFIC income test and asset test described
  above, if the Company owns, directly or indirectly, 25% or more of the total
  value of the outstanding shares of another foreign corporation, the Company
  will be treated as if it (a) held a proportionate share of the assets of such
  other foreign corporation and (b) received directly a proportionate share of
  the income of such other foreign corporation. In addition, for purposes of the
  PFIC income test and asset test described above, “passive income”
  does not include any interest, dividends, rents, or royalties that are received
  or accrued by the Company from a “related person” (as defined in
  Section 954(d)(3) of the Code), to the extent such items are properly allocable
  to the income of such related person that is not passive income.

If the Company is a PFIC, the U.S. federal income tax consequences
  to a U.S. Holder of the acquisition, ownership, and disposition of Common Shares
  will depend on whether such U.S. Holder makes an election to treat the Company
  as a “qualified electing fund” or “QEF” under Section
  1295 of the Code (a “QEF Election”) or a mark-to-market election
  under Section 1296 of the Code (a “Mark-to-Market Election”). A
  U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election
  will be referred to in this summary as a “Non-Electing U.S. Holder.”

Under Section 1291 of the Code, any gain recognized on the
  sale or other taxable disposition of Common Shares, and any “excess distribution”
  (as defined in Section 1291(b) of the Code) paid on the Common Shares, must
  be ratably allocated to each day in a Non-Electing U.S. Holder’s holding
  period for the Common Shares. The amount of any such gain or excess distribution
  allocated to prior years of such Non-Electing U.S. Holder’s holding period
  for the Common Shares generally will be subject to U.S. federal income tax at
  the highest tax applicable to ordinary income in each such prior year. A Non-Electing
  U.S. Holder will be required to pay interest on the resulting tax liability
  for each such prior year, calculated as if such tax liability had been due in
  each such prior year.

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62

A U.S. Holder that makes a QEF Election generally will not
  be subject to the rules of Section 1291 of the Code discussed above. However,
  a U.S. Holder that makes a QEF Election generally will be subject to U.S. federal
  income tax on such U.S. Holder’s pro rata share of (a) the “net
  capital gain” of the Company, which will be taxed as long-term capital
  gain to such U.S. Holder, and (b) and the “ordinary earnings” of
  the Company, which will be taxed as ordinary income to such U.S. Holder. A U.S.
  Holder that makes a QEF Election will be subject to U.S. federal income tax
  on such amounts for each taxable year in which the Company is a PFIC, regardless
  of whether such amounts are actually distributed to such U.S. Holder by the
  Company.

A U.S. Holder that makes a Mark-to-Market Election generally
  will not be subject to the rules of Section 1291 of the Code discussed above.
  A U.S. Holder may make a Mark-to-Market Election only if the Common Shares are
  “marketable stock” (as defined in Section 1296(e) of the Code).
  A U.S. Holder that makes a Mark-to-Market Election will include in gross income,
  for each taxable year in which the Company is a PFIC, an amount equal to the
  excess, if any, of (a) the fair market value of the Common Shares as of the
  close of such taxable year over (b) such U.S. Holder’s tax basis in such
  Common Shares. A U.S. Holder that makes a Mark-to-Market Election will, subject
  to certain limitations, be allowed a deduction in an amount equal to the excess,
  if any, of (a) such U.S. Holder’s adjusted tax basis in the Common Shares
  over (b) the fair market value of such Common Shares as of the close of such
  taxable year.

The Company does not believe that it was a PFIC for the taxable
  year ended April 30, 2005. There can be no assurance, however, that the IRS
  will not challenge the determination made by the Company concerning its PFIC
  status or that the Company will not be a PFIC for the current or any future
  taxable year.

The PFIC rules are complex, and each U.S. Holder should consult
  its own financial advisor, legal counsel, or accountant regarding the PFIC rules
  and how the PFIC rules may affect the U.S. federal income tax consequences of
  the acquisition, ownership, and disposition of Common Shares.

10 F.         
  DIVIDENDS AND PAYING AGENTS

Not applicable.

10 G.          STATEMENT
  BY EXPERTS

Not applicable.

10 H.          DOCUMENTS
  ON DISPLAY

The Company is a reporting company under the Securities Exchange
  Act of 1934, as amended (the “Exchange Act”) and is a “foreign
  private issuer” as defined in the Exchange Act. A foreign private issuer
  is exempt from the provisions of the Exchange Act which prescribe the furnishing
  and content of proxy statements to shareholders and relating to short swing
  profits reporting and liability. Readers may review a copy of the Company’s
  filings with the U.S. Securities and Exchange Commission (“the “SEC”),
  including exhibits and schedules filed with it, at the SEC's public reference
  facilities in 100F Street, NE, Washington, D.C. 20549. Readers may also obtain
  copies of such materials from the Public Reference Section of the SEC, 100F
  Street, NE, Washington, D.C. 20549, at prescribed rates. Readers may call the
  SEC at 1-800-SEC-0330 for further information on the public reference rooms.
  The SEC maintains a Web site

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63

(http://www.sec.gov) that contains reports, submissions and
  other information regarding registrants that file electronically with the SEC.
  The Company has only recently become subject to the requirement to file electronically
  through the EDGAR system most of its securities documents, including registration
  statements under the Securities Act of 1933, as amended and registration statements,
  reports and other documents under the Securities Exchange Act of 1934, as amended.

The Company is required to file financial statements and other
  information with the Securities Commissions in the Provinces of Alberta, British
  Columbia, Manitoba, New Brunswick, Newfoundland, Ontario, Prince Edward Island,
  and Saskatchewan,electronically through the Canadian System for Electronic
  Document Analysis and Retrieval (SEDAR) which can be viewed at www.sedar.com.

Copies of any documents referred to in this annual report
  and filed with the SEC can be viewed at the Company’s head office during
  normal business hours by giving 48 hours notice to the Corporate Secretary.

10 I.          SUBSIDIARY
  INFORMATION

Not required.

ITEM 11:QUANTITATIVE
  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Gold Price

The Company’s primary business is the acquisition and
  development of gold properties and its revenue to date has almost entirely been
  derived from proceeds from, or related, to the sale of gold. See “Risk
  Factors - Metal Price Volatility”. Gold prices are subject to significant
  volatility and these changes, to the extent that the Company’s production
  is unhedged, can significantly affect the Company’s profitability and
  cash flow. Gold prices declined steadily since the latter part of 1996, culminating
  in August 1999 with the lowest price in twenty years, and until spring of 2002
  essentially remained below $300 per ounce. Each ten percent change in the
  price of gold from a gold price of approximately $390 per ounce will change
  the Company’s projected annual revenues by $760,500, and, each ten
  percent change in the price of silver from approximately $6.50 per ounce
  will change projected annual revenues by $84,500. Over the past financial
  year the price of gold has ranged between $388 and $455 per ounce.

The Company may utilize commodity instruments for other than
  trading purposes to protect the selling price of a portion of its gold production.
  The Company has historically used a combination of puts and calls, as part of
  this hedging program. The proceeds derived from writing (selling) the calls
  have at times paid for the puts, and at other times puts have been closed out
  and the proceeds used to purchase further puts. The market risk to the Company’s
  cash flow of the put instruments relates to the possible failure of the counter-parties
  to honour their commitment to purchase the gold when the put price exceeds the
  appropriate spot price at maturity. The counter-parties to the Company’s
  put contracts are, however, large international credit worthy institutions.
  The market risk to the Company of its gold call contracts relate to the possibility
  that the Company may not produce sufficient gold at the appropriate time to
  meet the call obligations should they arise. Currently, there are no puts or
  calls outstanding.

Interest Rate

The Company’s only material variable interest rate obligations
  relate to its investment of cash balances including those amounts included as
  current assets and the principal amounts residing in the reclamation trust fund.

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64

Foreign Currency

Other than the proceeds derived from the exercise of stock
  options which are received in Canadian dollars, the Company’s revenue
  and most of its operating costs are derived in, or based on, U.S. dollar amounts.
  Only the Company’s Canadian head office corporate general and administration
  costs are denominated in a currency other than the U.S. dollar and therefore
  the effect of a change in the Canadian/U.S. dollar exchange rate would be immaterial.

Impact of Price Increases on Construction Items

The amount of capital costs associated with the development
  of a mining property is adversely impacted by escalations in the price of items
  related to construction, including steel, fuel, concrete and other construction
  consumables. Such price escalations are caused by numerous factors beyond the
  Company’s control.

ITEM 12:          DESCRIPTION
  OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable

ITEM 13:         
  DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES

Not applicable.

ITEM 14:MATERIAL
  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable

ITEM 15:          CONTROLS
  AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. The
  Company maintains a small head office staff which because of its size precludes
  the functioning of all internal controls, most notably division of duties. To
  compensate for this situation management through its Chief Financial Officer
  and Disclosure Policy performs a thorough review of any and all financial information
  disclosed to the public markets. In addition, the Company’s audit committee
  reviews and recommends to the Board approval of any and all financial information
  reviewed and referred to it by management for disclosure to the public markets.
  The Company’s Chief Executive Officer and Chief Financial Officer have
  evaluated the effectiveness of the Company’s disclosure controls and procedures
  (as such term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange
  Act of 1934, as amended (the “Exchange Act”)) as of the end of the
  period covered by this annual report (the “Evaluation Date”). Based
  on such evaluation, such officers have concluded that, as of the Evaluation
  Date, the Company’s disclosure controls and procedures are effective in
  alerting them on a timely basis to material information relating to the Company
  required to be included in our reports filed or submitted under the Exchange
  Act.

Changes in Internal Controls over Financial Reporting.
  During the most recent fiscal year, there have not been any significant changes
  in the Company’s internal controls over financial reporting or in other
  factors that have materially affected, or are reasonably likely to materially
  affect, our internal controls over financial reporting.

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|ITEM 16: | AUDIT COMMITTEE FINANCIAL EXPERT;
        CODE OF ETHICS; PRINCIPAL ACCOUNTANT FEES AND SERVICES, EXEMPTIONS
        FROM LISTING STANDARDS FOR AUDIT COMMITTEES; PURCHASES OF EQUITY SECURITIES
        BY THE ISSUER AND AFFILIATED PURCHASERS
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16 A.          AUDIT
  COMMITTEE FINANCIAL EXPERT

Messrs. David Fagin and Paul Sweeney are both financial experts.
  As financial experts they have an understanding of generally accepted accounting
  principles and financial statements; are able to assess the general application
  of accounting principles in connection with the accounting for estimates, accruals
  and reserves; have experience preparing, auditing, analyzing or evaluating financial
  statements that entail accounting issues of equal complexity to the Company’s
  financial statements (or actively supervising another person who did so); have
  an understanding of internal controls and procedures for financial reporting
  and an understanding of audit committee functions. Messrs. Fagin and Sweeney
  are both independent under the current audit committee standards of AMEX applicable
  to the Company.

Mr. Fagin does not have an accounting designation; instead
  his expertise is derived from his high level involvement in the financial matters
  of public corporations almost continuously for at least 35 years. Mr. Fagin
  was involved in the valuation of oil and gas companies for 10 years both as
  a consultant and a bank appraisal engineer (1958-‘68); President of a subsidiary
  of Rosario Resources Corporation, a NYSE company (1968-‘75) and then Executive
  Vice-President (’75-‘77) then President (’77-82’) during which
  period he was intimately involved in financial and accounting matters. In 1982
  he founded Fagin Exploration Company and worked closely with an accountant and
  auditors to maintain the records. From 1986 to 1991 Mr. Fagin was the President
  and Chief Operating Officer for Homestake Mining Corporation (NYSE), responsible
  for producing operations in six countries and was involved in decisions for
  corporate financial reporting. Between 1992 and 1996, Mr. Fagin was Executive
  Chairman of Golden Star Resources (ASE and TSE) and managed all administrative
  matters including annual reports, audits and registration in Canada and the
  US. Since 1987 Mr. Fagin has served on Boards and Audit Committees of several
  public companies including T. Rowe Price Mutual Funds, Golden Star, Canyon Resource
  Corporation, Dayton Mining Corp. and the Company, where he is currently either
  Chairman or a member of each audit committee.

Mr. Sweeney is a Certified General Accountant with the Association
  of Certified General Accountants of British Columbia since 1988. Mr. Sweeney
  has a solid background in accounting and financial management starting his accounting
  career in 1972. From 1987 to 1993 he worked with Placer Dome Inc. as Chief Financial
  Officer (1987-1989) of an Australian subsidiary operating five mines in Australia
  and Papua New Guinea. Mr. Sweeney was responsible for all accounting, financial
  and marketing requirements; then Assistant Treasurer (1989 to 1991) at Vancouver
  head office where he was responsible for the review of financial needs for all
  members of the Placer Dome group worldwide risk management and debt administration;
  and director, development planning (1991-1993) where he was responsible for
  the development of plans relating to the existing assets and cash flow by the
  group worldwide. Since 1994 Mr. Sweeney has served as the Chief Financial Officer
  of several public companies including Princeton Mining Corporation, Sutton Resources
  Ltd., Manhattan Minerals Corp. and currently Canico Resource Corp. where he
  is responsible for all finance, accounting and taxation matters.

The third member of the Company’s audit committee, Anthony
  Petrina, although not a “financial expert” is financially literate
  in that he has the ability to read and understand a set of financial statements
  that present a breadth and level of complexity of accounting issues that are
  generally comparable to the breadth and complexity of the issues that can reasonably
  be expected to be raised by the Company’s financial statements. Mr. Petrina
  worked for Placer Dome for 32 years, serving as President, CEO and Vice-Chairman,
  until his retirement in 1992. Mr. Petrina has been a director of several other
  mining companies since his retirement to date.

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66

Audit Committee Charter

The following is the text of the Audit Committee’s
  Charter:

“(Amended and Restated effective
  July 29, 2004)

The primary function of the Audit
  Committee is to assist the Board in fulfilling its oversight responsibilities,
  primarily through overseeing management’s conduct of the Company’s
  accounting and financial reporting process and systems of internal accounting
  and financial controls; selecting, retaining and monitoring the independence
  and performance of the Company’s outside auditors, including overseeing
  the audits of the Company’s financial statements, and approving any non
  audit services; and providing an avenue of communication among the outside auditors,
  management and the Board.

14.1         Composition
  of the Audit Committee:

|a) | Shall consist of a minimum of three directors
        at all times, all of whom must be independent as required by applicable
        law and applicable stock exchange listing rules (the “Listing Rules”).
        A member of the Committee shall be considered independent if (a) he or
        she is not an employee of the Company; (b) he or she does not accept,
        directly or indirectly, any consulting, advisory or other compensatory
        fee from the Company or its subsidiaries other than in connection with
        serving on the Committee, any other Board committee or as a member of
        the Board; (c) he or she is not an “affiliated person” of
        the Company or any Company subsidiary as defined by applicable law and
        Listing Rules; and (d) he or she meets all other requirements for independence
        imposed by law and the Listing Rules from time to time and any requirements
        imposed by any Canadian or other governmental body having jurisdiction
        over the Company
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b) | All members of the Committee shall have a practical
        knowledge of finance and accounting and be able to read and understand
        fundamental financial statements from the time of their respective appointments
        to the Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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67

|c) | At least one member of the Committee shall be
        a “financial expert” as defined by Item 401(h) of Regulation
        S-K, unless otherwise determined by the Board, and at least one member
        shall meet the financial sophistication standards under the Listing Rules.
        The designation or identification of a member of the Committee as an
        “audit committee financial expert” does not impose on such
        person any duties, obligations, or liability that are greater than the
        duties, obligations, and liability imposed on such person as a member
        of the Committee and Board of Directors in the absence of such designation
        or identification; and (ii) the designation or identification of a member
        of the Committee as an “audit committee financial expert”
        does not affect the duties, obligations, or liability of any other member
        of the Committee or Board of Directors
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|d) | Each member of the Committee shall be appointed
        by the Board and shall serve until the earlier to occur of the date on
        which he or she shall be replaced by the Board, resigns from the Committee,
        or resigns from the Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|e) | Shall meet no less than four times annually and
        at least quarterly, on such dates that the Chair of the Audit Committee
        determine. Notice of meetings shall be given by letter, facsimile or other
        means of recorded electronic communication or by telephone not less than
        24 hours before the time fixed for the meeting. Members may waive notice
        of any meetings before or after the holding thereof. A majority of the
        members present at a meeting will constitute a quorum.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|f) | The Chair of the Audit Committee shall be appointed
        by the Board following the recommendation of the Chair of the Board, who
        will prepare and / or approve an agenda in advance of each meeting and
        shall preside over meetings of the Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | 14.2         Terms
        of Reference                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | The responsibilities and duties of the Audit
        Committee shall be to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|a) | Review and recommend for Board approval the annual
        and quarterly financial statements of the Company, including Management’s
        Discussion and Analysis, and determine whether they are complete and consistent
        with the information known to committee members. Determine that the auditors
        are satisfied that the financial statements have been prepared in accordance
        with applicable generally accepted accounting principles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|b) | Make regular reports to the Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|c) | Have the sole authority to appoint or replace
        the independent auditor (subject, if applicable, to shareholder ratification).
        The independent auditor shall report directly to the Audit Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|d) | Review the scope of the audit to be conducted
        by the external auditor of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

68

|e) | Be directly responsible for the compensation
        and oversight of the work of the independent auditor (including resolution
        of disagreements between management and the independent auditor regarding
        financial reporting) for the purpose of preparing or issuing an audit
        report or related work.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|f) | Review and pre-approve all auditing services,
        internal control related services and permitted non-audit services (including
        the terms thereof) to be performed for the Company by its independent
        auditor, subject to the de minimus exceptions for non-audit services described
        in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended,
        which are approved by the Audit Committee prior to completion of the audit.
        The Audit Committee may form and delegate authority to subcommittees consisting
        of one or more members when appropriate, including the authority to grant
        pre-approvals of audit and permitted non-audit services, provided that
        decisions of such subcommittee to grant pre-approvals shall be presented
        to the full Audit Committee at this next scheduled meeting.
|  
|g) | Pre-approve all engagement letters for all auditing
        and non-audit services to be provided to the Company or its subsidiaries,
        before and after completion of work and assess the performance of external
        and internal auditors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|h) | Review and determine the compensation to be paid
        to the independent auditor for all auditing services, internal control
        related services and permitted non- audit services. The Company shall
        provide appropriate funding, as determined by the Audit Committee, for
        payment of compensation to the independent auditor for the purpose of
        rendering or issuing an audit report and to advisors employed by the Audit
        Committee.                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|i) | Review all public disclosure documents containing
        audited or unaudited financial information before release, including but
        not limited to prospectus, annual report, annual information form and
        management’s discussion and analysis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|j) | Review, at least semi-annually, all expenses
        paid by the Company to or in behalf of the CEO and the President and any
        other financial arrangements or transactions with them and their affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|k) | Review all post-audit or management letters containing
        the recommendations of the external auditor and management’s response/follow-ups
        of any identified weakness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|l) | Have the right, for the purpose of performing
        their duties, of inspecting all of the books and records of the Company
        and its affiliates and of discussing such accounts and records and any
        matters relating to the financial position or condition of the Company
        with the officers and auditors of the Company and its affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|m) | Review any transaction involving the Company
        and a related party at least once a year or upon any significant change
        in the transaction or relationship.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

69

|n)    | Review and discuss with the independent auditors
        and management (including the senior internal audit executive) any significant
        matters regarding the Company’s internal controls and procedures
        over financial reporting that have come to the attention of the independent
        auditor during the conduct of their annual audit, and review whether internal
        control recommendations made by the auditors have been implemented by
        management and review any special steps adopted in light of material control
        deficiencies and the adequacy of disclosures about changes in internal
        control over financial reporting.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|o)    | Review major risk exposures (whether financial,
        operating or otherwise) and the guidelines and policies that management
        has put in place to govern the process of monitoring, controlling and
        reporting such exposures (including any hedging).                                                                                                                                                                                                                                                                                                                                                                                                               
|     
|p)    | Review and discuss reports from the independent
        auditors on:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     
|(i)   | all critical accounting policies and practices
        used in preparation of the Company’s financial statements;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     
|(ii)  | all alternative treatments of financial information
        within generally accepted accounting principles that have been discussed
        with management, ramifications of the use of such alternative disclosures
        and treatments and the treatment preferred by the independent auditors;
        and                                                                                                                                                                                                                                                                                                                                                                    
|     
|(iii) | other material written communications between
        the independent auditor and management, such as management letters or
        schedules of adjusted differences.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     
|q)    | Discuss with management and the independent auditors
        the Company’s use of non-GAAP information in any report, earnings
        release or other publicly disseminated document and any off-balance sheet
        structures and the effect of regulatory and accounting initiatives on
        the Company.                                                                                                                                                                                                                                                                                                                                                                   
|     
|r)    | Review annually management’s report on
        internal controls and any auditor’s attestation regarding management’s
        assessment of internal controls, required by law or Listing Rules and
        review whether internal control recommendations made by the auditors have
        been implemented by management.                                                                                                                                                                                                                                                                                                                                                         
|     
|s)    | Establish procedures for: (a) the receipt, retention
        and treatment of complaints received by the Company regarding accounting,
        internal accounting controls or auditing matters; and (b) the confidential,
        anonymous submission by employees of the Company of concerns regarding
        questionable business conduct, accounting or auditing matters.                                                                                                                                                                                                                                                                                                      
|     
|t)    | Have such other duties, powers and authorities,
        consistent with the provisions of applicable laws and Listing Rules, or
        as the Board may by resolution delegate to the Audit Committee from time
        to time.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     
|u)    | At the Company’s expense, retain independent
        counsel, accountants or other experts for such purposes as the Committee,
        in its sole discretion, determines to be                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

70

|   | appropriate to carry out its responsibilities,
        and set the compensation to be paid to such experts.                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|v) | Review on an annual basis and if necessary
        update this Charter and have changes approved by the Board.                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 14.3 Regulations                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The following regulations shall apply
        to the proceedings of the Audit Committee.                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|a) | The business of the Audit Committee
        shall be transacted either at meetings thereof or by conference
        telephone or other communications facilities that permit all persons
        participating in the meeting to hear each other, or by resolution in
        writing. All questions at a meeting shall be decided in accordance
        with the vote of a majority of those present and the Chair of the
        meeting shall not have a second or casting vote.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|b) | A resolution in writing signed by
        all members of the Audit Committee entitled to vote on that resolution
        at a meeting of the Audit Committee shall be as valid as if it had been
        passed at a duly called and constituted meeting. Such resolutions in
        writing may be in one or more counterparts, all of which, when
        taken together, shall be deemed to constitute one resolution.                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|c) | The auditor of the Company shall,
        at the expense of the Company, be entitled to attend and be heard
        at or may be invited to any meeting of the Audit Committee, except
        for portions of meetings in which their work, fees and performance
        may be discussed.                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|d) | The Audit Committee Chair shall regularly
        report on the activities of the Audit Committee, to the Board of
        Directors.                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|e) | The external auditor and senior management
        shall have the opportunity or may be invited to meet separately
        with the Audit Committee.                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|f) | The minutes of the proceedings of
        the Audit Committee and any resolutions in writing shall be kept
        in a book provided for that purpose which shall always be open for
        inspection by any director of the Company.                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|g) | Subject to the foregoing, the calling,
        holding and procedure at meetings of the Audit Committee shall
        be determined by the Audit Committee Chair.                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 14.4  Limitation
        of Audit Committee’s Role                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | While the Audit Committee has the
        responsibilities and powers set forth in this Charter, it is not
        the duty of the Audit Committee to plan or conduct audits or to determine
        if the Company’s financial statements or disclosures are
        complete and accurate and are in accordance with GAAP and applicable
        rules and regulations. These are responsibilities of management
        and the independent auditors.”                          

---

71

Item 16B.          Code of
  Ethics

The Company adopted a code of ethics consistent with SEC rules
  and regulations. The Code of ethics governs the actions of and is applicable
  to all of the directors and officers of the Company and its subsidiaries, and
  their affiliates. The code of ethics deals with the following issues:

| | • | compliance with all the laws and regulations identified in
      the code of ethics;
| | - | ------------------------------------------------------------------------------------
| | • | corporate opportunities and conflicts of interest;                                  
| | • | the quality of the public disclosures;                                              
| | • | the protection and appropriate use of the Company’s
      properties;               
| | • | the protection of confidential information and property;                            
| | • | fair behavior; and                                                                  
| | • | compliance with insider trading and corrupt practices legislation.                  

A copy of the code of ethics is posted on and available for
  review on the Company’s website www.pacrim-mining.com. There have been
  no waivers granted to a provision of the code of ethics in the fiscal year ended
  April 30, 2005 to any of the Company’s principal officers..

Item 16C.         
  Principal Accountant Fees and Services

Audit Fees

Staley, Okada & Partners, Chartered Accountants (“Staley,
  Okada & Partners”), serve as the independent auditors for the Company
  and have acted as the Company’s independent auditor for the fiscal years
  ended April 30, 2005 and April 30, 2004. The chart below sets forth the total
  amount billed the Company by Staley, Okada & Partners for services performed
  in the last two fiscal yearsand breaks down these amounts by category of service
  (for audit fees, audit-related fees, tax fees and other fees) in CDN$.

"Audit Fees" are the aggregate fees billed by Staley, Okada
  & Partners for the audit of the Company’s consolidated annual financial
  statements, reviews of interim financial statements and attestation services
  that are provided in connection with statutory and regulatory filings or engagements.

"Audit-Related Fees" are fees charged by Staley, Okada &
  Partners for assurance and related services that are reasonably related to the
  performance of the audit or review of the Company’s financial statements
  and are not reported under "Audit Fees." This category comprises fees billed
  for independent accountant review of the interim financial statement s and Management
  Discussion and Analysis, as well as advisory services associated with the Company’s
  financial reporting.

"Tax Fees" are fees for professional services rendered by
  Staley, Okada & Partners for tax compliance, tax advice on actual or contemplated
  transactions.

Fees disclosed under the category "All Other Fees" for the
  2004 fiscal year are related to quarterly reviews and for the 2005 fiscal year
  are related to quarterly reviews and corporate reorganization advice.

External Auditor Service Fees (By Category), (in Canadian
  Dollars)

|Financial Year Ending | Audit Fees (1) | Audit Related Fees (2) | Tax Fees (3) | All Other Fees (4)
|--------------------- | -------------- | ---------------------- | ------------ | ------------------
|April 30, 2005        | Cdn.$113,461   | Cdn.$32,942            | Cdn.$10,680  | Cdn.$Nil          
|April 30, 2004        | Cdn.$70,000    | Cdn.$4,641             | Cdn.$8,520   | Cdn.$6,248        

---

72

|(1) | The aggregate audit fees billed.                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The aggregate fees billed for assurance and related
        services that are reasonably related to the performance of the audit or
        review of the Company’s financial statements, which are not included
        under the heading “Audit Fees”.
|(3) | The aggregate fees billed for professional services
        rendered for tax compliance, tax advice and tax planning.                                                                                                                                   
|(4) | The aggregate fees billed for products and services
        other than as set out under the heading “Audit Fees”, “Audit
        Related Fees” and “Tax Fees”.                                                                                          

Audit Committee's pre-approval policies and procedures

The Audit Committee nominates and engages the independent
  auditors to audit the financial statements, and approves all audit, audit-related
  services, tax services and other services provided by Staley, Okada & Partners.
  Any services provided by Staley, Okada & Partners that are not specifically
  included within the scope of the audit must be pre-approved by the audit committee
  prior to any engagement. The audit committee is permitted to approve certain
  fees for audit-related services, tax services and other services pursuant to
  a de minimusexception before the completion of the engagement. In the
  fiscal year ended April 30, 2005, fees paid to Staley, Okada & Partners
  were approved pursuant to the de minimusexception for tax services.

Item 16D.          Exemptions
  from the Listing Standards for Audit Committees.

Not Applicable

Item 16E.          Purchases
  of Equity Securities by the Issuer and Affiliated Purchasers.

None

PART III

ITEM 17.          FINANCIAL
  STATEMENTS

The Financial Statements were prepared in accordance with
  Canadian GAAP and are presented in U.S. dollars. There are differences between
  United States and Canadian GAAP. A reconciliation of the financial statements
  to United States GAAP is set forth in Note 14 to the Consolidated Financial
  Statements forming part hereof.

The following financial statements and related schedules are
  included in this Item and form part of this Annual Report:

|(a) | Financial Statements for the financial period ended April 30, 2005, containing:                                     
|--- | --------------------------------------------------------------------------------------------------------------------
|   
|    | Auditors’ Report for the years April 30, 2005 and April 30, 2004;                                                   
|    | Consolidated Balance Sheets as at April 30, 2005 and April 30,2004;                                                 
|    | Consolidated Statements of Loss for the year ended April 30, 2005, April
      30, 2004 and April 30, 2003;         
|    | Consolidated Statements of Shareholders’ Equity for the year ended
      April 30, 2005 and April 30, 2004;         
|    | Consolidated Statements of Cash Flow for the year ended April 30, 2005,
      April 30, 2004 and April 30, 2003; and
|    | Notes to Consolidated Financial Statements.                                                                         

---



PACIFIC RIM MINING CORP.

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2005 and 2004

Expressed in US Funds



F-1

---

|MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL
      REPORTING
|---------------------------------------------------------
|                                                         

To the Shareholders of Pacific Rim Mining Corp.:

The accompanying consolidated financial statements of the
  Company were prepared by management in accordance with accounting principles
  generally accepted in Canada, and within the framework of the summary of significant
  accounting policies noted in these consolidated financial statements. Management
  is responsible for all information in the annual report. All financial and operating
  data in the annual report is consistent, where appropriate, with that contained
  in the consolidated financial statements.

A system of internal accounting control is maintained in order
  to provide reasonable assurance that assets are safeguarded and that transactions
  are properly recorded and executed in accordance with management’s authorization.
  This system includes established policies and procedures, the selection and
  training of qualified personnel and an organization providing for appropriate
  delegation of authority and, where possible, segregation of responsibilities.

The Board of Directors discharges its responsibilities for
  the consolidated financial statements primarily through activities of its Audit
  Committee composed of three directors, none of whom are members of management.
  This Committee meets regularly with management to assure that it is performing
  its responsibility to maintain financial controls and systems and to approve
  the quarterly unaudited and annual audited consolidated financial statements
  of the Company. The Audit Committee also meets with the independent auditors
  to discuss the scope and the results of their audit and audit report prior to
  submitting the consolidated financial statements to the Board of Directors for
  approval.

The consolidated financial statements have been audited on
  behalf of the shareholders by the Company’s independent auditors, Staley,
  Okada & Partners, in accordance with Canadian and United States generally
  accepted auditing standards. The auditors’ report outlines the scope of
  their audit and their opinion on the consolidated financial statements.

|John Norman             | Thomas C. Shrake       
|----------------------- | -----------------------
|Chief Financial Officer | Chief Executive Officer
|                       

F-2

---

|                             | Suite 400 - 889 West Pender Street
|---------------------------- | ----------------------------------
|Vancouver, BC Canada V6C 3B2
|Tel604 694-6070             
|Fax604 585-8377             
|info@staleyokada.com        
|                             | www.staleyokada.com               

|REPORT OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM
|-------------------------------------------------------------
|                                                             

To the Shareholders of Pacific Rim Mining Corp.:

We have audited the accompanying consolidated balance sheets
  of Pacific Rim Mining Corp. as of April 30, 2005 and 2004, and the related consolidated
  statements of loss, shareholders’ equity, and cash flows for the years
  ended April 30, 2005, 2004 and 2003. 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 Canadian generally
  accepted auditing standards and with the standards of the Public Company Accounting
  Oversight Board (United States). Those standards require that we plan and perform
  the audits to obtain reasonable assurance about whether the financial statements
  are free of material misstatement. The Company is not required to have, nor
  were we engaged to perform an audit of its internal control over financial reporting.
  Our audits included consideration of internal control over financial reporting
  as a basis for designing audit procedures that are appropriate in the circumstances,
  but not for the purpose of expressing an opinion on the effectiveness of the
  Company’s internal control over financial reporting. Accordingly, we express
  no such opinion. An audit also includes examining, on a test basis, evidence
  supporting the amounts and disclosures in the financial statements, assessing
  the accounting principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation. We believe
  that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
  present fairly, in all material respects, the financial position of the Company
  as of April 30, 2005 and 2004, and the results of its operations and its cash
  flows for the years ended April 30, 2005, 2004 and 2003, in conformity with
  Canadian generally accepted accounting principles.

|                                                                     | “Staley, Okada & Partners”
|-------------------------------------------------------------------- | --------------------------
|Vancouver, B.C.                                                      | STALEY, OKADA & PARTNERS  
|June 6, 2005, except for Note 15, which is as of June
      20, 2005 | CHARTERED ACCOUNTANTS     
|                                                                    

|COMMENTS BY AUDITORS FOR U.S. READERS ON
      CANADA – U.S. REPORTING DIFFERENCE
|---------------------------------------------------------------------------------
|                                                                                 

In the United States, reporting standards for auditors require
  the addition of an explanatory paragraph when financial statements are affected
  by future events, the outcome of which is undeterminable. As discussed in Note
  1, the Company’s continued existence as a going concern is dependent upon
  the future economic success of its exploration and development activities, the
  Company’s ability to continue to secure adequate financing and the Company
  achieving a positive cash flow and profitable operations. Our report to the
  shareholders dated June 6, 2005, is expressed in accordance with Canadian reporting
  standards, which do not require a reference to such going concern considerations
  in the auditors’ report when the situation is adequately disclosed in
  the financial statements.

|                                                                     | “Staley, Okada & Partners”
|-------------------------------------------------------------------- | --------------------------
|Vancouver, B.C.                                                      | STALEY, OKADA & PARTNERS  
|June 6, 2005, except for Note 15, which is as of June
      20, 2005 | CHARTERED ACCOUNTANTS     
|                                                                    

F-3


---

|Pacific Rim Mining Corp.     | Statement 1
|---------------------------- | -----------
|Consolidated Balance Sheets  |            
|In thousands of U.S. dollars |            

|                                                        |   | As at     |   |   | As at     |  
|------------------------------------------------------- | - | --------- | - | - | --------- | -
|                                                        |   | April 30, |   |   | April 30, |  
|ASSETS                                                  |   | 2005      |   |   | 2004      |  
|Current Assets                                          |   |           |   |   |           |  
|Cash, cash equivalents and bullion
      (Note 1b)      |   |           |   |   |           |  
|Cash
      and cash equivalents                         | $ | 794       |   | $ | 1,463     |  
|Bullion
      (Note 1b and 4)                           |   | 21        |   |   | 1,301     |  
|                                                        |   | 815       |   |   | 2,764     |  
|Receivables                                             |   | 116       |   |   | 118       |  
|Inventories (Note 5)                                    |   | 266       |   |   | 2,930     |  
|                                                        |   | 1,197     |   |   | 5,812     |  
|Property, Plant and Equipment(Note 6)                   |   | 4,299     |   |   | 5,102     |  
|Closure Fund(Note 8b)                                   |   | 3,122     |   |   | 3,119     |  
|                                                        | $ | 8,618     |   | $ | 14,033    |  
|                                                        |   |           |   |   |           |  
|LIABILITIES                                             |   |           |   |   |           |  
|Current Liabilities                                     |   |           |   |   |           |  
|Accounts payable and accrued liabilities                | $ | 1,214     |   | $ | 1,761     |  
|Loans payable (Note 8a)                                 |   | -         |   |   | 828       |  
|Accrued closure costs - current
      portion (Note 8c) |   | 118       |   |   | 190       |  
|                                                        |   | 1,332     |   |   | 2,779     |  
|Accrued Closure Costs(Note 8c)                          |   | 1,747     |   |   | 1,636     |  
|                                                        |   | 3,079     |   |   | 4,415     |  
|Going Concern(Note 1)                                   |   |           |   |   |           |  
|                                                        |   |           |   |   |           |  
|SHAREHOLDERS’ EQUITY                                    |   |           |   |   |           |  
|Share Capital-Statement 3 (Note 9)                      |   |           |   |   |           |  
|Authorized:                                             |   |           |   |   |           |  
|unlimited
      common shares without par value         |   |           |   |   |           |  
|Issued and fully paid:                                  |   |           |   |   |           |  
|80,642,194
      (2004 - 80,483,994) shares outstanding |   | 57,435    |   |   | 57,364    |  
|Contributed Surplus- Statement 3                        |   | 810       |   |   | 326       |  
|Deficit- Statement 3                                    |   | (52,706   | ) |   | (48,072   | )
|                                                        |   | 5,539     |   |   | 9,618     |  
|                                                        | $ | 8,618     |   | $ | 14,033    |  

APPROVED BY THE BOARD OF DIRECTORS:

|“David
      K. Fagin”   | , Director
|------------------------ | ----------
|                         |           
|“Thomas
      C. Shrake” | , Director

- See Accompanying Notes -

F-4

---

|Pacific Rim Mining Corp.                                   | Statement 2
|---------------------------------------------------------- | -----------
|Consolidated Statements of Loss                            |            
|In thousands of U.S. dollars, except for per share amounts |            

|                                                    |   | Year      |   |   | Year      |   |   | Year      |  
|--------------------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
|                                                    |   | Ended     |   |   | Ended     |   |   | Ended     |  
|                                                    |   | April 30, |   |   | April 30, |   |   | April 30, |  
|                                                    |   | 2005      |   |   | 2004      |   |   | 2003      |  
|Revenue                                             |   |           |   |   |           |   |   |           |  
|Sales                                               | $ | 11,868    |   | $ | 12,140    |   | $ | 12,509    |  
|                                                    |   |           |   |   |           |   |   |           |  
|Cost of Sales                                       |   |           |   |   |           |   |   |           |  
|Operating costs                                     |   | 8,963     |   |   | 12,193    |   |   | 8,999     |  
|Depreciation, depletion and amortization            |   | 878       |   |   | 1,295     |   |   | 3,092     |  
|Write-down of mining interest (Note
      7b(i))    |   | -         |   |   | -         |   |   | 1,262     |  
|                                                    |   | 9,841     |   |   | 13,488    |   |   | 13,353    |  
|Mine Operating Income (Loss)                        |   | 2,027     |   |   | (1,348    | ) |   | (844      | )
|                                                    |   |           |   |   |           |   |   |           |  
|Expenses (Income)                                   |   |           |   |   |           |   |   |           |  
|Exploration                                         |   |           |   |   |           |   |   |           |  
|- direct                                            |   | 6,351     |   |   | 5,144     |   |   | 3,346     |  
|- stock-based
      compensation (Note 9)           |   | 73        |   |   | 20        |   |   | -         |  
|General and administrative                          |   |           |   |   |           |   |   |           |  
|- direct                                            |   | 1,149     |   |   | 878       |   |   | 937       |  
|- stock-based
      compensation (Note 9)           |   | 411       |   |   | 316       |   |   | -         |  
|Write-down of marketable securities                 |   | -         |   |   | -         |   |   | 275       |  
|Interest expense                                    |   | 18        |   |   | 47        |   |   | 78        |  
|Foreign exchange                                    |   | (108      | ) |   | 26        |   |   | (28       | )
|Interest income                                     |   | (120      | ) |   | (182      | ) |   | (175      | )
|Gain on sale of mineral properties                  |   | -         |   |   | -         |   |   | (922      | )
|Gain on sale of marketable securities               |   | -         |   |   | -         |   |   | (1,047    | )
|Gain on sale of property, plant
      and equipment |   | (848      | ) |   | (290      | ) |   | -         |  
|                                                    |   | 6,926     |   |   | 5,959     |   |   | 2,464     |  
|Loss Before Unusual Item                            |   | (4,899    | ) |   | (7,307    | ) |   | (3,308    | )
|                                                    |   |           |   |   |           |   |   |           |  
|Recovery of Investment In Andacollo Mine(Note 1c)   |   | 284       |   |   | 448       |   |   | 508       |  
|Loss for the Year Before Taxes                      |   | (4,615    | ) |   | (6,859    | ) |   | (2,800    | )
|Income Taxes                                        |   | 19        |   |   | -         |   |   | -         |  
|Loss for the Year                                   | $ | (4,634    | ) | $ | (6,859    | ) | $ | (2,800    | )
|                                                    |   |           |   |   |           |   |   |           |  
|Loss Per Share - Basic and Diluted                  | $ | (0.06     | ) | $ | (0.09     | ) | $ | (0.04     | )

- See Accompanying Notes -

F-5

---

|Pacific Rim Mining Corp.                              | Statement 3
|----------------------------------------------------- | -----------
|Consolidated Statements of Shareholders'
      Equity |            
|In thousands of U.S. dollars                          |            

|                                | Share Capital - Common
      Shares |  |   |        |  |   |             |   |   |             |  
|------------------------------- | ----------------------------------- |  | - | ------ |  | - | ----------- | - | - | ----------- | -
|                                |                                     |  |   |        |  |   | Contributed |   |   | Accumulated |  
|                                | Number                              |  |   | Amount |  |   | Surplus     |   |   | Deficit     |  
|                                |                                     |  |   |        |  |   |             |   |   |             |  
|Balance – April 30, 2003        | 78,528,594                          |  | $ | 56,173 |  | $ | -           |   | $ | (41,213     | )
|Shares issued for cash –        |                                     |  |   |        |  |   |             |   |   |             |  
|options
      exercised         | 1,955,400                           |  |   | 1,181  |  |   | -           |   |   | -           |  
|Stock-based compensation        | -                                   |  |   | -      |  |   | 336         |   |   | -           |  
|Fair value of options exercised | -                                   |  |   | 10     |  |   | (10         | ) |   | -           |  
|Loss for the year               | -                                   |  |   | -      |  |   | -           |   |   | (6,859      | )
|                                |                                     |  |   |        |  |   |             |   |   |             |  
|Balance - April 30, 2004        | 80,483,994                          |  | $ | 57,364 |  | $ | 326         |   | $ | (48,072     | )
|Shares issued for cash –        |                                     |  |   |        |  |   |             |   |   |             |  
|options
      exercised         | 158,200                             |  |   | 71     |  |   | -           |   |   | -           |  
|Stock-based compensation        | -                                   |  |   | -      |  |   | 484         |   |   | -           |  
|Loss for the year               | -                                   |  |   | -      |  |   | -           |   |   | (4,634      | )
|                                |                                     |  |   |        |  |   |             |   |   |             |  
|Balance - April 30, 2005        | 80,642,194                          |  | $ | 57,435 |  | $ | 810         |   | $ | (52,706     | )

- See Accompanying Notes -

F-6

---

|Pacific Rim Mining Corp.              | Statement 4
|------------------------------------- | -----------
|Consolidated Statements of Cash Flows |            
|In thousands of U.S. dollars          |            

|                                                               |   | Year      |   |   | Year      |   |   | Year      |  
|-------------------------------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
|                                                               |   | Ended     |   |   | Ended     |   |   | Ended     |  
|                                                               |   | April 30, |   |   | April 30, |   |   | April 30, |  
|                                                               |   | 2005      |   |   | 2004      |   |   | 2003      |  
|Operating Activities                                           |   |           |   |   |           |   |   |           |  
|Loss for the year                                              | $ | (4,634    | ) | $ | (6,859    | ) | $ | (2,800    | )
|Adjustment
      to reconcile loss to cash flow                |   |           |   |   |           |   |   |           |  
|provided by operations:                                        |   |           |   |   |           |   |   |           |  
|Depletion,
      depreciation and amortization                 |   | 869       |   |   | 800       |   |   | 2,717     |  
|Accrued
      closure and pension costs                        |   | 343       |   |   | 495       |   |   | 375       |  
|Stock-based
      compensation                                 |   | 484       |   |   | 336       |   |   | -         |  
|Foreign
      exchange                                         |   | (108      | ) |   | 26        |   |   | (28       | )
|Net
      interest earned on sinking fund                      |   | (91       | ) |   | (174      | ) |   | (143      | )
|Gain
      on sale of marketable securities                    |   | -         |   |   | -         |   |   | (1,047    | )
|Gain
      on sale of mineral properties                       |   | -         |   |   | -         |   |   | (922      | )
|Gain
      on sale of property, plant and equipment            |   | (848      | ) |   | (290      | ) |   | -         |  
|Loss
      on sale of supplies inventory                       |   | 37        |   |   | -         |   |   | -         |  
|Write-down
      of marketable securities                      |   | -         |   |   | -         |   |   | 275       |  
|Write-down
      of mining interest                            |   | -         |   |   | -         |   |   | 1,262     |  
|Write-down
      of supplies inventory                         |   | 165       |   |   | -         |   |   | -         |  
|                                                               |   | (3,783    | ) |   | (5,666    | ) |   | (311      | )
|Accounts
      payable and accrued liabilities                 |   | (547      | ) |   | 533       |   |   | (138      | )
|Closure
      cost expenditures                                |   | (304      | ) |   | (2,057    | ) |   | (692      | )
|Loans
      payable                                            |   | (828      | ) |   | (1,043    | ) |   | (659      | )
|Inventories                                                    |   | 3,710     |   |   | 7,194     |   |   | (2,270    | )
|Receivables                                                    |   | 2         |   |   | (68       | ) |   | 26        |  
|Proceeds
      of disposition of supplies inventory            |   | 32        |   |   | -         |   |   | -         |  
|Cash Flow Used for Operating Activities                        |   | (1,718    | ) |   | (1,107    | ) |   | (4,044    | )
|Investing Activities                                           |   |           |   |   |           |   |   |           |  
|Purchases of property, plant and
      equipment               |   | (86       | ) |   | (461      | ) |   | (79       | )
|Proceeds of disposition of property,
      plant and equipment |   | 848       |   |   | 304       |   |   | 56        |  
|Reclamation sinking fund withdrawals                           |   | 108       |   |   | 465       |   |   | -         |  
|Cash Flow Provided By (Used for) Investing Activities          |   | 870       |   |   | 308       |   |   | (23       | )
|Financing Activities                                           |   |           |   |   |           |   |   |           |  
|Issuance of share capital                                      |   | 71        |   |   | 1,181     |   |   | 31        |  
|Proceeds on sale of marketable
      securities                |   | -         |   |   | -         |   |   | 2,551     |  
|Cash Flow Provided By Financing Activities                     |   | 71        |   |   | 1,181     |   |   | 2,582     |  
|Foreign Exchange                                               |   | 108       |   |   | (26       | ) |   | 28        |  
|Net Increase (Decrease) in Cash and Cash Equivalents           |   | (669      | ) |   | 356       |   |   | (1,457    | )
|Cash and cash equivalents - Beginning
      of year            |   | 1,463     |   |   | 1,107     |   |   | 2,564     |  
|Cash and Cash Equivalents - End
      of Year                  | $ | 794       |   | $ | 1,463     |   | $ | 1,107     |  
|                                                               |   |           |   |   |           |   |   |           |  
|Supplementary Schedule of Cash Transactions:                   |   |           |   |   |           |   |   |           |  
|Interest paid during the period                                | $ | 25        |   | $ | 61        |   | $ | 79        |  
|Income
      taxes paid during the period                      | $ | 19        |   | $ | -         |   | $ | -         |  
|                                                               |   |           |   |   |           |   |   |           |  
|Supplementary Schedule of Non-cash Transactions:               |   |           |   |   |           |   |   |           |  
|Marketable securities received
      for mineral properties    | $ | -         |   | $ | -         |   | $ | 900       |  
|Stock-based compensation                                       | $ | 484       |   | $ | 336       |   | $ | -         |  
|Accrued closure costs capitalized
      as property, plant and |   |           |   |   |           |   |   |           |  
|equipment                                                      | $ | -         |   | $ | 495       |   | $ | -         |  

- See Accompanying Notes -

F-7

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|1. | Nature of Operations and Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The Company is involved in the exploration,
        development and operation of gold properties. The Company owns a 49% interest
        in the Denton-Rawhide Mine, located near Fallon, Nevada, U.S.A., a 100%
        interest in certain mineral properties, known as El Dorado, located in
        El Salvador and exploration interests in mineral claims in Chile and Argentina.                                                                                                                                                                                                                                                  
|  
|   | These consolidated financial statements
        have been prepared in accordance with Canadian generally accepted accounting
        principles on a going concern basis, which presume the realization of
        assets and discharge of liabilities in the normal course of business for
        the foreseeable future. The Company’s ability to continue as a going
        concern is dependent upon achieving profitable operations and upon obtaining
        additional financing. While the Company is expending its best efforts
        in this regard, the outcome of these matters cannot be predicted at this
        time.
|  
|   | During the year, the Company incurred
        a loss of $4,634 and has an accumulated deficit of $52,706. The
        operations of the Company have primarily been funded by their interest
        in the Denton Rawhide Joint Venture and the issuance of common shares.
        Continued operations of the Company are dependent on the Company's ability
        to complete public equity financing and/or generate profitable operations
        in the future.                                                                                                                                                                   
|  
|   | These consolidated financial statements
        do not reflect adjustments that would be necessary if the going concern
        assumption were not appropriate because management believes that the actions
        already taken or planned will mitigate the adverse conditions and events
        which raise doubts about the validity of the going concern assumption
        used in preparing these financial statements.                                                                                                                                                                                                         
|  
|   | If the going concern assumption were not
        appropriate for these consolidated financial statements then adjustments
        would be necessary in the carrying value of assets and liabilities, the
        reported revenue and expenses and the balance sheet classifications used.                                                                                                                                                                                                                                                                                                                                               
|  
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | These consolidated financial statements
        are presented in accordance with generally accepted accounting principles
        (“GAAP”) applicable in Canada and have been reconciled as
        to significant differences in measurement to generally accepted accounting
        principles applicable in the United States as disclosed in Note 16.                                                                                                                                                                                                                                                                                
|  
|   | Certain of the comparative figures have
        been reclassified to conform to the current year’s presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | These consolidated financial statements
        include the accounts of the Company’s wholly-owned subsidiaries,
        Dayton Mining (US) Inc., Pacific Rim Exploration Inc., DMC Cayman Inc.,
        Andacollo Gold Inc., La Serena Inc., Dayton Chile Exploraciones Mineras
        Limitada, Pacific Rim El Salvador S.A. de C.V., Pac Rim Cayman, Pac Rim
        Caribe III and International Pacific Rim S.A.                                                                                                                                                                                                                    
|  
|   | The 49% joint venture interest in Denton-Rawhide
        is accounted for on the proportionate consolidation basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-8

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|1. | Nature of Operations and Basis of Presentation- Continued                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | b)                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   | c)                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|  
|  
|2. | Significant Accounting Policies and
        Accounting Changes                                                                                                                                                                                                                                                                                                                  
|  
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Cash and cash equivalents includes cash
        on hand, demand deposits, and short term highly liquid investments with
        a term to maturity of three months or less from inception which are readily
        convertible to known amounts of cash and which, in the opinion of management,
        are subject to an insignificant risk of loss in values.               
|  
|   | Bullion                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | Gold and silver bullion is valued at the
        lower of cost and estimated fair market value.                                                                                                                                                                                                                                                                                 
|  
|   | Inventories                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | Inventories, comprised of ore on leach
        pads, gold in process and mine operating supplies are valued at the lower
        of cost and net realizable value.                                                                                                                                                                                                              
|  
|   | Property, Plant and Equipment                                                                                                                                                                                                                                                                                                                                                   
|  
|   | Property, plant and equipment is stated
        at estimated fair value as at the date of acquisition less accumulated
        depreciation and accumulated write-downs. Mining property, plant and equipment
        is depreciated using the unit of production method over estimated recoverable
        ounces.                                                             
|  
|   | Annually, reviews are undertaken to evaluate
        the carrying values of operating mines and development properties. If
        it is determined that the estimated net recoverable amount is less than
        the carrying value and the impairment in value is likely to be permanent,
        a write-down to the net recoverable amount is made by a charge to earnings.

F-9

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|2. | Significant Accounting Policies and Accounting
        Changes- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Property, Plant and Equipment- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | All exploration expenditures are expensed as incurred.
        Significant property acquisition payments for active exploration properties
        are capitalized. If no mineable ore body is discovered, previously capitalized
        costs are expensed in the period the property is abandoned. Expenditures
        for the development of new mines, to define further mineralization in
        existing ore bodies, and to expand the capacity of operating mines, are
        capitalized and amortized on a units of production basis over estimated
        recoverable reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | Environmental Expenditures and Closure Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | The operations of the Company may in the future
        be affected by changes in environmental regulations, including those for
        future removal and site restoration costs. Both the likelihood of new
        regulations and their overall effect upon the Company vary greatly and
        are not predictable. The Company's policy is to meet standards set by
        relevant legislation by application of technically proven and economically
        feasible measures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | Environmental expenditures that relate to ongoing
        environmental and reclamation programs are charged against earnings as
        incurred or capitalized and amortized depending on their future economic
        benefits. Estimated future removal and site restoration costs, when the
        ultimate liability is reasonably determinable, are charged against earnings
        over the estimated remaining life of the operation, net of expected recoveries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | The Company’s share of estimated closure costs
        associated with the Denton-Rawhide Mine at the time of acquisition was
        recognized in full as part of the acquisition cost. Increases in estimates
        of closure liabilities subsequent to the acquisition of Denton-Rawhide
        are accounted for in accordance with CICA 3110 “Asset Retirement
        Obligations” which conforms in all material respects to FASB
        (Financial Accounting Standards Board) Statement No. 143 as required under
        United States GAAP requirements for the reporting of asset retirement
        obligations. Effective May 1, 2003, the Company elected early implementation
        of CICA 3110, whereby the Company prospectively recognizes asset retirement
        obligations in the period in which they are incurred, if a reasonable
        estimate of fair market value can be made. The asset retirement costs
        are capitalized as part of the carrying amount of the long term asset
        to be amortized over the estimated remaining useful life of the asset
        and the associated liability is accreted over the estimated future ounces
        of gold production until settlement of the obligation. As a result of
        the adoption of this accounting standard, the carrying value of the Rawhide
        Mine and the corresponding asset retirement obligation was increased by
        $500 during the year ended April 30, 2004.
|  
|   | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | The Company uses the asset and liability method
        of accounting for future income taxes. Under this method, current income
        taxes are recognized for the estimated income taxes payable for the current
        period. Future income tax assets and liabilities are recognized for temporary
        differences between the tax and accounting basis of assets and liabilities
        as well as for the benefit of losses available to be carried forward to
        future years for tax purposes, which are likely to be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-10

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|2. | Significant Accounting Policies and
        Accounting Changes- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Share Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | Effective May 1, 2003, the Company prospectively
        adopted the recommendations of CICA Handbook Section 3870 “Stock-based
        Compensation and Other Stock-based Payments” which requires
        fair value accounting for all stock options issued during the year. The
        prior years stock-based compensation expense was only recognized when
        stock-based compensation awards were made to non-employees, while pro
        forma disclosure was acceptable for awards made to employees.                                                                                                                
|  
|   | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Revenues from the sale of all precious
        metal bullion are recognized when title to the bullion passes to the buyer,
        an arrangement exists. The price is fixed and determinable and collection
        is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | Earnings (Loss) per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | Basic earnings (loss) per share is computed
        by dividing income available to common shareholders by the weighted average
        number of common shares outstanding during the period. The computation
        of diluted earnings per share assumes the conversion, exercise or contingent
        issuance of securities only when such conversion, exercise or issuances
        would have a dilutive effect on earnings per share. The dilutive effect
        of outstanding options and warrants and their equivalents is reflected
        in diluted earnings per share by application of the treasury stock method.
|  
|   | Derivative Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | The Company may enter into gold hedging
        contracts to manage its exposure to fluctuations in the market price of
        gold and to establish minimum prices for a portion of its future production.
        The Company’s entire hedging activity is considered normal course
        sales requiring settlements through physical delivery. Gains or losses
        on these contracts are included in sales revenue when product is delivered
        against the contract.                                                                                                                                               
|  
|   | Foreign Exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | Transaction amounts denominated in other
        currencies are translated into their United States dollar equivalents
        at exchange rates prevailing at the transaction date. Carrying values
        of monetary assets and liabilities are adjusted at each balance sheet
        date to reflect exchange rates prevailing at that date. Gains and losses
        arising from restatement of foreign currency monetary assets and liabilities
        at each year-end are included in earnings.                                                                                                                          

F-11

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|2. | Significant Accounting Policies and Accounting
        Changes- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | The preparation of financial statements in conformity
        with Canadian generally accepted accounting principles requires management
        to make estimates and assumptions that affect the reported amounts of
        assets and liabilities and disclosures of contingent assets and liabilities
        at the date of the financial statements and the reported amounts of revenues
        and expenses during the reporting period. Actual results could differ
        from those estimates.                                                                                                                                                            
|  
|   | Variable Interest Entities (VIEs)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   | The Accounting Standards Board (AcSB) issued Accounting
        Guideline AcG 15, “Consolidation of Variable Interest Entities,”
        to harmonize the Guideline with the equivalent FASB Interpretation No.
        46R, “Consolidation of Variable Interest Entities.” The Guideline
        provides criteria for identifying VIEs and further criteria for determining
        what entity, if any, should consolidate them. The Guideline is effective
        for annual and interim periods beginning on or after November 1, 2004,
        and upon adoption, will not materially impact the Company’s results
        of operations and financial position.
|  
|  
|3. | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | The Company’s financial instruments consist
        of cash and cash equivalents, bullion (Note 10)receivables, closure
        fund, accounts payable, loans payable and accrued closure costs. Unless
        otherwise noted, it is management’s opinion that the Company is
        not exposed to significant interest, currency or credit risks arising
        from the financial instruments. The fair value of these financial instruments
        approximates their carrying value due to their short-term maturity or
        capacity of prompt liquidation.                                                                                              
|  
|  
|4. | Bullion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | Details are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |                                      | April 30, 2005 | April 30, 2004
| | ------------------------------------ | -------------- | --------------
| |                                      | Gold           | Silver        
| | Ounces at refinery                   | 84             | 850           
| | Market value per ounce ($/oz.)       | $434.00        | $6.80         
| | Market value                         | $36            | $6            
| | Total market value                   | $42            | $1,301        
| | Valuation – lower of cost and market | $21            | $1,301        
|

F-12

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|5. | Inventories            
|-- | -----------------------
|  
|   | Details are as follows:

| |                      |   | April 30, |  |   | April 30, | 
| | -------------------- | - | --------- |  | - | --------- | 
| |                      |   | 2005      |  |   | 2004      | 
| | Production inventory | $ | 266       |  | $ | 2,696     | 
| | Supplies inventory   |   | -         |  |   | 234       | 
| |                      | $ | 266       |  | $ | 2,930     | 

|6. | Property, Plant and Equipment
      Details are as follows:
|-- | -----------------------------------------------------------

| |                                          |   | April 30, |   |   | April 30, |  
| | ---------------------------------------- | - | --------- | - | - | --------- | -
| |                                          |   | 2005      |   |   | 2004      |  
| | Cost                                     | $ | 9,536     |   | $ | 10,320    |  
| | Accumulated depreciation and write-downs |   | (5,237    | ) |   | (5,218    | )
| |                                          | $ | 4,299     |   | $ | 5,102     |  

|  
|--
|  
|7.
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  
|  

F-13

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|7. | Mineral Properties- Continued
|-- | -----------------------------
|  
|   | b)                           
|  
|   |                              

| |  |  |                               |   | April 30, |   |   | April 30, |  
| |  |  | ----------------------------- | - | --------- | - | - | --------- | -
| |  |  |                               |   | 2005      |   |   | 2004      |  
| |  |  | Current assets                | $ | 412       |   | $ | 4,434     |  
| |  |  | Property, plant and equipment |   | 46        |   |   | 878       |  
| |  |  | Closure fund                  |   | 3,122     |   |   | 3,119     |  
| |  |  | Current liabilities           |   | (560      | ) |   | (2,061    | )
| |  |  | Long-term liabilities         |   | (1,747    | ) |   | (1,636    | )
| |  |  | Net assets                    | $ | 1,273     |   | $ | 4,734     |  

| |  |  | The condensed statements of operating income (loss)
        of the Company’s 49% interest are as follows:
| |  |  | ---------------------------------------------------------------------------------------------------------

| |  |  |                                               |   | Year Ended     |   |   | Year Ended     |   |   | Year Ended     |  
| |  |  | --------------------------------------------- | - | -------------- | - | - | -------------- | - | - | -------------- | -
| |  |  |                                               |   | April 30, 2005 |   |   | April 30, 2004 |   |   | April 30, 2003 |  
| |  |  | Sales                                         | $ | 11,868         |   | $ | 12,140         |   | $ | 12,509         |  
| |  |  | Gain on sale of property, plant and equipment |   | 848            |   |   | 290            |   |   | -              |  
| |  |  | Costs and expenses                            |   | (9,841         | ) |   | (13,483        | ) |   | (13,348        | )
| |  |  | Net income (loss)                             | $ | 2,875          |   | $ | (1,053         | ) | $ | (839           | )

| |  |  | The condensed statements of cash flows of the Company’s
        49% interest are as follows:
| |  |  | --------------------------------------------------------------------------------------------

| |  |  |                                              |   | Year Ended     |   |   | Year Ended     |   |   | Year Ended     |  
| |  |  | -------------------------------------------- | - | -------------- | - | - | -------------- | - | - | -------------- | -
| |  |  |                                              |   | April 30, 2005 |   |   | April 30, 2004 |   |   | April 30, 2003 |  
| |  |  |                                              |   |                |   |   |                |   |   |                |  
| |  |  | Cash flows provided by operations            | $ | 6,624          |   | $ | 5,160          |   | $ | 549            |  
| |  |  | Cash flows provided by (used for) investment |   |                |   |   |                |   |   |                |  
| |  |  | activities                                   |   | 812            |   |   | (150           | ) |   | (23            | )
| |  |  | Cash flows provided by (used for) financing  |   |                |   |   |                |   |   |                |  
| |  |  | activities                                   |   | (828           | ) |   | (1,021         | ) |   | -              |  
| |  |  |                                              |   |                |   |   |                |   |   |                |  
| |  |  | Net cash flow                                | $ | 6,608          |   | $ | 3,989          |   | $ | 526            |  

| |  |  | During the year ended April 30, 2003, the Denton-Rawhide
        Mine experienced unexpected production shortfalls due to slower than expected
        heap leach recoveries. A review of the carrying value of the Denton-Rawhide
        investment indicated that the fair value of this investment had been impaired;
        therefore a $1,262 reduction in carrying value was recorded and charged
        to that year’s operations.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-14

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|7. | Mineral Properties– Continued
|-- | -----------------------------
|  
|   | b)                           
|  
|   |                              
|  
|   | c)                           
|  
|   |                              
|  
|   |                              
|  
|   | d)                           
|  
|   |                              
|  

F-15

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|8. | Closure Fund, Accrued Closure Costs
        and Loan Payable
|-- | ------------------------------------------------------------
|  
|   | a)                                                          
|  
|   |                                                             
|  
|   |                                                             
|  
|   | b)                                                          
|  
|   |                                                             

F-16

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|8. | Closure Fund, Accrued Closure Costs and Loan Payable-
      Continued
|-- | ---------------------------------------------------------------------
|  
|   | c)                                                                   
|  
|   |                                                                      
|  
|   |                                                                      

| |  | Accrued closure costs – April 30, 2004         |   |       |  |   |       |  
| |  | ---------------------------------------------- | - | ----- |  | - | ----- | -
| |  | Current                                        | $ | 190   |  |   |       |  
| |  | Long-term                                      |   | 1,636 |  | $ | 1,826 |  
| |  | Add: Pension liability accruals *              |   |       |  |   | 343   |  
| |  | Less: Reclamation expenditures during the year |   |       |  |   | (304  | )
| |  | Accrued closure costs – April 30,
      2005   |   |       |  |   |       |  
| |  | Current                                        | $ | 118   |  |   |       |  
| |  | Long-term                                      |   | 1,747 |  | $ | 1,865 |  

| |  | * | The Company has determined that additional post-retirement
        benefit liabilities exist relating to employees of the Rawhide Joint Venture.
        The current and long-term portions of the estimated liability have been
        recognized on the consolidated balance sheet with a corresponding charge
        to mine operating income. The Rawhide Joint Venture operator is currently
        reviewing past accounting treatment of post-retirement plan funding. The
        Company anticipates that any accounting adjustments from this review will
        not negatively impact the future financial performance of the Joint Venture.
| |  | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

|9. | Share Capital                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Common Shares                                                                                                                                                                                                                                                                              
|  
|   | The Company filed a Notice of Alteration of Articles,
        under the new Business Corporations Act (British Columbia) which, effective
        January 20, 2005 altered its authorized share structure from 1,000,000,000
        common shares to an unlimited number of common shares.

F-17

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|9. | Share Capital- Continued                                                                                                                                                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Stock Options                                                                                                                                                                                                                                                                                                                            
|  
|   | Upon amalgamation, stock options outstanding under
        the plans of Dayton and PRMC were rolled over, provided that upon surrender,
        termination or expiry without exercise the shares would not be available
        for the grant of new options.                                                                           
|  
|   | In October 2002 shareholders approved a stock option
        and bonus plan under which, up to 6,000,000 common shares are reserved
        for the grant of stock options and up to 367,000 common shares are reserved
        for the grant of bonus shares to directors, employees or consultants (“eligible
        parties”).       
|  
|   | Stock options or bonus shares may be granted under
        the 2002 Plan, by the Board of Directors, to eligible parties, for a term
        of up to 10 years, at the closing price on the TSX on the date prior to
        the grant, and on conditions as may be determined by the Board of Directors.
        Details are as follows:

| |                                                     | Number of Options |   |           |   |                 
| | --------------------------------------------------- | ----------------- | - | --------- | - | ----------------
| |                                                     | Pre-              |   | October   |   | Weighted Average
| |                                                     | Amalgamation      |   | 2002      |   | Exercise Price  
| |                                                     | Plans             |   | Plan      |   | (in Cdn $)      
| | Options outstanding at April 30, 2003               | 4,517,480         |   | 2,110,000 |   | $0.73           
| | Year ended April 30, 2004         
      - granted  | -                 |   | 1,425,800 |   | $0.80           
| | -
      expired/cancelled                           | (952,700          | ) | (130,000  | ) | $1.27           
| | - exercised                                         | (1,760,400        | ) | (195,000  | ) | $0.80           
| | Options outstanding at April 30, 2004               | 1,804,380         |   | 3,210,800 |   | $0.60           
| | Year ended April 30, 2005          
      - granted | -                 |   | 1,330,000 |   | $0.75           
| | - expired/cancelled                                 | (65,080           | ) | -         |   | $1.33           
| | - exercised                                         | (138,200          | ) | (20,000   | ) | $0.55           
| | Options outstanding at April 30, 2005               | 1,601,100         |   | 4,520,800 |   | $0.63           
| | Vested as at April 30, 2005                         | 1,601,100         |   | 3,358,867 |   | $0.60           

| | The following table summarizes information about
        stock options outstanding to directors and employees as at April 30, 2005.
| | -----------------------------------------------------------------------------------------------------------------------------------

| |                   | Exercise Price | Number      | Number   
| | ----------------- | -------------- | ----------- | ---------
| | Expiry Date       | (in Cdn $)     | Outstanding | Vested   
| | May 29, 2005      | $0.54          | 625,100     | 625,100  
| | July 4, 2006      | $0.29          | 976,000     | 976,000  
| | April 18, 2007    | $0.62          | 1,790,000   | 1,790,000
| | July 23, 2008     | $0.43          | 170,800     | 113,867  
| | October 8, 2008   | $0.85          | 1,230,000   | 811,667  
| | February 18, 2010 | $0.75          | 1,330,000   | 643,333  
| |                   |                | 6,121,900   | 4,959,967

F-18

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|9. | Share Capital- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Stock Options- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | On February 18, 2005, the Company granted an additional
        1,330,000 incentive stock options under its stock option plan at an exercise
        price of CDN$0.75 per share. Options issued to full and part-time
        employees and consultants vest as to one-third upon grant and one third
        on each of the following two anniversary dates of the grant. Options issued
        to non-executive directors vest 100% upon grant. The options expire on
        February 18, 2010.
|  
|   | TheCompany has prospectively adopted the
        recommendations of CICA Handbook Section 3870 “Stock-based Compensation
        and Other Stock-based Payments” for stock options granted to
        directors, officers and employees effective May 1, 2003. Comparative figures
        have been shown on a pro forma basis, as required.                                                                                                                                                       

| | Stock-based compensation expense relating |   |         |   |   |          |   |   |          |  
| | ----------------------------------------- | - | ------- | - | - | -------- | - | - | -------- | -
| | to:                                       |   | 2005(i) |   |   | 2004 (i) |   |   | 2003(ii) |  
| | Administrative
      costs                | $ | 411     |   | $ | 316      |   | $ | 473      |  
| | Exploration costs                         |   | 73      |   |   | 20       |   |   | -        |  
| | Total stock-based compensation            | $ | 484     |   | $ | 336      |   | $ | 473      |  
| |                                           |   |         |   |   |          |   |   |          |  
| | Loss for the year – as reported           | $ | (4,634  | ) | $ | (6,859   | ) | $ | (2,800   | )
| | Loss for the year – pro forma             | $ | N/A     |   | $ | N/A      |   | $ | (3,273   | )
| | Loss Per Share - Basic and Diluted        |   |         |   |   |          |   |   |          |  
| | As reported                               | $ | (0.06   | ) | $ | (0.09    | ) | $ | (0.04    | )
| | Pro-forma                                 | $ | N/A     |   | $ | N/A      |   | $ | (0.04    | )

| | (i)                                                                                                                                                                                                                 | Recorded as an expense with the offsetting entry
        to contributed surplus.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------
| | (ii)                                                                                                                                                                                                                | Disclosed as an expense on a pro forma basis only.                              
| |                                                                                                                                                                                                                     |                                                                                 
| | The fair value of the options
        used in the information above has been estimated at the date of grant
        of options using the Black-Scholes Option Pricing Model with the following
        assumptions:

| |                                                   | April 30, 2005 | April 30, 2004 | April 30,2003
| | ------------------------------------------------- | -------------- | -------------- | -------------
| | Average risk free interest rate                   | 3.46%          | 3.85%          | 4.31%        
| | Average expected option life                      | 4 years        | 4 years        | 4 years      
| | Stock volatility – based on trading
      history | 87.39%         | 82.31%         | 89.46%       
| | Dividend payments during life of option           | Nil            | Nil            | Nil          

| | The Black-Scholes Option Pricing Model was created
        for use in estimating the fair value of freely tradable, fully transferable
        options. The Company’s employee stock options have characteristics
        significantly different from those of traded options, and because changes
        in the highly subjective input assumptions can materially effect the calculated
        values, management believes that the accepted Black-Scholes model does
        not necessarily provide a reliable measure of the fair value of the Company’s
        stock option awards.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

F-19

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|10. | Gold Sales Contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | (Metal prices in U.S. Dollars)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | At April 30, 2005, the Company’s gold hedging
        position consisted of 3,000 ounces (2004 - 6,000) of forward sales contracts
        for future delivery of gold at various dates from May 2005 to July 2005
        (2004 - May to October 2004) at an average price of US$442 (2004 -
        US$411) per ounce. At April 30, 2005 the Company had no financial
        exposure to market risks related to the settlement of outstanding hedges
        as gold spot prices were approximately US$434 (2004 - US$390)
        per ounce at that date. The estimated fair value of these contracts at
        the April 30, 2005 spot prices was $24 (2004 - $126), which represents
        the fair value to the Company on the balance sheet date if it were to
        settle these instruments prior to their maturity.
|   
|    | The credit risk exposure related to the Company’s
        gold hedging activities is limited to the unrealized gains (losses) on
        outstanding contracts based on current market prices. The Company’s
        gold hedging contract counter parties are large international credit-worthy
        institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|   
|11. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | As at April 30, 2005 the Company has the following
        tax loss carry forwards:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | Country       | Category                                         |   | Amount |  | Expiry   
| | ------------- | ------------------------------------------------ | - | ------ |  | ---------
| | Argentina     | Operating losses                                 | $ | 2,353  |  | 2006-2010
| | Canada        | Non-capital losses                               | $ | 7,850  |  | 2006-2015
| |               | Net capital losses                               | $ | 2,595  |  | N/A      
| |               | Mineral expenditures                             | $ | 11,007 |  | N/A      
| | El Salvador   | Mineral expenditures                             | $ | 17,124 |  | (i)      
| | United States | Operating losses – Regular tax                   | $ | 14,152 |  | 2006-2025
| |               | Operating losses – Alternative minimum
      tax | $ | 10,110 |  | 2006-2025

| | (i)                                                                                                                                                                                                                                          | These expenditures expire when they are written-off
        for local accounting purposes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                              |                                                                                           
| | Future income tax assets
        are not recorded for the above tax loss carry forwards due to the significant
        uncertainty of their recovery. The tax losses may be subject to audit
        and adjustment by local tax authorities
|

F-20

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|12. | Commitments                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Lease Commitments                                                                                                                                     
|   
|    | The Company has entered into operating leases for
        office premises, a photocopier and a vehicle. Minimum lease payments are
        as follows:

| |      |   | Office       |  |   |             |  |   |         |  |   |      
| | ---- | - | ------------ |  | - | ----------- |  | - | ------- |  | - | -----
| |      |   | (i) Premises |  |   | Photocopier |  |   | Vehicle |  |   | Total
| | 2006 | $ | 62.5         |  | $ | 3.8         |  | $ | 24.6    |  | $ | 90.9 
| | 2007 |   | 29.8         |  |   | 3.8         |  |   | 24.6    |  |   | 58.2 
| | 2008 |   | 17.2         |  |   | 3.8         |  |   | 2.1     |  |   | 23.1 
| | 2009 |   | -            |  |   | 1.6         |  |   | -       |  |   | 1.6  
| |      | $ | 109.5        |  | $ | 13.0        |  | $ | 51.3    |  | $ | 173.8

| | (i) | In addition to the basic rent, the Company is responsible
        for its proportionate share of property taxes and operating costs.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------
|

|13. | Contingent Liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The Rawhide joint venture partner and operator asserts
        that the Rawhide joint venture is required to pay future pension funding
        interest obligations, based on actuarial estimates of up to $2,000
        (Pacific Rim's portion would be approximately $1,000) over the next
        30 years. The operator's assertion is based on their current belief that
        the joint venture partners are responsible for all future pension obligations
        based on actuarial calculated amounts for an unfunded plan. The Company
        maintains this assertion is incorrect based on a joint venture partners'
        agreement at the inception of joint venture pension accounting that stipulates
        that the joint venture would only be responsible for actuarially calculated
        current service costs, which have all been paid to date. The Company believes
        there are no grounds for the operator's assertion and will vigorously
        defend this position.
|   

F-21

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|14. | Segmented Information  
|--- | -----------------------
|   
|    | Details are as follows:

| |                                          |   | Year      |   |   | Year      |   |   | Year      |  
| | ---------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
| |                                          |   | Ended     |   |   | Ended     |   |   | Ended     |  
| |                                          |   | April 30, |   |   | April 30, |   |   | April 30, |  
| |                                          |   | 2005      |   |   | 2004      |   |   | 2003      |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Total Assets                             |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | 589       |   | $ | 1,017     |   | $ | 99        |  
| | USA                                      |   | 3,661     |   |   | 8,556     |   |   | 17,094    |  
| | El Salvador                              |   | 4,354     |   |   | 4,457     |   |   | 4,252     |  
| | Argentina                                |   | 11        |   |   | -         |   |   | -         |  
| | Chile                                    |   | 3         |   |   | 3         |   |   | 2         |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Total                                    | $ | 8,618     |   | $ | 14,033    |   | $ | 21,447    |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Total Property, Plant and Equipment      |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | 5         |   | $ | 9         |   | $ | 8         |  
| | USA                                      |   | 60        |   |   | 909       |   |   | 1,263     |  
| | El Salvador                              |   | 4,234     |   |   | 4,184     |   |   | 4,184     |  
| | Argentina                                |   | -         |   |   | -         |   |   | -         |  
| | Chile                                    |   | -         |   |   | -         |   |   | -         |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Total                                    | $ | 4,299     |   | $ | 5,102     |   | $ | 5,455     |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Revenue, Excluding Interest Income       |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | -         |   | $ | -         |   | $ | -         |  
| | USA                                      |   | 11,868    |   |   | 12,140    |   |   | 12,509    |  
| | El Salvador                              |   | -         |   |   | -         |   |   | -         |  
| | Argentina                                |   | -         |   |   | -         |   |   | -         |  
| | Chile                                    |   | -         |   |   | -         |   |   | -         |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Total                                    | $ | 11,868    |   | $ | 12,140    |   | $ | 12,509    |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Depreciation, Depletion and Amortization |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | 4         |   | $ | 5         |   | $ | 4         |  
| | USA                                      |   | 874       |   |   | 1,290     |   |   | 3,088     |  
| | El Salvador                              |   | -         |   |   | -         |   |   | -         |  
| | Argentina                                |   |           |   |   | -         |   |   | -         |  
| | Chile                                    |   | -         |   |   | -         |   |   | -         |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Total                                    | $ | 878       |   | $ | 1,295     |   | $ | 3,092     |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Net Income (Loss)                        |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | (1,045    | ) | $ | (971      | ) | $ | 887       |  
| | USA                                      |   | 2,352     |   |   | (1,475    | ) |   | (1,004    | )
| | El Salvador                              |   | (6,047    | ) |   | (4,822    | ) |   | (3,151    | )
| | Argentina                                |   | (116      | ) |   | (39       | ) |   | (40       | )
| | Chile                                    |   | 222       |   |   | 448       |   |   | 508       |  
| |                                          |   |           |   |   |           |   |   |           |  
| | Total                                    | $ | (4,634    | ) | $ | (6,859    | ) | $ | (2,800    | )
|

F-22

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|15. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Sale of Andacollo Mine                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Subsequent to year-end, the Company entered into
        a letter of intent dated June 20, 2005, with an arms-length buyer, to
        sell the previously written off Andacollo assets for payments totalling
        $5,400. Payment terms are: $300 non-refundable deposit which was
        paid by the purchaser upon signing the letter of intent for the exclusive
        right to conduct due diligence and execute a definitive purchase agreement
        during a 30-day period from the signing of the letter of intent, $2,700
        due and payable upon the signing of the definitive agreement (“Closing”),
        $1,000 within 12 months of Closing and $1,400 within 24-months
        of Closing. The buyer may extend the initial due diligence period by an
        additional 30-days by the payment of an additional $300 non-refundable
        deposit resulting in the payment to be made upon closing being reduced
        to $2,400.
|   
|    | Two previous non-related agreements for the sale
        of Andacollo Mine were cancelled during the year. The Company retained
        $100 non-refundable deposits for each agreement for a total of $200
        which has been recorded in these statements as a Recovery of Investment
        in Andacollo Mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|   
|16. | United States Generally Accepted Accounting Principles
        (“US GAAP”)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    | The effect of the measurement differences between
        Canadian GAAP and US GAAP are summarized below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    | Under US GAAP, securities that are available-for-sale
        are recorded at fair value and unrealized gains or losses are excluded
        from earnings and recorded as a separate component of shareholders’
        equity. Declines in fair value that are other than temporary are written
        off. Under Canadian GAAP, investments in marketable securities are carried
        at the lower of cost and estimated fair market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | Under United States GAAP, adjustments arising from
        foreign currency translations are deferred until realization and are included
        as a separate component of shareholders’ equity as a component of
        comprehensive income or loss. Therefore, translation adjustments are not
        included in determining net income but reported as other comprehensive
        income. Under Canadian GAAP, translation adjustments are included in net
        income. There is no comprehensive income category in Canada.                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | The significant changes in the consolidated financial
        statements relative to US GAAP are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | Statements of Loss(in thousands of US dollars,
        except for per share amounts)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                          |   | Year      |   |   | Year      |   |   | Year      |  
| | -------------------------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
| |                                                          |   | Ended     |   |   | Ended     |   |   | Ended     |  
| |                                                          |   | April 30, |   |   | April 30, |   |   | April 30, |  
| |                                                          |   | 2005      |   |   | 2004      |   |   | 2003      |  
| |                                                          |   |           |   |   |           |   |   |           |  
| | Net loss following Canadian GAAP                         | $ | (4,634    | ) | $ | (6,859    | ) | $ | (2,800    | )
| | Loss on write-down of marketable securities              |   | -         |   |   | -         |   |   | -         |  
| |                                                          |   |           |   |   |           |   |   |           |  
| | Net loss following US GAAP                               |   | (4,634    | ) |   | (6,859    | ) |   | (2,800    | )
| | Unrealized holding gain on marketable securities         |   | -         |   |   | -         |   |   | 50        |  
| | Loss on write-down of marketable securities              |   | -         |   |   | -         |   |   | -         |  
| | Foreign exchange adjustment                              |   | (108      | ) |   | 26        |   |   | (28       | )
| |                                                          |   |           |   |   |           |   |   |           |  
| | Comprehensive loss, following US GAAP                    |   | (4,742    | ) |   | (6,833    | ) |   | (2,778    | )
| | Weighted average number of common shares, computed under |   |           |   |   |           |   |   |           |  
| | US GAAP (thousands
      of shares)                      |   | 80,514    |   |   | 79,146    |   |   | 78,450    |  
| |                                                          |   |           |   |   |           |   |   |           |  
| | Loss per share, following US GAAP                        | $ | (0.06     | ) | $ | (0.09     | ) | $ | (0.04     | )

F-23

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|16. | United States Generally Accepted Accounting Principles- Continued
      Deficit and Comprehensive Gain (Loss)(in thousands of US dollars)
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

| |                                                           |   | April 30, |   |   | April 30, |   |   | April 30, |  
| | --------------------------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
| |                                                           |   | 2005      |   |   | 2004      |   |   | 2003      |  
| |                                                           |   |           |   |   |           |   |   |           |  
| | Deficit                                                   |   |           |   |   |           |   |   |           |  
| | Adjusted deficit, beginning of
      year per US GAAP     | $ | (48,134   | ) | $ | (41,275   | ) | $ | (38,475   | )
| | Net loss per
      US GAAP                                |   | (4,742    | ) |   | (6,833    | ) |   | (2,778    | )
| | Adjusted deficit, end of year per
      US GAAP           | $ | (52,876   | ) | $ | (48,108   | ) | $ | (41,253   | )
| |                                                           |   |           |   |   |           |   |   |           |  
| | Accumulated Other Comprehensive Gain (Loss)               |   |           |   |   |           |   |   |           |  
| | Beginning of
      year per US GAAP                       | $ | 2         |   | $ | 28        |   | $ | (50       | )
| | Current year other comprehensive
      gain (loss)        |   | 108       |   |   | (26       | ) |   | 78        |  
| | Accumulated other comprehensive gain (loss),
      end of |   |           |   |   |           |   |   |           |  
| | year per US GAAP                                          | $ | 110       |   | $ | 2         |   | $ | 28        |  

| | As the Company delivers gold against outstanding forward
        sales contracts, it has determined that there is no impact from the adoption
        of Statement of Financial Accounting Standard (“SFAS”) No.
        133, Accounting For Derivative Instruments and Hedging Activities.
      Recent U.S. Accounting Pronouncements
      In August 2001, the FASB issued SFAS No. 143, "Accounting
        for Asset Retirement Obligations". SFAS No. 143 requires entities
        to record the fair value of a liability for an asset retirement obligation
        in the period in which it is a cost by increasing the carrying amount
        of the related long-lived asset. Over time, the liability is accreted
        to its present value each period, and the capitalized cost is depreciated
        over the useful life of the related obligation for its recorded amount
        or incurs a gain or loss upon settlement. The Company adopted SFAS No.
        143, as required, on May 1, 2003.
      In August 2001, the FASB issued SFAS No. 144, “Accounting
        for the Impairment or Disposal of Long-lived Assets”. SFAS No.
        144 was issued to resolve certain implementation issues that had arisen
        under SFAS No. 121. Under SFAS No. 144, a single uniform accounting model
        is required to be used for long-lived assets to be disposed of by sale,
        whether previously held and used or newly acquired, and certain additional
        disclosures are required. The Company adopted SFAS No. 144, as required,
        with no material impact on its financial statements.
      In April 2002, the FASB issued SFAS No. 145, “Rescission
        of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No.
        13, and Technical Corrections”. SFAS No. 145 updates, clarifies
        and simplifies existing accounting pronouncements, by rescinding SFAS
        No. 4, which required all gains and losses from extinguishment of debt
        to be aggregated and, if material, classified as an extraordinary item,
        net of related income tax effect. As a result, the criteria in APB No.
        30 will now be used to classify those gains and losses. Additionally,
        SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications
        that have economic effects similar to sale-leaseback transactions be accounted
        for in the same manner as sale-leaseback transactions. Finally, SFAS No.
        145 also makes technical corrections to existing pronouncements. While
        those corrections are not substantive in nature, in some instances, they
        may change accounting practice. The Company adopted the provisions of
        SFAS No. 145 that amended SFAS No. 13, as required, on May 15, 2002 for
        transactions occurring after such date with no material impact on its
        financial statements. The Company adopted the remaining provisions of
        SFAS No. 145, as required, on May 1, 2003 with no material impact on its
        financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-24

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|16. | United States Generally Accepted Accounting Principles- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Recent U.S. Accounting Pronouncements- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | In June 2002, the FASB issued SFAS No. 146, “Accounting
        for Costs Associated with Exit or Disposal Activities”. SFAS
        No. 146 was issued to address the financial accounting and reporting for
        costs associated with exit or disposal activities, unless specifically
        excluded. SFAS No. 146 requires that a liability for costs associated
        with an exit or disposal activity be recognized and measured at its fair
        value in the period in which the liability is incurred. The Company adopted
        SFAS No. 146, as required, on May 1, 2003 with the result that the carrying
        value of the Rawhide Mine and the corresponding asset retirement obligation
        was increased by $0.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | In December 2002, the FASB issued SFAS No. 148, "Accounting for
          Stock-Based Compensation -- Transition and Disclosure". SFAS 148
          amends SFAS No. 123, to provide alternative methods of transition for
          a voluntary change to the fair value based method of accounting for
          stock-based employee compensation. In addition, SFAS 148 amends the
          disclosure requirements of SFAS 123 to require prominent disclosures
          in both annual and interim financial statements about the method of
          accounting for stock-based employee compensation and the effect of the
          method used on reported results. SFAS 148 is effective for fiscal years
          beginning after December 15, 2002. The interim disclosure provisions
          are effective for financial reports containing financial statements
          for interim periods beginning after December 15, 2002. The Company adopted
          SFAS No. 148, on May 1, 2003.
        In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN
          46”), “Consolidation of Variable Interest Entities, an
          Interpretation of ARB No. 51.”FIN 46 requires certain variable
          interest entities to be consolidated by the primary beneficiary of the
          entity, if the equity investors in the entity do not have the characteristics
          of a controlling financial interest or do not have sufficient equity
          at risk for the entity to finance its activities without additional
          subordinated financial support from other parties. FIN 46 is effective
          for all new variable interest entities created or acquired after January
          31, 2003. For variable interest entities created or acquired prior to
          February 1, 2003, the provisions of FIN 46 must be applied for the first
          interim or annual period beginning after June 15, 2003. However, in
          December 2003, the FASB published a revision to FIN 46 to clarify some
          of the provisions of FIN 46, and to exempt certain entities from its
          requirements. Under the new guidance, there are new effective dates
          for companies that have interests in structures that are commonly referred
          to as special-purpose entities. The rules are effective in financial
          statements for periods ending after June 15, 2004. The adoption did
          not have any impact on the Company’s financial statements.
|   
|    | On April 30, 2003, the FASB issued SFAS No. 149,
        "Amendment of Statement 133 on Derivative Instruments and Hedging Activities".
        SFAS No. 149 amends and clarifies accounting for derivative instruments,
        including certain derivative instruments embedded in other contracts,
        and for hedging activities under SFAS No. 133. The new guidance amends
        SFAS No. 133 for decisions made as part of the Derivatives Implementation
        Group ("DIG") process that effectively required amendments to SFAS
        No. 133, and decisions made in connection with other FASB projects dealing
        with financial instruments and in connection with implementation issues
        raised in relation to the application of the definition of a derivative
        and characteristics of a derivative that contains financing components.
        In addition, it clarifies when a derivative contains a financing component
        that warrants special reporting in the statement of cash flows. SFAS No.
        149 is effective for contracts entered into or modified after June 30,
        2003 and for hedging relationships designated after June 30, 2003. The
        Company adopted SFAS 149, as required, on July 1, 2003, with no material
        impact on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-25

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|16. | United States Generally Accepted Accounting Principles- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Recent U.S. Accounting Pronouncements- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | In May 2003, the FASB issued SFAS 150, "Accounting
        for Certain Financial Instruments with Characteristics of both Liabilities
        and Equity". SFAS No. 150 establishes standards for classifying and
        measuring as liabilities certain financial instruments that embody obligations
        of the issuer and have characteristics of both liabilities and equity.
        SFAS No. 150 is effective for all financial instruments created or modified
        after May 31, 2003 and otherwise is effective at the beginning of the
        first interim period beginning after June 15, 2003. The Company adopted
        SFAS 150, as required, on August 1, 2003, with no material impact on its
        financial statements.                                                                                                                                                                                                       
|   
|    | In December 2003, the Securities and Exchange Commission
        (“SEC”) issued Staff Accounting Bulletin (“SAB”)
        No. 104, Revenue Recognition. SAB 104 revises or rescinds portions of
        the interpretive guidance included in Topic 13 of the codification of
        staff accounting bulletins in order to make this interpretive guidance
        consistent with current authoritative accounting and auditing guidance
        and SEC rules and regulations. The adoption of SAB 104 did not have a
        material effect on the Company’s financial statements.                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | In November 2004, the FASB issued SFAS No. 151,
        “Inventory Costs, an amendment of ARB No. 43, Chapter 4”
        which will become effective for fiscal years beginning after June 15,
        2005. This standard clarifies that abnormal amounts of idle facility expense,
        freight, handling costs and wasted material should be expensed as incurred
        and not included in overhead. In addition, this standard requires that
        the allocation of fixed production overhead costs to inventory be based
        on the normal capacity of the production facilities. The adoption of this
        standard is not expected to have material effect on the Company’s
        results of operations or financial position.                                                                                                                                                                                                        
|   
|    | In November 2004, the Emerging Issues Task Force
        issued EITF Abstract 03-13 (EITF 03-13) to provide guidance on applying
        SFAS 144, “Determining Whether to Report Discontinued Operations”.
        SFAS 144 discusses when an entity should disclose a “component”
        as discontinued operations. Under SFAS 144, a component should be disclosed
        as discontinued operations when continuing cash flows are eliminated and
        when there is no significant continuing involvement with the component.
        EITF 03-13 provides additional guidance on factors to consider in evaluating
        what constitutes continuing cash flows and continuing significant influence.
        This statement is effective for fiscal periods beginning after December
        15, 2004. The Company does not expect there to be any material impact
        on the operations or financial position upon adoption of the guidance.

F-26

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2005 and 2004                   
|In thousands of U.S. dollars              
|                                          
|                                          

|16. | United States Generally Accepted Accounting Principles- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Recent U.S. Accounting Pronouncements- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    | In December 2004, the Financial Accounting Standards
        Board (FASB) issued Statement of Financial Accounting Standard (SFAS)
        No. 123R, “Share Based Payment”. SFAS 123R is a revision of
        SFAS No. 123 “Accounting for Stock-Based Compensation”, and
        supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”
        and its related implementation guidance. SFAS 123R establishes standards
        for the accounting for transactions in which an entity exchanges its equity
        instruments for goods or services. It also addresses transactions in which
        an entity incurs liabilities in exchange for goods or services that are
        based on the fair value of the entity’s equity instruments or that
        may be settled by the issuance of those equity instruments. SFAS 123R
        focuses primarily on accounting for transactions in which an entity obtains
        employee services in share-based payment transactions. SFAS 123R does
        not change the accounting guidance for share-based payment transactions
        with parties other than employees provided in SFAS 123 as originally issued
        and Emerging Issues Task Force Issue No. 96-18, “Accounting for
        Equity Instruments That Are Issued to Other Than Employees for Acquiring,
        or in Conjunction with Selling, Goods or Services”. SFAS 123R does
        not address the accounting for employee share ownership plans, which are
        subject to AICPA Statement of Position 93-6, “Employers’ Accounting
        for Employee Stock Ownership Plans”. SFAS 123R requires a public
        entity to measure the cost of employee services received in exchange for
        an award of equity instruments based on the grant-date fair value of the
        award (with limited exceptions). That cost will be recognized over the
        period during which an employee is required to provide service in exchange
        for the award – the requisite service period (usually the vesting
        period). SFAS 123R requires that the compensation cost relating to share-based
        payment transactions be recognized in financial statements. That cost
        will be measured based on the fair value of the equity or liability instruments
        issued. The scope of SFAS 123R includes a wide range of share-based compensation
        arrangements including share options, restricted share plans, performance-based
        awards, share appreciation rights, and employee share purchase plans.
        Public entities (other than those filing as small business issuers) will
        be required to apply SFAS 123R as of the first interim or annual reporting
        period that begins after June 15, 2005. Public entities that file as small
        business issuers will be required to apply SFAS 123R in the first interim
        or annual reporting period that begins after December 15, 2005. For nonpublic
        entities, SFAS 123R must be applied as of the beginning of the first annual
        reporting period beginning after December 15, 2005. The adoption of this
        standard is not expected to have a material effect on the Company’s
        results of operations or financial position.
|   
|    | In December 2004, FASB issued SFAS No. 153, “Exchanges
        of Nonmonetary Assets - An Amendment of APB Opinion No. 29”. The
        guidance in APB Opinion No. 29, “Accounting for Nonmonetary Transactions”,
        is based on the principle that exchanges of nonmonetary assets should
        be measured based on the fair value of the assets exchanged. The guidance
        in that Opinion, however, included certain exceptions to that principle.
        SFAS No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary
        exchanges of similar productive assets and replaces it with a general
        exception for exchanges of nonmonetary assets that do not have commercial
        substance. A nonmonetary exchange has commercial substance if the future
        cash flows of the entity are expected to change significantly as a result
        of the exchange. The provisions of SFAS No. 153 are effective for nonmonetary
        asset exchanges occurring in fiscal periods beginning after June 15, 2005.
        Early application is permitted and companies must apply the standard prospectively.
        The adoption of this standard is not expected to have a material effect
        on the Company’s results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   

F-27

---

73

ITEM 18:          FINANCIAL
  STATEMENTS

Not applicable. See Item 17 above.

ITEM 19:          EXHIBITS

Exhibits as follows:

|Exhibit |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|1.1(1)  |  | Articles of the amalgamated Company approved
        January 8, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|1.2(4)  |  | New Articles of the Company approved
        September 22, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.1(2)  |  | Assignment Agreement dated for reference
        as of April 6, 2000 between Kinross Rawhide Mining Company, Kinross Fallon
        Inc. and Dayton Mining Corporation                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.2(2)  |  | Construction and Post-Construction Operating
        Agreement dated as of June 23, 1989 among Kennecott Explorations (Australia)
        Ltd. (as assigned to Kennecott Rawhide) and Kiewit Mining Group Inc. (as
        assigned (i) in part to Plexus, Inc. which in turn assigned its interest
        to Plexus Rawhide Mining Company which changed its name to Kinross Rawhide
        and (ii) in part to Kiewit Rawhide Corp. which changed its name to Kinross
        Fallon) as amended by the First Amendment to Operating Agreement;
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.3(2)  |  | Agreement and First Amendment to Construction
        and Post- Construction Operating Agreement dated as of December 15, 1992
        made among Kennecott Rawhide, Kiewit Mining Group Inc., Plexus Inc. and
        Plexus Rawhide Mining Company                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.4(2)  |  | Participation Agreement dated as of June
        23, 1989 made between Plexus Inc. (as assigned to Plexus Rawhide Minng
        Company which changed its name to Kinross Rawhide) and Kiewit Mining Group
        Inc. (as assigned to Kiewit Rawhide Corp. which changed its name to Kinross
        Fallon).                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.5(2)  |  | Option and Royalty Agreement among Mirage
        Resource Corporation, Zinc Metal Corporation and New York and El Salvador
        Mining Co. Inc. dated June 25, 1993                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|12.1    |  | Certification
        of Chief Executive Officer pursuant to s.302 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|12.2    |  | Certification
        of Chief Financial Officer pursuant to s.302 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|13.1    |  | Certification
        of Chief Executive Officer pursuant to s.906 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|13.2    |  | Certification
        of Chief Financial Officer pursuant to s.906 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|14.1    |  | Consent of
        SRK Consulting Engineers and Scientists                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

74

|Exhibit |  | Exhibit Description                       
|------- |  | ------------------------------------------
|Number  |  |                                           
|        |  |                                           
|14.2    |  | Consent of Staley & Okada &
      Partners

|(1) | Incorporated by reference to exhibits filed as part
        of the Company’s Form 8-A Registration Statement filed with the
        Securities and Exchange Commission on May 6, 2002.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated by reference to exhibits filed as part
        of the 20F of the Company dated August 26, 2002.                                                                          
|   
|(3) | Incorporated by reference to exhibits filed as part
        of the 20F of Dayton dated February 26, 2002                                                                              
|   
|(4) | Incorporated by reference to exhibit filed as 6-K
        January 2005                                                                                                                

---

75

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities
  Exchange Act of 1934, the Company certifies that it meets all of the requirements
  for filing on Form 20-F and has duly caused this Annual Report to be signed
  on its behalf by the undersigned, thereunto duly authorized.

|                     | PACIFIC RIM MINING CORP.    
|-------------------- | ----------------------------
|                     |                             
|                     |                             
|Date:  July 28, 2005 | /s/ Thomas C. Shrake        
|                     | Thomas C. Shrake            
|                     | Its: Chief Executive Officer

---

76

EXHIBITINDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Exhibit     
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Appears at  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Sequentially
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Numbered    
|Number  |  | Exhibit
      Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Page        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|1.1(1)  |  | Articles of the amalgamated
        Company approved January 8, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|1.2(4)  |  | New Articles of the
        Company approved September 22, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|4.1(2)  |  | Assignment Agreement
        dated for reference as of April 6, 2000 between Kinross Rawhide Mining
        Company, Kinross Fallon Inc. and Dayton Mining Corporation                                                                                                                                                                                                                                                                                                                                                                                      |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|4.2(2)  |  | Construction and Post-Construction
        Operating Agreement dated as of June 23, 1989 among Kennecott Explorations
        (Australia) Ltd. (as assigned to Kennecott Rawhide) and Kiewit Mining
        Group Inc. (as assigned (i) in part to Plexus, Inc. which in turn assigned
        its interest to Plexus Rawhide Mining Company which changed its name to
        Kinross Rawhide and (ii) in part to Kiewit Rawhide Corp. which changed
        its name to Kinross Fallon) as amended by the First Amendment to Operating
        Agreement; |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|4.3(2)  |  | Agreement and First
        Amendment to Construction and Post- Construction Operating Agreement dated
        as of December 15, 1992 made among Kennecott Rawhide, Kiewit Mining Group
        Inc., Plexus Inc. and Plexus Rawhide Mining Company                                                                                                                                                                                                                                                                                                        |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|4.4(2)  |  | Participation Agreement
        dated as of June 23, 1989 made between Plexus Inc. (as assigned to Plexus
        Rawhide Minng Company which changed its name to Kinross Rawhide) and Kiewit
        Mining Group Inc. (as assigned to Kiewit Rawhide Corp. which changed its
        name to Kinross Fallon).                                                                                                                                                                                                                                             |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|4.5(2)  |  | Option and Royalty
        Agreement among Mirage Resource Corporation, Zinc Metal Corporation and
        New York and El Salvador Mining Co. Inc. dated June 25, 1993                                                                                                                                                                                                                                                                                                                                                                                     |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|12.1    |  | Certification
        of Chief Executive Officer pursuant to s.302 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|12.2    |  | Certification
        of Chief Financial Officer pursuant to s.302 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|13.1    |  | Certification
        of Chief Executive Officer pursuant to s.906 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|13.2    |  | Certification
        of Chief Financial Officer pursuant to s.906 of the Sarbanes-Oxley Act
        of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|14.1    |  | Consent
        of SRK Consulting Engineers and Scientists                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             
|14.2    |  | Consent of Staley & Okada & Partners                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |             

---

77

|(1) | Incorporated by reference to exhibits filed as part
        of the Company’s Form 8-A Registration Statement filed with the
        Securities and Exchange Commission on May 6, 2002.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated by reference to exhibits filed as part
        of the Company’s 20F dated August 26, 2002.                                                                               
|   
|(3) | Incorporated by reference to exhibits filed as part
        of the 20F of Dayton dated February 26, 2002                                                                              
|   
|(4) | Incorporated by reference to exhibit filed as 6-K
        January 2005                                                                                                                

---