---

- 1 -

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 20-F

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACTOF 1934

OR

[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of event require this shell company report:For
the transition period from ____ to _____

Commission file number: 001-31328

PACIFIC RIM MINING CORP.(Exact name of Registrant as
specified in its charter)

Province of British Columbia,
Canada(Jurisdiction of incorporation or organization)

|625 Howe Street, Suite 1050, Vancouver, British
      Columbia, Canada V6E 2T6
|------------------------------------------------------------------------------
|(Address of principal executive offices                                       

Barbara Henderson625 Howe Street, Suite 1050,
Vancouver, British Columbia, Canada V6E 2T6 Tel: (604) 689-1976
E-mail: bhenderson@pacrim-mining.com
  Name,Telephone, E-mail and or/Facsimile number and Address of Company
  Contact Person)

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, no par value | None                                      

Securities registered or to be registered pursuant to Section
12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report: 168,401,708

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

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- 2 -

If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934. 
[    ] 
Yes   [ x ] No

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 if such shorter period that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. 
[ x ]  Yes  
[   ]  No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was require to submit and post such files) 
[     ]  Yes  [    ]  No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one):

|Large accelerated filer [     ] | Accelerated Filer [    
    ] | Non-accelerated filer [ x
]
|------------------------------- | ----------------------------- | ---------------------------

Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

|US GAAP [     ] | International Reporting Standards as issued
      [    ] | Other [ x ]
|--------------- | -------------------------------------------------------- | -----------
|                | By the International Accounting Standards
      Board    |            

If Other has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant
has elected to follow: 
Item 17   [ x ]  
Item 18  [   ]

If this is an annual report, indicate by
  check mark whether the registrant is a shell company (as defined in Rule 12b-2
  of the Exchange Act). 
  [    ]  Yes  [ x ] No

---

TABLE OF CONTENTS

|CAUTIONARY
      NOTE TO US INVESTORS REGARDING RESOURCE AND RESERVE ESTIMATES | 2                                                                                                
|------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------
|GLOSSARY
      OF TECHNICAL TERMS                                              | 3                                                                                                
|CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS                | 4                                                                                                
|PART
      I                                                                   | 6                                                                                                
|                                                                               | ITEM
      1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                              
|                                                                               | ITEM
      2. OFFER STATISTICS AND EXPECTED TIMETABLE                                            
|                                                                               | ITEM
      3. KEY INFORMATION                                                                    
|                                                                               | ITEM
      4. INFORMATION ON THE COMPANY                                                         
|                                                                               | ITEM
      4A. UNRESOLVED STAFF COMMENTS                                                         
|                                                                               | ITEM
      5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                       
|                                                                               | ITEM
      6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                         
|                                                                               | ITEM
      7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                  
|                                                                               | ITEM
      8. FINANCIAL INFORMATION                                                              
|                                                                               | ITEM
      9. THE OFFER AND LISTING                                                              
|                                                                               | ITEM
      10. ADDITIONAL INFORMATION                                                            
|                                                                               | ITEM
      11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                         
|                                                                               | ITEM
      12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                            
|PART
      II                                                                  | 73                                                                                               
|                                                                               | ITEM
      13. DEFAULTS, DIVIDENT ARREARAGES AND DELINQUENCIES                                   
|                                                                               | ITEM
      14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS
|                                                                               | ITEM
      15. CONTROLS AND PROCEDURES                                                           
|                                                                               | ITEM
      16. [RESERVED]                                                                        
|                                                                               | ITEM
      16A. AUDIT COMMITTEE FINANCIAL EXPERT                                                 
|                                                                               | ITEM
      16B. CODE OF ETHICS                                                                   
|                                                                               | ITEM
      16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                           
|                                                                               | ITEM
      16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                       
|                                                                               | ITEM
      16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
      PURCHASERS     
|                                                                               | ITEM
      16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT                                     
|                                                                               | ITEM
      16G. CORPORATE GOVERNANCE                                                             
|PART
      III                                                                 | 76                                                                                               
|                                                                               | ITEM
      17. FINANCIAL STATEMENTS                                                              
|                                                                               | ITEM
      18. FINANCIAL STATEMENTS                                                              
|                                                                               | ITEM
      19. EXHIBITS                                                                          

---

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CAUTIONARY NOTE TO US INVESTORS REGARDING RESOURCE AND
RESERVE ESTIMATES

This Annual Report on Form 20-F has been prepared in accordance
with the requirements of the securities law in effect in Canada, which differ
from the requirements of the United States securities laws. The terms mineral
reserve, proven mineral reserve and probable mineral reserve are Canadian
mining terms as defined in accordance with Canadian National Instrument 43-101 
Standards of Disclosure for Mineral Projects (NI 43-101) and the
Canadian Institute of Mining, Metallurgy and Petroleum (the CIM)  CIM
Definition Standards on Mineral Resources and Mineral Reserves, adopted by
the CIM Council, as amended. These definitions differ from the definitions in
the United States Securities and Exchange Commission (SEC) Industry Guide 7
under the United States Securities Act of 1933, as amended (the Securities
Act). Under SEC Industry Guide 7 standards, a final or bankable feasibility
study is required to report reserves, the three-year historical average price is
used in any reserve or cash flow analysis to designate reserves and the primary
environmental analysis or report must be filed with the appropriate governmental
authority.

In addition , the terms mineral resource, measured
resource, indicated resource and inferred resource are defined in and
required to be disclosed by NI 43-101; however, these terms are not defined
terms under SEC Industry Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. Investors are cautioned
not to assume that any part of or all of mineral deposits in these categories
will ever be converted into reserves. Inferred mineral resources have a great
amount of uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of inferred mineral resources may not form the basis
of feasibility or pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred mineral resource
exists or is economically or legally mineable. Disclosure of contained ounces
in a resource is permitted disclosure under Canadian regulations; however the
SEC normally only permits issuers to report mineralization that does not
constitute reserves by SEC Industry Guide 7 standards as in place tonnage and
grade without reference to unit measures.

Accordingly, information contained in this Annual Report on
Form 20-F and the documents incorporated by reference herein contain
descriptions of our mineral deposits that may not be comparable to similar
information made public by U.S. companies subject to the reporting and
disclosure requirements under the United States federal securities laws and the
rules and regulations thereunder.

NI 43-101 Definitions

|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 and inferred mineral resource
      used in this annual Form 20-F are Canadian mining terms as defined in
      accordance with NI 43-101 under the guidelines set out in the CIM
      Standards.                                                                                                                                                                                                                                                                                                                                                                                                                                
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Measured 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 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.                               

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- 3 -

NI 43-101 Definitions

|Inferred 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|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 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Proven 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 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 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 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.                                                     

GLOSSARY OF TECHNICAL TERMS

In this annual report on Form 20-F, the following terms and
acronyms have the following meanings:

|CAFTA        | The Dominican Republic-United States-Central
      America Free Trade Agreement    
|-------------- | -----------------------------------------------------------------------------------
|               |                                                                                    
|CIM          | Canadian Institute of Mining, Metallurgy and
      Petroleum.                      
|               |                                                                                    
|Dore         | A compound containing gold and silver metal and
      various impurities.          
|               |                                                                                    
|GOES         | The Government of El Salvador                                                      
|               |                                                                                    
|g/t or gpt | Grams per tonne. One gram per tonne equals
      0.02917 troy ounces per short ton.

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- 4 -

|NI 43-101        | National Instrument 43-101 - Standards of Disclosure
      for Mineral Projects. An instrument 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 instrument establishes certain
      standards for all public disclosure of scientific and technical
      information concerning mineral projects.                                                                                                                                                                                                                                                                                  
|------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|ICSID            | The International Center for the Settlement of Investment
      Disputes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|ILES             | The Investment Law of El Salvador                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|tpd              | Tonnes per day. One tonne equals 1.10231 tons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|TSX              | The Toronto Stock Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Conversion Factors

To Convert From
    To
    Multiply ByFeet
    Metres
    0.305Metres
    Feet
    3.281Miles
    Kilometres (km)
    1.609Kilometres
    Miles
    0.6214Acres
    Hectares (ha)
    0.405Hectares
    Acres
    2.471Grams
    Ounces (Troy)
    0.03215Grams/Tonnes
    Ounces (Troy)/Short Ton
    0.02917Tonnes (metric)
    Pounds
    2,205Tonnes (metric)
    Short Tons
    1.1023


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

This Annual Report on Form 20-F and exhibits attached hereto
contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and Canadian securities laws. Such
forward-looking statements concern the Company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. Statements concerning
estimates of mineral resources and reserves 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 the outcome of legal proceedings

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- 5 -

- risks related to failure to obtain adequate financing on a timely basis and
  on acceptable terms;
- political and regulatory risks associated with mining and exploration;
- risks related to the maintenance of exchange listings;
- risks related to environmental regulation and liability;
- the potential for delays in exploration or development activities;
- the uncertainty of profitability based upon the Companys history of
  losses;
- 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 prefeasibility and feasibility studies, and the possibility that
  future exploration, development or mining results will not be consistent with
  the Companys expectations;
- risks related to gold price and other commodity price fluctuations

This list is not exhaustive of the factors that may affect our
forward-looking statements. Some of the important risks and uncertainties that
could affect forward-looking statements are described in this Annual Report on
Form 20-F under Description of the Business 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. Investors are cautioned against attributing undue certainty to
forward-looking statements.

---

- 6 -

PART I

In this document, references to we, our, us, the
Company or Pacific Rim mean Pacific Rim Mining Corp. and: its U.S.
subsidiaries (Pac Rim Cayman LLC (PacRim), Pacific Rim Exploration Inc., and
Dayton Mining (U.S.) Inc.); Salvadoran subsidiaries (Pacific Rim El Salvador,
S.A. de C.V. (PRES) and Dorado Exploraciones, S.A. de C.V. (DOREX)); and,
Panamanian subsidiary (Minera Verde, S.A. (Minera Verde)), inclusive, unless
the context of the sentence clearly suggests otherwise.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISORS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

|A. | Selected Financial Data
|-- | -----------------------

The following table presents selected financial information.
The Company prepares its financial statements, which are filed with this report
on Form 20-F, in accordance with Canadian generally accepted accounting
practices (GAAP), and they may be subject to Canadian auditing and auditor
independence standards. They may not be comparable to financial statements of
United States companies. There is one quantitative difference between Canadian
GAAP and United States GAAP as disclosed in note 13 of the consolidated
financial statements for the years ended April 30, 2011 and 2010.

The following selected data has been extracted from the more
detailed financial statements included herein, including the Companys audited
consolidated financial statements prepared under Canadian GAAP and US GAAP. The
selected financial data is qualified in its entirety by, and should be read in
conjunction with, the financial statements and notes thereto as well as
managements discussion and analysis of results of operations.

Year Ended April 30 (in
      thousands of US Dollars)2011 US GAAP
    2011 Cdn GAAP
    2010 US GAAP
    2010 Cdn GAAP
    2009 Cdn and US GAAP
    2008 Cdn and US GAAPLoss from Continuing Operations
    (3,735)
    (4,002)
    (3,874)
    (5,005)
    (9,443)
    (15,657)Net Loss
    (3,735)
    (4,002)
    (3,836)
    (4,967)
    (6,276)
    (12,734)Income (loss) per common share from continued operations 
      Basic and Diluted
    (0.03)
    (0.03)
    (0.03)
    (0.04)
    (0.08)
    (0.13)Income (loss) per common share  Basic and Diluted
    (0.03)
    (0.03)
    (0.03)
    (0.04)
    (0.05)
    (0.11)Total Assets
    6,681
    6,681
    6,927
    6,927
    8,187
    18,270


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- 7 -

Year Ended April 30 (in
      thousands of US Dollars)2011 US GAAP
    2011 Cdn GAAP
    2010 US GAAP
    2010 Cdn GAAP
    2009 Cdn and US GAAP
    2008 Cdn and US GAAPNet Assets
    2,195
    3,993
    2,697
    4,301
    6,508
    12,161Cash Dividend per share
    N/A
    N/A
    N/A
    N/A
    N/A
    N/AShares outstanding(1)
    150,568,308
    150,568,308
    130,308,308
    130,308,308
    118,033,642
    116,915,460Total shareholders Equity
    2,195
    3,993
    2,697
    4,301
    6,508
    12,161


(1)Number of common shares issued and
outstanding

Outstanding Share Data

The following table outlines the common shares outstanding at
and subsequent to the year end to:

Number of Common 
      Shares
    Number of Options
    Number of WarrantsBalance on April 30, 2011
    150,568,308
    10,295,000
    23,531,000Issued or Exercised subsequent to year end
    17,833,400
    Nil
    9,633,100Balance on July 20, 2011
    168,401,708
    10,295,000
    33,164,100


Currency and Exchange Rates

Unless otherwise indicated, all dollar amounts in this annual
report on Form 20-F are in United States dollars. The exchange rate of Canadian
dollars into United States dollars, on July 19, 2011, based on the noon
rate of exchange as quoted by the Bank of Canada was U.S.$1.00 = CDN
$XX.

Exchange Rates for Previous Six MonthsFor the Month ended
    High
    LowApril 2011
    $0.9610
    $0.9551March 2011
    $0.9796
    $0.9737February 2011
    $0.9905
    $0.9849January 2011
    $0.9974
    $0.9911December 2010
    $1.0112
    $1.0050November 2010
    $1.0170
    $1.0099


Exchange Rates for Previous Five Financial
      Years ended December 31For the Year Ended
    AverageDecember 31, 2010
    $1.0299December 31, 2009
    $1.1420December 31, 2008
    $1.0660December 31, 2007
    $1.0748December 31, 2006
    $1.1342


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- 8 -

|B. | Capitalization and indebtedness
|-- | -------------------------------

Not applicable.

|C. | Reason for the offer and use of
proceeds
|-- | ----------------------------------------

Not applicable.

|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.

Failure to successfully address the risks and uncertainties
described below could have a material adverse effect on the Companys business,
financial condition and/or results of operations, and the trading price of the
Companys shares may decline and investors may lose all or part of their
investment.

The principal activity of the Company is mineral exploration,
which is inherently risky. Exploration is also capital intensive, and the
Company currently has no source of income. The risk factors that could affect
the Companys future results include, but are not limited to, those items
discussed below. Descriptions of the Companys exploration properties, including
details of an ongoing legal action pertaining to the El Dorado property, are
described in Item 4D  Property, Plant and Equipment.

In particular, the following risk factors apply:

History of Losses

The Company has a history of losses and may continue to incur
losses for the foreseeable future. As of April 30, 2011, the Company had an
accumulated deficit of $90.1 million. The Company currently has no source of
revenue and there can be no assurance that the Company will realize revenue
growth or achieve profitability in the future.

Financing Risks

The Companys sources of financing include current cash and
cash equivalents, and short term investments. The Company utilizes these limited
financial resources to finance its exploration activities, general and
administrative and legal expenses. While the Company believes it has the
financial resources to conduct the exploration work, property maintenance, and
general and administrative expenditures it has currently planned or is obligated
to undertake during fiscal 2012, future financing will be necessary in order to
fund future costs associated with an ongoing legal action, ongoing general and
administrative costs including regulatory responsibilities, as well as to fund
future exploration work including: a Phase II exploration program at Hog Ranch
(if warranted); the resumption of exploration work at the El Salvador properties
(if conditions allow); possible exploration program on the Remance project
(should its acquisition be finalized); and, exploration on other potential
future property acquisitions. Furthermore the Company does not have the funds in
place to conduct mine development activities at the El Dorado property should
the Company receive the permits allowing it to undertake these activities.

There is no assurance that financing will be available to the
Company, on reasonable and acceptable terms at the time it is required by the
Company. 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 favorable. Failure to obtain such additional financing
could result in the Companys failure to remain a going concern, the Companys
inability to continue to fund PacRims CAFTA/ILES action, or could cause the
delay or indefinite postponement of further exploration and development of its
projects with a possible loss of some properties.

Going Concern

The Companys financial statements have been prepared on the
basis that the Company will continue as a going concern, which assumes that the
Company will be able to meet its commitments, continue operations, realize its
assets and discharge its liabilities in the normal course of business for the
foreseeable future, there are events and conditions that cast substantial doubt
on the validity of that assumption. During the year ended April 30, 2011, the
Company incurred a loss of $4.0 million (2010 - $5.0 million) before
discontinued operations and as at April 30, 2011 has an accumulated deficit of
$90.1 million (April 30, 2010 - $86.1 million). The Company will require
additional funding to maintain its ongoing exploration programs and property
commitments, for administrative purposes and CAFTA arbitration and negotiation.
These legal costs for CAFTA are substantial.

The Companys ability to continue operations and exploration
activities as a going concern is dependent upon its ability to obtain additional
funding. While the Company has been successful in obtaining its required funding
in the past, there is no assurance that sufficient funds will be available to the Company in the
future. The Company has no assurance that such financing will be available or be
available on favorable terms. Factors that could affect the availability of
financing include the progress and results of the El Dorado project and its
permitting application, the resolution of international arbitration proceedings
over the non-issuance of permits in El Salvador, the state of international debt
and equity markets, investor perceptions and expectations and the global
financial and metals markets. The Company has obtained additional financing
subsequent to April 30, 2011, however the Company will require additional
financing through, but not limited to, the issuance of additional equity in
order to fund its ongoing exploration and CAFTA costs. There can be no assurance
the Company will be successful in this endeavor.

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The consolidated financial statements do not reflect
adjustments in the carrying values of the assets and liabilities, the reported
revenues and expenses, and the balance sheet classifications used, that would be
necessary if the company were unable to realize its assets and settle its
liabilities

Maintenance of Exchange Listings

The Companys shares currently trade on the TSX in Canada and
on the OTCQX platform in the US. The Company remains SEC-registered in the US.
The Companys ability to maintain its TSX listing will be dependent on meeting
the exchanges ongoing listing maintenance standards including provisions for
minimum exploration work expenditures. The Company did not meet the TSXs
exploration work expenditure standard during fiscal 2011, but anticipates
satisfying this ongoing listing maintenance item during fiscal 2012 as a result
of planned exploration work on the Hog Ranch property. The TSX may elect at any
time to undertake a formal listing review of the Company, which could result in
the Companys shares being subject to delisting from the TSX, in which event the
Company would seek a listing on the TSX Venture Exchange. However, there is no
assurance that the Company would be successful in obtaining such a listing.

Exploration, Development and Operating Risks

Resource exploration, development, and operation is a highly
speculative business that involves significant risks, which even a combination
of careful evaluation, experience and knowledge may not eliminate. While the
discovery of precious metals and other minerals may result in substantial
rewards, few properties that are explored are ultimately developed into
producing mines. Major expenses may be required to locate and establish
economically viable mineral deposits, to develop metallurgical processes and to
construct mining and processing facilities at a particular site. It is
impossible to ensure that the exploration or development programs planned by the
Company will result in a profitable commercial mining operation. The potential
for any project to eventually become an economically viable operation depends on
numerous factors including: the quantity and quality of the minerals discovered
if any, the proximity to infrastructure, metal and mineral prices (which vary
considerably over time) and government regulations. The exact effect these
factors can have on any given exploration property can not accurately be
predicted but the effect can be materially adverse.

Except for the El Dorado Project, on which a pre-feasibility
study was completed in 2005, none of the Company's properties have a known body
of ore and the Companys proposed exploration programs are an exploratory search
for ore.

Although mineral resource estimates included in this document
(and/or in previous regulatory documents filed by the Company) have been
carefully calculated, prepared, reviewed and/or verified by independent mining
experts who are Qualified Persons, and have been reviewed by the Company, 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 or previously
disclosed reserves 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
reserves, production and capital 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 ore recovery.

The El Dorado Project is the Companys most advanced
exploration property, which along with its secondary grassroots exploration
projects Santa Rita and Zamora-Cerro Colorado, is located in El Salvador. The
Company may commence exploration programs in other jurisdictions during fiscal
2012. As with most jurisdictions, El Salvador 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. The Company may acquire interests in properties in other
North, Central and South American countries that may place substantial
restrictions on the Companys exploratory and development activities. There can
be no assurance that additional significant restrictions will not be placed on
the Company's existing or future 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. The
Companys operations are subject to all of the physical hazards and risks
normally encountered in the exploration, development and production of precious
metals and other minerals including unusual or unexpected geological formations, seismic activity, rock
bursts, cave-ins, flooding and other conditions involved in the drilling and
removal of material, any of which could result in damage to or destruction of
documents, samples or drill core, damage to life or property, environmental
damage and possible legal liability. It may not be possible to insure against
these risks, or for economic reasons the Company may elect not to insure against
these risks. The payment of liabilities as a result of the occurrence of any of
these hazards may have a material adverse effect on the Companys financial
position.

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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.

Reliability of Mineralization Estimates

Although the Company has assessed the mineral resource
estimates presented herein and mineral resource and reserve estimates documented
in other regulatory filings, and believes that the methods used to estimate such
mineral reserves and mineral resources are 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.

Definitional standards for reporting mineralized material
differ between United States reporting standards and the Canadian standards use
in this annual report

We use the terms measured resources, indicated resources
and inferred resources in this annual report on Form 20-F to comply with
reporting standards in Canada. We advise U.S. investors that while those terms
are recognized and required by Canadian regulations, the SEC does not recognize
them. While we have converted a portion of these resources to proven and
probable reserves, U.S. investors are cautioned not to assume that any part or
all of the additional mineral deposits in these categories will ever be
converted into mineral reserves. Mineral resources have a great amount of
uncertainty as to their existence, and great uncertainty as to their economic
and legal feasibility. It cannot be assumed that all or any part of measured
mineral resources, indicated mineral resources, or inferred mineral resource
will ever be upgraded to a higher category. In accordance with Canadian rules,
estimates of inferred mineral resources cannot form the basis of a feasibility
study or other economic evaluations. Investors are cautioned not to assume that
any part of the reported measured mineral resource, indicated mineral resource,
or inferred mineral resource in this Annual Report is economically or legally
mineable. See Cautionary Note to U.S. Investors Regarding Resource and Reserve
Estimates above.

Title to Properties

PRES, a subsidiary of PacRim, has applied for an exploitation
concession over a portion of its El Dorado Project exploration licence area and
has carried out the studies required by the authorities for this concession,
including an EIS. The approval of the El Dorado EIS by the Salvadoran Ministry
of Natural Resources and the Environment is a requirement for approval of the
exploitation concession by the Ministry of Economy. The Company cannot say with
certainty if or when the authorities in El Salvador will approve the El Dorado
EIS or grant PRES an exploitation concession. The exploitation concession
application area covers ground protected by an exploration licence granted to
PRES that nominally expired in January 2005. Legal opinions secured by the
Company indicate that El Salvadoran administrative laws and procedures assure
PRES exclusive rights to the proposed exploitation concession area while the
application is in process, despite the underlying exploration licence having
expired. There can be no assurance however that this opinion will not be
challenged by regulatory authorities or other third parties and that PRESs
legal rights to explore within the exploitation concession application area will
be upheld indefinitely pending the outcome of the application process.
Furthermore, as a result of restricted access to documents in El Salvador due to
the ongoing CAFTA/ILES arbitration, the Company has not had the ability to
confirm or renew its existing Salvadoran exploration licences during fiscal
2011.

The Company conducted significant due diligence on the Hog
Ranch property in Nevada prior to signing the Hog Ranch LOI, and the subsequent
Definitive Agreement, granting the Company the option to acquire a 65% joint
venture interest in Hog Ranch, including securing legal opinions on the title
and underlying agreements and underlying obligations of the Hog Ranch claims.
The Company is of the opinion that the Hog Ranch claims are in good standing and
that title to the project lies with ICN Resources Ltd. (ICN) and Washoe Gold
Inc. (WGI). However, the Hog Ranch property may be subject to prior
unregistered agreements or transfers or local land claims and title may be
affected by undetected defects.

The Company conducted significant due diligence on the Remance
Project in Panama prior to signing a letter of intent to acquire the project
from Minera Clifton, including securing legal opinions on the title and tenure
of the Remance exploitation concession. The Company is of the opinion that the
Remance exploitation concession is in good standing and that title to the
project lies with Minera Clifton. However, the Remance property, as well as the
Company's other exploration properties, may be subject to prior unregistered
agreements or transfers or local land claims and title may be affected by
undetected defects.

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The Remance exploitation concession is nearing the end of its
initial term and the Companys decision to sign a Final Agreement on the
acquisition of this project is dependent on Minera Clifton obtaining an
extension to the term of the concession, as is provided for under Panamanian
law. Minera Cliftons application for extension of the Remance exploitation
concession was recently denied by the Panamanian ministry responsible for
mining, a decision which Minera Clifton is now appealing. There can be no
assurance at this time that the ministrys decision will be overturned and that
the Remance exploitation concession extension will ultimately be granted. As
such, although the Company intends to keep the Remance LOI in place (as there is
no cost or risk in doing so), the Companys acquisition of the Remance project
can not be guaranteed.

The Company has investigated and believes it has good title to
its properties. However, there is no guarantee that adverse claims to title will
not arise in the future, nor can the Company express an opinion on how difficult
the resolution of such claims would be under the laws of foreign
jurisdictions.

Government Law, Environmental and Other Regulatory
Requirements

The Company's current exploration projects are located in the
US and El Salvador, and the Company may acquire exploration properties in other
North, Central and 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.

Currency fluctuations, exchange controls, change to tax regimes
and political action could impair the value of the Company's assets in the
foreign jurisdictions in which the Company operates.

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.

PRES has experienced significant delays in the processing of
its El Dorado EIS and exploitation concession application, and as a result
PacRim initiated an action against the GOES under the CAFTA international trade
treaty and the Investment Law of El Salvador. There can be no assurance that
PRES will be successful in either obtaining its sought-after El Dorado
exploitation concession, or that any legal challenges PacRim has undertaken or
that the Company or its subsidiaries may choose to undertake in the future to
resolve this issue will be successful. PacRim is currently awaiting a decision
from the ICSID Tribunal presiding over its legal action under CAFTA and the
Investment Law of El Salvador regarding the Jurisdiction Objection filed by the
GOES. This ruling is outside of PacRims and the Companys control. If this
decision is not in favor of PacRim, all or parts of the legal action may not
proceed as planned or may require significant revision, either of which could
result in significant impact on the Companys share price.

Foreign Operations

The Company and its subsidiaries operate in certain parts of
the world that have experienced social unrest, political and economic
instability and resulting governmental corruption and may operate its business
in manners that are contrary to the regulations imposed in the United States and
Canada. While the Company has policies in place to ensure adequate monitoring of
its activities and compliance with Canadian, United States and local laws and
regulations in the countries in which it operates, there can be no assurance
that the Companys internal control policies and procedures will always protect
it from reckless or negligent acts committed by its employees or agents. Such
employees or agents may undertake actions that would result in a violation of
law, including but not limited to, tax laws, customs laws, environmental laws,
labour laws, permitting laws and regulations, industry laws or international
anti-corruption and anti-bribery laws, including Canadian anti-corruption laws
and the U.S. Foreign Corrupt Practices Act. Violations of these laws, or
allegations of such violations, could disrupt the Companys business and result
in a material adverse effect on its business and operations.

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Dependence on Management

The success of the operations and activities of the Company is
  dependent to a significant extent on the efforts and abilities of a small number
  of skilled and experienced executives and personnel. Due to the small size of
  the Company, the loss of any of these key persons or the inability of the
  Company to attract and retain additional highly-skilled employees may adversely
  affect its business and future operations. The Company does not maintain key
  employee insurance on any of its employees.

Conflicts of Interest

The 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, directors who have such a
conflict will declare their potential conflict and 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 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.

Competition for Other Assets

Significant and increasing competition exists for the limited
number of gold acquisition opportunities available worldwide. 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.

Increased costs could affect our financial condition.

We anticipate that costs at our projects that we may explore or
develop, will frequently be subject to variation from one year to the next due
to a number of factors, such as changing ore grade, metallurgy and revisions to
mine plans, if any, in response to the physical shape and location of the ore
body. In addition, costs are affected by the price of commodities such as fuel,
rubber and electricity. Such commodities are at times subject to volatile price
movements, including increases that could make production at certain operations
less profitable. A material increase in costs at any significant location could
have a significant effect on our profitability.

Currency Fluctuations May Affect the Costs of Doing
Business

The Company's offices and primary activities are currently
located in Canada, the United States, and El Salvador. Gold and silver are sold
in international markets at prices denominated in US dollars. However, some of
the costs associated with the Company's activities in Canada may be denominated
in currencies other than the US dollar. Any appreciation of these currencies vis
a vis the US dollar could increase the Company's cost of doing business in these
countries. In addition, the US dollar is subject to fluctuation in value vis a
vis the Canadian dollar. The Company does not utilize hedging programs to
mitigate the effect of currency movements.

Adequacy of Insurance Coverage

The Company has purchased liability insurance that it believes
is appropriate for the level of risk incurred, however there are no guarantees
that the level of coverage of existing policies can or will be maintained.
Furthermore, the Company 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.

Reclamation Risks at Denton-Rawhide

During fiscal 2009 the Company sold the assets it held through
its 49% interest in the Denton-Rawhide joint venture to its 51% partner
Kennecott. Subsequently, in late calendar 2010, Kennecott sold its 100% interest
in the Denton-Rawhide Joint Venture to a third party. According to the terms of
Kennecott's 2010 sale, reclamation obligations at the Denton-Rawhide operation
were separated such that Kennecott remains responsible for reclamation
expenditures due to any disturbances created prior to the sale, and the
purchaser becomes responsible for undertaking reclamation related to any
disturbances created after the sale. As part of the sale of its interest in
Denton-Rawhide to Kennecott, the Company had provided a guarantee on 49% of any
reclamation and closure costs in the event that these expenditures (limited to those related to disturbances
made up to the point the Company sold it's interest in the operation) were to
exceed $7.0 million. In other words, the Company's obligations are limited to
pre-sale property conditions. The Coordinating Committee of the Denton-Rawhide
mine estimates total reclamation and severance costs for the Denton-Rawhide mine
will be $9.8 million. $4.5 million in reclamation and severance costs have
already been incurred on behalf of the Company and Kennecott as previous joint
venture partners, leaving an estimated $5.3 million allocated for future
reclamation costs related to disturbances made at the operation prior to
Kennecotts 2010 sale of the property..

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This estimate may not be a true reflection of actual
reclamation and closure costs of the Denton-Rawhide mine for which the Company
is jointly responsible, and the Company recognizes a potential future
reclamation liability, as per the terms of its sale as described above, should
actual reclamation and closure costs exceed $7.0 million in excess of
reclamation and severance costs incurred prior to the date of the sale (October
30, 2008).

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 decade.
The Company anticipates that general and administrative costs associated with
regulatory compliance will continue to increase alongside corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of
2002, as well as new rules implemented by the SEC, Canadian Securities
Administrators and the TSX. The Company expects these rules and regulations to
continue to result in significant legal and financial compliance costs and to
make some activities more time-consuming and costly. There can be no assurance
that the Company will continue to effectively meet all of the requirements of
the regulations to which it must comply, including Sarbanes-Oxley Section
404 and National Instrument 52-109, Certification of Disclosure in
Issuers Annual and Interim Filings (NI 52-109). Any failure to
effectively implement new or improved internal controls, or to resolve
difficulties encountered in their implementation, could harm the Companys
operating results, cause the Company to fail to meet reporting obligations or
result in management being required to give a qualified assessment of the
Companys 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 the
Companys reported financial information, which could have a material adverse
effect on the Companys stock price. The Company also expects these rules and
regulations may make it more difficult and more expensive for it to obtain
director and officer liability insurance, and it 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 the
Company to attract and retain qualified individuals to serve on its board of
directors or as executive officers. 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 and/or NI 52-109 could be impaired, which could cause the
Company's stock price to decrease.

Environmental Risks and Hazards

The Companys exploration activities are subject to
environmental regulation in the various jurisdictions in which it operates.
These regulations mandate, among other things, the maintenance of air and water
quality standards and land reclamation. They also set forth limitations on the
generation, transportation, storage and disposal of solid and hazardous waste.
Environmental legislation is evolving in a manner that will require stricter
standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their officers, directors and
employees. There is no assurance that future changes in environmental
regulation, if any, will not adversely affect the Companys operations.
Environmental hazards may also exist on the Companys properties that are
currently unknown to the Company and that have been caused by previous or
existing owners or operators of the properties.

Environmental approvals and permits are currently, and may in
the future, be required in connection with the operations of the Company. To the
extent that such approvals are required and not obtained, the Company may be
curtailed or prohibited from continuing in its exploration, development or
mining activities or from proceeding with its exploration or development plans
for current properties.

Failure to comply with applicable laws, regulations and
permitting requirements may result in enforcement actions that cause
exploration, development or mining activities to cease or be curtailed and may
include corrective measures requiring capital expenditures or remedial actions.
In such an event, the Company could be required to compensate those suffering
loss or damage by reason of the Companys activities and may have civil or
criminal fines or penalties imposed for violations of applicable laws or
regulations.

Amendments to existing environmental laws and regulations
governing exploration, development and mining activities of mining companies, or
more stringent application of current laws and regulations could have a material
adverse impact on the Company causing increases in exploration expenses, capital
expenditures or production costs, or a reduction in production levels at
producing operations, or require abandonment or delays in development of new
mining properties.

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Future Sales of Common Shares by Existing Shareholders

The sale of a large number of common shares of the Company in
  the public markets, or the potential for such sales, could decrease the trading
  price of the Companys common shares and could negatively impact the Companys
  ability to raise capital through future sales of common shares.

Foreign Private Issuer Status

The Company is required to determine its foreign private
issuer status (as defined in Rule 3b-4(c) under the U.S. Securities and
Exchange Act of 1934 (as amended) for the purposes of U.S. securities law) (the
Exchange Act), annually at the end of its second fiscal quarter. Although more
than 50% of its voting securities were held by U.S. residents as of the last
business day of its most recently completed second fiscal quarter, the Company
is still considered a foreign private issuer as it met the following conditions:
(i) a majority of its executive officers and directors, taken separately, are
non-U.S. citizens or residents, (ii) more than 50% of its assets are located
outside the U.S., and (iii) the business of the Company is principally
administered outside the U.S. The Company may in the future lose its foreign
private issuer status if it fails to meet any of the aforementioned
criteria.

The regulatory and compliance costs to the Company under U.S.
securities laws as a U.S. domestic issuer may be significantly more than the
costs the Company incurs as a Canadian foreign private issuer eligible to use
the multijurisdictional disclosure system. If the Company is not a foreign
private issuer it would be required to file periodic and current reports and
registration statements on U.S. domestic issuer forms with the SEC, which are
more detailed and extensive than the forms available to a foreign private
issuer. This could have a materially adverse impact on the Companys corporate
overhead costs and its ability to raise future financing.

You may be unable to enforce U.S. judgments against us or our
officers and directors

We are incorporated under the laws of the Province of British
Columbia, Canada. The majority of our directors are resident in Canada.
Consequently, it may be difficult for United States investors to affect service
of process within the United States upon us or upon those directors or officers
who are not residents of the United States, or to realize in the United States
upon judgments. Judgments of United States courts predicated upon civil
liabilities may be enforceable in Canada by a Canadian court if the U.S. court
in which the judgment was obtained had jurisdiction, as determined by the
Canadian court, in the matter. There is substantial doubt whether an original
action could be brought successfully in Canada against any of such persons or
the Company predicted solely upon such civil liabilities.

Market events and conditions

In recent years the U.S. credit markets have experienced
serious disruption due to a deterioration in residential property values,
defaults and delinquencies in the residential mortgage market (particularly,
sub-prime and non-prime mortgages) and a decline in the credit quality of
mortgage backed securities. These problems led to a slow-down in residential
housing market transactions, declining housing prices, delinquencies in
non-mortgage consumer credit and a general decline in consumer confidence. These
conditions have caused a loss of confidence in the broader U.S. and global
credit and financial markets and resulting in the collapse of, and government
intervention in, major banks, financial institutions and insurers and creating a
climate of greater volatility, less liquidity, widening of credit spreads, a
lack of price transparency, increased credit losses and tighter credit
conditions. Notwithstanding various actions by the U.S. and foreign governments,
concerns about the general condition of the capital markets, financial
instruments, banks, investment banks, insurers and other financial institutions
caused the broader credit markets to further deteriorate and stock markets to
decline substantially. In addition, general economic indicators have
deteriorated, including declining consumer sentiment, increased unemployment and
declining economic growth and uncertainty about corporate earnings.

These disruptions in the credit and financial markets have had
a significant material adverse impact on a number of financial institutions and
have limited access to capital and credit for many companies. These disruptions
could, among other things, make it more difficult for us to obtain, or increase
our cost of obtaining, capital and financing for operations. The Companys
access to additional capital may not be available on terms acceptable to it or
at all.

General economic conditions

Ongoing volatility in global financial markets has had a
profound impact on the global economy. Many industries, including the gold and
base metal mining industry, are impacted by these market conditions. Some of the
key impacts of the current financial market turmoil include contraction in
credit markets resulting in a widening of credit risk, devaluations and high
volatility in global equity, commodity, foreign exchange and precious metal
markets, and a lack of market liquidity. A continued or worsened slowdown in the
financial markets or other economic conditions, including but not limited to,
consumer spending, employment rates, business conditions, inflation, fuel and
energy costs, consumer debt levels, lack of available credit, the state of the
financial markets, interest rates, and tax rates may adversely affect our growth
and profitability. Specifically:

- the global credit/liquidity crisis could impact the cost and availability
  of financing and our overall liquidity;

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- 15 -

- the volatility of the gold price may impact our future revenues, profits
  and cash flow;
- volatile energy prices, commodity and consumables prices and currency
  exchange rates impact potential production costs; and
- the devaluation and volatility of global stock markets impacts the
  valuation of our equity securities, which may impact our ability to raise
  funds through the issuance of equity.

These factors could have a material adverse effect on our
financial condition and results of operations.

ITEM 4. INFORMATION ON THE COMPANY

|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 of Dayton Mining
Corporation (Dayton) and Pacific Rim Mining Corp. (Pacific Rim) on April 11,
2002 under the former Company Act (British Columbia).

Effective March 29, 2004, the British Columbia legislature
enacted the Business Corporations Act (British Columbia) (the New Act)
and repealed the former Company Act (British Columbia) 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 may 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 British Columbia Registrar of
Companies effective July 26, 2004. At the annual general meeting held on
September 22, 2004, the Companys shareholders approved 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. In
addition, the shareholders approved 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 British
Columbia Registrar of Companies issued a new Notice of Articles on January 20,
2005.

The Company is domiciled in British Columbia, Canada and is a
company organized under the New Act. The Companys principal place of business
is located at Suite 1050, 625 Howe Street, Vancouver, British Columbia, V6C 2T6
and its registered and records office is located on the 10th Floor,
595 Howe Street, Vancouver, British Columbia, V6C 2T5. The Company, through its
subsidiaries, has administration offices in Nevada and El Salvador. The
Companys U.S. agent is Dorsey & Whitney LLP, located at 1400 Wewatta
Street, Suite 400, Denver, Colorado 80202-5549, USA.

Additional sources of information regarding Pacific Rim Mining
Corp. include: information available on SEDAR (www.sedar.com) including
the Companys unaudited interim financial statements published quarterly; the
Companys 20-F filing (available at www.sec.gov); and, the Companys
corporate website www.pacrim-mining.com and Spanish-language
informational website (www.pacificrim.com.sv).

|B. | Business overview
|-- | -----------------

Pacific Rim is an environmentally and socially responsible
exploration company focused exclusively on high grade, environmentally clean
gold deposits in the Americas. Pacific Rims most advanced asset is the high
grade, vein-hosted El Dorado gold project in El Salvador, where the Company also
owns several grassroots gold projects. The Company recently acquired a joint
venture option on the Hog Ranch epithermal gold project in Nevada and is
actively pursuing additional exploration opportunities elsewhere in the
Americas.

The El Dorado gold project in El Salvador was the focus of
virtually all of the Companys exploration work between 2002 and 2008, when
efforts to advance its El Salvador projects, including El Dorado, ceased as a
result of the GOES passive refusal to issue a decision on the Companys
application for environmental and mining permits for the El Dorado project. The
El Dorado project is now the subject of a legal dispute initiated by the
Companys subsidiary and owner of the El Dorado project, PacRim, under CAFTA and
the Investment Law of El Salvador (the CAFTA/ILES action). Notwithstanding the
ongoing CAFTA/ILES legal action, the Company continues to seek a negotiated
resolution to the El Dorado permitting impasse and to renewing its advancement
of the El Dorado project.

The Companys business plans and management talent primarily
lie in gold exploration in the Americas. Accordingly, management has renewed its
focus on the acquisition of new projects of merit that fit its exploration
objectives. In March 2011 the Company signed a letter of intent to acquire a 65% joint venture interest in the
Hog Ranch epithermal gold property in northern Nevada. Subsequent to the end of
fiscal 2011, a Definitive Agreement was executed between the Company and the Hog
Ranch vendors, and exploration plans for Hog Ranch are now being coordinated.
Earlier in fiscal 2011, the Company signed a letter of intent to acquire the
Remance gold project in Panama. Formal acquisition of Remance remains on hold
however, and is highly uncertain at this time, pending the outcome of an appeal
launched by the property vendors in response to the Government of Panamas
recent denial of an extension to the Remance concession term. If this roadblock
is overcome, the Company will proceed with the Remance acquisition. In the
meantime, the Company is focusing is exploration efforts on the Hog Ranch
property and on the ongoing search for additional project acquisitions.

---

- 16 -

Pacific Rims shares trade under the symbol PMU on the Toronto
Stock Exchange (TSX) and on the OTCQX market in the US under the symbol
PFRMF.

Significant Events During Fiscal 2011

Significant technical and corporate events that occurred during
the twelve months ended April 30, 2011 include:

- On May 31, and June 1, 2010, hearings on a Preliminary Objection filed by
  the GOES, which sought to dispose of nearly all of the claims brought by
  PacRim against GOES under CAFTA and the Investment Law of El Salvador, were
  held at the headquarters of the International Centre for Settlement of
  Investment Disputes (ICSID) in Washington, DC. On August 2, 2010 the ICSID
  tribunal panel that is hearing the investment claims of PacRim against the
  GOES, and that presided over the Preliminary Objection hearings, ruled in
  favour of PacRim, unanimously rejecting all of the arguments made by the GOES
  in its Preliminary Objection filed under Articles 10.20.4 and 10.20.5 of
  CAFTA.
- On August 19, 2010, the Company notified NYSE Amex Equities (NYSE Amex)
  of its intent to voluntarily delist its common shares from NYSE Amex. As the
  Company remains a Securities and Exchange Commission (SEC) registrant, it
  concurrently commenced a listing application for the Over the Counter QX
  (OTCQX) platform, an OTC trading platform with rigorous standards available
  to issuers listed on a major international stock exchange. The Company was
  delisted from NYSE Amex at the opening of the market on September 9, 2010, and
  concurrently commenced trading on the OTCQX under the symbol PFRMF.
- On August 20, 1010, Pacific Rim, through its Panamanian subsidiary Minera
  Verde, signed a Letter of Intent (LOI) with Compania Minera Clifton S.A.
  (Minera Clifton) (collectively with the Company and Minera Verde, the
  Remance Parties) to acquire a 100% interest in the Remance project located
  in Panama, Central America. The Remance Parties have agreed to sign a formal
  option agreement granting Minera Verde the exclusive right and option to
  acquire 100% of Minera Clifton's right, title and interest in the Remance
  project. Minera Cliftons application for an extension to the Remance
  concession term, as provided by Panamanian law, was recently denied; a
  decision which is currently being appealed by Minera Clifton. The Company does
  not intend to sign a final agreement to acquire the Remance project unless the
  term of the Remance concession is extended. While the Company is keeping the
  Remance LOI in effect during Minera Cliftons appeal, the outcome of this
  process, and hence the Companys final acquisition of the Remance project, is
  highly uncertain.
- On September 21, 2010, the Company announced its intent to raise
  approximately $3.33 million CDN through a non- brokered private placement
  financing. On October 8, 2010 the private placement financing closed. A total
  of 19.6 million Units at a price of CDN $0.17 per Unit were issued to
  subscribers for gross proceeds of CDN $3,332.000. Each Unit consists of one
  common share of the Company and one half of one non-transferable share
  purchase warrant. Each full warrant entitles the holder to acquire one
  additional common share of the Company at a price of CDN $0.30 for a period of
  24 months following the closing of the financing. The Company also issued
  660,000 Units to certain finders in connection with the private placement, in
  payment of a finders fee of 6% of the proceeds raised from subscribers
  introduced by the finders, and 660,000 warrants to the finders representing 6%
  of the total number of Units sold to purchasers introduced by the finders.
- On March 30, 2011, the Company announced that, through its US subsidiary
  Pacific Rim Exploration Ltd. (PREx), it had signed a LOI with ICN Resources
  Ltd. (ICN) and Washoe Gold Inc. (WGI) (collectively with the Company and
  PREx, the Hog Ranch Parties) to acquire a 65% interest in the Hog Ranch
  Property located in Washoe County, Nevada. Subsequent to the Companys fiscal
  2011 year end, the Hog Ranch Parties signed a Definitive Agreement (subject to
  final regulatory approval), which provides for the grant to PREx of an option
  to acquire a 65% interest (the Interest) in the Hog Ranch Property through
  the expenditure of an aggregate of $8 million in exploration expenditures and
  the issuance of an aggregate of 1 million common shares of Pacific Rim.
- On April 6, 2011, the Company announced its intent to raise up to CDN $3.5
  million through a non-brokered private placement financing, which amount was
  increased to CDN $3.65 million on April 20, 2011.

---

- 17 -

Subsequent to the end of the Companys 2011 fiscal year, the
following events occurred:

- On May 3, 2011 the private placement financing announced on April 6, 2011
      closed. A total of 17.6 million Units at a price of CDN $0.21 per Unit were
      issued to subscribers for gross proceeds of CDN $3,696,000. Each Unit consists
      of one common share of the Company and one half of one non-transferable share
      purchase warrant.
- Between May 2 and 4, 2011, hearings on a second objection filed by the GOES
  in relation to PacRims action under CAFTA and the Investment Law of El
  Salvador took place at the ICSID headquarters in Washington, DC. The purpose
  of these hearings was for the ICSID Tribunal to hear argument and witness
  testimony regarding an objection (the Jurisdiction Objection) filed by the
  GOES in August 2010 wherein the GOES asserts that ICSID does not have
  jurisdiction to hear PacRim's claims under CAFTA or the Investment Law based
  largely on timing and nationality issues. The Jurisdiction Objection was filed
  immediately after the ICSID Tribunal panel unanimously rejected all of the
  GOESs arguments made in an earlier Preliminary Objection (filed under
  Articles 10.20.4 and 10.20.5 of CAFTA) and issued a ruling in favor of PacRim.
  A ruling on the Jurisdiction Objection is not expected until late calendar
  2011.

Current Market Status

The business of mining and exploration involves a high degree
of risk. The Company is entirely reliant on its current cash and cash
equivalents and future financings and/or financial arrangements in order to fund
legal, exploration and administration expenses. There can be no assurance that
such financing will be available now or in the future, or be available on
favourable terms. Additional funding will be required in the future to maintain
its ongoing exploration programs and property commitments, for administrative
purposes and CAFTA/ILES arbitration and negotiation.

El Dorado Gold Project, El Salvador

The Companys principal exploration property and sole material
property is the El Dorado gold project, located in El Salvador approximately 65
kilometres northeast of the capital city San Salvador, and is Pacific Rims
flagship advanced-stage exploration property. Pacific Rim, through PacRim and
PRES, owns 100% of the El Dorado project. The El Dorado project comprises a 144
square kilometre area covered by three exploration licences with nominal expiry
dates of September 28, 2013 (one licence) and September 29, 2013 (two licences)
and a 12.75 square kilometre area pending conversion to an exploitation
concession, which underlying exploration licence has a nominal expiry date of
January 1, 2005. In accordance with Salvadoran Law, PRES presented a request for
the conversion of this 12.75 square kilometre portion of the El Dorado
exploration licences to an exploitation concession in December 2004. The
conversion process is currently pending ministerial acceptance of PRESs EIS and
issuance of environmental permits. Salvadoran administrative laws and procedures
give PRES exclusive rights to the exploitation concession area while the
permitting process is underway. However, as a result of restricted access to
documents in El Salvador due to the ongoing CAFTA/ILES arbitration, the Company
has not had the ability to confirm or renew its existing Salvadoran exploration
licences during fiscal 2011.

El Dorado is subject to a royalty of 3% of net smelter returns
in favour of a previous property owner. Pacific Rim has the right to buy back
the royalty for $1 million for the first 1.5% and $3 million for the second
1.5%, provided that at least one half of the royalty is acquired within six
months of the commencement of commercial production.

The El Dorado gold project is Pacific Rims most advanced
exploration project. El Dorado has current estimated resources of 1.4 million
gold equivalent ounces in the Measured and Indicated categories combined, plus a
further 0.3 million gold equivalent ounces in the Inferred category (readers are
referred to the Companys March 2008 El Dorado Technical Report filed on SEDAR
www.sedar.com for additional important information regarding the El
Dorado resources). Because the average grade of these resources (approximately
10.5 gold equivalent grams per tonne) is relatively high, the underground mine
planned for the El Dorado deposits is expected to have low unit operating costs.
Importantly, the El Dorado deposits are inherently environmentally clean and the
production and processing is expected to have a negligible impact on the local
environment. The El Dorado project has delivered many technical successes;
however its path forward to development and operation has been hampered by
excessively lengthy delays in the permitting process on the part of the GOES.
The El Dorado project is currently the subject of a legal dispute under the
auspices of the CAFTA international trade treaty and the Investment Law of El
Salvador, as discussed above.

In July 2008 the Company suspended all drilling activity at the
El Dorado project. This difficult decision was made in order to preserve capital
and substantially reduce Pacific Rims El Salvador investment activity while the
El Dorado permitting issue remains unresolved. The Company did not conduct any
significant exploration work to further advance the El Dorado project during
fiscal 2011. Activities undertaken by the Company at the El Dorado project
during fiscal 2011 were restricted to care and maintenance responsibilities and
baseline environmental data collection.

The Company does not intend to contemplate resuming significant
exploration work designed to advance the El Dorado project further until such
time as the environmental permit is received and the exploitation concession is
granted. The Company intends to continue exploration activities and make
expenditures required to keep the El Dorado property in good standing during
fiscal 2012 and for the foreseeable future.

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- 18 -

Arbitration Claim Initiated

In April 2009, PacRim, a Nevada corporation and a wholly-owned
subsidiary of Pacific Rim filed international arbitration proceedings against
the GOES under CAFTA and the Investment Law of El Salvador in its own name and
on behalf of PRES and DOREX (collectively the Enterprises). A Notice of Intent
to commence international arbitration proceedings had previously been filed by
PacRim in December 2008. PacRim has retained the Washington, DC-based
international law firm of Crowell & Moring, LLP to represent it in the
arbitration and is seeking award of damages in the hundreds of millions of
dollars from the GOES for its multiple breaches of international and Salvadoran
law.

Developments during the twelve
months ended April 30, 2011

Hearings related to an objection (the Preliminary Objection)
was held on May 31 and June 1, 2010 at ICSID headquarters in Washington, DC. The
Preliminary Objection, wherein GOES sought to dispose of nearly all of PacRims
case, was originally filed by the GOES on January 4, 2010 (fiscal 2010). On
August 2, 2010 the ICSID Tribunal that is hearing the investment claims of
PacRim against the GOES, and that presided over the Preliminary Objection
hearings, ruled in favor of PacRim, unanimously rejecting all of the arguments
made by the GOES in its Preliminary Objection filed under Articles 10.20.4 and
10.20.5 of CAFTA.

Immediately following the ICSID Preliminary Objection ruling,
the GOES filed another objection (the Jurisdiction Objection), wherein the
GOES asserts that ICSID does not have jurisdiction to hear PacRim's claims under
CAFTA or the Investment Law based largely on timing and nationality issues. On
May 2 - 4, 2011 hearings were again held at ICSID headquarters in Washington, DC
in order for the ICSID Tribunal to hear argument and witness testimony regarding
the Jurisdiction Objection. As with the Preliminary Objection, PacRim asserts
the Jurisdiction Objection is without merit and looks forward to the Tribunals
decision, anticipated for late calendar 2011. If the GOES is unsuccessful in its
Jurisdiction Objection, the CAFTA/ILES action is expected to proceed to the
merits phase during fiscal 2012.

Additional details regarding the El Dorado property and the
legal arbitration action pertaining to it are provided in Item 4D Property,
Plant and Equipment below.

Other Properties

Hog Ranch Property,
Nevada

In March 2011, Pacific Rim, through its US subsidiary Pacific
Rim Exploration Inc. (PREx) signed an LOI with ICN Resources Ltd. (ICN) and
Washoe Gold Inc. (WGI) (collectively with the Company and PREx, the Hog Ranch
Parties) providing the Company with the option to acquire a 65% joint venture
interest in the Hog Ranch Property located in Washoe County, Nevada,
approximately 180 km north of Reno. Subsequent to the end of fiscal 2011 the Hog
Ranch Parties signed a Definitive Agreement finalizing the terms of the LOI
(subject to final regulatory approval) , the effective date (as defined therein)
of which is July 8, 2011.

As per the Definitive Agreement, PREx has been granted the
option to acquire a 65% interest (the Interest) in the Hog Ranch Property
through the expenditure of an aggregate of $8 million in exploration
expenditures and the issuance of an aggregate of 1 million common shares of
Pacific Rim, with annual extensions dependent on results of exploration. Pacific
Rim, through PREx, is the operator of the Hog Ranch Property. Upon PREx earning
the Interest, PREx and WGI agree to participate in a joint venture for the
further exploration and development of Hog Ranch.

The Company is currently evaluating past drilling and
geophysical results from previous operators of the Hog Ranch project,
formulating a geologic model for Hog Ranch and planning the details of its Phase
1 exploration program, which is expected to commence imminently and include
detailed geological mapping with emphasis on the structural geology, soil
sampling, claim staking, and drill target definition. Included in this Phase 1
program will be a 10-15-hole drill program expected to begin by early calendar
2012.

Additional details regarding the Hog Ranch property are
provided in Item 4D  Property, Plant and Equipment below.

Remance Gold Project,
Panama

During fiscal 2011, the Company, through its Panamanian
subsidiary Minera Verde, signed an LOI with Compania Minera Clifton S.A.
(Minera Clifton) (collectively with the Company and Minera Verde, the Remance
Parties) to acquire a 100% interest in the Remance project located in Panama,
Central America.

The Remance Parties have agreed to sign a formal option
agreement (the Formal Agreement) granting Minera Verde the exclusive right and
option (the "Option") to acquire 100% of Minera Clifton's right, title and
interest in the Remance project as soon as practicable. Signing of the Formal Agreement has not been
concluded at this time and is currently highly uncertain. Minera Cliftons
application for an extension to the Remance concession term, as provided by
Panamanian law, was recently denied; a decision which is currently being
appealed by Minera Clifton. The extension denial by the Ministry of Commerce and
Industry is highly suspicious and diplomatic efforts are aimed at pointing out
these irregularities in an attempt to overturn the decision. While the Company
is keeping the Remance LOI in effect during Minera Cliftons appeal, the outcome
of this process, and hence the Companys final acquisition of the Remance
project, is highly uncertain. If signed, the Formal Agreement will be subject to
all required regulatory approvals, including the approval of the Toronto Stock
Exchange (the TSX). The option to acquire Remance may be exercised by the
Company by paying an aggregate of $200,000 in four equal tranches plus 5 million
common shares of Pacific Rim to Minera Clifton, conducting a specified
exploration program during the Option Period (as defined in the LOI) and paying
$5 million in cash or common shares to Minera Clifton at the end of the Option
Period.

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- 19 -

As noted above, the Remance project acquisition has not
currently been completed and is highly uncertain at this time. The Company
believes that Minera Cliftons application for extension of the Remance
concession term, normally a routine process permitted under Panamanian mining
law, was sidelined by bureaucratic irregularities and issues within the ministry
responsible for mining. If the Remance extension is ultimately granted to Minera
Clifton, the Company intends to proceed with its acquisition of the Remance
Project by signing the Formal Agreement.

The Companys current knowledge of the Remance project suggests
a thorough and systematic drill program is warranted to test the depth extent of
the known near-surface gold mineralization (the Company would be obliged, as per
the terms of the Remance, to conduct a 10,000 meter drill program on Remance in
the first year of the Option Period as described above). A first phase
exploration program, including environmental and metallurgical studies as well
as drilling, is expected to cost approximately $1 million. The Company would
require additional financing to complete its Remance exploration
obligations.

Additional details regarding the Remance property are provided
in Item 4D  Property, Plant and Equipment below.

Santa Rita and Zamora-Cerro
Colorado Gold Projects, El Salvador

The Companys Santa Rita and Zamora-Cerro Colorado projects
cover low-sulfidation epithermal gold districts in El Salvador. The Santa Rita
gold project is located in central El Salvador, immediately northwest of the El
Dorado project and is 100% claimed by the Company through staking. During fiscal
2010, the Santa Rita exploration licence expired and was immediately re-staked
by the Companys subsidiary DOREX. DOREX is currently awaiting approval of the
new Santa Rita exploration licence. The Zamora-Cerro Colorado project comprises
certain claims that are subject to an option agreement with a third party and
additional claims that were staked and are100% owned by the Company. The Santa
Rita and Zamora-Cerro Colorado projects occur along a regional gold belt that
the Company believes stretches from its El Dorado system in El Salvador to a
number of million-plus ounce gold systems in Guatemala.

Exploration activities were curtailed at both the Santa Rita
and Zamora-Cerro Colorado projects in July 2008, concurrent with cessation of
drilling at the El Dorado project, in keeping with the Companys decision to
significantly reduce its investment in El Salvador until such time as the El
Dorado environmental permit is received and the exploitation concession is
granted. No material developments occurred on the Santa Rita or Zamora-Cerro
Colorado since that time. The Company intends to maintain the Zamora-Cerro
Colorado licences during fiscal 2012 and beyond, and awaits approval of the
re-staked Santa Rita licence. During fiscal 2010 an amendment to the
Zamora-Cerro Colorado option agreement was signed by the Company and the
property vendors Nycon Resources, Inc. and Cerro Colorado S.A. de C.V.
(together, the Optionor). Under the terms of the amended agreement, the
Company will retain its 100% option on the claims comprising the Zamora-Cerro
Colorado property but will defer further option payments to the Optionor until
the earlier of February 11, 2015 or such time as the Company receives an
approved mining permit for the El Dorado project (being a clear signal of the
GOESs support of the mining industry in El Salvador). All other aspects of the
option agreement remain unchanged.

Additional details regarding the Santa Rita and Zamora-Cerro
Colorado properties and the detailed terms of the Zamora-Cerro Colorado option
agreement are provided in Item 4D - Property, Plant and Equipment below
..

Competition

The mineral property exploration and development business, in
general, is intensively competitive and there is not any assurance that even if
commercial quantities of ore are discovered, a ready market will exist for sale
of same. Numerous factors beyond our control may affect the marketability of any
substances discovered. These factors include market fluctuations; the proximity
and capacity of natural resource markets and processing equipment; and
government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of mineral and
environmental protection. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may make it difficult for us to
receive an adequate return on investment.

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- 20 -

We compete with many companies possessing greater financial
resources and technical facilities for the acquisition of mineral concessions,
claims, leases and other mineral interests as well as for the recruitment and
retention of qualified employees.

Seasonality

There are no seasonal affects on our mineral properties.

|C. | Organizational Structure
|-- | ------------------------

The Company has the following material subsidiary
companies:

Name
    Jurisdiction of incorporation or
      organization
    Percent of voting shares owned by the
      CompanyPac Rim Cayman LLC
    Nevada, USA
    100% directly ownedDayton Mining (U.S.) Inc. (1)
    Nevada, USA
    100% directly ownedMinera Verde. S.A. (2)
    Panama
    100% directly ownedPacific Rim Exploration Inc.
    Nevada, USA
    100% indirectly owned through Pac Rim
      Cayman LLCPacific Rim El Salvador S.A. de C.V. (3)
    El Salvador
    100% indirectly owned through Pac Rim
      Cayman LLCDorado Exploraciones SA de C.V. (4)
    El Salvador
    100% indirectly owned through Pac Rim
      Cayman LLCPacrimco, S.A. (5)
    Costa Rica
    100% indirectly owned through Pac Rim
      Cayman LLC


| | (1) | This subsidiary held the Companys 49% interest in the
      Denton-Rawhide joint venture.                                                                                                                                                                                                                             
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | This subsidiary was created to hold the Remance property
      in Panama.                                                                                                                                                                                                                                              
| | (3) | This subsidiary holds the Companys interest in the El
      Dorado exploration licence that is under application for conversion to an
      exploitation concession.                                                                                                                                                  
| | (4) | This subsidiary holds the Companys interests in the El
      Dorado exploration licences, and the Zamora-Cerro Colorado project claims
      not included in the Zamora-Cerro Colorado option agreement, and has
      applied for new exploration licences to cover the Santa Rita project, all
      in El Salvador.
| | (5) | This subsidiary was created in 2008 to hold potential
      Costa Rican exploration property acquisitions .                                                                                                                                                                                                            

Unless the context otherwise indicates, reference to the term
the Company in this Annual Report on Form 20-F includes Pacific Rim Mining
Corp. and its subsidiaries.

|D. | Property, Plant and Equipment
|-- | -----------------------------

Mineral Properties

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 is principally involved in the exploration for
high-grade epithermal gold and silver deposits in the Americas. The Companys
only advanced material project is the El Dorado gold property in El Salvador and
the Company continues to search for exploration projects to acquire in the
Americas that meet its exploration focus.

El Salvador Properties

El Salvador Mining Regime

The following is based on the Companys understanding of the El
Salvador mining regime.

Under the laws of El Salvador, the government owns all mineral
rights. All private and government-owned lands that have not been declared areas
of protection for reasons of national sovereignty, areas of cultural or social
interest, areas of ecological or environmental protection or areas of capitation
of surface or underground waters for potable water supply; zones occupied by
public service facilities; or areas that are within the urban limit of cities or
towns are open to exploration and are available through application for an
exploration license, which can subsequently be converted to an exploitation
concession upon compliance with certain conditions. An exploration license is
held by payment of an annual fee, compliance with the environmental laws of the
country and fulfilment of the technical exploration program, which may be modified on an annual basis.
El Salvadorian mining laws do not discriminate between nationals and
foreigners.

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El Salvadors current mining law, which was enacted in 1996 and
last amended in 2001, governs the provisions for granting of exploration
licences and exploitation concessions. By granting an exploitation concession,
the El Salvadoran Ministry of Economys Department of Hydrocarbons and Mines
confers upon the applicant the right to produce and sell valuable commodities
recovered from the natural resources within the area of the concession. To be
granted an exploitation concession, which is a necessary step to commencing
mining extraction activities, an environmental permit based on an Environmental
Impact Study (EIS) must first be approved by the Salvadoran Ministry of
Environment and Natural Resources (MARN). The applicant must also satisfy a
number of other conditions. Once granted, the concession requires that
development activities commence within 12 months of the date of the final
concession agreement and that the mine and associated facilities be built and
operated in accordance with the conditions of the environmental permit.

El Dorado Property, El Salvador

The Companys most advanced property in El Salvador is the El
Dorado Property, which consists of three exploration licenses (contiguous to and
completely surrounding the pending exploitation concession area), which the
Company, indirectly through its wholly-owned subsidiaries, holds as to a 100%
interest.

The information presented below summarizes information prepared
under the supervision of Mr. Steven Ristorcelli, P.Geo., of Mine Development
Associates. This information is included in a report entitled Technical Report
Update on the El Dorado Project Gold and Silver Resources dated March 3, 2008
co-authored by Mr. Ristorcelli and Mr. Peter Ronning, P.Eng. each of whom are
independent Qualified Persons as defined in NI 43-101. Information presented
under the headings Recent Developments, January 2008 Updated Resource
Estimate, Environmental Impact Study and Mining Permit CAFTA Action and
Summary has been updated by the Company to reflect developments that have
occurred since March 3, 2008, being the date of the most recent El Dorado
Technical Report.

Predecessor Dayton upon its acquisition of Mirage Resource
Corp. in April 2000 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. 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 are 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.

By agreement dated March 29, 2006, the Company superseded an
option agreement dated November 14, 2003 to acquire a parcel of land suitable
for mineral exploitation activities within the El Dorado exploration licence
area. Under the terms of the new agreement, the Company has prepaid an annual
rental fee in the amount of $29,000 with the option to purchase the parcel for a
payment of $971,000 at any time up to April 1, 2007. During fiscal 2007 the
Company commenced the process of exercising its option to purchase one of the
larger parcels of land over which it holds a purchase option agreement
(negotiated during fiscal 2004), and advanced to the property owner $0.3 million
of the $1.0 million total negotiated option payment. During fiscal 2008, upon
transfer of title in the parcel of land to the Company, the final $0.7 million
was paid. 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 (as defined under the SECs Industry
Guide 7) and all work programs are exploratory searches for ore grade
mineralization.

Property Description and Location

The El Dorado Property (see Figures 1 and 2 below) is comprised
of three exploration licenses totalling 14,407 hectares with nominal expiry
dates of September 28, 2013 (one license) and September 29, 2013 (two licenses),
and the 1,275 hectare area of the pending Exploitation Concession, which
underlying exploration license has a nominal expiry date of January 1, 2005. The
Company continues to hold the 1,275 hectare pending Exploitation Concession area
beyond its expiry date as it has declared its intention to convert the land
holding to an Exploitation Concession, which will have a term of 30 years and
may be extended if warranted. See El Salvador Mining Regime above. The
cost to hold the licenses is a rental of $300 per square kilometre, amounting to
$47,046 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 pending exploitation concession.

In addition to its mineral rights, the Company owns
approximately 765,000 square metres of real estate in the central part of the El
Dorado Property.

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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 kilometres northeast of San Salvador, the capital city of the
nation, and 10 kilometres southwest of the town of Sensuntepeque.

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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 San
Salvador is approximately two and one-half hours, depending on traffic
levels.

The area has a large rural population and Sensuntepeque is a
moderate sized town of approximately 20,000 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 Property 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.

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 kilometres. 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 14,400
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.

Geological mapping has been 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.

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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.

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
kilometres. Systems of related veins are up to three kilometres long. In those
veins that have been mined or extensively drilled, mineralization has been
demonstrated to exist over vertical intervals of up to 300 metres. (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).

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.

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.

January 2008 Resource Estimate

On January 17, 2008 the Company released the results of an
updated resource estimate for the El Dorado gold project, in which 1.4 million
gold equivalent ounces were tabulated in the Measured and Indicated resource
categories combined and a further 0.3 million gold equivalent ounces were
tabulated in the Inferred category. Full details of the 2008 El Dorado resource
estimate, by deposit and resource category, are presented below.

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El Dorado Project Resources (as of January 17,
      2008)Deposit
    Resource Category
    Tonnes
    Gold Grade (g
      Au/t)
    Gold Ounces
    Silver Grade (g
      Ag/t)
    Silver Ounces
    Gold Equivalent
      Grade (g AuEq/t)
    Gold **Equivalent**
      OuncesBalsamo
    Indicated
    566,700
    9.86
    179,600
    112.95
    2,058,000
    11.47
    209,000Inferred
    281,200
    7.71
    69,700
    76.29
    690,000
    8.80
    79,600Minita
    Measured
    614,100
    12.23
    241,500
    80.59
    1,591,200
    13.39
    264,300Indicated
    1,175,100
    9.65
    364,400
    58.16
    2,197,300
    10.47
    395,700Total M&I
    1,789,200
    10.53
    605,900
    65.86
    3,788,500
    11.47
    660,000Inferred
    78,400
    10.39
    26,200
    67.44
    170,000
    11.39
    28,700South Minita
    Indicated
    1,070,900
    9.25
    318,400
    63.99
    2,203,000
    10.16
    349,900Inferred
    302,800
    7.20
    70,100
    48.23
    470,000
    7.89
    76,800Nance Dulce
    Inferred
    128,900
    19.56
    81,100
    121.98
    506,000
    21.30
    88,300Coyotera
    Measured
    166,000
    7.86
    42,100
    57.79
    309,000
    8.69
    46,500Indicated
    501,000
    7.15
    115,200
    58.68
    945,000
    7.99
    128,700Total M&I
    667,000
    7.34
    157,300
    58.48
    1,254,000
    8.17
    175,200Inferred
    19,000
    5.83
    3,600
    72.12
    44,000
    6.86
    4,200Nueva Esperanza
    Indicated
    183,000
    5.77
    33,900
    30.47
    179,000
    6.20
    36,400Inferred
    29,000
    4.67
    4,300
    35.49
    33,000
    5.17
    4,800TOTAL MEASURED ALL DEPOSITS
    780,100
    11.31
    283,600
    75.76
    1,900,200
    12.39
    310,800TOTAL INDICATED ALL DEPOSITS
    3,496,700
    9.00
    1,011,500
    67.45
    7,582,300
    9.96
    1,119,700TOTAL MEASURED & INDICATED
      ALL DEPOSITS
    4,276,800
    9.42
    1,295,100
    68.96
    9,482,500
    10.40
    1,430,500TOTAL INFERRED ALL DEPOSITS
    839,300
    9.45
    255,000
    70.89
    1,913,000
    10.47
    282,400Notes:1) Resources based on a gold equivalent cut-off
      grade of 4.0 g AuEq/t and greater than a grade-times-thickness of 4 (g
      AuEq/t x meters)2) Gold equivalents based upon a silver to gold
      ratio of 70:13) Resources for the Minita, South Minita, Nance
      Dulce, Coyotera and Nueva Esperanza deposits are unchanged from the July
      2006 El Dorado Resource Estimate (see NI 43-101 disclosure)


The mineral resource estimates presented above have
      been calculated in accordance with National Instrument 43-101 as
      required by Canadian securities regulatory authorities, which differs from
      standards of the SEC. The resource estimates contained in this
      discussion would not be permitted in reports of U.S. Companies
      filed with the SEC. See Cautionary Note to U.S. Investors Regarding
      Resource and Reserve Estimates above.


The resources were estimated by interpreting drill intercepts
in cross section, coding samples, capping assays, compositing to vein
thicknesses, and estimating grades and thicknesses of each of the veins into
three dimensional grade thickness models. Each of the three veins comprising the
Minita resource, ten veins comprising the South Minita resource, and five veins
comprising the Balsamo resource were estimated separately. The 4.0 g/t cut-off
grade (wherein gold equivalents are based on a silver to gold ratio of 70:1 and
greater than a grade-times-thickness of 4 (g AuEq/t x metres)) is predicated on
estimated operating costs of $49.68 per tonne, estimated gold recovery of 90% and a gold price of $400 per
ounce. These parameters stem from the Companys 2005 El Dorado prefeasibility
study, the results of which are based on various input estimates related to
costs and commodity prices that were current at the time of its publication.
Readers are cautioned that significant changes have occurred in a number of the
inputs used in the January 2005 El Dorado prefeasibility study since its
publication in January 2005. However, the Company and its consultants elected to
maintain the 4.0 g/t gold equivalent cut-off grade for the 2008 El Dorado
resource estimate in order to facilitate comparisons between the current
resource estimate and the 2006 resource estimate. Full technical reports related
to the 2008 El Dorado resource estimate, the 2006 El Dorado resource estimate
and the 2005 El Dorado pre-feasibility study are publicly available on SEDAR at www.sedar.com.

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The foregoing disclosure under January 2008 Updated Resource
Estimate is based on information prepared under the supervision of Mr. Steven
Ristorcelli, P.Geo., of Mine Development Associates, contained in a report
entitled Technical Report Update on the El Dorado Project Gold and Silver
Resources dated March 3, 2008 co-authored by Mr. Ristorcelli and Mr. Peter
Ronning, P.Eng. each of whom are independent Qualified Persons. This information
has further been reviewed and verified by Mr. William Gehlen, Certified
Professional Geologist and a Qualified Person. Mr. Gehlen is the Vice-President
of Exploration of the Company and supervised the Companys exploration work on
the El Salvador properties. The Companys sampling procedures follow the
Exploration Best Practices Guidelines outlined by the Mining Standards Task
Force and adopted by the TSX. Samples have been assayed using fire assay with a
gravimetric finish on a 30-gram split. Quality control measures, including
check- and sample standard-assaying, are being implemented. Samples were assayed
by Inspectorate America Corporation in Reno, Nevada, an ISO 9002 certified
laboratory, independent of the Company.

Recent Developments

In July 2008, the Company suspended all drilling activity at
the El Dorado project. This decision was made in order to preserve capital and
substantially reduce Pacific Rims El Salvador investment activity while the El
Dorado permitting issue remains unresolved. See Environmental Impact Study
and Mining Permitbelow. The Company did not conduct any significant
exploration work to further advance the El Dorado project during fiscal 2011.
Exploration activities undertaken by the Company at the El Dorado project during
fiscal 2011 were restricted to care and maintenance responsibilities, baseline
environmental data collection and community consultations. The Company also
participated in several GOES administrative and legislative initiatives and
studies focused on mining in El Salvador.

Environmental Impact Study and Mining Permit

In September 2004, PRES submitted an EIS to MARN for a 750
tonne per day operation based on producing precious metals from the Minita
deposit alone. In September 2005, the finalized EIS, which incorporated initial
comments from MARN, was resubmitted to MARN. MARN then conveyed its
technical approval of the EIS, and instructed PRES to submit the EIS for public
comment, which was carried out in October 2005. In March 2006, PRES received
from MARN a list of issues raised during the public comment period and was asked
to amend the EIS to address these and a number of other issues. In October 2006,
the amended EIS, which included the requested clarification on a number of
items, was resubmitted to MARN. Finally, in December 2006, PRES submitted a
proposal for a water treatment plant in response to additional comments by
MARN.

Well over four years have passed since the El Dorado EIS was
submitted in its final form to MARN, during which time MARN has failed to take
action on approval of the EIS. This in turn is preventing a resolution to PRESs
exploitation concession application.

Arbitration Claim under CAFTA and the ILES

In April 2009, PacRim, a Nevada corporation and a wholly-owned
subsidiary of Pacific Rim filed international arbitration proceedings against
the GOES under CAFTA and the Investment Law of El Salvador in its own name and
on behalf of PRES and DOREX (collectively the Enterprises). A Notice of Intent
to commence international arbitration proceedings had previously been filed by
PacRim in December 2008. PacRim has retained the Washington, DC-based
international law firm of Crowell & Moring, LLP to represent it in the
arbitration and is seeking award of damages in the hundreds of millions of
dollars from the GOES for its multiple breaches of international and Salvadoran
law.

Basis of Claim

Since acquiring the El Dorado project in El Salvador in 2002,
PacRim and the Enterprises have operated in full compliance with Salvadoran law,
including the countrys environmental, mining and foreign investment laws, and
have met or exceeded all applicable standards while conducting business in El
Salvador. Ample evidence, however, demonstrates that the GOES has failed to
fulfill its obligations.

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PacRims claims are based on the GOESs breaches of
international and Salvadoran law arising out of the GOESs improper failure to
finalize the permitting process in accordance with Salvadoran law. This conduct
by the GOES has resulted in a significant loss to PacRim, the shareholders of
Pacific Rim and to the local communities, and has unnecessarily delayed normal
development of these valuable deposits.

Pacific Rims mandate to its shareholders is to build a gold
mining company that explores and develops gold deposits in an environmentally
responsible manner. In meeting its responsibilities, a mine design for the
Enterprises El Dorado gold project located in the department of Cabañas, was
submitted to the GOES in its final form more than three years ago. Despite
strong local support and the inclusion of carefully engineered and reliable
environmental protections for the proposed El Dorado Mine, the GOES has not met
its responsibility to issue the Enterprises the permits necessary to advance the
project to the final step of full production.

Fiscal 2011 Developments

Hearings related to an objection (the Preliminary Objection)
were held on May 31 and June 1, 2010 at ICSID headquarters in Washington, DC.
The Preliminary Objection, wherein GOES sought to dispose of nearly all of
PacRims case, was originally filed by the GOES on January 4, 2010 (fiscal
2010). On August 2, 2010 the ICSID Tribunal that is hearing the investment
claims of PacRim against the GOES, and that presided over the Preliminary
Objection hearings, ruled in favor of PacRim, unanimously rejecting all of the
arguments made by the GOES in its Preliminary Objection filed under Articles
10.20.4 and 10.20.5 of CAFTA.

Immediately following the ICSID Preliminary Objection ruling,
the GOES filed another objection (the Jurisdiction Objection), wherein the
GOES asserts that ICSID does not have jurisdiction to hear PacRim's claims under
CAFTA or the Investment Law based largely on timing and nationality issues. On
May 2 - 4, 2011 hearings were again held at ICSID headquarters in Washington, DC
in order for the ICSID Tribunal to hear argument and witness testimony regarding
the Jurisdiction Objection. As with the Preliminary Objection, PacRim asserts
the Jurisdiction Objection is without merit and looks forward to the Tribunals
decision, anticipated for late calendar 2011. If the GOES is unsuccessful in its
Jurisdiction Objection, the CAFTA/ILES action is expected to proceed to the
merits phase during fiscal 2012.

Summary

The El Dorado gold project is Pacific Rims most advanced
exploration project. El Dorado has current estimated resources of 1.4 million
gold equivalent ounces in the Measured and Indicated categories combined, plus a
further 0.3 million gold equivalent ounces in the Inferred category (readers are
referred to the Companys March 2008 El Dorado Technical Report filed on SEDAR
www.sedar.com for additional important information regarding the El
Dorado resources). Because the average grade of these resources (approximately
10.5 gold equivalent grams per tonne) is relatively high, the underground mine
planned for the El Dorado deposits is expected to have low unit operating costs.
Importantly, the El Dorado deposits are inherently environmentally clean and the
production and processing is expected to have a negligible impact on the local
environment. The El Dorado project has delivered many technical successes;
however its path forward to development and operation has been hampered by
excessively lengthy delays in the permitting process on the part of the GOES.
The El Dorado project is currently the subject of a legal dispute under the
auspices of the CAFTA international trade treaty and the Investment Law of El
Salvador, as discussed above.

The Company drastically reduced its Salvadoran exploration
expenditures during fiscal 2009, which primarily affected exploration work at
the El Dorado project. The Company does not intend to contemplate resuming
significant exploration work designed to advance the El Dorado project further
until such time as the environmental permit is received and the exploitation
concession is granted. The Company intends to continue exploration activities
and make expenditures required to keep the El Dorado property in good standing
during fiscal 2012 and for the foreseeable future.

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 gold project is located in central El Salvador,
immediately northwest of the El Dorado project. The Santa Rita exploration
licence was staked by the Companys subsidiary PRES in July 2005 after its
regional reconnaissance program in El Salvador resulted in the discovery of
gold-bearing quartz-calcite boulders. During fiscal 2010, the Santa Rita
exploration licence expired and was immediately re-staked by the Companys
subsidiary DOREX. DOREX is currently awaiting approval of the new Santa Rita
exploration licence.

PRES discovered an epithermal quartz-calcite vein system at
Santa Rita in fiscal 2006. Two distinct veins were originally discovered and
surface rock channel samples collected from along the length of one of these,
the 2+ kilometre long Trinidad vein, which returned anomalous gold (between 6.4
g/t gold and 118.3 g/t over vein widths of 1 to 2 meters) at various localities
along its length. In late fiscal 2006 PRES received a permit from MARN to
conduct a drill program on the Santa Rita gold project. However, during fiscal
2007 the Company stepped back from exploration work at Santa
Rita when the project became the target of anti-mining protests. Exploration
work at Santa Rita resumed during fiscal 2008 and continued into early fiscal
2009.

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Notwithstanding the excellent exploration potential
demonstrated to date at the Santa Rita project, exploration activities were
curtailed in July 2008 in keeping with the Companys decision to significantly
reduce its investment in El Salvador until such time as the El Dorado
environmental permit is received and the exploitation concession is granted.
DOREX is currently awaiting receipt of approval of its application for the new
Santa Rita exploration licence.

The foregoing disclosure has been prepared by or under the
supervision of William Gehlen, Certified Professional Geologist, a Qualified
Person for the purposes of NI 43-101. Mr. Gehlen is the Vice-President of
Exploration of the Company. The Companys sampling procedures follow the
Exploration Best Practices Guidelines outlined by the Mining Standards Task
Force and adopted by the TSX. Samples have been assayed using fire assay with a
gravimetric finish on a 30-gram split. Quality control measures, including
check- and sample standard-assaying, are being implemented. Samples were assayed
by Inspectorate America Corporation in Reno, Nevada, an ISO 9002 certified
laboratory, independent of the Company.

Zamora-Cerro Colorado Gold Project, El Salvador

There are no known ore reserves on the Zamora-Cerro Colorado
property and all work programs on the property are exploratory searches for ore
grade mineralization.

During fiscal 2006 Pacific Rim signed an agreement to acquire a
100% interest in the Zamora gold project in El Salvador from a consortium of
private companies, which was amended in fiscal 2007 to include additional
exploration licences known as Cerro Colorado.

On February 11, 2010, an amendment to the Zamora-Cerro Colorado
option agreement was signed by the Company and the property vendors Nycon
Resources, Inc. and Cerro Colorado S.A. de C.V. (collectively, the Optionor).
Under the terms of the amended agreement, the Company will retain is 100% option
on the claims comprising the Zamora-Cerro Colorado property but will defer all
further and remaining option payments to the Optionor until the earlier of
February 11, 2015, or such time as the Company receives an approved mining
permit for the El Dorado project (being a clear signal of the GOES support of
the mining industry in El Salvador). All other aspects of the option agreement
remain unchanged.

The schedule of advanced royalty payments required to maintain
the Companys option to purchase the Zamora-Cerro Colorado property, as per the
amended agreement is:

Upon TSX approval of the amended agreement:
    100,000 shares plus 100,000 warrants of the
      Company (shares issued)Yearly advanced royalty payments:
    The greater of:First anniversary
    100,000 shares or
      $100,000 in shares of the Company (shares issued)Second anniversary
    140,000 shares or
      $140,000 in shares of the Company (shares issued)Third anniversary
    200,000 shares or
      $200,000 in shares of the Company (shares issued)Fourth payment -
      Payment date is
      earlier        of the date the
      Company
      receives        confirmation
      that the Government of
      the        Republic of El
      Salvador has granted
      a        mining exploitation
      concession for the
      El        Dorado Project and
      February 11, 2015
    300,000
      shares or $300,000 in shares of the Company (option payment
             deferred  see above)Fifth payment 
      due on anniversary
      of        fourth payment per
      February 2010        amended
      agreement and
      subsequent        anniversaries
    400,000 shares or
      $400,000 in shares of the Company (option
      payment        deferred  see
      above)


The above advanced royalty payment schedule applies to both the
Zamora and Cerro Colorado exploration license options and supersedes the
original agreement terms. As per the terms of the revised agreement, advanced
royalty payments as outlined above will continue until production is achieved or
the exploration concessions expire. Title to 100% of the Cerro Colorado and
Zamora exploration licenses is to be transferred to Pacific Rim at such time as
a positive production decision is made by the Company. Upon achievement of
commercial production from the Cerro Colorado or Zamora claims, the sellers are
entitled to receive a 3% net smelter royalty to a maximum of $10 million
(inclusive of the dollar value of the advanced royalty payments made).

The Zamora and Cerro Colorado claims comprise a 125 square
kilometre land package located 50 kilometres north of San Salvador, in El
Salvador. The Company has staked additional ground between the Cerro Colorado
and Zamora licences it optioned in order to cover what the Company believes is a large gold-bearing epithermal
system situated on the same regional gold belt that hosts PRESs El Dorado and
Santa Rita gold systems in El Salvador and a number of million-plus ounce gold
systems in Guatemala. The Company has not yet received confirmation that the
licences it staked in fiscal 2008 and early fiscal 2009 have been formally
granted.

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- 31 -

Despite the positive exploration results the Company has
generated to date on the Zamora-Cerro Colorado project, further exploration
activities were curtailed in July 2008 in keeping with the Companys decision to
significantly reduce its investment in El Salvador until such time as the El
Dorado environmental permit is received and the exploitation concession is
granted. The Company intends to continue exploration activities required to keep
the Zamora-Cerro Colorado licences in good standing during fiscal 2012.

The foregoing disclosure has been prepared by or under the
supervision of William Gehlen, Certified Professional Geologist, a Qualified
Person for the purposes of NI 43-101. Mr. Gehlen is the Vice-President of
Exploration of the Company. The Companys sampling procedures follow the
Exploration Best Practices Guidelines outlined by the Mining Standards Task
Force and adopted by the TSX. Samples have been assayed using fire assay with a
gravimetric finish on a 30-gram split. Quality control measures, including
check- and sample standard-assaying, are being implemented. Samples were assayed
by Inspectorate America Corporation in Reno, Nevada, an ISO 9002 certified
laboratory, independent of the Company.

Other Properties

Hog Ranch Property, Nevada

In March 2011, Pacific Rim, through its US subsidiary Pacific
Rim Exploration Inc. (PREx) signed a Letter of Intent (LOI) with ICN
Resources Ltd. (ICN) and Washoe Gold Inc. (WGI) (collectively with the
Company and PREx, the Hog Ranch Parties) providing the Company with the option
to acquire a 65% joint venture interest in the Hog Ranch Property located in
Washoe County, Nevada, approximately 180 km north of Reno. Subsequent to the end
of fiscal 2011 the Hog Ranch Parties signed a Definitive Agreement finalizing
the terms of the LOI (subject to final regulatory approval) , the effective date
(as defined therein) of which is July 8, 2011.

As per the Definitive Agreement, PREx has been granted the
option to acquire a 65% interest (the Interest) in the Hog Ranch Property
through the expenditure of an aggregate of $8 million in exploration
expenditures and the issuance of an aggregate of 1 million common shares of
Pacific Rim, with annual extensions dependent on results of exploration,
according to the following schedule:

|Exploration expenditures with respect to the
      property of up to $8.0 million as follows:
|---------------------------------------------------------------------------------------------
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             

Share payments of up to 1.0 million shares as follows:

(i) 200,000 common shares of Pacific
Rim within five business days of receipt of approval of the Definitive Agreement
by the applicable stock exchanges (PAID); and (ii) 200,000 common
shares of Pacific Rim on or before each of the second, third, fourth and fifth
anniversaries of the effective date of July 8, 2011.

Pacific Rim, through PREx, is the operator of the Hog Ranch
Property. Upon PREx earning the Interest, PREx and WGI agree to participate in a
joint venture for the further exploration and development of Hog Ranch.

Hog Ranch consists of 465 unpatented claims and 239 hectares of
fee lands. Approximately 200,000 ounces of gold were produced at the property
from a small heap leach mine operated by Western Goldfields and subsequently
Western Mining in the late 1980s and early1990s. These low-grade ores were
extracted from the uppermost parts of a low-sulfidation epithermal system.
Western Mining reclaimed the mine site to regulatory approved conditions,
including partially backfilling the pits. Several companies have explored for
low-grade gold mineralization and conducted some exploration in the deeper parts
of the Hog Ranch epithermal system, where higher grade feeder veins are likely
to reside. Pacific Rims primary focus is high-grade banded epithermal veins
recoverable in an underground operation. PREx will take its usual approach of
detailed geology with special attention to the structural geology to identify
these deeper drill targets.

The Company is currently evaluating past drilling and
geophysical results from previous operators of the Hog Ranch project,
formulating a geologic model for Hog Ranch and planning the details of its Phase
1 exploration program, which is expected to commence imminently and include
detailed geological mapping with emphasis on the structural geology, soil
sampling, claim staking, and drill target definition. Included in this Phase 1
program will be a 10-15-hole drill program expected to begin by early calendar
2012.

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- 32 -

Remance Property, Panama

During fiscal 2011, the Company, through its Panamanian
subsidiary Minera Verde, signed a Letter of Intent with Compania Minera Clifton
S.A. (Minera Clifton) (collectively with the Company and Minera Verde, the
Remance Parties) to acquire a 100% interest in the Remance project located in
Panama, Central America.

The Remance Parties have agreed to sign a formal option
agreement (the Formal Agreement) granting Minera Verde the exclusive right and
option (the "Option") to acquire 100% of Minera Clifton's right, title and
interest in the Remance project as soon as practicable. Signing of the Formal
Agreement has not been concluded at this time and is currently highly uncertain.
Minera Cliftons application for an extension to the Remance concession term, as
provided by Panamanian law, was recently denied; a decision which is currently
being appealed by Minera Clifton. The extension denial by the Ministry of
Commerce and Industry is highly suspicious and diplomatic efforts are aimed at
pointing out these irregularities in an attempt to overturn the decision. While
the Company is keeping the Remance LOI in effect during Minera Cliftons appeal,
the outcome of this process, and hence the Companys final acquisition of the
Remance project, is highly uncertain. If signed, the Formal Agreement will be
subject to all required regulatory approvals, including the approval of the
Toronto Stock Exchange (the TSX). The option to acquire Remance may be
exercised by the Company by completing the following terms:

1. paying to
Minera Clifton the sum of $200,000 (the "Cash Payment"), payable as follows:

On the date of execution of the Formal
      Agreement by the Parties:
    $
    50,000On the date which is 3 months after the date of execution
      of the Formal Agreement:
    $
    50,000On the date which is 6 months after the
      date of execution of the Formal Agreement:
    $
    50,000On the date which is 10 months after the date of execution
      of the Formal Agreement:
    $
    50,000


2. on the
date of execution of the Formal Agreement, issuing to Minera Clifton a total of
5 million common shares of Pacific Rim (the "Acquisition Shares");

3. within
the Option Period (as defined below), conducting a drilling program on the
Concession of at least 10,000 metres, and initiating environmental and
metallurgical studies on the Remance project (collectively, the "Drilling
Program"). The Option Period is the period which begins on the date on which
Pacific Rim has received all required permissions and approvals of the
Panamanian government to begin the Drilling Program, and which ends on the date
which is 12 months thereafter; and

4. on or
before the date which is 10 days after the last day of the Option Period, giving
written notice to Minera Clifton that it intends to exercise the Option, in
consideration of which Pacific Rim will pay to Minera Clifton, as soon as
practicable thereafter, the sum of $5,000,000, payable, at the election of
Minera Clifton, in cash or common shares of Pacific Rim (the "Additional
Shares").

As noted above, the Remance project acquisition has not
currently been completed and is highly uncertain at this time. The Company
believes that Minera Cliftons application for extension of the Remance
concession term, normally a routine process permitted under Panamanian mining
law, was sidelined by bureaucratic irregularities and issues within the ministry
responsible for mining. If the Remance extension is ultimately granted to Minera
Clifton, the Company intends to proceed with its acquisition of the Remance
Project by signing the Formal Agreement.

The Companys current knowledge of the Remance project suggests
a thorough and systematic drill program is warranted to test the depth extent of
the known near-surface gold mineralization (the Company would be obliged, as per
the terms of the Remance, to conduct a 10,000 meter drill program on Remance in
the first year of the Option Period as described above). A first phase
exploration program, including environmental and metallurgical studies as well
as drilling, is expected to cost approximately $1 million. The Company would
require additional financing to complete its Remance exploration
obligations.

Generative Program

Pacific Rims project generation initiatives focus on acquiring
projects the Company believes have good exploration potential without incurring
onerous costs. The Company focuses solely on low-sulfidation epithermal gold
systems, which are environmentally clean, high grade, and have potentially low
cost production, and continuously evaluates and seeks to acquire new project
opportunities that fit its exploration criteria and meet its high standards.

In July 2008 the Company shifted the focus of its grassroots
exploration initiatives out of El Salvador to other jurisdictions that have
similarly prospective mineral potential but a more robust appreciation of the
economic benefits of the mining industry. Using its unique understanding of
epithermal gold systems in the Central American Gold Belt, particularly within
El Salvador, Pacific Rim has been very successful in locating new, high grade
gold-bearing systems in the past and is ideally equipped to apply this formula
for discovery to neighbouring jurisdictions and elsewhere along the Pacific Rim.
The Companys identification of the Remance project opportunity and its recent
acquisition of the Hog Ranch joint venture option are a direct result of these
efforts. While the Company continues to seek additional high quality projects
that fit its exploration focus, there are no guarantees that any project
evaluation or due diligence work currently underway will result in a positive
outcome or that the Company will be successful in acquiring any of the projects
it is currently evaluating.

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- 33 -

Environmental Matters

Reclamation  US Interests

The Companys US operations are subject to federal, state and
local environmental laws and regulations. The Companys US interests consist of
the Hog Ranch property (an early-stage exploration property) and its prior
ownership of the Denton-Rawhide operation.

As a result of our due diligence investigation prior to
acquisition of the Hog Ranch property, the Company does not believe it has or
will inherit any significant reclamation liability on the property stemming from
prior operations. Gold mining operations were conducted on the Hog Ranch
property in the 1990s. However, previous operators reclaimed all prior workings
to regulatory-approved conditions including partially backfilling the open pits.
The terms of the Hog Ranch Definitive Agreement preclude any environmental
liability for Pacific Rim stemming from these prior operations. Environmental
risks associated with exploration programs the Company intends to undertake at
Hog Ranch relate primarily to the construction of drill roads and sites,
drilling, and the handling and storage of fuel.

The Companys exploration programs are designed according to
industry best practices to have minimal to no impact on flora, fauna and surface
or underground water sources. Temporary disturbances (temporary access roads,
drill pads, mud pits, trenches) are reclaimed. Using the same methods required
for structural studies at dam sites and large construction sites, drill holes
are reclaimed to regulatory guidelines. The temporary access trails, drill pads
and mud sumps are reclaimed by filling in ruts, holes and pits, re-contouring
any banks or steep cuts, building water diversion ditches to control runoff and
planting fast growing, native grasses to stabilize the ground. Trenches are
refilled and replanted in a like manner, and fence barriers are occasionally
built to control livestock movement around reclaimed areas. Permanent or long
term disturbances such as roads, buildings, wells, walls, fences, gates, etc.
are constructed with erosion controls and stability measures including, as
necessary, waterbars, rock retaining walls, water diversion ditches, drain pipes
and/or stabilizing vegetation, and are constructed to regulatory guidelines. All
areas of reclamation and construction are subject to regulatory approval and
monitored on an annual basis and remediation is done if required

Contractors to the Company are required to use certified,
non-polluting, non-toxic additives in drilling programs and comply with OSHA
work and safety standards and procedures. These issues are routinely monitored
by Company employees.

During fiscal 2009 the Company sold its 49% interest in the
Denton-Rawhide operation to it's joint venture partner, Kennecott-Rawhide Mining
Company ("Kennecott"). Subsequently, in late calendar 2010, Kennecott sold its
100% interest in the Denton-Rawhide Joint Venture to a third party. According to
the terms of Kennecott's 2010 sale, reclamation obligations at the
Denton-Rawhide operation were separated such that Kennecott remains responsible
for reclamation expenditures due to any disturbances created prior to the sale,
and the purchaser becomes responsible for undertaking reclamation related to any
disturbances created after the sale. As part of the sale of its interest in
Denton-Rawhide to Kennecott, the Company had provided a guarantee on 49% of any
reclamation and closure costs in the event that these expenditures (limited to
those related to disturbances made up to the point the Company sold it's
interest in the operation) were to exceed $7.0 million. In other words, the
Company's obligations are limited to pre-sale property conditions.

A reclamation and closure plan for Denton-Rawhide, covering the
period ending with the Companys sale of its 49% interest in the operation to
Kennecott, has been submitted to the Bureau of Land Management and the Nevada
Department of Environmental Protection and is currently awaiting approval.
Kennecott has estimated a total of $4.9 million in reclamation and closure costs
under the proposed plan. Kennecott, on behalf of the Rawhide Joint Venture, has
posted surety bonds as required for compliance with state and local closure,
reclamation and environmental obligations. Estimated future reclamation and
property closure costs for Denton-Rawhide are based on current legal and
regulatory requirements. Actual costs incurred for reclamation activities in
future periods could differ from the amounts estimated. Additionally, future
changes to environmental laws and regulations could affect the extent of
reclamation and remediation work required to be performed by the Company. Any
such changes in future costs could materially impact the amounts charged to
operations for reclamation and remediation.

The Hog Ranch property is open to mineral development managed
by the U.S. Bureau of Land Management and the State of Nevada. Our exploration
activities will comply with environmental regulations and guidelines set forth
by the U.S. Bureau of Land Management and the State of Nevada.

The Bureau of Mining Regulation and Reclamation (BMRR), in
cooperation with other state, federal and local agencies regulates mining activities in Nevada under regulations adopted in 1989.
The Nevada Administrative Code (NAC) 445A.350-NAC 445A.447 and (NAC) 519A.010 -
NAC 519A.415 were developed to implement the requirements of the Nevada Revised
Statutes (NRS) 445A.300-NRS 445A.730 and (NRS) 519A.010 - NRS 519A.290. BMRR is
composed of three distinct technical branches: regulation, closure and
reclamation. It is the mission of BMRR to ensure that Nevada's waters are not
degraded by mining operations and that the lands disturbed by mining operations
are reclaimed to safe and stable conditions to ensure a productive post-mining
land use. These laws and regulations are the primary pieces of legislation
governing the Companys reclamation obligations.

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- 34 -

The Regulation Branch of the BMRR has responsibility for
protecting waters of the State under the water pollution control regulations.
The branch consists of the permitting and inspection sections. The permitting
section issues Water Pollution Control Permits to ensure that the qualities of
Nevadas water resources are not impacted by mining activity. The inspection
section conducts regular inspections during the life of a mining facility to
confirm that operations are in compliance with permit requirements. The Closure
Branch of the BMRR also has the responsibility of protecting waters of the state
under the water pollution control regulations. This branch works with facilities
at the cessation of operations to ensure that all components are left chemically
stable for the long term. The Closure Branch issues water pollution control
permits and conducts inspections to ensure that the mine site, in the closure
and post-closure period, will not degrade waters of the State.

The Reclamation Branch of the BMRR regulates exploration and
mining operations in Nevada on both private and public lands. The Branch issues
permits to exploration and mining operations to reclaim the disturbance created
to a safe and stable condition to ensure a productive post-mining land use. An
operator must obtain a reclamation permit prior to construction of any
exploration, mining or milling activity that proposes to create disturbance over
5 acres or remove in excess of 36,500 tons of material from the earth. In
addition to obtaining a reclamation permit, an operator must file a surety bond
with the Division or federal land manager to ensure that reclamation will be
completed, should an operator default on the project.

In summary, BMRR works with industry and the public to ensure
that mining operations in the state, from initial design through reclamation, do
not negatively impact the environment and that the land will be returned to a
productive post-mining use.

International Properties

The Companys international exploration properties, currently
located in El Salvador, are governed by existing local environmental laws,
though the Company elects in certain circumstances to exceed its obligations
under local environmental law and comply with internationally accepted
environmental standards.

The Companys exploration programs are designed according to
industry best practices to have minimal to no impact on flora, fauna and surface
or underground water sources. Temporary disturbances (temporary access roads,
drill pads, mud pits, hand dug trenches, impacts on existing infrastructure) are
reclaimed and repaired. Using the same methods required for structural studies
at dam site and large construction sites, drill holes are capped with either a
50 meter grout cap or are completely filled with grout, depending on the
geologic environment. The temporary access trails, drill pads and mud sumps are
reclaimed by filling in ruts, holes and pits, re-contouring any banks or steep
cuts, building water diversion ditches to control runoff and planting fast
growing, native grasses to stabilize the ground. Trenches are refilled and
replanted in a like manner, and fence barriers are occasionally built to control
livestock movement around reclaimed areas. Permanent or long term disturbances
such as roads, buildings, wells, walls and fences, gates, etc. are constructed
with erosion controls and stability measures including, as necessary, "badenes",
rock retaining walls, water diversion ditches, drain pipes and/or stabilizing
vegetation, and are constructed to standards exceeding local regulation. Often,
local tree varieties are harvested then replanted in the disturbed areas when it
does not conflict with normal local usage. All areas of reclamation and
construction are monitored on an annual basis. If additional repair is required
because of the initial construction, it is repaired until the area gains
stability. The Companys professional environmental staff has volunteered and
assisted the local authorities in evaluating other arms-length environmental,
geologic, hydrologic, disaster sites around the immediate communities by
conducting land slide analysis, ground water studies, surface water studies,
land fill site studies, helping to evaluate other industrial waste sites, fire
prevention, disease control, disaster relief preparedness and first aid.

Contractors to the Company are required to use certified,
non-polluting, non-toxic additives in drilling programs and comply with
international work and safety standards and procedures. These issues are
routinely monitored by Company employees under the direction of the local
environmental and safety managers. Environmental compliance and risk are
regularly assessed by third party contractors specializing in mining and
exploration risk management. In addition, the Company has established showcase
programs for environmental protection, waste management and reforestation in
order to educate workers and local populace on common best practice measures for
a healthier, cleaner and safer living and working environment.

Ongoing reclamation activities associated with the Companys
exploration stage properties are expensed as exploration in the period
incurred.

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- 35 -

Proposed Transactions

Pacific Rim is continually reviewing potential project
acquisitions and other opportunities that could enhance shareholder value.

Other than the Hog Ranch joint venture option, which involves
future payments of shares and the potential Remance project acquisition, which
if completed, will involve payments of cash and shares, there are currently no
transactions in process that would affect the financial condition, results of
operations or cash flows of the Company.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Critical Accounting 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. Significant areas requiring the use of management
estimates include the carrying value of mineral properties and property, plant
and equipment, and stock based compensation. Factors that could affect these
estimates include risks inherent in mineral exploration and development, changes
in reclamation requirements, and changes in government policy.

The carrying value of the El Dorado property reflects its
acquisition cost, which was based on an estimate of the propertys mineral
resource at the time of the acquisition. This resource estimate was filed as a
NI 43-101 compliant technical report in February 2002. It has been superseded by
subsequent resource estimates, the most recent of which was completed in January
2008.

The Companys activities in El Salvador are subject to the
effects of changes in legal, tax and regulatory regimes, national and local
political issues, labour and economic developments and government bureaucracy.
PRES has experienced lengthy delays in the GOESs processing of the El Dorado
exploitation concession application with no resolution to date, which, along
with other factors beyond the control of PRES, could adversely impact operations
in El Salvador or result in the impairment of the El Dorado property in the
future; such impairment could be material. PRES has commenced a legal claim
under CAFTA and the Investment Law of El Salvador. If PRES is unsuccessful in
obtaining a permit for El Dorado or in its CAFTA/ILES claim, or other factors
beyond the control of the Company, such factors could adversely impact
operations in El Salvador or result in the impairment of the El Dorado property
in the future; such impairment could be material. As at April 30, 2011,
management of the Company determined that impairment indicators existed on its
El Dorado project and completed an impairment assessment on this project. The
current economic environment, the decline in the Companys stock price and the
difficulty in obtaining a permit were considered as impairment indicators. As
part of their impairment evaluation, management considered a number of factors,
including the Companys share price at April 30, 2011 and current gold prices
along with the Companys 2005 pre-feasibility study. Based on this impairment
evaluation no impairment of the El Dorado project was identified as of April 30,
2011. To date, the Companys discussions with its legal counsel representing the
Company in the CAFTA/ILES arbitration have not resulted in a determination of
any material impairment in the carrying value of the Company concessions.

The Company re-evaluates the carrying values of property, plant
and equipment when events or changes in circumstance indicate that carrying
values may not be recoverable. If it is determined that the estimated net
recoverable amount based on non-discounted cash flows is less than the carrying
value, a write-down to the estimated fair value is made by a charge to
earnings.

The Company makes significant assumptions and estimates in
determining the fair market value of stock-based compensation granted to
employees and non-employees and the value attributed to various warrants and
broker warrants issued on financings, which have an effect on the stock-based
compensation expense recognized and the contributed surplus and share capital
balances on the Companys balance sheet. Using the Black-Scholes Option Pricing
Model, management has made estimates of the life of stock options and warrants,
the expected volatility and the expected dividend yields that could materially
affect the fair market value of these securities. The estimates were chosen
after reviewing the historical life of the Companys options and analyzing share
price history to determine volatility.

As part of the sale of its interest in Denton-Rawhide (readers
are referred to the Companys 2009 Annual Report), the Company has provided a
guarantee on 49% of any reclamation and closure costs in the event that
reclamation and closure costs were to exceed $7.0 million. Kennecott has
estimated a total of $4.9 million for these expenditures under the proposed
plan.

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- 36 -

Changes in Accounting Policies

In January 2009, the CICA issued Handbook Section 1582,
Business Combinations, which establishes new standards for accounting for
business combinations. This is effective for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after January 1, 2011. Early adoption is permitted. The
Company has elected to early adopt this standard effective May 1, 2010. The
adoption of this standard did not have any impact on the Companys financial
position, earnings or cash flows.

In January 2009, the CICA issued Handbook Section 1602,
Non-controlling Interests, to provide guidance on accounting for non-controlling
interests in a subsidiary in consolidated financial statements subsequent to a
business combination. The section is effective for fiscal years beginning on or
after January 2011. Early adoption is permitted. The Company has elected to
early adopt this standard effective May 1, 2010. The adoption of this standard
did not have any impact on the Companys financial position, earnings or cash
flows.

Recent accounting pronouncements not yet adopted

The Canadian Accounting Standards Board (AcSB) has announced
its decision to replace Canadian GAAP with International Financial Reporting
Standards (IFRS) for all Canadian Publicly Accountable Enterprises (PAEs).
The effective changeover date is May 1, 2011, at which time Canadian GAAP will
cease to apply for Pacific Rim and will be replaced by IFRS. Following this
timeline, the Company will issue its first set of interim financial statements
prepared under IFRS in the first quarter of 2012 ending July 31, 2011 including
comparative IFRS financial results and an opening balance sheet as at May 1,
2010. The first annual IFRS consolidated financial statements will be prepared
for the year ended April 30, 2012 with restated comparatives for the year ended
April 30, 2011.

Management has developed a project plan for the conversion to
IFRS which is comprised of three phases: the scoping phase, the planning phase
and the transition phase.

Management has completed the scoping phase in which a component
evaluation was prepared of its existing financial statement line items,
comparing Canadian GAAP to the corresponding IFRS guidelines. The Companys key
personnel have completed training to gain a full understanding of the IFRS
impact with regard to the Companys accounting and reporting procedures. A
number of differences were identified but most are not expected to have a
material impact on the reported results and financial position. Set out below
are the most significant areas, identified to date by management, where changes
in accounting policies may have the highest potential impact on the Companys
consolidated financial statements.

Most adjustments required on transition to IFRS will be made,
retrospectively, against opening retained earnings as of the date of the first
comparative balance sheet presented based on standards applicable at that time.

IFRS 1

IFRS 1, First-Time Adoption of International Financial
Reporting Standards, provides entities adopting IFRS for the first time with a
number of optional exemptions and mandatory exceptions, in certain areas, to the
general requirement for full retrospective application of IFRS.

Mandatory exceptions:

| | 1. | Estimates - An entitys estimates under IFRS at the date
      of transition to IFRS must be consistent with estimates made for the same
      date in accordance with GAAP, unless there is objective evidence that
      those estimates were in error;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Optional Exemptions Elected:

| | 1. | IFRS 2 Share-Based Payments  The Company will elect this
      exemption from retroactive restatement of equity instruments granted
      before November 2, 2002 and those which were granted after November 2,
      2002 but which vested prior to May 1, 2010 which have been accounted for
      in accordance with Canadian GAAP.                                                                                                                                                                                                                                                                                                                                         
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 2. | Business Combinations - IFRS 1 indicates that a
      first-time adopter may elect not to apply IFRS 3 Business Combinations
      retrospectively to business combinations that occurred before the date of
      transition to IFRS. The Company will apply this election and IFRS 3 will
      be applied only to business combinations that occur on or after May 1,
      2010.                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 3. | Cumulative translation differences - IFRS 1 allows a
      first-time adopter to not comply with the requirements of IAS 21 The
      Effects of Changes in Foreign Exchange Rates for cumulative translation
      differences that existed at the date of transition to IFRS. The Company
      will choose to apply this election and will eliminate any cumulative
      translation difference and adjust retained earnings by the same amount
at the date of transition to IFRS. If, subsequent to adoption, a foreign
operation is disposed of, the translation differences that arose before the date
of transition to IFRS will not affect the gain or loss on disposal.

---

- 37 -

Share Based Payments

IFRS and Canadian GAAP largely converge on the accounting
treatment for share  based transactions with only a few differences.

Canadian GAAP allows either accelerated or straight line method
of amortization for the fair value of stock options under graded vesting.
Currently, the Company is using the accelerated amortization method and
therefore the adoption of IFRS 2 is not expected to have an impact on the
Companys financial statements.

Under IFRS, the estimate for forfeitures must be made when
determining the number of equity instruments expected to vest, while under
Canadian GAAP forfeitures can be recognized as they occur. The Company has begun
using the estimate of forfeitures starting May 1, 2010 when determining the
number of equity instruments expected to vest.

Upon adoption of IFRS 2, the Company will be fully compliant
with the new standard and the adoption is not expected to have an impact on the
financial statements.

Impairment

Canadian GAAP generally uses a two-step approach to impairment
testing: first comparing asset carrying values with undiscounted future cash
flows to determine whether impairment exists; and then measuring any impairment
by comparing asset carrying values with discounted cash flows. International
Accounting Standard (IAS) 36, Impairment of Assets uses a one-step approach
for both testing and measurement of impairment, with asset carrying values
compared directly with the higher of fair value less costs to sell and value in
use (which uses discounted future cash flows). This may potentially result in
write downs where the carrying value of assets were previously supported under
Canadian GAAP on an undiscounted cash flow basis, but could not be supported on
a discounted cash flow basis.

Based on the Companys assessment of its resource property
costs, there will be no impairment charge on transition to IFRS.

Exploration and Evaluation Assets

Exploration and Evaluation (E&E) assets are defined to be
the expenses incurred subsequent to obtaining the right to explore the
property.

Upon adoption of IFRS, management has decided to continue with
its current accounting policy, which is to capitalize the acquisition costs of
the mineral properties and expense all exploration costs.

The Company is currently in compliance with the International
Accounting Standards Board (IASB) Framework which requires exploration
expenditures to be expensed and capitalization of expenditures only after the
completion of a feasibility study.

Upon adoption of IFRS 6, Exploration and Evaluation of Mineral
Properties, the Company will be fully compliant with the new standard. The
adoption is expected to have an impact on the financial statements as the
mineral property acquisition costs for El Salvador will now be included in a
separate line on the Statement of Financial Position rather than as part of
Property, Plant & Equipment.

Property, Plant and Equipment

Under IFRS, Property, Plant and Equipment (PP&E) can be
measured at fair value or at cost while under Canadian GAAP, the Company has to
carry PP&E on a cost basis and the revaluation is prohibited.

Upon adoption of IFRS, management has determined that the
Company will elect a cost model. Currently, the Company has only a small amount
of equipment and vehicles capitalized as property, plant and equipment and it
has been valued in compliance with IFRS. Therefore, there will be no impact on
the Companys financial statements on the adoption of IFRS except for the
reallocation of the mineral property costs to a separate line.

In accordance with IAS 16 Property, Plant and Equipment, upon
acquisition of significant assets, the Company will need to allocate an amount
initially recognized in respect of an asset to its component parts and accounts
for each component separately when the components have different useful lives or
the components provide benefits to the entity in a different pattern.

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- 38 -

Foreign Currency

IFRS requires that the functional currency of each entity in
the consolidated group be determined separately in accordance with IAS 21 and
the entitys financial results and position should be measured using the
currency of the primary economic environment in which the entity operates (the
functional currency). Based on the cash outflows or expenses the functional
currency is most likely Canadian dollars for Pacific Rim and United States
dollars for the El Salvador companies and the United States companies.

If it is determined that the Canadian entity has a Canadian
dollar functional currency, the Canadian entity will need to be translated into
the United States dollar reporting currency using the current rate method which
will result in a cumulative translation adjustment in the Accumulated Other
Comprehensive Income in the Equity section of the Statement of Financial
Position.

As events and conditions relevant to the Company change, it
will re-consider the primary and secondary indicators, as described in IAS 21,
in determining the functional currency for each entity. Going forward under
IFRS, management will assess the appropriate functional currency based on
existing circumstances which may have a significant impact on the Companys
consolidated financial statements prepared under IFRS.

The presentation currency of the Companys financial statements
will continue to be the United States dollar.

Future Income Taxes

Like Canadian GAAP, deferred income taxes under IFRS are
determined using the liability method for temporary differences at the balance
sheet date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes, and by generally applying tax rates
applicable to the Company to such temporary differences. Deferred income taxes
relating to temporary differences that are in equity are recognized in equity
and under IFRS subsequent adjustments thereto are backward traced to equity.

IFRS prohibits recognition where deferred income taxes arise
from the initial recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither
accounting nor taxable net earnings.

When the Company adopts IAS 12, Income Taxes, the future
income tax liability will have a zero balance with the adjustment flowing
through the opening retained earnings.

As the Company elects and approves the IFRS accounting policy
for each of the areas above, management will determine and disclose impact of
the IFRS adoption at the transition date on our financial statements. The
International Accounting Standards Board will also continue to issue new
accounting standards during the conversion period and, as a result, the final
impact of IFRS on the Companys consolidated financial statements will only be
measured once all the IFRS applicable accounting standards at the conversion
date are known.

Based on management assessment of the information system
currently used by the Company, all information required to be reported under
IFRS will be available with minimal system changes.

One of the more significant impacts identified to date of
adopting IFRS is the expanded presentation and disclosures required. Disclosure
requirements under IFRS generally contain more breadth and depth than those
required under Canadian GAAP and, therefore, will result in more extensive note
references. The Company is continuing to assess the level of presentation and
disclosures required to its consolidated financial statements.

|A. | Operating Results
|-- | -----------------

For the fiscal year ended April 30, 2011, Pacific Rim recorded
a loss for the period after discontinued operations of $(4.0) million or $(0.03)
per share, compared to a loss of $(5.0) million or $(0.04) per share for the
fiscal year ended April 30, 2010 and $(6.3) million or $(0.08) per share for the
fiscal year ended April 30, 2009. The decrease in net loss for fiscal 2011
compared to fiscal 2010 is primarily related to decreased exploration
expenditures, general and administrative expenses, and costs related to the
CAFTA/ILES action, offset in part by a gain on the sale of bullion during fiscal
2010 for which there is no comparable item during fiscal 2011. The decrease in
net loss for fiscal 2010 compared to fiscal 2009 is primarily related to
significantly decreased exploration expenses, offset in part by significantly
lower net income from the Denton-Rawhide joint venture as a result of the sale
by the Company of its interest in the joint venture during fiscal 2009.

Expenses

Due to the cessation of the El Dorado drilling program in July
2008 (early fiscal 2009) and the reduction of other exploration expenses at all
of the Companys projects, exploration expenditures decreased significantly over
the past three fiscal periods, from $5.5 million in fiscal 2009 and $1.8 million in fiscal 2010 to $1.3 million
in fiscal 2011.

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- 39 -

General and administrative expenses were reduced significantly
in fiscal 2010 due to reductions in staffing as well as the generally lower
level of business activity undertaken by the Company. This lower level of
business activity continued during fiscal 2011. General and administrative costs
were $1.2 million in fiscal 2011 compared to $1.4 million in fiscal 2010 and
$3.7 million in fiscal 2009.

CAFTA/ILES-related expenses totalled $1.6 million during fiscal
2011 compared to $2.2 million during fiscal 2010 and $nil for fiscal 2009. The
increase in CAFTA/ILES-related expenses between fiscal 2009 and fiscal 2010
reflects the commencement of the arbitration process and the build up to
activity in advance of the Preliminary Objection phase of the arbitration.
Between mid-fiscal 2010 and early fiscal 2011, arbitration-related activity
decreased following the Preliminary Objection decision, and then increased again
in 2011 in preparation for the hearings related to the Jurisdiction Objection
which took place subsequent to the end of fiscal 2011.

During fiscal 2010 the Company realized a $0.6 million gain on
the sale of bullion, and a $0.2 million financing expense associated with the
extension of warrants issued during the 2008 financing, for which there were no
comparable items during either of fiscal 2011 or 2009.

The Company booked a small foreign exchange gain of $0.1
million during fiscal 2011 compared to foreign exchanges losses of $0.02 million
during fiscal 2010 and $0.2 million during fiscal 2009, primarily reflecting the
impact of the US-Canadian dollar exchange rate on the Companys Canadian
dollar-denominated investments on hand.

Unusual Items

The Company received income of $0.04 million and $3.2 million
from the Denton-Rawhide operation during fiscal 2010 and fiscal 2009
respectively. The Companys interest in Denton-Rawhide was sold during fiscal
2009 though income was received into early fiscal 2010. There was no income from
the Denton-Rawhide operation during fiscal 2011.

Summary

As a result of decreased exploration expenditures, general and
administrative costs and CAFTA/ILES arbitration-related expenses, the Companys
loss for fiscal 2011 was reduced to $(4.0) million or $(0.03) per share from
previous fiscal periods ($(5.0) million or $(0.04) per share for fiscal 2010 and
$(6.3) million or $(0.08) per share for fiscal 2009).

Summary of Quarterly Results

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

Q4 2011
    Q3 2011
    Q2 2011
    Q1 2011
    Q4 2010
    Q3 2010
    Q2 2010
    Q1 2010Revenue from Continuing Operations
    $nil
    $nil
    $nil
    $nil
    $nil
    $nil
    $nil
    $nilLoss before discontinued operations
    $(833)
    $(1,260)
    $(676)
    $(1,233)
    $(1,726)
    $(1,043)
    $(1,355)
    $(881)Loss per share before discontinued
      operations  basic and diluted
    $(0.01)
    $(0.01)
    $(0.00)
    $(0.01)
    $(0.01)
    $(0.01)
    $(0.01)
    $(0.01)Discontinued Operations  Income from
      Denton Rawhide Joint Venture
    $nil
    $nil
    $nil
    $nil
    $nil
    $nil
    $38
    $nilNet loss for the period
    $(833)
    $(1,260)
    $(676)
    $(1,233)
    $(1,726)
    $(1,043)
    $(1,317)
    $(881)Net loss per share - basic and diluted
    $(0.01)
    $(0.01)
    $(0.00)
    $(0.01)
    $(0.01)
    $(0.01)
    $(0.01)
    $(0.01)


The Company typically incurs a net quarterly loss. Exploration
expenses have generally decreased over the past eight quarters, since the
Company elected to significantly reduce exploration in El Salvador in July 2008.
Likewise, the Company made significant cuts to staffing levels during Q2 2009
and Q3 2009, which led to lower general and administrative costs. However, in
the past six quarters, with the commencement of the CAFTA/ILES action in early
fiscal 2010, legal expenses have increased, largely offsetting the reduced
exploration and general and administrative costs. Income from discontinued
operations (the Denton-Rawhide joint venture) varied substantially quarter to
quarter in prior periods. During Q2 2010 the Company booked negligible income
from discontinued operations and for the past six quarters has received no
income, which will continue to be the case for the foreseeable future. Net loss
for each of the past 8 quarterly periods shows no discernable trend or
seasonality, and is largely a function of exploration, general and
administrative and CAFTA/ILES action expenses realized during each quarter.

Fourth Quarter Fiscal 2011

The Companys loss for the fourth quarter of fiscal 2011 was
lower than any of the quarters during fiscal 2011 and fiscal 2010 (with the exception of Q2 2011 and Q1 2010), primarily reflecting
ongoing decreases in exploration expenditures and general and administrative
costs, offset by arbitration-related expenses which vary quarter to quarter
depending on the level of activity related to the arbitration. During Q4 2011,
legal expenses were incurred in preparation for the Jurisdiction Objection
hearing held from May 2-4, 2011 and increased exploration expenditures related
to project generation initiatives. As the Companys participation in the
Denton-Rawhide Joint Venture is completed, the Company received no income from
discontinued operations to offset these expenses during any quarter of fiscal
2011.

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- 40 -

The Companys fiscal 2011 fourth quarter results presented
above are based on interim consolidated financial statements that have been
prepared in accordance with Canadian generally accepted accounting principles
(Canadian GAAP). The Companys reporting currency is the United States
(U.S.) dollar and all monetary amounts are stated in U.S. dollars unless
otherwise noted.

Impact on Operations as a Result of Governmental
Factors

The Companys operations are primarily focused on the
exploration for gold and silver and its sole material project, the El Dorado
property, is located in El Salvador. The Company has experienced significant
delays in the receipt of environmental and mining permits necessary to advance
the El Dorado project further. See Item 4D  Property, Plant and
Equipment, and specifically El Salvador Mining Regime and El
Dorado Property  Arbitration Claim under CAFTA and the ILES for
information related to El Salvadors mining law, the Companys actions to date
to comply with this law and a legal action that the Companys US subsidiary Pac
Rim Cayman LLC has commenced under CAFTA and the Investment Law of El Salvador.
The receipt of necessary permits, or lack thereof, could have a material impact
on the Companys operations.

|B. | Liquidity and capital resources
|-- | -------------------------------

Liquidity

During fiscal 2011 the Companys cash and cash equivalents
decreased by $1.0 million from $1.3 million at April 30, 2010 to $0.3 million at
April 30, 2011. Short-term investments increased year over year from $nil at
April 30, 2010 to $0.8 million at April 30, 2011. As a result of the decreased
cash and the increase in short-term investments, current assets decreased by
$0.2 million year over year from $1.4 million at April 30, 2010 to $1.2 million
at April 30, 2011. This decrease reflects cash spent on exploration expenses and
project generation efforts, general and administrative costs associated with
maintaining a public company, and expenditures related to advancing the
CAFTA/ILES action, offset by the proceeds of a private placement equity
financing undertaken by the Company during fiscal 2011.

The Companys financial statements have been prepared on the
basis that the Company will continue as a going concern, which assumes that the
Company will be able to meet its commitments, continue operations, realize its
assets and discharge its liabilities in the normal course of business for the
foreseeable future, there are events and conditions that cast substantial doubt
on the validity of that assumption. The Company will require additional
financing in the future to continue to conduct ongoing exploration programs and
to meet future property commitments, for administrative purposes and for legal
expenses related to the CAFTA/ILES arbitration action. The legal costs for this
legal action are substantial and are anticipated to increase should the case
proceed to the merits phase. The Company believes it will be able to obtain the
necessary financing to meet the Companys requirements on an ongoing basis;
however, there can be no assurance that the necessary financing will be
obtained.

The Companys ability to continue operations and exploration
activities as a going concern is dependent upon its ability to obtain additional
funding. The Company will need to undertake future financings sufficient to fund
ongoing exploration and administration expenses as well as anticipated costs for
the CAFTA/ILES arbitration. While the Company has been successful in obtaining
its required funding in the past, there is no assurance that sufficient funds
will be available to the Company in the future or will be available on
favourable terms. Factors that could affect the availability of financing
include the outcome of any rulings pertaining to PacRims CAFTA/ILES action, any
significant progress on the El Dorado project permitting application that may
develop, progress on any of the Companys exploration properties, the state of
international debt and equity markets, investor perceptions and expectations and
the global financial and metals markets. As it has in the past, the Company
plans to obtain additional financing through, but not limited to, the issuance
of additional equity.

Cash Flow Used For Operating Activities

The Companys loss before discontinued operations was $(4.0)
million in fiscal 2011 compared to $(5.0) million in fiscal 2010 and $(9.4)
million in fiscal 2009. These losses were offset by a number of non-cash items
including, notably: stock-based compensation of $0.3 million in fiscal 2011
compared to $0.4 million in fiscal 2010 and $0.6 million in fiscal 2009; shares
issued for property option payments of $nil during each of fiscal 2011 and
fiscal 2010 compared to $0.3 million during fiscal 2009; $0.2 million in
non-cash financing costs during fiscal 2010 (related to the extension of the
expiry date of warrants issued in fiscal 2008) for which there is no comparable
item in either fiscal 2011 or fiscal 2009; a change in accounts payable and
accrued liabilities of $0.1 million for fiscal 2011 compared to $0.9 million for
fiscal 2010 and $(0.7) million during fiscal 2009; and a $1.2 million change in
bullion during fiscal 2010 for which there is no comparable item during fiscal 2011
or fiscal 2009. As a result, cash flow used for operating activities was $(3.6)
million in fiscal 2011 compared to $(2.2) million in fiscal 2010 and $(9.2)
million in fiscal 2009.

---

- 41 -

Cash Flow Provided by (Used For) Investing
Activities

During fiscal 2011 the Company made net purchases of short term
investments of $(0.8) million compared to no short term investment purchases or
redemptions during fiscal 2010 and net redemptions of short term investments of
$4.2 million during fiscal 2009. Negligible purchases of property plant and
equipment were made in each of fiscal 2011, fiscal 2010 and fiscal 2009.
Proceeds from the sale of discontinued operations (related to the sale of the
Denton-Rawhide asset) were $nil during fiscal 2011 and fiscal 2010 compared to
$1.8 million for fiscal 2009. As a result, cash flow provided by (used for)
investing activities was $(0.8) million during fiscal 2011 compared to a
negligible amount during fiscal 2010 and $6.0 million during fiscal 2009.

Cash Flow Provided by Financing Activities

The Company realized $3.3 million in cash flow from financing
activities during fiscal 2011, compared to $2.2 million during fiscal 2010 and
$nil during fiscal 2009. The fiscal 2011 and fiscal 2010 financing cash flow
amounts are related to the issuance of common shares of the Company under two
private placement equity financings that closed in October 2010 and January 2010
respectively (details below) as well as the exercise of employee stock options
(16,666 shares at an average price of Cdn $0.17 per share during fiscal
2010.

During fiscal 2011, the Company announced and closed a private
placement financing through which a total of CDN $3,332,000 was raised through
the issuance of 19,600,000 units (Units). Each Unit issued in this financing
consists of one common share in the Company and one half of one non-transferable
share purchase warrant (Warrant) that entitles the holder to acquire one
additional common share of the Company at a price of CDN $0.30 for a period of
24 months following the closing of the financing, which occurred on October 8,
2010. Pacific Rim reserves the right to accelerate the exercise period of the
Warrants should its common stock trade above CDN $0.50 for 20 consecutive
trading days. The Units were subject to a four-month trading restriction that
began on the day of issuance and expired on February 9, 2011. The Company also
issued 660,000 Units (the Finders Units) to certain finders (the Finders) in
connection with the private placement, in payment of a finders fee of 6% of the
proceeds raised from subscribers introduced by the Finders, and issued 660,000
warrants to Finders (the Finders Warrants) representing 6% of the total
number of Units sold to purchasers introduced by the Finders.

Details of the fiscal 2010 private placement financing are
provided in the Companys 2010 Annual Report filed under form 20F, or the
Companys 2010 MD&A available on SEDAR.

Capital Resources and Financial Condition

Working Capital

At April 30, 2011, the book value of the Companys current
assets was $1.2 million, compared to $1.4 million at April 30, 2010, a reduction
of $0.2 million. The decrease in current assets is primarily a result of
expenditures of cash, offset by the addition of cash from the sale of securities
under a private placement financing. Property, plant and equipment balances at
April 30, 2011 were negligibly lower than the April 30, 2010 balance ($5.46
million $5.49 million respectively).

At April 30, 2011 the Company had current liabilities of $1.64
million marginally higher than the April 30, 2010 balance of $1.58 million due
to a slight increase in accounts payable and accrued liabilities. Of the
accounts payable and accrued liability balances, $1.4 million at April 30, 2011
and $1.1 million at April 30, 2010 is due to one vendor associated with PacRims
arbitration action.

The $0.2 million decrease in current assets combined with the
marginal increase in current liabilities, resulted in a $0.2 million reduction
in working capital from $(0.2) million at the end of fiscal 2010 to $(0.4) at
the end of fiscal 2011.

Subsequent Change to Working
Capital

On May 3, 2011, immediately subsequent to Pacific Rims fiscal
2011 year end, the Company closed a private placement financing through which a
total of CDN $3,696,000 was raised through the issuance of 17,600,000 units
(Units). Each Unit issued in this financing consists of one common share in
the Company and one half of one non-transferable share purchase warrant
(Warrant) that entitles the holder to acquire one additional common share of
the Company at a price of CDN $0.30 for a period of 24 months following the
closing of the financing. Pacific Rim reserves the right to accelerate the
exercise period of the Warrants should its common stock trade above CDN $0.50
for 20 consecutive trading days. The Units were subject to a four-month trading
restriction that began on the day of issuance and will expire on September 3,
2011. The Company also issued 233,400 Units (the Finders Units) to certain
finders (the Finders) in connection with the private placement, in payment of
a finders fee of 6% of the proceeds raised from subscribers introduced by the
Finders, and issued 716,400 warrants to Finders (the Finders Warrants)
representing 6% of the total number of Units sold to purchasers introduced by
the Finders.

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- 42 -

Financial Condition

The Company does not intend to resume significant exploration
programs in El Salvador until such time as the El Dorado environmental permit
and exploitation concession are received. The Company can not judge if or when
the required permits will be received and is not currently planning any
exploration programs for its El Dorado, Santa Rita and Zamora-Cerro Colorado
properties for fiscal 2012 beyond what is necessary to keep all of its
exploration licences in good standing. Should the required permits be granted,
the Company will evaluate its options for resuming full scale exploration work
designed to advance its El Salvador projects.

The Company intends to commence a Phase 1 exploration program
at the Hog Ranch property during fiscal 2012, including a roughly 15-hole drill
program late in the fiscal year. Acquisition of the Remance project is in doubt
and therefore, no exploration plans are being contemplated at this time.
However, if a final acquisition agreement on Remance is signed, as per the terms
of the Remance LOI the Company will be responsible for conducting a $1 million
exploration program in the first year of the option period. The Company intends
to continue its project generation initiatives with the aim of evaluating and
possibly acquiring new exploration properties of merit that fit its exploration
focus.

The Company anticipates that its fiscal 2012 exploration plans
as outlined above will cost approximately $1.6 million, with a further $1
million required in the event the Remance property is acquired. With the cash
balances currently on hand (as a result of the private placement financing that
closed in May 2011), the Company believes it has the financial resources
required to carry out its planned exploration programs but not the contingent
exploration expenditures related to the potential Remance acquisition or
additional CAFTA/ILES costs. The Company anticipates the requirement for
additional financing during or subsequent to fiscal 2012 in order to fund future
ongoing exploration programs.

The Companys general and administrative costs are expected to
remain stable during fiscal 2012. Expenditures related to PacRims arbitration
claim are expected to continue at present or modestly higher levels during
fiscal 2012, and are dependent on the level of arbitration activity. The Company
has currently accumulated a liability of approximately $1.4 related to the
CAFTA/ILES arbitration action, which is partly responsible for the Companys
current working capital deficit. The Company is currently discussing
vendor-specific alternative financing opportunities that will reduce this
accounts payable position.

The business of mining and exploration involves a high degree
of risk and there can be no assurance that any of the Companys current
exploration projects will result in profitable mining operations. The Company
has no source of revenue, and will require additional cash to continue fund
legal, exploration and administration expenses. As at April 30, 2011, the
Company has a working capital deficit of $0.4 million (which has since been
remediated as described above), has incurred losses since inception and has an
accumulated deficit of $90.1 million. The Companys ability to continue
operations and exploration activities as a going concern is dependent upon its
ability to obtain future funding. Despite the Companys successful May 2011
private placement financing, the Company will need to raise additional funds
during or subsequent to fiscal 2012 to support ongoing exploration and
administration expenses as well as its costs under PacRims CAFTA/ILES
arbitration action. While the Company has been successful in obtaining its
required funding in the past, there is no assurance that sufficient funds will
be available to the Company in the future, or be available on favourable terms.
Factors that could affect the availability of financing include progress in
obtaining the sought-after El Dorado mining permits, progress on or resolution
of the CAFTA/ILES claim including the outcome of the Jurisdiction Objection,
results from the Hog Ranch Phase 1 exploration program, the completion of the
Remance project acquisition and/or the acquisition of other exploration
projects, the state of international debt and equity markets, investor
perceptions and expectations and the global financial and metals markets.
Additional financing will require, but may not be limited to, the issuance of
additional equity.

During fiscal 2010 the Company announced it received notice
from the NYSE Amex Equities (NYSE Amex) that the Company was not in compliance
with Section 1003(a)(iii) of the NYSE Amex Company Guide. In order to maintain
listing of its common shares on the NYSE Amex, the Company was required to
submit a Compliance Plan (the Plan) to NYSE Amex addressing how it intends to
regain compliance with Section 1003(a)(iii) by May 11, 2011, which plan was
submitted on December 11, 2009.

The Companys Plan included several key milestones, the most
critical of which was to improve shareholders equity through a financing based
on one or more of receipt of the El Dorado permit, resolution of the CAFTA/ILES
action or the acquisition and exploration of a new project. The mid-plan
milestone of increasing shareholders equity to a minimum of $6.0 million was
not met and as a result the Company did not meet the terms of its Plan.
Furthermore, the Company was not able to ascertain with confidence whether it
would be in a position to regain full compliance with the NYSE Company Guide by
the end of the Plan period (May 2011) as the majority of the factors on which
ongoing compliance would be predicated are outside of the Companys control.

In the opinion of management, the level of financing required
to regain compliance with NYSE Amexs Company Guide would have been onerous and
dilutive to existing shareholders. Rather, the Company believes its financing
requirements should be based on its exploration objectives and value objectives
rather than the objective of the NYSE Amex. Lastly, as the Company has greatly
reduced its level of business activity at a time when listing costs and
standards continue to escalate, management was of the belief that ongoing listing on NYSE Amex is not currently practicable.

---

- 43 -

During fiscal 2011, the Company filed a notification with NYSE
Amex to voluntarily delist its common shares from the exchange. Concurrently,
the Company applied for and was successful in obtaining a listing on the OTCQX
platform. On September 9, 2010, the Companys shares were delisted from NYSE
Amex and began trading on OTCQX under the symbol PFRMF. The Companys shares
remain listed on the Toronto Stock Exchange where they trade under the symbol
PMU.

The Company does not have any off-balance sheet
arrangements.

Outlook

The Company is imminently commencing a Phase 1 exploration
property at its recently acquired Hog Ranch property in Nevada, which will
consist of field mapping and sampling, geophysical survey and a 10-15-hole drill
program to test both the near surface and underground vein potential of this
known gold district.

The Companys acquisition of the Remance property is on hold
and highly uncertain at this time, pending the vendors legal appeal of the
Government of Panamas recent decision to deny extension of the Remance
concession term. While the Company is keeping the Remance LOI in effect during
Minera Cliftons appeal, it does not intend to sign a final agreement to acquire
the Remance project unless the term of the concession is extended.

The Company will continue to curtail its exploration programs
and expenditures in El Salvador until such time as PRES receives the El Dorado
environmental permit and exploitation concession. The Company remains confident
that it will either receive the El Dorado permit and mining concession or that
it will be appropriately compensated.

The Company continues to seek new project opportunities in
North and Central America.

The Company believes its principal risks are its ability to
acquire new exploration projects of merit, its ability to fund the ongoing
CAFTA/ILES arbitration action to a just conclusion, its ability to fund future
exploration plans and ongoing general and administrative expenses and its
ability to maintain its TSX listing. The Phase 1 Hog Ranch exploration program
will consume the bulk of the Companys cash resources earmarked for exploration
during fiscal 2012. If the Remance project is acquired, the Company will require
additional financing to undertake an exploration program, as per the terms of
its Remance letter of intent, that is anticipated to cost approximately $1.0
million. Additional exploration work required to keep all of its El Salvador
projects in good standing, and exploration expenses related to the Companys
generative programs, will continue through fiscal 2012 and for the foreseeable
future. The Company anticipates that it will require additional financing in
late fiscal 2012 or early fiscal 2013 in order to fund its ongoing exploration,
administrative and legal expenses.

The Companys general and administrative costs are expected to
remain stable during fiscal 2012. Expenditures related to PacRims CAFTA/ILES
arbitration action are expected to continue at present or modestly higher levels
as during fiscal 2012, and are dependent on the level of arbitration activity.
The Company is currently discussing vendor-specific alternative financing
opportunities that will reduce its accounts payable and accrued liabilities, the
majority of which are payable to a single vendor involved in the arbitration
and/or for general working capital expenses and/or future expenses related to
the CAFTA/ILES claim

The Company will continue to seek opportunities for dialogue
with the GOES aimed at resolving the El Dorado permitting situation. The Company
and its subsidiaries have a well-documented history of supporting local
inhabitants and building relationships with all stakeholders. This is a key
component of the Companys approach to exploration and development, and will
continue in all jurisdictions in which it and its subsidiaries operate.

Unless these diplomatic efforts are successful, PacRims
CAFTA/ILES arbitration action is expected to proceed during fiscal 2012 and
beyond. The Company is currently awaiting a ruling from the ICSID Tribunal Panel
on the GOESs Jurisdiction Objection, anticipated in late calendar 2011. The
Company may seek traditional or alternative financing arrangements during fiscal
2012 specifically ear-marked for legal expenses.

|C. | Research and Development, Patents and Licenses,
    etc.
|-- | --------------------------------------------------------

None

|D. | Trend Information
|-- | -----------------

While the Company does not have any producing mines, it is
directly affected by trends in the metal industry. The Companys principal
assets are its gold exploration properties, one of which comprises several known
gold deposits. The global economic and credit crisis has affected all
industries, including mining, and has resulted in additional pressure on the
ability and costs of obtaining project capital financing. Global metal prices, driven by
rising global demand, climbed dramatically and approached historic highs over
the past several years but are volatile and subject to periodic corrections. The
effect of high metal prices had a significant positive impact on the ability to
raise equity capital, which has resulted in increases in global exploration
projects and in turn has caused the procurement of exploration services and
skilled employees to be increasingly difficult.

---

- 44 -

Overall market prices for securities in the mineral resources
sector and factors affecting such prices, including base metal prices, political
trends in the countries such companies operate, and general economic conditions,
may have an effect on the terms on which financing is available to the Company,
if at all.

Refer to Risk Factors for further information on uncertainty
or items affecting the business or nature of business of the Company.

|E. | Off-Balance Sheet Arrangements
|-- | ------------------------------

The Company has no material off-balance sheet arrangements such
as guarantee contracts, contingent interest in assets transferred to an entity,
derivative instrument obligations and any obligations that trigger financing,
liquidity, market or credit risk to the Company.

|F. | Tabular Disclosure of Contractual
  Obligations
|-- | -----------------------------------------------

The Company is committed to payments under operating leases for
office premises. The following table lists as of April 30, 2011, information
with respect to the Companys known contractual obligations.

Contractual Obligations (all amounts in thousands of US
dollars)

Payments due by periodTotal
    < 1 year
    1- 3 years
    4  5 years
    > 5 yearsOperating Lease Obligations
    $74
    $42
    $32
    -
    -Accounts Payable and Accrued Liabilities
    $1,642
    $1,642
    -
    -
    -Total
    $1,716
    $1,684
    $32
    -
    -


|G. | Safe Harbor
|-- | -----------

See Note regarding Forward-Looking Statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

|A. | Directors and Senior Management
|-- | -------------------------------

The following table set out the names of the directors and/or
senior officers as at April 30, 2011, the province or state and country in which
each is ordinarily a resident, all offices of the Company now held by each of
them, their principal occupations, the period of time for which each has been a
director and/or officer of the Company and the number of shares owned by each
director.

Name and Jurisdiction of
      Residence(1)
    Principal Occupation, Business
      or Employment(1)
    Previous Service as a Director of
      the Company
    Number of
      Shares(2)Catherine McLeod-Seltzer British Columbia,
      Canada
    Chairman and Director of the
      Company, Director and Chairman of Bear Creek Mining Corporation,
      Director of Stornoway Diamond Corporation, Director of Kinross Gold
      Corporation, Director of Troon Ventures Ltd. and Director of Major
      Drilling Group International Inc.
    Since April 11, 2002(3)
    3,672,800Thomas Shrake(5)Nevada, USA
    President, CEO and Director of
      the Company
    Since April 11, 2002(3)
    479,100(8)Anthony J. Petrina(5)(6)(7)British
      Columbia, Canada
    Retired. Director of the Company.
    Since April 11, 2002(3)
    203,000William Myckatyn(4)(5)(6)(7)
      British
      Columbia, Canada
    Corporate Director. Lead Director
      of the Company, Lead Director and Vice Chairman of QuadraFNX
      Mining Ltd., Director of First Point Minerals Corp., Director of San
      Marco Resources Inc. and Director of OceanaGold Corporation
    Since April 11, 2002(3)
    287,660


---

- 45 -

Name and Jurisdiction of
      Residence(1)
    Principal Occupation, Business
      or Employment(1)
    Previous Service as a Director of
      the Company
    Number of
      Shares(2)David K. Fagin(4)(6)Colorado, USA
    Investor. Director of the
      Company, and Director of Atna Resources Ltd.
    Since April 11, 2002(3)
223,000


|(1) | The information as to the province or state of residence
      and principal occupation, not being within the knowledge of the Company,
      has been furnished by the respective Directors individually.                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The information as to shares beneficially owned or over
      which a Director exercises control or direction, not being within the
      knowledge of the Company, has been furnished by the respective Directors
      individually.                                                                                             
|(3) | April 11, 2002 was the effective date of the amalgamation
      of Dayton Mining Corporation (Dayton) and the Company; Fagin,
      McLeod-Seltzer and Myckatyn were former directors of Dayton and
      McLeod-Seltzer, Myckatyn, Petrina and Shrake were Directors of the Company
      prior to the amalgamation with Dayton.
|(4) | Denotes member of Compensation Committee.                                                                                                                                                                                                                                                                                          
|(5) | Denotes member of Health, Safety and Environmental
      Committee.                                                                                                                                                                                                                                                                
|(6) | Denotes member of Audit Committee.                                                                                                                                                                                                                                                                                                 
|(7) | Denotes member of Nominating Committee.                                                                                                                                                                                                                                                                                            
|(8) | 50,000 of these shares are owned jointly with Anne B.
      Shrake in the Tom and Anne Shrake Family Trust.                                                                                                                                                                                                                      

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 or until a successor is elected or appointed. 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.

|B. | Compensation
|-- | ------------

During the fiscal year ended April 30, 2011, the Company had
three Named Executive Officers (for the purposes of Canadian securities
legislation), namely:

Thomas Shrake, President and Chief Executive Officer
  Steven
Krause, Chief Financial Officer; and 
William Gehlen, VP Exploration

The following table sets forth all annual and long term
compensation for services in all capacities to the Company (to the extent
required by Form 51-102F6) for the three most recently completed financial years
of the Company, being the years ended April 30, 2009, April 30, 2010 and April
30, 2011, in respect of each Chief Executive Officer and Chief Financial Officer
who acted in such capacity for all or any portion of the most recently completed
financial year, and each of the other three most highly compensated executive
officers of the Company, or the three most highly compensated individuals acting
in a similar capacity (other than the Chief Executive Officer and the Chief
Financial Officer), as at April 30, 2011, whose total compensation, for the most
recently completed financial year, individually, exceeded CDN$150,000, and any
individual who would have satisfied these criteria but for the fact that
individual was neither an executive officer of the Company, nor acting in a
similar capacity, at the end of the most recently completed financial year
(collectively the Named Executive Officers or NEOs).

Name andPrincipalPosition
    Year
      ***Ended*** ***April***
      30
    Salary US($)
    Share-
      Based Awards US($)
    Option-
      Based Awards
      US($)(1)
    Non-Equity Incentive
      Plan Compensation ($)
    Pension
      ValueUS($)
    All Other
      ***Compensation***US($)
    Total
      ***Compensation*** US($)AnnualIncentivePlans
    ***Long-term***
      ***Incentive*** PlansThomas Shrake (2)CEO
    2009 2010 2011
    204,582 180,000 180,000
    Nil Nil Nil
    74,356 54,240 65,835
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    278,938 234,240 245,835Steven Krause (3)CFO
    2009 2010 2011
    Nil Nil Nil
    Nil Nil Nil
    37,178 33,900 65,835
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    37,178 33,900 65,835Bill Gehlen VP Exploration
    2009 2010 2011
    120,000 120,000 120,000
    Nil Nil Nil
    29,742 27,120 39,501
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    149,742 147,120 159,501


---

- 46 -

| | (1) | The Company used the Black-Scholes model as the
      methodology to calculate the grant date fair value, and relied on the
      following the key assumptions and estimates for each calculation: expected
      dividend yield 0%, expected stock price volatility 96 and 99%, risk free
      interest rate 2.24 and 2.29%, and expected life of options of between 4
      and 5 years. The Company chose this methodology as it is the standard for
      exploration companies in Canada and has been consistently applied by the
      Company for valuing option-based awards since 2003. The stock-based awards
      are determined in Canadian funds and then translated into US funds at the
      2011 average foreign currency exchange rate of $0.99US/$1CDN.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (2) | Mr. Shrakes official annual salary is US$250,000 per
      year. Since November 2008, in light of economic and market conditions,
      Thomas Shrake has voluntarily taken only US$180,000 in salary per year,
      representing 72% of his official salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (3) | Mr. Krause, as CFO, was not an employee of the Company.
      He is employed by Avisar Chartered Accountants (Avisar) and the portion
      of the compensation paid to Mr. Krause by Avisar during the fiscal period
      ended April 30, 2011 and 2010 and which Avisar attributed to the CFO
      services provided by Mr. Krause to the Company was $11,331 and $11,860,
      respectively. During the 2011 fiscal year, Avisar charged the Company
      CDN$128,980 for accounting, tax and financial consulting
  services.                                                                                                                                                                                                                                      

Incentive Plan Awards - Outstanding Share-Based Awards and
Option-Based Awards

The following table sets forth information concerning all
awards outstanding under incentive plans of the Company pursuant to which
compensation that depends on achieving certain performance goals or similar
conditions within a specified period, at the end of the most recently completed
financial year, including awards granted before the most recently completed
financial year, to each of the NEOs:

Option-Based Awards
    Share-Based AwardsName
    Number of
      Securities Underlying
      Unexercised Options
      (#)
    Option
      Exercise Price CDN($)
    Option
      Expiration Date
    Value of
      Unexercised In-The-Money
      Options(1,2)
      US($)
    Number of Shares
      or Units of Shares That Have
      Not Vested (#)
    Market or Payout
      Value of Share-Based Awards
      That Have Not Vested
      US($)Thomas Shrake CEO
    200,000 300,000 500,000 400,000
      500,000
    0.92 1.17 0.17 0.21 0.21
    08/28/2011 03/09/2013 12/29/2013
      01/26/2015 12/16,2015
    Nil Nil 23,660 3,785 4,732
    N/A N/A N/A N/A N/A
    N/A N/A N/A N/A N/ASteven Krause CFO
    250,000 250,000 250,000 250,000
    0.17 0.21 0.20 0.21
    12/29/2013 01/26/2015 06/10/2015
      12/16/2015
    11,830 2,366 4,732 2,366
    N/A N/A N/A N/A
    N/A N/A N/A N/ABill Gehlen VP Exploration
    125,000 125,000 200,000 200,000
      300,000
    0.92 1.17 0.17 0.21 0.21
    08/28/2011 03/09/2013 12/29/2013
      01/26/2015 12/16/2015
    Nil Nil 9,464 1,892 2,839
    N/A N/A N/A N/A N/A
    N/A N/A N/A N/A N/A


|(1) | This amount is calculated based on the difference between
      the market value of the securities underlying the options at the end of
      the most recently completed financial year, which was CDN$0.22, and the
      exercise or base price of the option.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                  
|(2) | The value of the unexercised in-the-money options are
      determined in Canadian funds and then translated into US funds at the
      April 30, 2011 foreign currency exchange rate of
  $1.0566US/$1CDN.                                                      

---

- 47 -

Value Vested Or Earned During The Year

The value vested or earned during the most recently completed
financial year of incentive plan awards granted to NEOs is as follows:

NEO Name
    Option-Based Awards -
      Value Vested During The Year(1) US($)
    Share-Based Awards -
      Value Vested During The Year
      US($)
    Non-Equity Incentive Plan
      Compensation - Value Earned
      During The Year US($)Thomas Shrake CEO
    5,662
    Nil
    NilSteven Krause CFO
    413
    Nil
    NilBill Gehlen VP Exploration
    2,331
    Nil
    Nil


| | (1) | This amount is the dollar value that would have been
      realized, computed by obtaining the difference between the market price of
      the underlying securities at exercise and the exercise or base price of
      the options under the option-based award on the vesting
  date.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pension Plan Benefits

The Company does not have a pension plan that provides for
payments or benefits to the Named Executive Officers at, following, or in
connection with retirement.

Termination and Change of Control Benefits

The Company has a current employment agreement with Thomas
Shrake, CEO, which includes termination and change of control benefits.

In Mr. Shrakes employment agreement, change of control is
defined as any change in the effective control or direction of the Company and
includes:

| | (a) | an acquisition of 20% or more of the voting rights
      attached to all outstanding shares of the Company by a person or
      combination of persons acting in concert by virtue of an agreement,
      arrangement, commitment or understanding; or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                       
| | (b) | a change in the Companys officers or Directors, which
      alters the effective control or direction of the
Company.                                                                                                                                

An event of termination is defined in the employment
agreement as the occurrence of any of the following events at any time after a
change of control, without the executives written consent:

| | (a) | a change (other than changes that are clearly and
      exclusively consistent with a promotion) in the executives position or
      duties (including any position or duties as a director of the Company),
      responsibilities (including, without limitation, the person(s) to whom the
      executive reports, and who report to the executive), title or office in
      effect immediately prior to the change of control, which includes any
      removal of the executive from or any failure to re-elect or re-appoint the
      executive to any such positions or offices;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (b) | any failure by the Company to increase the executives
      remuneration in a manner consistent (both as to frequency and as to
      percentage increase) with increases granted generally to the Companys
      other senior personnel;                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (c) | the Company permanently relocating the executive to any
      place other than the location at which he reported to work on a regular
      basis immediately prior to the change of control;                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (d) | the Company taking any action to deprive the executive of
      any material fringe benefits enjoyed by him immediately prior to the
      change of control or the Company failing to increase or improve such
      material fringe benefits on a basis consistent with increases or
      improvements granted to the Companys other senior personnel;                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (e) | any breach of the Company of any provision of the
      employment agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

---

- 48 -

| | (f) | the good faith determination by the executive that, as a
      result of the change of control or any action or event thereafter, the
      executives status or responsibility in the Company has been diminished or
      the executive is effectively being prevented from carrying out his duties
      and responsibilities as they existed immediately prior to the change of
      control; or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                       
| | (g) | failure by the Company to obtain, in a form satisfactory
      to the executive, an effective assumption of its obligations hereunder by
      a successor to the Company, including a successor to a material portion of
      its business.                                                                                                                                                         

If, as a result of a change of control of the Company, Mr.
Shrake experiences an event of termination as described above, Mr. Shrake is
entitled to a severance payment of 24 months salary (based on his official
annual salary of US$ 250,000) and is able to exercise any stock options
previously granted within 45 business days in the event of termination after a
change of control. In addition, the estimated incremental value of his
non-vested stock options that would vest assuming a triggering event took place
on the last day of the most recently completed financial year would have been
US$4,416.

Steven Krause has a consulting agreement with the Company which
includes a change of control clause. In this consulting agreement, change of
control means the acquisition by any person or by any person and joint actor,
whether directly or indirectly, of voting securities as defined in the
Securities Act of British Columbia, as amended from time to time (the BC
Securities Act), which, when added to all other voting securities of the
Company at the time held by such person or by such person and a person acting
jointly or in concert with another person as that phrase is interpreted by the
BC Securities Act, totals for the first time not less than fifty percent (50%)
of the outstanding voting securities of the Company or the votes attached to
those securities are sufficient, if exercised, to elect a majority of the Board
of Directors.

Should a change of control occur, all outstanding stock options
held by Mr. Krause will become fully vested in accordance with the terms of the
2006 Evergreen Incentive Stock Option Plan, whereupon such options may be
exercised in whole or in part by Mr. Krause. In addition, the estimated
incremental value of his non-vested stock options that would vest assuming a
triggering event took place on the last day of the most recently completed
financial year would have been US$4,732.

William Gehlen has an employment agreement with a subsidiary of
the Company that includes termination and change of control benefits.. If, as a
result of a change of control of the Company, Mr. Gehlen experiences an event
of termination as defined above, Mr. Gehlen is entitled to a severance payment
of 12 months salary, plus one months salary per year of service after one
year, up to a maximum of 24 months salary, and is able to exercise any stock
options previously granted within 30 calendar days in the event of termination
after a change in control. In addition, the estimated incremental value of his
non-vested stock options that would vest assuming a triggering event took place
on the last day of the most recently completed financial year would have been
US$1,577.

Other than as set forth above, neither the Company nor its
subsidiaries has a contract, agreement, plan or arrangement that provides for
payments to a Named Executive Officer following or in connection with any
termination (whether voluntary, involuntary or constructive), resignation,
retirement, a change of control of the Company or its subsidiaries, or a change
in responsibilities of the Named Executive Officer following a change in
control.

Estimated Incremental Payment on Change of Control

Under the terms of Thomas Shrakes employment agreement, the
estimated incremental payment upon termination by the Company on a change of
control of the Company, Mr. Shrake is entitled to receive approximately US
$500,000 (calculated as at April 30, 2011) based upon an amount equal to 24
months salary, plus any amounts owed in respect of accrued vacation and the
accelerated option value of his existing stock options.

There are no provisions in Steven Krauses consulting agreement
that would require the Company to make any payments to Mr. Krause upon a change
of control of the Company.

Under the terms of William Gehlens employment agreement, the
estimated incremental payment upon termination by the Companys subsidiary on a
change of control of the Company, Mr. Gehlen is entitled to receive
approximately US $240,000 (calculated as at April 30, 2011) based upon an amount
equal to 12 months salary plus one months salary for every year of service
beyond one year to a maximum of 24 months salary, plus any amounts owed in
respect of accrued vacation and the accelerated option value of his existing
stock options.

---

- 49 -

Director Compensation

The following table sets forth all amounts of compensation
provided to the directors, who are not also Named Executive Officers, for the
Companys most recently completed financial year:

Director Name(1)
    Fees
      Earned US($)
    Share- Based
      Awards US($)
    Option- Based
      Awards
      US($)(2)
    Non-Equity Incentive
      Plan Compensation US($)
    Pension
      Value US($)
    All Other
      Compensatio n US($)
    Total
      US($)William Myckatyn
    9,900
    Nil
    15,560
    Nil
    Nil
    Nil
    25,460David Fagin
    9,900
    Nil
    15,560
    Nil
    Nil
    Nil
    25,460Anthony Petrina
    9,900
    Nil
    15,560
    Nil
    Nil
    Nil
    25,460Catherine McLeod-Seltzer
    Nil
    Nil
    39,501
    Nil
    Nil
    Nil
    39,501


(1) Relevant disclosure has been
provided in the Summary Compensation Table above, for Mr. Shrake, a Director who
is also a Named Executive Officer. Mr. Shrakes total compensation is related to
his role as CEO, and he receives no compensation for his services as a
Director.

(2) The Company used the Black-Scholes
model as the methodology to calculate the grant date fair value, and relied on
the following the key assumptions and estimates for each calculation: expected
dividend yield 0%, expected stock price volatility 96 and 99%, risk-free
interest rate 2.24 and 2.29%, and expected life of options of between 4 and 5
years. The Company chose this methodology as it is the standard for exploration
companies in Canada and has been consistently applied by the Company for valuing
option-based awards since 2003. The stock-based awards are determined in
Canadian funds and then translated into US funds at the 2011 average foreign
currency exchange rate of $0.99US/ $1CDN.

The Company has no arrangements, standard or otherwise,
pursuant to which Directors are compensated by the Company or its subsidiaries
for their services in their capacity as Directors, or for committee
participation, involvement in special assignments or for services as consultant
or expert during the most recently completed financial year or subsequently, up
to and including the date of this Information Circular except as follows:

- The Companys three independent directors are each entitled to receive an
  annual fee of CDN$10,000 to be paid upon his or her election or re-election to
  the Board at the annual general meeting of the Company.
- Each independent director is currently entitled to receive a grant of
  75,000 stock options upon his or her election or re- election at the Companys
  annual general meeting under the Amended Evergreen Plan.
- Stock options granted to independent directors will be deemed to vest
  immediately.
- Directors are reimbursed for individual travel and other ancillary
  expenses incurred in connection with attending board and committee meetings.

The Company has a stock option plan for the granting of
incentive stock options to the officers, employees and Directors. The purpose of
granting such options is to assist the Company in compensating, attracting,
retaining and motivating the Directors of the Company and to closely align the
personal interests of such persons to that of the shareholders.

Incentive Plan Awards - Outstanding Share-Based Awards and
Option-Based Awards

The following table sets forth information concerning all
awards outstanding at the end of the most recently completed financial year,
including awards granted before the most recently completed financial year, to
each of the Directors who are not Named Executive Officers:

---

- 50 -

Option-Based Awards
    Share-Based AwardsDirector Name
    Number of
      Securities Underlying
      Unexercised Options
      (#)
    Option
      Exercise PriceCDN($)
    Option
      ***Expiration*** Date
    Value of
      Unexercised In-The-
      Money Options(1,2) US($)
    Number of Shares
      Or Units Of Shares ThatHave Not Vested
      (#)
    Market or Payout
      Value Of Share- ***Based
      Awards*** That Have Not
      Vested US($)William Myckatyn
    90,000 75,000 15,000 125,000
      75,000 75,000 50,000 75,000 50,000
    0.92 0.96 1.17 0.17 0.17
      0.21 0.21 0.17 0.21
    08/28/2011 08/27/2012 03/09/2013
      12/29/2013 12/29/2013 08/25/2014 01/26/2015 08/25/2015
      12/16/2015
    Nil Nil Nil 5,915 3,549
      709 473 3,549 473
    N/A N/A N/A N/A N/A N/A
      N/A N/A N/A
    N/A N/A N/A N/A N/A N/A
      N/A N/A N/ADavid Fagin
    75,000 75,000 125,000 75,000
      75,000 50,000 75,000 50,000
    0.92 0.96 0.17 0.17 0.21
      0.21 0.17 0.21
    08/28/2011 08/27/2012 12/29/2013
      12/29/2013 08/25/2014 01/26/2015 08/25/2015 12/16/2015
    Nil Nil 5,915 3,549 709
      473 3,549 473
    N/A N/A N/A N/A N/A N/A
      N/A N/A
    N/A N/A N/A N/A N/A N/A
      N/A N/AAnthony Petrina
    75,000 75,000 125,000 75,000
      75,000 50,000 75,000 50,000
    0.92 0.96 0.17 0.17 0.21
      0.21 0.17 0.21
    08/28/2011 08/27/2012 12/29/2013
      12/29/2013 08/25/2014 01/26/2015 08/25/2015 12/16/2015
    Nil Nil 5,915 3,549 709
      473 3,549 473
    N/A N/A N/A N/A N/A N/A
      N/A N/A
    N/A N/A N/A N/A N/A N/A
      N/A N/ACatherine McLeod-Seltzer
    100,000 125,000 300,000 200,000
      300,000
    0.92 1.17 0.17 0.21 0.21
    08/28/2011 03/09/2013 12/29/2013
      01/26/2015 12/16/2015
    Nil Nil 14,196 1,892 2,839
    N/A N/A N/A N/A N/A
    N/A N/A N/A N/A N/A


|(1) | This amount is calculated based on the difference between
      the market value of the securities underlying the options at the end of
      the most recently completed financial year, which was CDN $0.22 per share
      and the exercise or base price of the option.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                            
|(2) | The value of the unexercised in-the-money options are
      determined in Canadian funds and then translated into US funds at the
      April 30, 2011 foreign currency exchange rate of
  $1.0566US/$1CDN.                                                                

---

- 51 -

Incentive Plan Awards - Value Vested Or Earned During The
Year

The value vested or earned during the most recently completed
financial year of incentive plan awards granted to Directors who are not Named
Executive Officers is as follows:

Director
      Name
    Option-Based Awards
      - Value Vested During The Year(1) US($)
    Share-Based Awards
      - Value Vested During The Year
      US($)
    Non-Equity
      Incentive Plan Compensation - Value
      Earned During The Year US($)William Myckatyn
    1,333
    N/A
    N/ADavid Fagin
    1,333
    N/A
    N/AAnthony Petrina
    1,333
    N/A
    N/ACatherine McLeod-Seltzer
    3,331
    N/A
    N/A


(1) This amount is the dollar value
that would have been realized, computed by obtaining the difference between the
market price of the underlying securities at exercise and the exercise or base
price of the options under the option-based award on the vesting date.

Securities Authorized for Issuance Under Equity Compensation
Plans

Plan Category
    Number of
      Securities to be issued upon exercise of
      outstanding options, warrants and
      rights
    Weighted
      average exercise price of outstanding
      options, warrants and rights
      CDN($)
    Number of securities
      remaining available for future issuance
      under equity compensation plans (excluding
      securities reflected in column (a))Equity compensation plans approved by securityholders
    10,295,000
    0.46
    6,545,170Equity compensation plans not approved
      by securityholders
    Nil
    N/A
    N/ATotal:
    10,295,000
    0.46
    6,545,170


Details of the Companys Plan(s) are set out in the notes to
its audited financial statements which may be accessed at the Companys web site
or www.sedar.com.

|C. | Board Practices
|-- | ---------------

Corporate governance relates to the activities of the Companys
board of Directors (the Board), the members of which are elected by and
are accountable to the Shareholders, and takes into account the role of the
individual members of management who are appointed by the Board and who are
charged with the day-to-day management of the Company. The Board is committed to
sound corporate governance practices which are both in the interests of its
Shareholders and contribute to effective and efficient decision making.

National Policy 58-201, Corporate Governance Guidelines,
establishes corporate governance guidelines which apply to all public companies.
The Company has reviewed its own corporate governance practices in light of
these guidelines. In certain cases, the Companys practices comply with the
guidelines; however, the Board considers that some of the guidelines are not
suitable for the Company at its current stage of development and therefore these
guidelines have not been adopted. National Instrument 58-101, Disclosure of
Corporate Governance Practices, mandates disclosure of corporate governance
practices, which disclosure is set out below.

Independence of Members of Board and Management Supervision
by Board

The Board currently consists of five Directors, a majority of
whom are independent based upon the tests for independence set forth in NI
52-110. Following the Shareholders meeting on September 13, 2011, the Board
will include three (3) independent Directors: Messrs. Myckatyn, Petrina, and
Fagin. Mr. Shrake and Ms. McLeod-Seltzer are not considered independent as they
are the President and Chief Executive Officer, and Board Chairman, respectively, of the
Company.

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- 52 -

The Board facilitates the exercise of independent judgement in
carrying out its responsibilities, by the effective supervision of management by
the independent Directors on an informal basis, through active and regular
involvement in reviewing and supervising the operations of the Company and
through regular and full access to management. Further independent supervision
is performed through the Audit Committee which is composed entirely of
independent Directors who meet regularly with the Companys auditors without
management being in attendance. The independent Directors hold meetings without
the presence of non-independent Directors on a quarterly basis and are also
encouraged to meet at any time they consider necessary without any members of
management, including the non-independent Directors, being present. The
Companys auditors, legal counsel and certain employees may be invited to
attend. During the Companys most recently completed financial year, the
independent Directors met a total of four (4) times.

Leadership is provided for the Boards independent Directors
through access to management and the independent operation of the Audit
Committee, as discussed above, and through its Lead Director, Mr. Myckatyn. As
Lead Director, Mr. Myckatyns role and responsibilities are to:

| | a. | assist the Chairman to manage the Board and its
      committees in a manner that ensures that these relationships are effective
      and efficient and further the best interests of the Company;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                    
| | b. | oversee the process of evaluation of the Board, its
      committees and individual Directors;                                                                                                     
| |    |                                                                                                                                                                                                    
| | c. | act as the principal sounding board and counsellor for
      the Chairman;                                                                                                                         
| |    |                                                                                                                                                                                                    
| | d. | ensure that the Chairman is aware of concerns of the
      independent Directors, Shareholders and other stakeholders;                                                                             
| |    |                                                                                                                                                                                                    
| | e. | work with the Chairman to assist the Chairman in
      fulfilling her responsibilities in managing the Board;                                                                                      
| |    |                                                                                                                                                                                                    
| | f. | work with the Chairman to co-ordinate the agenda for
      Board meetings;                                                                                                                         
| |    |                                                                                                                                                                                                    
| | g. | chair and manage all meetings for the independent
      Directors;                                                                                                                                 
| |    |                                                                                                                                                                                                    
| | h. | attend committee meetings when it is appropriate to do
      so; and                                                                                                                               
| |    |                                                                                                                                                                                                    
| | i. | meet, from time to time, with the Chairman and the
      President and Chief Executive Officer to convey and discuss concerns of
      the independent Directors.                                  

Participation of Directors in Other Reporting
Issuers

The following table sets forth directors of the Company that
are also a director of any other issuer that is a reporting issuer (or
equivalent) in a jurisdiction or foreign jurisdiction.

Name of Director
    Name of Other Public
      CompanyCatherine McLeod-Seltzer
    Bear Creek Mining Corporation, Stornoway
      Diamond Corporation, Kinross Gold Corporation, Troon Ventures Ltd. and
      Major Drilling Group International, Inc.William Myckatyn
    QuadraFNX Mining Ltd., First
      Point Minerals Corp., San Marco Resources Inc. and OceanaGold CorporationDavid K. Fagin
    Atna Resources Ltd.


Participation of Directors in Board Meetings

The Board meets at least once every quarter to review, among
other things, the performance of the Company. The Board also holds a meeting
each year to review and assess the Companys financial forecasts and business
plan for the ensuing year and its overall strategic objectives. Other meetings
of the Board are called to deal with special matters as circumstances require.
During the Companys most recently completed financial year, four (4) Board
meetings were held. The attendance record of each Director for the Board
meetings held is as follows:

Name of Director
    No. of Board Meetings
      Attended in the Most Recently Completed Financial
      YearCatherine McLeod-Seltzer
    3Thomas Shrake
    4Anthony J. Petrina
  4


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- 53 -

Name of Director
    No. of Board Meetings
      Attended in the Most Recently Completed Financial
      YearWilliam Myckatyn
    4David K. Fagin
    4


Board Mandate

The mandate of the Board is to manage or supervise the
management of the business and affairs of the Company and to act with a view to
the best interests of the Company. The Board sets long-term goals and objectives
for the Company to formulate the plans and strategies necessary to achieve those
objectives and to supervise and offer guidance to the Companys senior
management in their implementation. Although the Board has delegated to senior
management personnel the responsibility for managing the day-to-day affairs of
the Company, the Board is ultimately responsible for all matters relating to the
Company and its business. In fulfilling its mandate, the Board, among other
matters, is responsible for reviewing and approving the Companys overall
business strategies and its annual business plan; reviewing and approving the
quarterly corporate and cash flow forecasts; reviewing and approving significant
capital investments; reviewing major strategic initiatives to ensure that the
Companys proposed actions accord with Shareholder objectives; reviewing
succession planning; assessing managements performance against approved
business plans and industry standards; reviewing and approving the reports and
other disclosure issued to Shareholders; ensuring the effective operation of the
Board; and safeguarding Shareholders equity interests through the optimum
utilization of the Companys capital resources.

The Board expects management to efficiently implement its
strategic plans for the Company in a professional, competent and ethical manner,
to keep the Board fully apprised of its progress in doing so and to be fully
accountable to the Board in respect to all matters for which it has been
assigned responsibility. In addition to matters which must by law or pursuant to
the constating documents of the Company be approved by the Board, all matters of
strategic importance to the Company are referred to the Board for prior review
and approval. Any material expenditures or legal commitments, including without
limitation debt or equity financings, acquisitions and divestitures by the
Company, financial statements and major disclosure documents, are subject to
prior approval by the Board. The Board holds meetings on a regular basis to
review the Companys strategy as well as to consider and approve particular
matters. One of the Boards responsibilities is to review and, if thought fit,
to approve opportunities as presented by management and to provide guidance to
management. The Board expects management to operate the business of the Company
in a manner that enhances Shareholder value and is consistent with the highest
level of integrity. Management is expected to execute the Companys business
plan and to meet performance goals and objectives.

The Board oversees the management of the Companys affairs
directly and through its committees. The Board also meets to plan for the future
growth of the Company; identify risks of the Companys business, thus ensuring
the implementation of appropriate systems to manage these risks; monitor senior
management; and ensure timely disclosure of material transactions. The frequency
of Board meetings, as well as the nature of agenda items, change, depending upon
the state of the Companys affairs and in light of opportunities or risks that
the Company faces. When necessary and appropriate, issues may be approved and
adopted by the Board by way of written resolutions in accordance with applicable
corporate law.

Position Descriptions

The Board has developed written position descriptions for the
Chairman, the President and CEO and for the Directors at large. On a quarterly
basis, the Board approves the operating and capital forecasts, and the Chairman
and President and CEO are required to ensure the Company operates within those
guidelines. Material departures must be approved by the Board. The Board is of
the view that the respective corporate governance roles of the Board and
management, as represented by the Chairman and President and CEO, are clear, and
that the limits to managements responsibility and authority are well
defined.

The Board has not developed written position descriptions for
the Chair of each Board committee. The Chairs of the Nominating Committee, the
Compensation Committee, and the Health, Safety and Environmental Committee are
responsible for calling the meetings of each Committee, establishing meeting
agenda with input from management, and supervising the conduct of the meetings.
The Chair of the Audit Committee has a clear mandate from the Board to carry out
his responsibilities.

Orientation and Continuing Education

New Directors are provided with a Board Manual, as reviewed and
adopted by the Board, which contains comprehensive information and guidelines on
the duties of the Board, and members of management, terms of reference for
committees and policies adopted by the Board. New Directors are given a full
briefing by the Chairman of the Board and President and CEO. The President and
CEO reports at each Board meeting on the Companys activities and provides
Directors with a monthly written report. All Directors are encouraged to contact
senior management for updates at any time.

The Board currently does not provide continuing education for
its Directors. By using a Board composed of experienced professionals with a wide range of financial, legal, exploration and mining
expertise, the Company ensures that the Board operates effectively and
efficiently.

---

- 54 -

Board members are encouraged to communicate with management,
legal counsel and, where applicable, auditors and technical consultants of the
Company; to keep themselves current with industry trends and developments and
changes in legislation with managements assistance; and to attend related
industry seminars and visit the Companys operations. Board members have full
access to the Companys records.

Ethical Business Conduct

The Board has adopted a written Code of Conduct and Ethics by
which it and all officers and employees of the Company abide. A copy of the Code
of Conduct and Ethics is available for review on the Companys website and on
SEDAR at www.sedar.com. In addition, the Board, through its meetings with
management and other informal discussions with management, monitors in
compliance with the Code of Conduct and Ethics and encourages a culture of
ethical business conduct. The Companys high calibre management team promotes a
culture of ethical business conduct throughout the Companys operations and is
expected to monitor the activities of the Companys employees, consultants and
agents in that regard. The Board encourages any concerns regarding ethical
conduct in respect of the Companys operations to be raised, on an anonymous
basis, with the President and CEO, the Chairman, or another Board member as
appropriate.

It is a requirement of applicable corporate law that Directors
and senior officers who have an interest in a transaction or agreement with the
Company promptly disclose that interest at any meeting of the Board at which the
transaction or agreement will be discussed and, in the case of Directors,
abstain from discussions and voting in respect to same if the interest is
material. These requirements are also contained in the Companys Articles, which
are made available to the Directors and senior officers of the Company.

Audit Committee

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.

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.

---

- 55 -

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.

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.

---

- 56 -

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 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.

---

- 57 -

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.

Composition of the Audit Committee

The members of the Audit Committee are David Fagin, William
Myckatyn and Anthony Petrina. All of the members are financially literate and
independent for the purposes of National Instrument 52-110 (NI
52-110).

Mr. Fagin is a financial expert, in that he has an
understanding of generally accepted accounting principles and financial
statements; is able to assess the general application of accounting principles
in connection with the accounting for estimates, accruals and reserves; has
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); has an
understanding of internal controls and procedures for financial reporting and an
understanding of audit committee functions.

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 ten 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), Executive
Vice-President (1975-77) then President (1977-82) 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 Ltd. (ASE and TSE) and managed all
administrative matters including annual reports, audits and registration in
Canada and the U.S. Since 1987, Mr. Fagin has served on boards and audit
committees of several public companies including T. Rowe Price Mutual Funds,
Golden Star Resources Ltd., Canyon Resources Corp. (recently acquired by Atna
Resources Ltd.), Dayton Mining Corp. and the Company, where he was either
Chairman or a member of each audit committee. He currently remains a director of
Atna Resources Ltd.

Mr. Myckatyn does not have an accounting designation. However,
Mr. Myckatyn 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. Myckatyn has over 30 years experience in
the mining industry. Mr. Myckatyn was Chairman, President and Chief Executive
Officer of Dayton Mining Corporation from 1998 to April, 2002 where he led the
restructuring of Dayton and its subsequent merger with the Company. Prior to
1998, Mr. Myckatyn was the President and CEO of Princeton Mining Corporation,
overseeing completion in 1997 of the construction of the Huckleberry open-pit
copper mine in British Columbia and the 1998 merger of the company with Imperial
Metals Corporation. Mr. Myckatyn worked for Gibraltar Mines Limited from 1991 to
1996, initially as Mine Manager and ultimately as President and CEO as the
company transitioned from being controlled by Placer Dome Inc. into an
independent growth oriented public company, and through it acquisition by
Westmin Resources Inc. in 1996. For over ten yeas prior to that, Mr. Myckatyn
worked for various operations controlled by Placer Dome Inc. and its associated
and predecessor companies including four separate mines in Australia and the
Philippines.

Mr. Myckatyn is the Lead Director and Vice-Chairman of
QuadraFNX Mining Ltd. and a director of First Point Minerals Corporation, San
Marco Resources Inc. and OceanaGold Corporation. Mr. Myckatyn received his
Bachelor of Applied Science in Mining Engineering from the University of British
Columbia in 1972 and is a registered member of the British Columbia Association
of Professional Engineers and Geoscientists.

The third member of the Companys audit committee, Anthony
Petrina, 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, Chief Executive Officer and Vice-Chairman, until his
retirement in 1992. Mr. Petrina has been a director of several other mining
companies since his retirement.

---

- 58 -

Nomination of Directors

The Nominating Committee is composed of two Directors, Messrs.
Petrina (Chair) and Myckatyn, each of whom is independent based upon the tests
for independence set forth in NI 52-110. 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.

Compensation Committee

The Compensation Committee is composed of Messrs. Fagin (Chair)
and Myckatyn, each of whom is independent based upon the tests for independence
set forth in NI 52-110. The overall purpose of the Compensation Committee is to
make recommendations to the Board for human resources and compensation policies
and to implement and oversee same if the Board approves the recommendations for
the Company.

The Compensation Committee is responsible for reviewing all
overall compensation strategy, objectives and policies; annually reviewing and
assessing the performance of the executive officers; recommending to the Board
the compensation of the executive officers; reviewing executive appointments;
and reviewing the adequacy and form of Directors compensation.

To determine compensation payable, the Compensation Committee
reviews compensation paid for Directors and officers of companies of a similar
size and stage of development in the mineral exploration industry and determines
an appropriate compensation reflecting the need to provide incentive and
compensation for the time and effort expended by the Directors and senior
management, while taking into account the financial and other resources of the
Company. The Board of Directors does not benchmark its executive compensation
program, but from time to time does review compensation practices of companies
of similar size and stage of development to ensure the compensation paid is
competitive within the Company's industry and geographic location while taking
into account the financial and other resources of the Company.

No compensation consultant or advisor has, at any time since
the beginning of the Companys most recently completed financial year, been
retained to assist in determining compensation for any of the Companys
Directors or officers.

Other Committees

Committees of the Board are an integral part of the Companys
governance structure. The Boards committees presently consist of an Audit
Committee, a Compensation Committee, a Heath, Safety and Environmental Committee
and a Nominating Committee. The Boards committees have been established to
devote the necessary expertise and resources to particular areas, and to enhance
the quality of discussion at Board meetings. The Committees facilitate effective
Board decision making by providing recommendations to the Board on matters
within their respective responsibilities. The Board believes that the Committees
assist in the effective functioning of the Board and that the composition of the
Committees should ensure that the views of the independent Directors are
effectively represented.

A discussion of the Companys Nominating and Compensation
Committees is provided above under the sub-headings Nomination of Directors
and Compensation Committee. See Item 16A  Audit Committee Financial
Expert.

The Companys Health, Safety and Environmental Committee is
composed of Messrs. Myckatyn (Chair), Shrake and Petrina, a majority of whom are
considered independent based upon the tests for independence set forth in NI
52-110. The Health, Safety and 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.

The Board has determined that, at this stage of the Companys
development, it is not necessary for the Board to have additional standing
committees. The Board may from time to time appoint a special committee of one
or more Directors which committee may engage an outside advisor at the Companys
expense in order to assist the committee in fulfilling its responsibilities.

Assessments

The Board annually, and at such other times as it deems
appropriate, reviews the performance and effectiveness of the Board, the
Directors and its committees to determine whether changes in size, personnel or
responsibilities are warranted. To assist in its review, the Board conducts
informal surveys of its Directors respecting its own effectiveness. In addition,
the Board satisfies itself that the Board, its committees, and its individual
Directors are performing effectively through frequent discussions between
management and individual Board members. There are also discussions among the
independent Directors with resulting comments to the Board.

---

- 59 -

Shareholder Feedback and Concerns

The Company is dedicated to the maintenance of good Shareholder
relations and attempts to deal with any expressed concerns of Shareholders in an
effective and timely manner. The Company employs a Vice-President of Investor
Relations to monitor and promptly address Shareholder concerns in an expeditious
and informal manner. If any material issues of concern arise, the Board of
Directors is informed and provides direction for action as needed. The Company
has a Disclosure Policy which is followed and is available for review on the
Companys website.

|D. | Employees
|-- | ---------

As at April 30, 2011, the Company (including its subsidiaries)
had one employee in Canada, five employees in the U.S. and 29 employees in El
Salvador. None of the Companys employees are represented by labour unions.

|E. | Share Ownership
|-- | ---------------

See Item 6A. Directors and Senior Management and Item 6B.
Compensation for details as to share ownership on an individual basis.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS

|A. | Major Shareholders
|-- | ------------------

According to information provided by the Companys transfer
agent, the following are the only shareholders of the Company that beneficially
own, directly or indirectly, or exercise control over, shares carrying more than
5% of the outstanding voting rights attached to the Companys common shares as
at June 30, 2011:

Name of Shareholder
    No. of Shares
    % of Issued SharesCDS & Co.
    127,547,880
    75.74%CEDE & Co.
    12,522,506
    7.44%


Voting Rights

The Companys major shareholders do not have different voting
rights from other shareholders.

Change of Control

To the best of the Companys knowledge, there are no
arrangements of which may result in a change in control of the Company.

Geographic Breakdown

According to information provided by the Companys transfer
agent, as at June 30, 20110, there were 176 U.S. registered holders owning
20,362,117 of the Companys outstanding shares.

The Company is a publicly owned Canadian corporation, the
shares of which are owned by Canadian residents, U.S. residents, and residents
of other countries.

|B. | Related party transactions
|-- | --------------------------

The Company received accounting and tax preparation services
from an accounting firm in which an Officer of the Company is a partner. The
total accounting fees paid during fiscal 2011 was US$117,000

|C. | Interests of Experts and counsel
|-- | --------------------------------

Not applicable.

ITEM 8. FINANCIAL INFORMATION

|A. | Consolidated Statements and Other Financial
      Information
|-- | -------------------------------------------------------------

The consolidated financial statements required to be filed as a
part of this annual report on Form 20-F are filed under Item 17 and incorporated
herein by reference.

---

- 60 -

Legal

In April 2009, PacRim, a Nevada corporation and a wholly-owned
subsidiary of Pacific Rim filed international arbitration proceedings against
the GOES under CAFTA and the ILES in its own name and on behalf of PRES and
DOREX (collectively the Enterprises). A Notice of Intent to commence
international arbitration proceedings had previously been filed by PacRim in
December 2008. PacRim has retained the Washington, DC-based international law
firm of Crowell & Moring, LLP to represent it in the arbitration and is
seeking award of damages in the hundreds of millions of dollars from the GOES
for its multiple breaches of international and Salvadoran law.

Since acquiring the El Dorado project in El Salvador in 2002,
PacRim and the Enterprises have operated in full compliance with Salvadoran law,
including the countrys environmental, mining and foreign investment laws, and
have met or exceeded all applicable standards while conducting business in El
Salvador. Ample evidence, however, demonstrates that the GOES has failed to
fulfill its obligations.

PacRims claims are based on the GOESs breaches of
international and Salvadoran law arising out of the GOESs improper failure to
finalize the permitting process in accordance with Salvadoran law. This conduct
by the GOES has resulted in a significant loss to PacRim, the shareholders of
Pacific Rim and to the local communities, and has unnecessarily delayed normal
development of these valuable deposits.

Pacific Rims mandate to its shareholders is to build a gold
mining company that explores and develops gold deposits in an environmentally
responsible manner. In meeting its responsibilities, a mine design for the
Enterprises El Dorado gold project located in the department of Cabañas, was
submitted to the GOES in its final form more than three years ago. Despite
strong local support and the inclusion of carefully engineered and reliable
environmental protections for the proposed El Dorado Mine, the GOES has not met
its responsibility to issue the Enterprises the permits necessary to advance the
project to the final step of full production.

Hearings related to the Preliminary Objection were held on May
31 and June 1, 2010 at ICSID headquarters in Washington, DC. The Preliminary
Objection, wherein GOES sought to dispose of nearly all of PacRims case, was
originally filed by the GOES on January 4, 2010 (fiscal 2010). On August 2, 2010
the ICSID Tribunal that is hearing the investment claims of PacRim against the
GOES, and that presided over the Preliminary Objection hearings, ruled in favor
of PacRim, unanimously rejecting all of the arguments made by the GOES in its
Preliminary Objection filed under Articles 10.20.4 and 10.20.5 of CAFTA.

Immediately following the ICSID Preliminary Objection ruling,
the GOES filed another the Jurisdiction Objection, wherein the GOES asserts that
ICSID does not have jurisdiction to hear PacRim's claims under CAFTA or the
Investment Law based largely on timing and nationality issues. On May 2 - 4,
2011 hearings were again held at ICSID headquarters in Washington, DC in order
for the ICSID Tribunal to hear argument and witness testimony regarding the
Jurisdiction Objection. As with the Preliminary Objection, PacRim asserts the
Jurisdiction Objection is without merit and looks forward to the Tribunals
decision, anticipated for late calendar 2011. If the GOES is unsuccessful in its
Jurisdiction Objection, the CAFTA/ILES action is expected to proceed to the
merits phase during fiscal 2012.

Dividend Policy

The Company does not have any intention of paying cash
dividends in the foreseeable future. In particular, there can be no assurance
that our Board of Directors will ever declare cash dividends, which action is
completely within their discretion.

|B. | Significant Changes
|-- | -------------------

There have been no significant changes since April 30, 2011
that are not disclosed herein.

ITEM 9. THE OFFER AND LISTING

|A. | Offer and Listing Details
|-- | -------------------------

The Companys post-amalgamation shares were called for trading
on the TSX and the NYSE Amex, on April 15, 2002 as PMU. In September 2010 the
Company delisted from NYSE Amex and the TSX is the only exchange on which the
Companys shares are listed. The Companys shares additionally trade on the
OTCQX platform in the US. Prior to April 15, 2002 Daytons shares traded as
DAY on the TSX and the American Stock Exchange and the Companys shares traded
as PFG on the TSX.

The following table sets forth the annual high and low closing
prices of the common shares traded on the TSX and the OTCQX for the five most recent financial years.

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- 61 -

TSX CDN($)
    OTCQX (1)US($)Fiscal Period Ended
    High
    Low
    High
    LowApril 30, 2011
    0.35
    0.155
    0.35
    0.16April 30, 2010
    0.40
    0.16
    0.36
    0.165April 30, 2009
    0.99
    0.09
    0.99
    0.08April 30, 2008
    1.25
    0.83
    1.39
    0.83April 30, 2007
    1.43
    0.70
    1.29
    0.63


The following table outlines the high and low market prices for
each fiscal financial quarter for the two most recent full financial years and
any subsequent period:

TSX CDN($)
    OTCQX (1)US($)Fiscal Financial Quarter Ended
    High
    Low
    High
    LowApril 30, 2011
    0.35
    0.185
    0.35
    0.23January 31, 2011
    0.25
    0.18
    0.23
    0.02October 31, 2010
    0.22
    0.165
    0.22
    0.15July 31, 2010
    0.26
    0.155
    0.26
    0.16April 30, 2010
    0215
    0.16
    0.22
    0.16January 31, 2010
    0.315
    0.18
    0.29
    0.18October 31, 2009
    0.345
    0.20
    0.32
    0.19July 31, 2009
    0.40
    0.21
    0.36
    0.21


The following table outlines the high and low market prices for
each of the most recent six months:

TSX CDN($)
    OTCQX (1)US($)Month
    High
    Low
    High
    LowJune 2011
    0.21
    0.16
    0.21
    0.16May 2011
    0.23
    0.18
    0.25
    0.186April 2011
    0.24
    0.185
    0.24
    0.195March 2011
    0.315
    0.21
    0.33
    0.22February 2011
    0.35
    0.22
    0.35
    0.215January 2011
    0.25
    0.18
    0.23
    0.175


(1) Share prices listed under the OTCQX heading above, from
dates prior to September 9, 2010, were taken from the Companys listing on the
NYSE Amex.

|B. | Plan of Distribution
|-- | --------------------

Not Applicable.

|C. | Markets
|-- | -------

The Companys common shares are listed and trade on the TSX
under the symbol PMU and additionally trade on the OTCQX platform under the
symbol PFRMF. 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 the Xetra, the Deutsche Borse
AG electronic trading system since May 31, 2002.

|D. | Selling Shareholders
|-- | --------------------

Not Applicable.

|E. | Dilution
|-- | --------

Not Applicable.

|F. | Expenses of the issue
|-- | ---------------------

Not Applicable.

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- 62 -

ITEM 10. ADDITIONAL INFORMATION

|A. | Share Capital
|-- | -------------

Not applicable.

|B. | Memorandum and Articles of
Association
|-- | --------------------------------------

| | 1. | The Company, was formed on April 11, 2002 by the
      amalgamation of Dayton and Pacific Rim under the former Company Act
      (British Columbia). Now existing under the Business Corporations Act,
      S.B.C. 2002, c. 57 (British Columbia) (the New Act), as amended, the
      Company, is permitted to conduct any lawful business that it s not
      restricted from conducting by its Notice of Articles and Articles, neither
      of which contain any restriction on the business the Company may
      conduct.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 2. | A director who has a disclosable interest in a proposed
      contract or transaction with the Company shall be liable to account to the
      Company for any profits that accrue to the director under or as a result
      of the contract or transaction unless disclosure is made thereof and the
      contract or transaction is approved in accordance with the provisions of
      the New Act. A director who holds a disclosable interest in a contract or
      transaction into which the Company has entered or proposes to enter into
      is 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 resolutions. The Articles of the Company
      permit an interested director to be counted in the quorum at the meeting
      whether or not the director votes on any or all of the resolutions
      considered at the meeting. The Company, if authorized by the board of
      directors, may borrow money, issue debt obligations and charge the assets
      of the Company, provided only that such power is exercised bona fide and
      in the best interests of the Company. There is no mandatory retirement age
      for directors. A director is not required to hold shares of the
      Company.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 3. | The Company has only one class of common shares, without
      any special rights or restrictions. The dividend entitlement of a
      shareholder of record is fixed at the time of declaration by the board of
      directors. A vested dividend entitlement does not lapse, but unclaimed
      dividends are subject to a statutory six year contract debts limitation.
      Each common share is entitled to one vote on the election of each
      director. There are no cumulative voting rights, in consequence of which a
      simple majority of votes at the annual meeting can elect all the directors
      of the Company. Each common share carries with it the right to share
      equally with every other common share in dividends declared and in any
      distribution of surplus assets of the Company after payment to creditors
      on any winding up, liquidation or dissolution. There are no redemption or
      sinking fund provisions. All common shares must be fully paid prior to
      issue and are thereafter subject to no further capital calls by the
      Company. There exists no discriminatory provision affecting any existing
      or prospective holder of common shares as a result of such shareholder
      owning a substantial number of shares.                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 4. | Pursuant to the New Act and the Articles of the Company,
      the rights of shareholders may be changed only by the shareholders passing
      a special resolution approved by two-thirds (2/3) of the votes cast at a
      general meeting of the Company, the notice of which is accompanied by a
      circular describing the proposed action and its effect on the
      shareholders. Certain special resolutions provide that a shareholder may
      dissent in respect of the resolution, by sending a notice of dissent to
      the Company and otherwise complying with the provisions of the New Act. A
      shareholder who validly exercises such right of dissent in accordance with
      the New Act may have the shares that are subject of the notice of dissent
      purchased by the Company at their fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 5. | The board of directors must call an annual general
      meeting once in each calendar year and not later than 15 months after the
      last such meeting. The board may call an extraordinary general meeting at
      any time. Notice of such meetings must be accompanied by information
      circular describing the proposed business to be dealt with and making the
      required disclosure regarding the Company and the matters to be considered
      at the meeting. A shareholder or shareholders holding in the aggregate of
      5% of the issued shares of the Company may requisition a meeting and the
      board is required to hold such meeting within four months of such
      requisition. Admission to such meetings is open to registered shareholders
      and their duly appointed proxy holders. Others may be admitted with the
      consent of the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 6. | The constating documents of the Company contain no
      limitations on the rights of non-resident or foreign shareholders to hold
      or exercise rights on the shares of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 7. | There are no provisions in the Companys constating
      documents that would have an effect of delaying, deferring or preventing a
      change in control of the Company and that would operate only with respect
      to a merger, acquisition or corporate restructuring involving the Company
      or any of its subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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- 63 -

| | 8.  | There are no provisions in the Companys constating
      documents that govern the ownership threshold above which shareholder
      ownership must be disclosed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 9.  | There is no limitation at law upon the right of a
      non-resident to hold shares in a Canadian company. However, the Investment
      Canada Act (Canada) (the Investment Act) requires certain non-Canadian
      individuals, governments, corporations, agencies or entities who wish to
      acquire a Canadian business or to establish a new Canadian business as
      those terms are defined in the Investment Act, to file a notification or
      an application for review with Investment Canada, a Canadian federal
      governmental agency. The Investment Act requires that certain acquisitions
      of control of a Canadian business by a non-Canadian must be reviewed by
      the Minister responsible for the Investment Act and approved on the basis
      that the Minister is satisfied that the acquisition is likely to be of net
      benefit to Canada, having regard to the criteria set forth in the
      Investment Act. The Investment Act makes the acquisition of control a
      reviewable event. The Investment Act sets out detailed rules for
      determining whether control has been acquired. The acquisition of
      one-third or more of the voting shares of a corporation may, in some
      circumstances, be deemed to constitute acquisition of control. A
      reviewable acquisition of control may not be implemented before being
      approved by the Minister. If not ultimately approved, a reviewable
      acquisition that has been completed may be subject to an order to divest,
      enforceable by injunction or a court order directing disposition of assets
      or shares.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 10. | There are no provisions in the Companys constating
      documents that govern changes in capital that are more stringent that
      required by law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|C. | Material contracts
|-- | ------------------

In March 2011, Pacific Rim, through its US subsidiary PREx
signed an LOI with ICN and WGI (collectively with the Company and PREx, the Hog
Ranch Parties) providing the Company with the option to acquire a 65% joint
venture interest in the Hog Ranch Property located in Washoe County, Nevada,
approximately 180 km north of Reno. Subsequent to the end of fiscal 2011 (in
June 2011) the Hog Ranch Parties signed a Definitive Agreement finalizing the
terms of the LOI (subject to final regulatory approval).

As per the Definitive Agreement, PREx has been granted the
option to acquire a 65% interest (the Interest) in the Hog Ranch Property
through the expenditure of an aggregate of $8 million in exploration
expenditures and the issuance of an aggregate of 1 million common shares of
Pacific Rim, with annual extensions dependent on results of exploration. See
Item 4D  Property Plant and Equipment, specifically Other
Propertiesfor a schedule of the Hog Ranch option payments.

During fiscal 2011, the Company, through its Panamanian
subsidiary Minera Verde, signed an LOI with Minera Clifton (collectively with
the Company and Minera Verde, the Remance Parties) to acquire a 100% interest
in the Remance project located in Panama, Central America.

The Remance Parties have agreed to sign a formal option
agreement (the Formal Agreement) granting Minera Verde the exclusive right and
option (the "Option") to acquire 100% of Minera Clifton's right, title and
interest in the Remance project as soon as practicable. Signing of the Formal
Agreement has not been concluded at this time and is currently highly uncertain.
Minera Cliftons application for an extension to the Remance concession term, as
provided by Panamanian law, was recently denied; a decision which is currently
being appealed by Minera Clifton. The extension denial by the Ministry of
Commerce and Industry is highly suspicious and diplomatic efforts are aimed at
pointing out these irregularities in an attempt to overturn the decision. While
the Company is keeping the Remance LOI in effect during Minera Cliftons appeal,
the outcome of this process, and hence the Companys final acquisition of the
Remance project, is highly uncertain. If signed, the Formal Agreement will be
subject to all required regulatory approvals, including the approval of the
Toronto Stock Exchange (the TSX). The option to acquire Remance may be
exercised by the Company by paying an aggregate of $200,000 in four equal
tranches plus 5 million common shares of Pacific Rim to Minera Clifton,
conducting a specified exploration program during the Option Period (as defined
in the LOI) and paying $5 million in cash or common shares to Minera Clifton at
the end of the Option Period.

The Remance project acquisition has not currently been
completed and is highly uncertain at this time. The Company believes that Minera
Cliftons application for extension of the Remance concession term, normally a
routine process permitted under Panamanian mining law, was sidelined by
bureaucratic irregularities and possible issues within the ministry responsible
for mining. If the Remance extension is ultimately granted to Minera Clifton,
the Company intends to proceed with its acquisition of the Remance Project by
signing the Formal Agreement. See Item 4D  Property Plant and
Equipment, specifically Other Properties.

|D. | Exchange controls
|-- | -----------------

There are currently no governmental laws, decrees, regulations
or other legislation of Canada which affect the import or export of capital,
including the availability of cash and cash equivalents for use by the
Company.

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- 64 -

|E. | Taxation
|-- | --------

Although not free from doubt, the Company believes it was
classified as a "passive foreign investment company" during the tax year ended
April 30, 2011, and may be classified as a passive foreign investment company
in future tax years. If the Company is a passive foreign investment company
for a tax year, such classification will likely have adverse U.S. federal income
tax consequences for U.S. shareholders.

U.S. investors in our Common Shares should be aware that the
Company believes it was classified as a passive foreign investment company
(PFIC) during the tax year ended April 30, 2011and may be classified as a PFIC
for future tax years. If the Company is a PFIC for any year during a U.S.
shareholders holding period, then such U.S. shareholder generally will be
required to treat any gain realized upon a disposition of Common Shares, or any
so-called excess distribution received on its Common Shares, as ordinary
income, and to pay an interest charge on a portion of such gain or
distributions, unless the shareholder makes a timely and effective "qualified
electing fund" election (QEF Election) or a "mark-to-market" election with
respect to the Common Shares. A U.S. shareholder who makes a QEF Election
generally must report on a current basis its share of the Company's net capital
gain and ordinary earnings for any year in which the Company is a PFIC, whether
or not the Company distributes any amounts to its shareholders. However, U.S.
shareholders should be aware that there can be no assurance that the Company
will satisfy record keeping requirements that apply to a qualified electing
fund, or that the Company will supply U.S. shareholders with information that
such U.S. shareholders require to report under the QEF rules, in the event that
the Company a PFIC and a U.S. shareholder wishes to make a QEF Election. Thus,
U.S. shareholders may not be able to make a QEF Election with respect to their
Common Shares. A U.S. shareholder who makes the mark-to-market election
generally must include as ordinary income each year the excess of the fair
market value of the Common Shares over the taxpayers basis therein. This
paragraph is qualified in its entirety by the discussion below under the heading
Certain United States Federal Income Tax Considerations. Each U.S. shareholder
should consult its own tax advisor regarding the U.S. federal, U.S. federal
alternative minimum, U.S. federal estate and gift, U.S. state and local, and
foreign tax consequences of the PFIC rules and the acquisition, ownership, and
disposition of our Common Shares.

CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS

The following is a general summary of certain material U.S.
federal income tax considerations applicable to a U.S. Holder (as defined below)
arising from and relating to the acquisition, ownership, and disposition of
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 considerations that may apply to a U.S. Holder arising from and
relating to 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 to such U.S. Holder, including specific tax consequences
to a U.S. Holder under an applicable tax treaty. 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 tax advisor regarding the U.S. federal, U.S. federal alternative minimum,
U.S. federal estate and gift, U.S. state and local, and foreign tax consequences
relating to the acquisition, ownership and disposition of Common Shares.

No legal opinion from U.S. legal counsel or ruling from the
Internal Revenue Service (the IRS) has been requested, or will be obtained,
regarding the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares. This summary is not binding on the
IRS, and the IRS is not precluded from taking a position that is different from,
and contrary to, the positions taken in this summary. In addition, because the
authorities on which this summary is based are subject to various
interpretations, the IRS and the U.S. courts could disagree with one or more of
the positions taken in this summary.

Scope of this Summary

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 IRS, published administrative positions of
the IRS, U.S. court decisions, 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 document. 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 or prospective basis which
could affect the U.S. federal income tax considerations described in this
summary. 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 or prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a
beneficial owner of Common Shares that is for U.S. federal income tax
purposes:

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- an individual who is a citizen or resident of the U.S.;
- a corporation (or other entity taxable as a corporation for U.S. federal
  income tax purposes) organized under the laws of the U.S., any state thereof
  or the District of Columbia;
- an estate whose income is subject to U.S. federal income taxation
  regardless of its source; or
- a trust that (a) is subject to the primary supervision of a court within
  the U.S. and the control of one or more U.S. persons for all substantial
  decisions or (b) has a valid election in effect under applicable Treasury
  regulations to be treated as a U.S. person.

Non-U.S. Holders

For purposes of this summary, a non-U.S. Holder is a
beneficial owner of Common Shares that is not a U.S. Holder. This summary does
not address the U.S. federal income tax consequences to non-U.S. Holders arising
from and relating to the acquisition, ownership, and disposition of Common
Shares. Accordingly, a non-U.S. Holder should consult its own tax advisor
regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and foreign tax consequences (including
the potential application of and operation of any income tax treaties) relating
to 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
considerations applicable 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, underwriters, insurance companies, real estate investment trusts,
or regulated investment companies; (c) U.S. Holders that are dealers in
securities or currencies or U.S. Holders that are traders in securities 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 own
Common Shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (f) U.S. Holders that acquired Common Shares in connection with the
exercise of employee stock options or otherwise as compensation for services;
(g) U.S. Holders that hold Common Shares other than as a capital asset within
the meaning of Section 1221 of the Code (generally, property held for investment
purposes); (h) partnerships and other pass-through entities (and investors in
such partnerships and entities); or (i) U.S. Holders that own or have owned
(directly, indirectly, or by attribution) 10% or more of the total combined
voting power of the outstanding shares of the Company. This summary also does
not address the U.S. federal income tax considerations applicable to U.S.
Holders who are (a) U.S. expatriates or former long-term residents of the U.S.,
(b) persons that have been, are, or will be a resident or deemed to be a
resident in Canada for purposes of the Income Tax Act (Canada) (the Tax Act);
(c) persons that use or hold, will use or hold, or that are or will be deemed to
use or hold Common Shares in connection with carrying on a business in Canada;
(d) persons whose Common Shares constitute taxable Canadian property under the
Tax Act; or (e) persons that have a permanent establishment in Canada for the
purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to
special provisions under the Code, including U.S. Holders described immediately
above, should consult their own tax advisor regarding the U.S. federal, U.S.
federal alternative minimum, U.S. federal estate and gift, U.S. state and local,
and foreign tax consequences relating to the acquisition, ownership and
disposition of Common Shares.

If an entity that is classified as a 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 and the partners of
such partnership generally will depend on the activities of the partnership and
the status of such partners. This summary does not address the tax consequences
to any such partner. Partners of entities that are classified as partnerships
for U.S. federal income tax purposes should consult their own tax advisor
regarding the U.S. federal income tax consequences arising from and relating to
the acquisition, ownership, and disposition of Common Shares.

Tax Consequences Not Addressed

This summary does not address the U.S. federal, U.S. federal
alternative minimum, U.S. federal estate and gift, U.S. state and local, and
foreign tax consequences to U.S. Holders of the acquisition, ownership, and
disposition of Common Shares. Each U.S. Holder should consult its own tax
advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S.
federal estate and gift, U.S. state and local, and foreign tax consequences of
the acquisition, ownership, and disposition of Common Shares.

Passive Foreign Investment Company Rules

If the Company were to constitute a passive foreign investment
company under the meaning of Section 1297 of the Code (a PFIC, as defined
below) for any year during a U.S. Holders holding period, then certain
different and potentially adverse rules will effect the U.S. federal income tax
consequences to a U.S. Holder resulting from the acquisition, ownership and
disposition of Common Shares. In addition, in any year in which the Company is
classified as a PFIC, such holder would be required to file an annual report
with the IRS containing such information as Treasury Regulations and/or
other IRS guidelines may require. Recent IRS guidance suspends this annual
requirement pending the release of new forms; filings will eventually be
required with respect to any year in which the obligation was suspended.

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PFIC Status of the Company

The Company generally will be a PFIC if, for a tax year, (a)
75% or more of the gross income of the Company for such tax year is passive
income (the income test) or (b) 50% or more of the value of the Companys
assets either produce passive income or are held for the production of passive
income, based on the quarterly average of the fair market value of such assets
(the asset test). Gross income generally includes all sales revenues less
the cost of goods sold, and passive income generally includes, for example,
dividends, interest, certain rents and royalties, certain gains from the sale of
stock and securities, and certain gains from commodities transactions.

Active business gains arising from the sale of commodities
generally are excluded from passive income if substantially all of a foreign
corporations commodities are stock in trade of such foreign corporation or
other property of a kind which would properly be included in inventory of such
foreign corporation, or property held by such foreign corporation primarily for
sale to customers in the ordinary course of business, if such gains constitute
more than 85% of the corporations total receipts and certain other requirements
are satisfied.

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 corporation, the Company will be
treated as if it (a) held a proportionate share of the assets of such other
corporation and (b) received directly a proportionate share of the income of
such other 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.

In addition, under certain attribution rules, if the Company is
a PFIC, U.S. Holders will be deemed to own their proportionate share of any
subsidiary of the Company which is also a PFIC (a Subsidiary PFIC), and will
be subject to U.S. federal income tax on their proportionate share of (a) a
distribution on the shares of a Subsidiary PFIC and (b) a disposition or deemed
disposition of shares of a Subsidiary PFIC, both as if such U.S. Holders
directly held the shares of such Subsidiary PFIC.

The Company believes that it was classified as a PFIC during
the tax year ended April 30, 2011 and may be classified as a PFIC for current
and future tax years. The determination of whether any corporation was, or will
be, a PFIC for a tax year depends, in part, on the application of complex U.S.
federal income tax rules, which are subject to differing interpretations. In
addition, whether any corporation will be a PFIC for any tax year depends on the
assets and income of such corporation over the course of each such tax year and,
as a result, cannot be predicted with certainty as of the date of this document.
Accordingly, there can be no assurance that the IRS will not challenge any
determination made by the Company (or a Subsidiary PFIC) concerning its PFIC
status or that the Company (and each Subsidiary PFIC) was not, or will not be, a
PFIC for any tax year. Each U.S. Holder should consult its own tax advisor
regarding the PFIC status of the Company and each Subsidiary PFIC.

Default PFIC Rules Under Section 1291 of the Code

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 and any Subsidiary PFICs 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.

A Non-Electing U.S. Holder will be subject to the rules of
Section 1291 of the Code with respect to (a) any gain recognized on the sale or
other taxable disposition of Common Shares and (b) any excess distribution
received on the Common Shares. A distribution generally will be an excess
distribution to the extent that such distribution (together with all other
distributions received in the current tax year) exceeds 125% of the average
distributions received during the three preceding tax years (or during a U.S.
Holders holding period for the Common Shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale
or other taxable disposition of Common Shares, and any excess distribution
received on Common Shares, must be ratably allocated to each day in a
Non-Electing U.S. Holders holding period for the respective Common Shares. The
amount of any such gain or excess distribution allocated to the tax year of
disposition or distribution of the excess distribution and to years before the
entity became a PFIC, if any, would be taxed as ordinary income. The amounts
allocated to any other tax year would be subject to U.S. federal income tax at
the highest tax applicable to ordinary income in each such year, and an interest
charge would be imposed on the tax liability for each such year, calculated as
if such tax liability had been due in each such year. A Non-Electing U.S. Holder
that is not a corporation must treat any such interest paid as personal
interest, which is not deductible.

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If the Company is a PFIC for any tax year during which a
Non-Electing U.S. Holder holds Common Shares, the Company will continue to be
treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of
whether the Company ceases to be a PFIC in one or more subsequent tax years. A
Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to
recognize gain (which will be taxed under the rules of Section 1291 of the Code
discussed above) as if such Common Shares were sold on the last day of the last
tax year for which the Company was a PFIC.

QEF Election

A U.S. Holder that makes a QEF Election for the first tax year
in which its holding period of its Common Shares begins, generally, will not be
subject to the rules of Section 1291 of the Code discussed above with respect to
its Common Shares. However, a U.S. Holder that makes a QEF Election 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) the ordinary earnings of the Company, which
will be taxed as ordinary income to such U.S. Holder. Generally, net capital
gain is the excess of (a) net long-term capital gain over (b) net short-term
capital loss, and ordinary earnings are the excess of (a) earnings and
profits over (b) net capital gain. A U.S. Holder that makes a QEF Election will
be subject to U.S. federal income tax on such amounts for each tax year in which
the Company is a PFIC, regardless of whether such amounts are actually
distributed to such U.S. Holder by the Company. However, for any tax year in
which the Company is a PFIC and has no net income or gain, U.S. Holders that
have made a QEF Election would not have any income inclusions as a result of the
QEF Election. If a U.S. Holder that made a QEF Election has an income inclusion,
such a U.S. Holder may, subject to certain limitations, elect to defer payment
of current U.S. federal income tax on such amounts, subject to an interest
charge. If such U.S. Holder is not a corporation, any such interest paid will be
treated as personal interest, which is not deductible.

A U.S. Holder that makes a QEF Election generally (a) may
receive a tax-free distribution from the Company to the extent that such
distribution represents earnings and profits of the Company that were
previously included in income by the U.S. Holder because of such QEF Election
and (b) will adjust such U.S. Holders tax basis in the Common Shares to reflect
the amount included in income or allowed as a tax-free distribution because of
such QEF Election. In addition, a U.S. Holder that makes a QEF Election
generally will recognize capital gain or loss on the sale or other taxable
disposition of Common Shares.

The procedure for making a QEF Election, and the U.S. federal
income tax consequences of making a QEF Election, will depend on whether such
QEF Election is timely. A QEF Election will be treated as timely if such QEF
Election is made for the first year in the U.S. Holders holding period for the
Common Shares in which the Company was a PFIC. A U.S. Holder may make a timely
QEF Election by filing the appropriate QEF Election documents at the time such
U.S. Holder files a U.S. federal income tax return for such year.

A QEF Election will apply to the tax year for which such QEF
Election is made and to all subsequent tax years, unless such QEF Election is
invalidated or terminated or the IRS consents to revocation of such QEF
Election. If a U.S. Holder makes a QEF Election and, in a subsequent tax year,
the Company ceases to be a PFIC, the QEF Election will remain in effect
(although it will not be applicable) during those tax years in which the Company
is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent
tax year, the QEF Election will be effective and the U.S. Holder will be subject
to the QEF rules described above during any subsequent tax year in which the
Company qualifies as a PFIC.

U.S. Holders should be aware that there can be no assurances
that the Company will satisfy the record keeping requirements that apply to a
QEF, or that the Company will supply U.S. Holders with information that such
U.S. Holders require to report under the QEF rules, in the event that the
Company is a PFIC and a U.S. Holder wishes to make a QEF Election. Thus, U.S.
Holders may not be able to make a QEF Election with respect to their Common
Shares. Each U.S. Holder should consult its own tax advisor regarding the
availability of, and procedure for making, a QEF Election.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the
Common Shares are marketable stock. The Common Shares generally will be
marketable stock if the Common Shares are regularly traded on (a) a national
securities exchange that is registered with the Securities and Exchange
Commission, (b) the national market system established pursuant to section 11A
of the Exchange Act, or (c) a foreign securities exchange that is regulated or
supervised by a governmental authority of the country in which the market is
located, provided that (i) such foreign exchange has trading volume, listing,
financial disclosure, and other requirements and the laws of the country in
which such foreign exchange is located, together with the rules of such foreign
exchange, ensure that such requirements are actually enforced and (ii) the rules
of such foreign exchange ensure active trading of listed stocks. If such stock
is traded on such a qualified exchange or other market, such stock generally
will be regularly traded for any calendar year during which such stock is
traded, other than in de minimis quantities, on at least 15 days during each
calendar quarter.

A U.S. Holder that makes a Mark-to-Market Election with respect
to its Common Shares generally will not be subject to the rules of Section 1291
of the Code discussed above with respect to such Common Shares. However, if a
U.S. Holder does not make a Mark-to-Market Election beginning in the first tax
year of such U.S. Holders holding period for the Common Shares or such U.S.
Holder has not made a timely QEF Election, the rules of Section 1291 of
the Code discussed above will apply to certain dispositions of, and
distributions on, the Common Shares.

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A U.S. Holder that makes a Mark-to-Market Election will include
in ordinary income, for each tax 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 tax 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 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 (but only to the extent of the net amount of previously
included income as a result of the Mark-to-Market Election for prior tax
years).

A U.S. Holder that makes a Mark-to-Market Election generally
also will adjust such U.S. Holders tax basis in the Common Shares to reflect
the amount included in gross income or allowed as a deduction because of such
Mark-to-Market Election. In addition, upon a sale or other taxable disposition
of Common Shares, a U.S. Holder that makes a Mark-to-Market Election will
recognize ordinary income or ordinary loss (not to exceed the excess, if any, of
(a) the amount included in ordinary income because of such Mark-to-Market
Election for prior tax years over (b) the amount allowed as a deduction because
of such Mark-to-Market Election for prior tax years).

A Mark-to-Market Election applies to the tax year in which such
Mark-to-Market Election is made and to each subsequent tax year, unless the
Common Shares cease to be marketable stock or the IRS consents to revocation
of such election. Each U.S. Holder should consult its own tax advisor regarding
the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market
Election with respect to the Common Shares, no such election may be made with
respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as
owning, because such stock is not marketable. Hence, the Mark-to-Market Election
will not be effective to eliminate the interest charge described above with
respect to deemed dispositions of Subsidiary PFIC stock or distributions from a
Subsidiary PFIC.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed
Treasury Regulations that, subject to certain exceptions, would cause a U.S.
Holder that had not made a timely QEF Election to recognize gain (but not loss)
upon certain transfers of Common Shares that would otherwise be tax-deferred
(e.g., gifts and exchanges pursuant to corporate reorganizations). However, the
specific U.S. federal income tax consequences to a U.S. Holder may vary based on
the manner in which Common Shares are transferred.

Certain additional adverse rules will apply with respect to a
U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder
makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S.
Holder that uses Common Shares as security for a loan will, except as may be
provided in Treasury Regulations, be treated as having made a taxable
disposition of such Common Shares.

Special rules also apply to the amount of foreign tax credit
that a U.S. Holder may claim on a distribution from a PFIC. Subject to such
special rules, foreign taxes paid with respect to any distribution in respect of
stock in a PFIC are generally eligible for the foreign tax credit. The rules
relating to distributions by a PFIC and their eligibility for the foreign tax
credit are complicated, and a U.S. Holder should consult with their own tax
advisor regarding the availability of the foreign tax credit with respect to
distributions by a PFIC.

The PFIC rules are complex, and each U.S. Holder should consult
its own tax advisor 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.

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

The following discussion is subject to the rules described
above under the heading Passive Foreign Investment Company Rules.

Distributions on Common Shares

Subject to the PFIC rules discussed above, a U.S. Holder that
receives a distribution, including a constructive distribution, with respect to
a Common Share 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, as computed for U.S. federal income tax
purposes. A dividend generally will be taxed to a U.S. Holder at ordinary income
tax rates. To the extent that a distribution exceeds the current and accumulated
earnings and profits of the Company, such distribution will be treated first
as a tax-free return of capital to the extent of a U.S. Holder's tax basis in
the Common Shares and thereafter as gain from the sale or exchange of such
Common Shares. (See  Sale or Other Taxable Disposition of Common Shares
below). However, the Company may not maintain the calculations of earnings and
profits in accordance with U.S. federal income tax principles, and each U.S.
Holder should therefore assume that any distribution by the Company with respect
to the Common Shares will constitute ordinary dividend income.

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Dividends received on Common Shares generally will not be
eligible for the dividends received deduction. In addition, the Company does
not anticipate that its distributions will be eligible for the preferential tax
rates applicable to long-term capital gains. The dividend rules are complex, and
each U.S. Holder should consult its own tax advisor regarding the application of
such rules.

Sale or Other Taxable Disposition of Common Shares

Subject to the PFIC rules discussed above, upon the sale or
other taxable disposition of Common Shares, a U.S. Holder generally will
recognize capital gain or loss in an amount equal to the difference between the
amount of cash plus the fair market value of any property received and such U.S.
Holder's tax basis in such Common Shares sold or otherwise disposed of. Subject
to the PFIC rules discussed above, gain or loss recognized on such sale or other
disposition generally will be long-term capital gain or loss if, at the time of
the sale or other disposition, the Common Shares have been 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 unless the gain is
subject to tax in Canada and is resourced as foreign source under the
Canada-U.S. Tax Convention and such U.S. Holder elects to treat such gain or
loss as foreign source.

Preferential tax rates apply to long-term capital gain of a
U.S. Holder that is an individual, estate, or trust. There are currently no
preferential tax rates for long-term capital gain of a U.S. Holder that is a
corporation. Deductions for capital losses are subject to significant
limitations under the Code.

Additional Tax on Passive Income

Newly enacted legislation requires certain U.S. Holders who are
individuals, estates or trusts to pay up to an additional 3.8% tax on, among
other things, dividends and capital gains for tax years beginning after December
31, 2012. U.S. Holders should consult their tax advisors regarding the effect,
if any, of this tax on their ownership and disposition of Common Shares.

Additional Considerations

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign
currency, or on the sale, exchange or other taxable disposition of Common
Shares, generally will be equal to the U.S. dollar value of such foreign
currency based on the exchange rate applicable on the date of receipt
(regardless of whether such foreign currency is converted into U.S. dollars at
that time). If the foreign currency received is not converted into U.S. dollars
on the date of receipt, a U.S. Holder will have a basis in the foreign currency
equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who
receives payment in foreign currency and engages in a subsequent conversion or
other disposition of the foreign currency may have a foreign currency exchange
gain or loss that would be treated as ordinary income or loss, and generally
will be U.S. source income or loss for foreign tax credit purposes. Each U.S.
Holder should consult its own U.S. tax advisor regarding the U.S. federal income
tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that
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. Generally, dividends paid by a foreign corporation should be
treated as foreign source for this purpose, and gains recognized on the sale of
stock of a foreign corporation by a U.S. Holder should be treated as U.S. source
for this purpose, except as otherwise provided in an applicable income tax
treaty, and if an election is properly made under the Code. However, the amount
of a distribution with respect to the Common Shares that is treated as a
dividend may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced foreign tax credit
allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. The foreign tax credit
rules are complex, and each U.S. Holder should consult its own U.S. tax advisor
regarding the foreign tax credit rules.

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Backup Withholding and Information Reporting

Under U.S. federal income tax law and Treasury regulations,
  certain categories of U.S. Holders must file information returns with respect to
  their investment in, or involvement in, a foreign corporation. For example, U.S.
  return disclosure obligations (and related penalties) are imposed on U.S.
  Holders that hold certain specified foreign financial assets in excess of
  $50,000. The definition of specified foreign financial assets includes not only
  financial accounts maintained in foreign financial institutions, but also,
  unless held in accounts maintained by a financial institution, any stock or
  security issued by a non-U.S. person, any financial instrument or contract held
  for investment that has an issuer or counterparty other than a U.S. person and
  any interest in a foreign entity. U.S. Holders may be subject to these reporting
  requirements unless their Common Shares are held in an account at a domestic
  financial institution. Penalties for failure to file certain of these
  information returns are substantial. U.S. Holders should consult with their own
  tax advisors regarding the requirements of filing information returns.

Payments made within the U.S. or by a U.S. payor or U.S.
middleman, of dividends on, and proceeds arising from the sale or other taxable
disposition of, Common Shares generally may be subject to information reporting
and backup withholding tax, at the rate of 28% (and increasing to 31% for
payments made after December 31, 2012), 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, certain exempt
persons, such as corporations, generally are excluded from these information
reporting and backup withholding 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 in a timely manner. Each U.S.
Holder should consult its own tax advisor regarding the information reporting
and backup withholding rules.

|F. | Dividends and paying agents
|-- | ---------------------------

Not applicable

|G. | Statement by experts
|-- | --------------------

Not applicable.

|H. | Documents on display
|-- | --------------------

We are subject to the informational requirements of the
Exchange Act and file reports and other information with SEC. Reports and other
information which we file with the SEC, including this annual report on Form
20-F, may be inspected and copied at the public reference facilities of the
Securities and Exchange Commission at:

100 F Street, NE Washington D.C.
20549

You can also obtain copies of this material by mail from the
Public Reference Section of the Securities and Exchange Commission, 100 F
Street, NE, Washington, D.C. 20549, at prescribed rates. Additionally, copies of
this material may also be obtained from the Securities and Exchange Commission's
internet site at http://www.sec.gov. The Commission's telephone number is
1-800-SEC-0330.

All documents referred to in this annual report on Form 20-F
are also available for inspection at the office of the Company, listed below,
during normal office hours:

Pacific Rim Mining Corp. Suite 1050, 625 Howe Street
Vancouver, British Columbia V6C 2T6 Canada

|I. | Subsidiary Information
|-- | ----------------------

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK

|A. | Quantitative Information about Market
  Risk
|-- | --------------------------------------------

The Company holds its cash and cash equivalents primarily in
U.S. dollar and Canadian dollar denominated accounts and its expenses are primarily incurred in U.S. dollars. At April 30, 2011 the
amount of cash and cash equivalents held was $258, the amount of short term
investments was $787, the amount of accounts receivable was $150 and the amount
of accounts payable and accrued liabilities was $1,642. Based on these net
exposures at April 30, 2011 and assuming that all other variables remain
constant, a 10% depreciation or appreciation of the US dollar against the
Canadian dollar would result in an increase or decrease of $0.2 million
in the Companys net earnings.

---

- 71 -

The following table summarizes the remaining contractual
maturities of the Companys financial liabilities and operating and capital
commitments at April 30, 2011:

2014
      and2011
    
    
    2012
    
    
    2013
    
    
    later
    
    
    Total**$**
    
    
    **$**
    
    
    **$**
    
    
    **$**
    
    
    **$**Accounts payable
    
    1,642
    
    
    -
    
    
    -
    
    
    -
    
    
    1,642Operating leases
    
    -
    
    
    42
    
    
    32
    
    
    -
    
    
    74Totals
    
    1,642
    
    
    42
    
    
    32
    
    
    -
    
    
    1,716


The exposure of the Companys financial instruments to interest
risk continues to be limited.

|B. | Qualitative Information about Market
  Risk
|-- | -------------------------------------------

The Companys objectives when managing capital and risk
are:

- To maintain adequate capital to operate its business and safeguard its
  ability to continue as a going concern; and
- To minimize the use of debt prior to the commencement of development
  activities

The Company continuously assesses its capital structure in
light of economic conditions, debt and equity markets and changes in the
Companys short-term and long-term plans. The Company is not subject to
externally imposed capital requirements.

The primary financial instruments currently affecting the
Companys financial condition and results of operations are cash and cash
equivalents, receivables and deposits. The following describes the types of risk
associated with these instruments and the way in which such exposure is
managed.

Credit Risk

Credit risk is the risk that the counterparty to a financial
instrument will cause a financial loss for the Company by failing to discharge
its obligations. The Companys credit risk is primarily attributable to its
liquid financial assets and the maximum credit risk the Company is exposed to is
100% of cash and receivables. The Company limits its exposure to credit risk by
depositing its cash and cash equivalents with international financial
institutions. The Company does not have financial assets that are invested in
asset based commercial paper.

Foreign Currency Risk

Foreign exchange risk is the risk that the fair value of the
Companys financial instruments will fluctuate because of changes in foreign
exchange rates. The Company holds its cash and cash equivalents primarily in
U.S. dollar and Canadian dollar denominated accounts and its expenses are
primarily incurred in U.S. dollars. At April 30, 2011 the amount of cash and
cash equivalents held was $258, the amount of short term investments was $787,
the amount of accounts receivable was $150 and the amount of accounts payable
and accrued liabilities was $1,642. Based on these net exposures at April 30,
2011 and assuming that all other variables remain constant, a 10% depreciation
or appreciation of the US dollar against the Canadian dollar would result in an
increase or decrease of $0.2 million in the Companys net earnings. The
Company has not entered into any derivative contracts to manage foreign exchange
risk at this time.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter
difficulty in raising funds to meet its operating commitments.

The Company seeks to manage liquidity by maintaining adequate
cash and cash equivalent balances to meet its short term commitments and by
raising equity or debt financing as required to meet long term commitments The
Company has no assurance that such financing will be available or be available
on favorable terms. Factors that could affect the availability of financing
include Pacific Rims performance as measured by various factors including the
progress and permitting of the El Dorado project, the state of international
debt and equity markets, investor perceptions and expectations and the global
financial and metals markets.

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- 72 -

The Company does not presently have sufficient working capital
to meet its accounts payable and accrued liabilities in addition to its
anticipated exploration and general and administrative expenses or the estimated
costs of pursuing the CAFTA action during or subsequent to fiscal 2012. The
Company will require financing during fiscal 2012 to meet these expenses and
obligations.

Fair Values

Cash and restricted cash is carried at fair value using a Level
1 fair value measurement. The carrying value of receivables and accounts payable
and accrued liabilities approximated their fair value because of the short-term
nature of these instruments.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES

Not Applicable.

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- 73 -

PART II

ITEM 13. DEFAULTS, DIVIDENT ARREARAGES AND
DELINQUENCIES

Not Applicable

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

A-D.

None

|E. | Use of Proceeds
|-- | ---------------

Not Applicable

ITEM 15. CONTROLS AND PROCEDURES

|A. | Managements annual report on disclosure controls and
      procedures
|-- | ----------------------------------------------------------------------

Management has designed disclosure controls and procedures, or
has caused them to be designed under its supervision, to provide reasonable
assurance that material information related to the Company is gathered and
reported to senior management, including the Chief Executive Officer (CEO) and
Chief Financial Officer (CFO), as appropriate to permit timely decisions
regarding public disclosure.

There has been no change in the Companys disclosure controls
during the twelve months ended April 30, 2011 that has materially affected, or
is reasonably likely to materially affect, its control over disclosures.

|B. | Managements annual report on internal control over
      financial reporting
|-- | -----------------------------------------------------------------------------

Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in Rule 13a-15(f)
under the Exchange Act.

Management has designed internal control over financial
reporting, or caused it to be designed under its supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements. Any system of internal control over
financial reporting, regardless of how well designed, has inherent limitations.
As such, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation.

There has been no change to the Companys internal controls
over financial reporting during the twelve months ended April 30, 2011 that has
materially affected, or is reasonably likely to materially affect, its control
over financing reporting.

|C. | Material Weakness
|-- | -----------------

A material weakness is a control deficiency, or combination of
control deficiencies, such that there is a reasonable possibility that a
material misstatement of the annual or interim consolidated financial statements
will not be prevented or detected on a timely basis.

The Companys CEO and CFO evaluated the effectiveness of the
Companys disclosure controls and procedures and have assessed the design and
operating effectiveness of the Companys internal control over financial
reporting as at April 30, 2011.

Based on that assessment, management concluded that, as at
April 30, 2011, the Companys internal control over financial reporting and
disclosure controls and procedures were not effective due to the existence of a
material weakness in the design of internal control over financial reporting
caused by a lack of adequate segregation of duties in the financial close
process. The Chief Financial Officer is responsible for preparing, authorizing,
and reviewing information that is integral to the preparation of financial
reports. He is also responsible for preparing and reviewing the resulting
financial reports. The weakness has the potential to result in material
misstatements in the Companys financial statements, and should also be
considered a material weakness in its disclosure controls and procedures.

Management has concluded that taking into account the present
stage of the Companys development the Company does not have sufficient size and
scale to warrant hiring of additional staff that would be required to correct
the weakness at this time.

---

- 74 -

|D. | Attestation Report of the Registered Public Accounting
      Firm
|-- | -----------------------------------------------------------------

This annual report on Form 20-F does not include an attestation
report of the Companys registered public accounting firm regarding internal
control over financial reporting. Managements report was not subject to
attestation by the Companys registered public accounting firm pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which permits
the Company to provide only managements report in this annual report. The
Dodd-Frank Act permits a non-accelerated filer to provide only managements
report on internal control over financial reporting in an annual report and omit
an attestation report of the Companys registered public accounting firm
regarding managements report on internal control over financial reporting.

|E. | Changes in internal control over financial
    reporting
|-- | --------------------------------------------------------

During the period covered by this annual report on Form 20-F,
there has been no change to the Companys internal controls over financial
reporting that has materially affected, or is reasonably likely to materially
affect, its control over financing reporting. The Chief Financial Officer is responsible for preparing,
authorizing, and reviewing information that is key to the preparation of
financial reports. He is also responsible for preparing and reviewing the
resulting financial reports, which represents a weakness that has the potential
to result in material misstatements in the Companys financial statements.

Management has concluded that taking into account the present
stage of the Companys development the Company does not have sufficient size and
scale to warrant hiring of additional staff to correct the weakness at this
time.

ITEM 16 [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

David Fagin is a financial expert, in that he has an
understanding of generally accepted accounting principles and financial
statements; is able to assess the general application of accounting principles
in connection with the accounting for estimates, accruals and reserves; has
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); has an
understanding of internal controls and procedures for financial reporting and an
understanding of audit committee functions.

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 ten 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 (1975-77) then President (1977-82) 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 Ltd. (ASE and TSE) and managed all
administrative matters including annual reports, audits and registration in
Canada and the U.S. Since 1987, Mr. Fagin has served on boards and audit
committees of several public companies including T. Rowe Price Mutual Funds,
Golden Star Resources Ltd., Canyon Resources Corp. (recently acquired by Atna
Resources Ltd.), Dayton Mining Corp. and the Company, where he was either
Chairman or a member of each audit committee. He currently remains a director of
Atna Resources Ltd.

Mr. Fagin is considered an independent director according to
Section 803 of the NYSE Amex Company Guide.

ITEM 16B. CODE OF ETHICS

The Company has had in place, since 2002, a Code of Conduct and
Ethics (the Code). A revised Code was approved by the Board of Directors of
the Company on December 17, 2002. A copy of the Code can be found on the
Companys website at
http://www.pacrim-mining.com/s/CorporateGovernance.asp.

There have never been any departures or material waivers of the
Code since its inception.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers LLP acted at the Companys independent
auditor for the fiscal years ended April 30, 2009, 2010 and 2011. The chart
below sets forth the total amount billed to the Company by
PricewaterhouseCoopers LLP for services performed in the last two fiscal years
and breaks down these amounts by category of service (for audit fees,
audit-related fees, tax fees and all other fees) in Canadian dollars

---

- 75 -

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

Financial Year Ended
    Audit Fees(1)
    Audit Related
      Fees(2)
    Tax Fees(3)
    All Other Fees(4)April 30, 2011
    $40,000
    Nil
    Nil
    NilApril 30, 2010
    $85,947
    Nil
    Nil
    Nil


|(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 Fees are the aggregate fees billed by
PricewaterhouseCoopers LLP for the audit of the Companys consolidated annual
financial statements and attestation services that are provided in connection
with statutory and regulatory filings or engagements.

Audit-Related Fees are the fees billed by
PricewaterhouseCoopers LLP 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
statements and Management Discussion and Analysis, as well as advisory services
associated with the Companys financial reporting.

Tax Fees are the fees billed for professional services
rendered by PricewaterhouseCoopers LLP for tax compliance, tax advice, and tax
planning.

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 independent
auditors. Any services provided by the independent auditors 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.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES

None.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
AFFILIATED PURCHASERS

None.

ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING
ACCOUNTANT

None.

ITEM 16G. CORPORATE GOVERNANCE

The only stock exchange on which the Companys common shares
trade is the TSX. The Companys common shares are not listed on a US exchange,
but do trade on the OTCQX platform in the US. The Companys Corporate Governance
practices are described in detail in its fiscal 2011 Information Circular dated
July 20, 2011.

---

- 76 -

PART III

ITEM 17. FINANCIAL STATEMENTS

Audited Annual Financial Statements

The audited consolidated financial statements of the Company
for the years ended April 30, 2011 and 2010, including the report of the
independent auditor with respect thereto, are filed as Exhibit 99.1and
incorporated by reference in this annual report on Form 20-F. For a
reconciliation of important differences between Canadian and United States
generally accepted accounting principles, see Note 13 to the Companys audited
consolidated financial statements.

ITEM 18. FINANCIAL STATEMENTS

The Company elected to provide financial statements pursuant to
Item 17.

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- 77 -

ITEM 19 EXHIBITS

|EXHIBITS       |                                                                                                                                                            
|-------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1           | The following audited consolidated
      financial statements of the Company, are exhibits to and form a part of
      this Report:                        
|               | Auditors
      Report on Consolidated Financial Statements                                                                                                
|               | Consolidated Balance Sheets as at April 30, 2011 and April 30, 2010;                                                                                       
|               | Consolidated
      Statements of Loss for the years ended April 30, 2011, 2010 and 2009;                                                                   
|               | Consolidated Statements of Shareholders Equity;                                                                                                           
|               | Consolidated
      Statements of Cash Flows for the years ended April 30, 2011, 2010 and 2009;                                                             
|               | Consolidated Statement of Comprehensive Loss for the year ended April
      30, 2011, 2010 and 2009                                                        
|               | Notes
      to Consolidated Financial Statements (which includes a reconciliation with
      United States GAAP as Note 13)                                
|               |                                                                                                                                                            
|CERTIFICATIONS
|99.2           | Certificate
      of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act                                                                
|99.3           | Certificate of Chief
      Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act                                                                
|99.4           | Certificate
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|99.5           | Certificate of Chief
      Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002
|               |                                                                                                                                                            
|CONSENTS       |                                                                                                                                                            
|99.6           | Consent of PricewaterhouseCoopers
      LLP, Chartered Accountants                                                                                         
|99.7           | Consent
      of William Gehlen, Certified Professional Geologist                                                                                          

---

- 78 -

SIGNATURES

The Registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| | PACIFIC RIM MINING CORP.
| | ------------------------
| |                         
| |                         
| | By:                     
| | Name:                   
| | Title:                  

Date: July 27, 2011

---