---

PACIFIC RIM MINING CORP.

(an exploration stage enterprise)

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2011 and 2010

Expressed in US Funds

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MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

Management is responsible for the integrity and fair
presentation of the financial information contained in this annual report. Where
appropriate, the financial information, including financial statements, reflects
amounts based the best estimates and judgments of management. The financial
statements have been prepared in accordance with accounting principles generally
accepted in Canada and reconciled to accounting principles generally accepted in
the United States as set out in note 13.

Management is responsible for establishing and maintaining
adequate internal control over financial reporting. Any system of internal
control over financial reporting, no matter how well designed, has inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Management has a process in place to evaluate
internal control over financial reporting based on the criteria established by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control  Integrated Framework.

The Board of Directors oversees managements responsibility for
financial reporting and internal control systems through an Audit Committee,
which is composed entirely of independent directors. The Audit Committee reviews
the financial statements and recommends their approval to the Board of
Directors. The Companys independent auditors have full access to the Audit
Committee, with and without management being present. The Audit Committee meets
periodically with management and the independent auditors to review the
financial statements and related financial reporting and internal control
matters before the financial statements are approved by the Board of Directors
and submitted to the shareholders.

Management has evaluated the effectiveness of the Companys
disclosure controls and procedures and has assessed the design and operating
effectiveness of the Companys internal control over financial reporting as at
April 30, 2011. The Company has not changed its internal controls over financial
reporting during the twelve months ended April 30, 2011 in a manner that has
materially affected, or is reasonably likely to materially affect, its control
over disclosures or its control over financial reporting. Based on our
assessment, management has concluded that, as at April 30, 2011, the Companys
internal control over financial reporting was not effective due to the existence
of a material weakness. A material weakness existed 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 key to
the preparation of financial reports. He is also responsible for preparing and
reviewing the resulting financial reports. This 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, and the audit committee has agreed
that taking into account the present stage of the Company/s development, the
Company does not have sufficient size and scale to warrant the hiring of
additional staff to correct the weakness at this time.

The effectiveness of the Companys internal control over
financial reporting has not been audited by the independent auditors as it was
not a legal requirement for the year ended April 30, 2011.

PricewaterhouseCoopers LLP, our independent auditors, appointed
by the shareholders, have audited our financial statements in accordance with
Canadian generally accepted auditing standards and their report follows.

|Steven Krause         | Thomas Shrake        
|----------------------- | -----------------------
|Steven Krause           | Thomas C. Shrake       
|Chief Financial Officer | Chief Executive Officer
|Vancouver, Canada       | Vancouver, Canada      
|July 20, 2011           | July 20, 2011          

- 2 -

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Independent Auditors Report

To the Shareholdersof Pacific Rim Mining Corp

We have audited the accompanying consolidated financial
statements of Pacific Rim Mining Corp. which comprise the consolidated balance
sheets as at April 30, 2011 and April 30, 2010 and the consolidated statements
of loss, shareholders equity, cash flows and comprehensive loss for each of the
years in the three year period ended April 30, 2011, and the related notes
including a summary of significant accounting policies and other explanatory
information.

Managements responsibility for the consolidated financial
statementsManagement is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
Canadian generally accepted accounting principles, and for such internal control
as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to
fraud or error.

Auditors responsibilityOur responsibility is to
express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement. Canadian generally accepted
auditing standards require that we comply with ethical requirements.

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. We were not engaged to
perform an audit of the companys internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated
financial statements.

We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit
opinion.

OpinionIn our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of
Pacific Rim Mining Corp. as at April 30, 2011 and 2010 and the results of its
operations and its cash flows for each of the years in the three year period
ended April 30, 2011 in accordance with Canadian generally accepted accounting
principles.

Emphasis of matterWithout qualifying our opinion, we
draw attention to Note 1 in the consolidated financial statements which
discloses conditions and matters that indicate the existence of a material
uncertainty that may cast significant doubt about Pacific Rim Mining Corp.s
ability to continue as a going concern.

(signed) PricewaterhouseCoopers LLP

Chartered AccountantsVancouver, B.C., Canada
July 27, 2011

- 3 -

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|Pacific Rim Mining Corp.         
|---------------------------------
|(an exploration stage enterprise)
|Consolidated Balance Sheets      
|As at April 30                   
|In thousands of U.S. Dollars     

|ASSETS                                                                                             |   | 2011    |   |   | 2010    |  
|-------------------------------------------------------------------------------------------------- | - | ------- | - | - | ------- | -
|Current Assets                                                                                     |   |         |   |   |         |  
|Cash and cash equivalents                                                                          | $ | 258     |   | $ | 1,333   |  
|Short-term investments                                                                             |   | 787     |   |   | -       |  
|Receivables, deposits and
      prepaids                                                           |   | 150     |   |   | 81      |  
|                                                                                                   |   | 1,195   |   |   | 1,414   |  
|                                                                                                   |   |         |   |   |         |  
|Property, Plant and Equipment(Note 5)                                                              |   | 5,462   |   |   | 5,492   |  
|Restricted Cash                                                                                    |   | 24      |   |   | 21      |  
|                                                                                                   | $ | 6,681   |   | $ | 6,927   |  
|                                                                                                   |   |         |   |   |         |  
|LIABILITIES                                                                                        |   |         |   |   |         |  
|Current Liabilities                                                                                |   |         |   |   |         |  
|Accounts payable
      and accrued liabilities (Note 8)                                            | $ | 1,642   |   | $ | 1,580   |  
|                                                                                                   |   | 1,642   |   |   | 1,580   |  
|                                                                                                   |   |         |   |   |         |  
|Future Income Tax Liability(Note 9)                                                                |   | 1,046   |   |   | 1,046   |  
|                                                                                                   |   | 2,688   |   |   | 2,626   |  
|SHAREHOLDERS
      EQUITY                                                                         |   |         |   |   |         |  
|Share Capital Subscribed                                                                           |   | 93      |   |   | -       |  
|Share Capital(Note 7)                                                                              |   |         |   |   |         |  
|Authorized:              unlimited
      common shares without par value                           |   |         |   |   |         |  
|Issued and fully
      paid:             150,568,308
      shares outstanding (2010 - 130,308,308) |   | 86,955  |   |   | 84,133  |  
|Contributed Surplus                                                                                |   | 7,045   |   |   | 6,266   |  
|Deficit                                                                                            |   | (90,100 | ) |   | (86,098 | )
|                                                                                                   |   | 3,993   |   |   | 4,301   |  
|                                                                                                   | $ | 6,681   |   | $ | 6,927   |  

|Nature of Operations and Going Concern(Note
      1)
|----------------------------------------------------
|Measurement Uncertainty(Note 5 (a))                 
|Contingency(Note 6)                                 
|Commitments(Note 10)                                
|Subsequent event(Note 14)                           
|                                                    
|APPROVED BY THE BOARD OF DIRECTORS:                 

Thomas Shrake, Director

David Fagin, Director

- The accompanying notes are an integral part of these
consolidated financial statements -

- 4 -

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|Pacific Rim Mining Corp.                                        
|----------------------------------------------------------------
|(an exploration stage enterprise)                               
|Consolidated Statements of Loss                                 
|For the year ended April 30                                     
|In thousands of U.S. Dollars, except for per share
      amounts

|                                                                       |   | 2011        |   |   | 2010        |   |   | 2009        |  
|---------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                                       |   |             |   |   |             |   |   |             |  
|                                                                       |   |             |   |   |             |   |   |             |  
|Expenses (Income)                                                      |   |             |   |   |             |   |   |             |  
|Exploration                                                            |   |             |   |   |             |   |   |             |  
|- direct                                                               | $ | 1,225       |   | $ | 1,621       |   | $ | 5,234       |  
|- stock-based compensation
      (Note 7)                              |   | 95          |   |   | 120         |   |   | 240         |  
|- amortization                                                         |   | 21          |   |   | 64          |   |   | 64          |  
|General and administrative                                             |   |             |   |   |             |   |   |             |  
|- direct                                                               |   | 992         |   |   | 1,135       |   |   | 3,400       |  
|- stock-based compensation
      (Note 7)                              |   | 240         |   |   | 238         |   |   | 315         |  
|- amortization                                                         |   | 8           |   |   | 9           |   |   | 9           |  
|Gain on sale of bullion                                                |   | -           |   |   | (576        | ) |   | -           |  
|Financing cost  warrants
      (Note 7)                               |   | -           |   |   | 213         |   |   | -           |  
|CAFTA lawsuit (Note 5(a))                                              |   | 1,586       |   |   | 2,233       |   |   | -           |  
|Foreign exchange loss (gain)                                           |   | (81         | ) |   | 15          |   |   | 240         |  
|Other income                                                           |   | (84         | ) |   | (71         | ) |   | (59         | )
|Loss Before Taxes and Discontinued
      Operations                    |   | (4,002      | ) |   | (5,001      | ) |   | (9,443      | )
|                                                                       |   |             |   |   |             |   |   |             |  
|Income Taxes(Note 9)                                                   |   | -           |   |   | (4          | ) |   | -           |  
|                                                                       |   |             |   |   |             |   |   |             |  
|Loss From Continuing Operations                                        |   | (4,002      | ) |   | (5,005      | ) |   | (9,443      | )
|                                                                       |   |             |   |   |             |   |   |             |  
|                                                                       |   |             |   |   |             |   |   |             |  
|Discontinued Operation(Note 6)                                         |   | -           |   |   | 38          |   |   | 3,167       |  
|                                                                       |   |             |   |   |             |   |   |             |  
|Loss for the
      Year                                                | $ | (4,002      | ) | $ | (4,967      | ) | $ | (6,276      | )
|                                                                       |   |             |   |   |             |   |   |             |  
|Loss Per Share
      From Continuing Operations - Basic and Diluted    | $ | (0.03       | ) | $ | (0.04       | ) | $ | (0.08       | )
|                                                                       |   |             |   |   |             |   |   |             |  
|Loss Per Share
      After Discontinued Operations - Basic and Diluted | $ | (0.03       | ) | $ | (0.04       | ) | $ | (0.05       | )
|                                                                       |   |             |   |   |             |   |   |             |  
|Weighted
      average shares outstanding during the year              |   | 141,631,705 |   |   | 121,608,522 |   |   | 117,151,350 |  

- The accompanying notes are an integral part of these
consolidated financial statements -

- 5 -

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|Pacific Rim Mining Corp.                       
|-----------------------------------------------
|(an exploration stage enterprise)              
|Consolidated Statements of Shareholders Equity
|In thousands of U.S. Dollars                   

|                                     |  |               |  |  |         |   |  |             |  |  |               |   |  | Accumulated |   |  |         |   |  |        |  
|------------------------------------ |  | ------------- |  |  | ------- | - |  | ----------- |  |  | ------------- | - |  | ----------- | - |  | ------- | - |  | ------ | -
|                                     |  | Share Capital |  |  | Share   |   |  | Contributed |  |  | Other         |   |  | Accumulated |   |  | Total   |  
|                                     |  | Common Shares |  |  | Capital |   |  | Surplus     |  |  | Comprehensive |   |  | Deficit     |   |  |         |  
|                                     |  |               |  |  |         |   |  | Subscribed  |  |  |               |   |  | Income      |   |  |         |   |  |        |  
|                                     |  | Number        |  |  | $       |   |  | $           |  |  | $             |   |  | $           |   |  | $       |   |  | $      |  
|Balance  April 30, 2008             |  | 116,915,460   |  |  | 82,649  |   |  | -           |  |  | 4,170         |   |  | 197         |   |  | (74,855 | ) |  | 12,161 |  
|Stock-based compensation             |  | -             |  |  | -       |   |  | -           |  |  | 555           |   |  | -           |   |  | -       |   |  | 555    |  
|Disposal of Denton-                  |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|Rawhide Joint Venture                |  | -             |  |  | -       |   |  | -           |  |  | -             |   |  | (197        | ) |  | -       |   |  | (197   | )
|(Note 6)                             |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|Shares issued for property           |  | 1,118,182     |  |  | 265     |   |  | -           |  |  | -             |   |  | -           |   |  | -       |   |  | 265    |  
|option payment                       |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|Loss for the year                    |  | -             |  |  | -       |   |  | -           |  |  | -             |   |  | -           |   |  | (6,276  | ) |  | (6,276 | )
|Balance  April 30, 2009             |  | 118,033,642   |  |  | 82,914  |   |  | -           |  |  | 4,725         |   |  | -           |   |  | (81,131 | ) |  | 6,508  |  
|Private placement                    |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|- Units issued for cash              |  | 11,775,000    |  |  | 1,331   |   |  | -           |  |  | 940           |   |  | -           |   |  | -       |   |  | 2,271  |  
|- Fair value finders units          |  | 483,000       |  |  | 54      |   |  | -           |  |  | 39            |   |  | -           |   |  | -       |   |  | 93     |  
|- Fair value
      finders warrants |  | -             |  |  | -       |   |  | -           |  |  | 66            |   |  | -           |   |  | -       |   |  | 66     |  
|Share issuance costs                 |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|- Finders units                     |  | -             |  |  | (54     | ) |  | -           |  |  | (39           | ) |  | -           |   |  | -       |   |  | (93    | )
|- Finders warrants                  |  | -             |  |  | (66     | ) |  | -           |  |  | -             |   |  | -           |   |  | -       |   |  | (66    | )
|- Cash                               |  | -             |  |  | (50     | ) |  | -           |  |  | (34           | ) |  | -           |   |  | -       |   |  | (84    | )
|Shares issued for cash               |  | 16,666        |  |  | 2       |   |  | -           |  |  | -             |   |  | -           |   |  | -       |   |  | 2      |  
|- Options exercised                  |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|Fair value of options exercised      |  | -             |  |  | 2       |   |  | -           |  |  | (2            | ) |  | -           |   |  | -       |   |  | -      |  
|Stock-based compensation             |  | -             |  |  | -       |   |  | -           |  |  | 358           |   |  | -           |   |  | -       |   |  | 358    |  
|Financing cost - warrants            |  | -             |  |  | -       |   |  | -           |  |  | 213           |   |  | -           |   |  | -       |   |  | 213    |  
|Loss for the year                    |  | -             |  |  | -       |   |  | -           |  |  | -             |   |  | -           |   |  | (4,967  | ) |  | (4,967 | )
|Balance  April 30, 2010             |  | 130,308,308   |  |  | 84,133  |   |  | -           |  |  | 6,266         |   |  | -           |   |  | (86,098 | ) |  | 4,301  |  
|Private placement                    |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|- Units issued for cash              |  | 19,600,000    |  |  | 2,872   |   |  | -           |  |  | 415           |   |  | -           |   |  | -       |   |  | 3,287  |  
|- Fair value finders
      units    |  | 660,000       |  |  | 97      |   |  | -           |  |  | 14            |   |  | -           |   |  | -       |   |  | 111    |  
|- Fair value finders warrants       |  | -             |  |  | -       |   |  | -           |  |  | 32            |   |  | -           |   |  | -       |   |  | 32     |  
|Share issuance costs                 |  |               |  |  |         |   |  |             |  |  |               |   |  |             |   |  |         |   |  |        |  
|- Finders units                     |  | -             |  |  | (97     | ) |  | -           |  |  | (14           | ) |  | -           |   |  | -       |   |  | (111   | )
|- Finders warrants                  |  | -             |  |  | (32     | ) |  | -           |  |  | -             |   |  | -           |   |  | -       |   |  | (32    | )
|- Cash                               |  | -             |  |  | (18     | ) |  | -           |  |  | (3            | ) |  | -           |   |  | -       |   |  | (21    | )
|Stock-based compensation             |  | -             |  |  | -       |   |  | -           |  |  | 335           |   |  | -           |   |  | -       |   |  | 335    |  
|Share capital subscribed             |  | -             |  |  | -       |   |  | 93          |  |  | -             |   |  | -           |   |  | -       |   |  | 93     |  
|Loss for the year                    |  | -             |  |  | -       |   |  | -           |  |  | -             |   |  | -           |   |  | (4,002  | ) |  | (4,002 | )
|Balance  April
      30, 2011       |  | 150,568,308   |  |  | 86,955  |   |  | 93          |  |  | 7,045         |   |  | -           |   |  | (90,100 | ) |  | 3,993  |  

- The accompanying notes are an integral part of these
consolidated financial statements -

- 6 -

---

|Pacific Rim Mining Corp.             
|-------------------------------------
|(an exploration stage enterprise)    
|Consolidated Statements of Cash Flows
|In thousands of U.S. Dollars         

|                                                            |   | 2011   |   |   | 2010   |   |   | 2009   |  
|----------------------------------------------------------- | - | ------ | - | - | ------ | - | - | ------ | -
|Operating Activities                                        |   |        |   |   |        |   |   |        |  
|Loss for the period from continuing operations              | $ | (4,002 | ) | $ | (5,005 | ) | $ | (9,443 | )
|Items not affecting cash:                                   |   |        |   |   |        |   |   |        |  
|Depletion, depreciation and
      amortization              |   | 30     |   |   | 73     |   |   | 73     |  
|Stock-based
      compensation                              |   | 335    |   |   | 358    |   |   | 555    |  
|Loss on disposal of capital
      assets                    |   | -      |   |   | -      |   |   | 2      |  
|Shares issued
      for property option payment             |   | -      |   |   | -      |   |   | 265    |  
|Non-cash financing costs 
      warrants                   |   | -      |   |   | 213    |   |   | -      |  
|                                                            |   | (3,637 | ) |   | (4,361 | ) |   | (8,548 | )
|Changes in non-cash working capital:                        |   |        |   |   |        |   |   |        |  
|Accounts payable
      and accrued liabilities              |   | 61     |   |   | 949    |   |   | (736   | )
|Receivables, deposits and
      prepaids                    |   | (69    | ) |   | 25     |   |   | 116    |  
|Bullion                                                     |   | -      |   |   | 1,225  |   |   | -      |  
|Cash Flow Used for Operating Activities                     |   | (3,645 | ) |   | (2,162 | ) |   | (9,168 | )
|Investing Activities                                        |   |        |   |   |        |   |   |        |  
|Net short term investments (purchase)
      redemption      |   | (787   | ) |   | -      |   |   | 4,232  |  
|Purchase of property, plant
      and equipment             |   | -      |   |   | (14    | ) |   | (7     | )
|Increase in restricted cash                                 |   | (3     | ) |   | -      |   |   | 3      |  
|Proceeds from sale of
      discontinued operation (Note 6) |   | -      |   |   | -      |   |   | 1,818  |  
|Cash Flow Provided By Investing Activities                  |   | (790   | ) |   | (14    | ) |   | 6,046  |  
|Financing Activities                                        |   |        |   |   |        |   |   |        |  
|Shares issued for cash, net of issuance cost                |   | 3,267  |   |   | 2,187  |   |   | -      |  
|Cash received for shares
      subscribed                   |   | 93     |   |   | -      |   |   | -      |  
|Cash Flow Provided By Financing Activities                  |   | 3,360  |   |   | 2,187  |   |   | -      |  
|                                                            |   |        |   |   |        |   |   |        |  
|Cash flows from continuing operations                       |   | (1,075 | ) |   | 11     |   |   | (3,122 | )
|                                                            |   |        |   |   |        |   |   |        |  
|Discontinued Operations(Note 6)                             |   |        |   |   |        |   |   |        |  
|Cash flow provided by
      operating activities            |   | -      |   |   | 38     |   |   | 2,721  |  
|Cash flow used in investing activities                      |   | -      |   |   | -      |   |   | (237   | )
|Cash flows from discontinued
      operations               |   | -      |   |   | 38     |   |   | 2,484  |  
|                                                            |   |        |   |   |        |   |   |        |  
|Change in Cash and cash equivalents                         |   | (1,075 | ) |   | 49     |   |   | (638   | )
|                                                            |   |        |   |   |        |   |   |        |  
|Cash and cash equivalents - Beginning of
      year         |   | 1,333  |   |   | 1,284  |   |   | 1,922  |  
|                                                            |   |        |   |   |        |   |   |        |  
|Cash and cash equivalents - End of Year                     | $ | 258    |   | $ | 1,333  |   | $ | 1,284  |  
|                                                            |   |        |   |   |        |   |   |        |  
|                                                            |   |        |   |   |        |   |   |        |  
|Supplemental Schedule of Non-Cash                           |   |        |   |   |        |   |   |        |  
|Financing Transactions                                      |   |        |   |   |        |   |   |        |  
|                                                            |   |        |   |   |        |   |   |        |  
|Fair value of Finders units                                | $ | 111    |   | $ | 93     |   | $ | -      |  
|Fair value of Finders warrants                             | $ | 32     |   | $ | 66     |   | $ | -      |  

- The accompanying notes are an integral part of these
consolidated financial statements -

- 7 -

---

|Pacific Rim Mining Corp.                     
|---------------------------------------------
|(an exploration stage enterprise)            
|Consolidated Statements of Comprehensive Loss
|For the Year Ended April 30                  
|In thousands of U.S. Dollars                 

|                                                        |   | 2011   |   |   | 2010   |   |   | 2009   |  
|------------------------------------------------------- | - | ------ | - | - | ------ | - | - | ------ | -
|Net Loss for the Year                                   | $ | (4,002 | ) | $ | (4,967 | ) | $ | (6,276 | )
|Other comprehensive income                              |   |        |   |   |        |   |   |        |  
|Disposal of
      Denton-Rawhide Joint Venture (Note 6) |   | -      |   |   | -      |   |   | (197   | )
|Comprehensive
      Loss for the Year                   | $ | (4,002 | ) | $ | (4,967 | ) | $ | (6,473 | )

- The accompanying notes are an integral part of these
consolidated financial statements -

- 8 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

|1. | Nature of Operations and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company is involved in the exploration and
      development of gold properties. The Company owns a 100% interest in the
      mineral property known as El Dorado, located in El Salvador, and carries
      out exploration activities in the United States and Central America.
      During 2008, the Company sold its 49% interest in the Denton-Rawhide mine,
      located near Fallon, Nevada, U.S.A. (Note 6).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company has not yet confirmed whether any of its
      exploration properties contain mineral deposits that are economically
      recoverable. The recoverability of any amounts capitalized for Mining
      Property Acquisition costs in El Salvador is dependent upon the existence
      of economically recoverable mineral deposits, the ability of the Company
      to obtain the necessary financing and permitting to complete the
      exploration and development of its exploration properties, and upon future
      profitable production or proceeds from the disposition of its
      properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | While these consolidated 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 $4,002 (2010 - $5,005) before discontinued operations and as at
      April 30, 2011 has an accumulated deficit of $90,100 (April 30, 2010 -
      $86,098). The Company will require additional funding to maintain its
      ongoing exploration programs and property commitments, for administrative
      purposes and CAFTA arbitration and negotiation (Note 6(a)). The 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 favourable 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, (note 17)
      however the Company anticipates that it 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 endeavour.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These 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 in the normal course of operations. Such
      adjustments could be material.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

- 9 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

|2. | Significant Accounting
Policies
|-- | -------------------------------

a) Consolidation

These consolidated financial statements
are presented in accordance with generally accepted accounting principles
(GAAP) applicable in Canada and have been reconciled to significant
differences in measurement to generally accepted accounting principles
applicable in the United States as disclosed in Note 13.

These consolidated financial statements
include the accounts of the Companys wholly-owned subsidiaries, Dayton Mining
(U.S.) Inc., Pacific Rim Exploration Inc., Pacific Rim Cayman, Pacific Rim El
Salvador S.A. de C.V., Dorado Exploraciones S.A. de C.V., Minera Verde S.A.,
Pacrimco S.A., Pac Rim Caribe III and its wholly-owned subsidiaries
International Pacific Rim S.A and Pacific Rim Chile Limitada.

b) Cash and Cash Equivalents

Cash and cash equivalents consist of
cash on deposit with banks and short-term interest-bearing investments with
maturities of three months or less at the purchase date. Cash and cash
equivalents are designated as held for trading and are recorded at fair value
with unrealized gains and losses recorded in the statement of loss.

c) Short Term Investments

Short term investments are comprised of
interest-bearing deposits with a term to maturity from inception of greater than
three months and less than one year. These investments are designated as held
for trading and are recorded at fair value with unrealized gains and losses
recorded in the statement of loss.

d) Property, Plant and Equipment

Property, plant and equipment are
stated at cost as at the date of acquisition less accumulated depreciation and
accumulated write-downs. The Company provides for amortization on equipment
using the straight-line method over their useful lives as follows:

Office furniture and equipment
    1-5 yearsComputer equipment
    2-5 yearsComputer software
    2-5 years


e) Mineral Properties

The Company is in the process of
exploring various mineral properties. All exploration expenditures are expensed
as incurred. Property acquisition payments for active exploration properties are
capitalized. If no mineable ore body is discovered, previously capitalized costs
are expensed in the period the property is abandoned, sold or determined to be
impaired.

Management reviews and evaluates the
carrying value of its mineral properties for impairment when events or changes
in circumstances indicate that the carrying amount of the related asset may not
be recoverable. If the total estimated future operating cash flows on an
undiscounted basis are less than the carrying amount of the asset, an impairment
loss is recognized and assets are written down to fair value which is normally
determined using the discounted value of future cash flows. Where estimates of
future net cash flows are not available and where other conditions suggest
impairment, management assesses whether carrying value can be recovered by
considering alternative methods of determining fair value. When it is determined
that a mineral property is impaired it is written down to its estimated fair
value.

- 10 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

Ownership in mineral properties
involves certain interest risks due to the difficulties of determining and
obtaining clear title to claims as well as the potential for problems arising
from the frequently ambiguous conveyance history characteristics of many mineral
properties. The Company has investigated ownership of its mineral properties
and, to the best of its knowledge, ownership of its interests are in good
standing.

f) Asset Impairment

Reviews are undertaken to evaluate the
carrying values of property, plant and equipment and mineral properties when
events or changes in circumstances indicate that carrying values may not be
recoverable. When information is available and conditions suggest a potential
impairment, estimated future net cash flows for the mine or property are
calculated using estimated future prices, mineral resources and operating,
capital and reclamation costs on an undiscounted basis. When estimated future
cash flows are less than the carrying value, the project is considered impaired.
Reductions in the carrying value of the mine or property are recorded to the
extent the net book value exceeds fair value, estimated using the discounted
future cash flows, through a charge to earnings.

g) Asset Retirement
Obligations

The Company recognizes asset retirement
obligations at fair value in the period in which the liability is incurred. Fair
value is determined based on the estimated future cash flows required to settle
the liability discounted at the Companys credit adjusted risk free interest
rate. The liability is adjusted for changes in the expected amounts and timing
of cash flows required to discharge the liability and accreted over time to its
full value. The associated asset retirement costs are capitalized as part of the
carrying amount of the related long-lived asset and amortized over the expected
useful life of the asset.

h) Income Taxes

Current income taxes are recorded based
on estimated income taxes payable for the current year. Future income tax assets
and liabilities are recognized for temporary differences between the tax and
accounting bases for assets and liabilities using substantively enacted tax
rates for the periods in which the differences are expected to reverse. The
amount of future income tax assets recognized is limited to the amount that is
more likely than not to be realized.

i) Share Capital

Share capital issued as non-monetary
consideration is recorded at an amount based on fair market value of the shares
issued.

The proceeds from the issue of units is
allocated between common shares and common share purchase warrants on a
pro-rated basis on a relative fair value as follows: the fair value of common
shares is based on the price at market close on the date the units are issued
and the fair value of the common share purchase warrants is determined using a
Black-Scholes pricing model.

j) Stock-based Compensation

All stock-based awards made to
employees and non-employees are measured and recognized using the Black-Scholes
fair value based method. For employees, the Company recognizes stock based
compensation expense based on the estimated fair value of the options on the
date of the grant. For non-employees, the fair value of the options is measured
on the earlier of the date at which the counterparty performance is complete or
the date the performance commitment is reached or the date at which the equity
instruments are granted if they are fully vested and non-forfeitable. The fair
value of the options is recognized over the vesting period of the options
granted as stock based compensation expense and corresponding adjustment to
contributed surplus. The number of options expected to vest is periodically
reviewed and the estimated option forfeiture rate is adjusted as required
throughout the life of the option. Upon exercise these amounts are transferred
to share capital.

- 11 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

k) Earnings (Loss) per Share

Basic earnings (loss) per share is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding during the period. The dilutive
effect of outstanding options and warrants and their equivalents is reflected in
diluted earnings per share by application of the treasury stock method. In
periods where a loss is incurred, the conversion, exercise or contingent
issuance of securities has not been included in the calculation as increasing
the number of shares outstanding would be anti-dilutive.

l) Foreign Currency
Translation

The Companys functional and reporting
currency is the United States dollar. Transactions denominated in other
currencies are translated into their United States dollar equivalents at
exchange rates prevailing at the transaction date. Carrying values of monetary
assets and liabilities denominated in foreign currencies are adjusted at each
balance sheet date to reflect exchange rates prevailing at that date. Gains and
losses on translation are included in determining net income for the period.

The accounts of the Companys foreign
subsidiaries, all of which are considered to be integrated foreign operations,
are translated into the functional currency using the temporal method as
follows:

| | i)   | Monetary assets and liabilities at the rate of exchange
      in effect at the balance sheet date,                                                            
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii)  | Non-monetary assets, liabilities and equity at historical
      rates , and                                                                                   
| | iii) | Revenue and expense items at the average rate of exchange
      prevailing during the period, except depreciation which is recorded at
      historical rates.

m) Use of Estimates

The preparation of financial statements
in conformity with Canadian GAAP requires management to make estimates and
assumptions that affect the reported amounts in these financial statements and
accompanying notes. Significant areas of estimation relate to the assessment of
impairment of mineral claim interests, stock-based compensation, future site
restoration costs, and the future income tax asset valuation allowance. Actual
results could differ from these estimates. By their nature, these estimates are
subject to a degree of uncertainty, and the impact on the financial statements
of future changes in such estimates could be material.

n) Financial Instruments

Financial assets and financial
liabilities are recognized on the balance sheet when the Company becomes a party
to contractual provisions of the financial instrument. All financial instruments
are measured at fair value on initial recognition. Measurement in subsequent
periods depends on whether the financial instrument has been classified as
held-for-trading, available-for-sale, held-to-maturity, loans and receivables or
other liabilities.

Financial assets and financial
liabilities held-for-trading are measured at fair value with gains and losses
recognized in the Companys loss for the year. Financial assets
held-to-maturity, loans and receivables and financial liabilities, other than
those held-for-trading, are measured at amortized cost using the effective
interest method of amortization. Available-for-sale financial assets are
measured at fair value with unrealized gains and losses including changes in
foreign exchange rates being recognized in other comprehensive income (OCI)
upon adoption.

The Company has classified each of its
significant categories of financial instruments as follows:

Cash and cash equivalents
    Held-for-tradingShort-term investments
    Held-for-tradingReceivables and deposits
    Loans and receivablesRestricted cash
    Held-for-tradingAccounts payable and accrued liabilities
    Other financial liabilities


Amounts due to and from related parties
are carried at cost.

- 12 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

|3. | Changes in Accounting
Policies
|-- | ------------------------------

a) Business combinations

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.

b) Non-controlling interest

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.

|   |                      
|-- | ---------------------
|4. | Financial Instruments

a) Fair value

The Companys financial instruments
consist of cash and cash equivalents, restricted cash, short-term investments,
receivables, deposits, and accounts payable and accrued liabilities. Cash and
cash equivalents, short-term investments andrestricted cash are carried at fair
value using a level 2 fair value measurement. The carrying value of the
receivables, deposits and prepaids and accounts payable and accrued liabilities
approximate their fair value because of the short term nature of these
instruments. Unless otherwise noted, it is managements opinion that the Company
is not exposed to significant interest, price or credit risks arising from its
financial instruments.

b) Management of financial risk

(i) Market Risks

Commodity Price Risk

The Company is subject to price risk
from fluctuations in the market price of gold which in turn is affected by
numerous factors including central bank policies, producer hedging activities,
the value of the US dollar relative to other major currencies, global demand and
supply and global political and economic conditions. The Company closely
monitors commodity prices to determine the appropriate course of action to be
taken by the Company. The carrying value of the Companys mineral property costs
could be adversely affected by any reductions in the long term prices of
gold.

Foreign Currency Risk

The Companys exposure to foreign
currency risk is primarily related to Canadian dollar-denominated transactions.
The Company does not enter into foreign exchange contracts to manage this
exposure. At April 30, 2011 the impact of a 10% depreciation or appreciation of
the US dollar against the Canadian dollar would result in an increase or
decrease of $102 in the Companys net earnings.

- 13 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

(ii) 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. As disclosed
in note 1, the Company has no assurance that such financing will be available or
be available on favourable 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.

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

| |                  |  |       |  |  |      |  |  | 2014 and |  |  |       | 
| | ---------------- |  | ----- |  |  | ---- |  |  | -------- |  |  | ----- | 
| |                  |  | 2012  |  |  | 2013 |  |  | later    |  |  | Total | 
| |                  |  | $     |  |  | $    |  |  | $        |  |  | $     | 
| |                  |  |       |  |  |      |  |  |          |  |  |       | 
| | Accounts payable |  | 1,642 |  |  | -    |  |  | -        |  |  | 1,642 | 
| | Operating leases |  | 42    |  |  | 32   |  |  | -        |  |  | 74    | 
| | Totals           |  | 1,684 |  |  | 32   |  |  | -        |  |  | 1,716 | 

(iii) Interest Rate Risk

The Company does not have significant
interest rate risk as all short term investments are held in instruments with
guaranteed interest rates.

(iv) Credit risk

Credit risk is the risk of an
unexpected loss if a customer or third party to a financial instrument fails to
meet its contractual obligations. The maximum credit risk the Company is exposed
to is 100% of cash, short term investments, and receivables and deposits.

|   |                              
|-- | -----------------------------
|5. | Property, Plant and
Equipment

| |                                                 |   | 2011  |   |   | 2010  |  
| | ----------------------------------------------- | - | ----- | - | - | ----- | -
| | Office Equipment and Vehicles                   | $ | 376   |   | $ | 376   |  
| | Accumulated depreciation                        |   | (368  | ) |   | (338  | )
| |                                                 |   | 8     |   |   | 38    |  
| | Mining Property Acquisition Costs  El Salvador |   | 5,454 |   |   | 5,454 |  
| |                                                 | $ | 5,462 |   | $ | 5,492 |  

Properties

a) El Dorado

The Company holds a 100% interest in
certain mineral properties in El Salvador known as El Dorado. El Dorado is
subject to a 3% net smelter return royalty. 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.

An Environmental Impact Study has been
submitted to governmental authorities for their consideration and requires
approval before the exploration licence can be converted to an exploitation
concession which is required to carry out mining in the licence area.

- 14 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

In meeting its responsibilities, a mine
design for the Companys El Dorado gold project was submitted to the Government
of El Salvador in its final form in October 2006. The issuance of the permit
remains outstanding and consequently the Company has concluded it must seek a
legal remedy to secure its right to develop the El Dorado project.

On April 30, 2009 Pac Rim Cayman LLC, a
Nevada corporation and a wholly-owned subsidiary of Pacific Rim Mining Corp.
filed international arbitration proceedings against the Government of El
Salvador under the Central America-Dominican Republic-United States of America
Free Trade Agreement ("CAFTA") in its own name and on behalf of its three
wholly-owned El Salvadoran enterprises, Pacific Rim El Salvador, Sociedad
Anónima de Capital Variable and Dorado Exploraciones, Sociedad Anónima de
Capital Variable.

The arbitration will be administered
under the Convention on the Settlement of Investment Disputes Between States and
Nationals of Other States and under the Rules of Procedure for Arbitration
Proceedings of the International Centre for Settlement of Investment Disputes
("ICSID"). ICSID is an affiliate of the World Bank and is headquartered in
Washington, D.C.

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. 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, rejecting
all of the arguments made by the GOES in its Preliminary Objection.

Between May 2 and 4, 2011, hearings on
a jurisdiction 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 objection hearings was for the ICSID
Tribunal to hear objections 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. A
ruling on the Jurisdiction Objection is not expected until late calendar
2011.

The Company is unable to determine an
outcome of the jurisdiction objection and is also unable to determine the
outcome of its international arbitration proceedings against the GOES under
CAFTA. As at April 30, 2011, the Company has now incurred $3.8 million in
preliminary objections relating to its arbitration proceedings.

Measurement uncertainty:

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. The Company has experienced lengthy delays in the
processing of the El Dorado exploitation concession application and has
commenced a legal claim under CAFTA as noted above. In addition, because of
CAFTA, the Company has not had the ability to confirm or renew its exploration
licences as a result of the claims that are under the CAFTA arbitration. If the
Company is unsuccessful in obtaining a permit for El Dorado or in its CAFTA
claim, or is impacted by other factors beyond the control of the Company, this
would adversely impact operations in El Salvador or result in the impairment of
the El Dorado property in the future; such impairment could be material.

- 15 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

b) Other El Salvador
Properties

By agreement dated February 6, 2006,
the Company agreed to acquire from a consortium of private companies a 100%
interest in an El Salvador exploration concession to be known as the Zamora
property. Upon TSX approval of the original agreement, the Company was required
to make a payment of 50,000 shares. The agreement was amended in September 2006
to include the acquisition of a 100% interest in the Cerro Colorado claims while
maintaining the provisions in the agreement for the Companys acquisition
of the Zamora claims. The agreement was amended in February 2010 to adjust the
fourth anniversary payment date to be the 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. Under the terms of the amended agreement, the Company maintains an
option to purchase the exploration concessions by making advance royalty
payments as follows:

Upon TSX approval of the agreement:
    100,000 shares plus 100,000 warrants of the
      CompanyAdvance payments:
    The greater of:First anniversary (shares issued)
    100,000 shares or $100 in shares of the CompanySecond anniversary (shares issued)
    140,000 shares or $140 in shares of the CompanyThird anniversary (shares issued)
    200,000 shares or $200 in shares of the CompanyFourth 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 in shares of the CompanyFifth payment  due on anniversary of fourth
         payment per February 2010 amended agreement
         and subsequent anniversaries
    400,000 shares or $400 in shares of the Company


The advance royalty payments will
continue until production is achieved or the exploration concessions expire.
Title to 100% of the Cerro Colorado and Zamora claims will be transferred to the
Company 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 vendor will receive a 3% net smelter royalty to a maximum purchase
price of $10,000 (inclusive of the value of the advance royalty payments
made).

Upon TSX approval of the original
agreement, 50,000 shares were issued on March 8, 2006. Upon TSX approval of the
2006 amended agreement, 100,000 shares and 100,000 warrants of the Company were
issued on November 8, 2006. On February 13, 2007, February 11, 2008, and
February 12, 2009 100,000 and 140,000, and 1,118,182 common shares respectively
were issued pursuant to the first, second and third anniversary payments.

c) Panama

During the year, the Company, through
its Panamanian subsidiary Minera Verde S.A. (Minera Verde), has signed a
binding Letter of Intent with Compania Minera Clifton S.A. (Minera Clifton) to
acquire a 100% interest in the Remance project located in Panama, Central
America. The Formal Agreement, once executed, will grant Minera Verde the
exclusive right and option (the Option) to acquire Minera Cliftons right,
title and interest in the Remance project. The Company is currently seeking
comfort from the government of Panama that the exploitation concession will be
renewed before executing the formal agreement.

The Option may be exercised by the
Company by completing the following terms:

| | i) | Paying to Minera Clifton the sum of $200 payable as
      follows
| | -- | -----------------------------------------------------------------

| | On the date of execution of the Formal
      Agreement                                   | $ | 50 | 
| | ---------------------------------------------------------------------------------------- | - | -- | 
| | On the date which is 3 months after the date of execution
      of the Formal Agreement  | $ | 50 | 
| | On the date which is 6 months after the
      date of execution of the Formal Agreement  | $ | 50 | 
| | On the date which is 10 months after the date of execution
      of the Formal Agreement | $ | 50 | 

- 16 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

| | ii)  | Issuing 5 million common shares of the Company on the
      date of execution of the formal Agreement.                                                                                                                                                                                                                       
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                              
| | iii) | Conducting a drilling program during the Option Period
      (the 12 months following the receipt of the required permissions from the
      Panamanian government).                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                              
| | iv)  | Giving written notice to Minera Clifton 10 days after the
      last day of the Option Period that it intends to exercise the Option in
      consideration of which the Company will pay to Minera Clifton the sum of
      $5,000 payable at the election of Minera Clifton, in cash or common shares
      of the Company.

d) Nevada, USA

During the year, the Company, through
its US subsidiary Pacific Rim Exploration Ltd. (PREx), has signed a Letter of
Intent with ICN Resources Ltd. (ICN) and Washoe Gold Inc. (WGI) to acquire a
65% interest in the Hog Ranch Property located in Washoe County, Nevada.

The Company is required to spend an
aggregate of $8 million in exploration expenditures and to issue an aggregate of
1 million common shares of Pacific Rim according to the following schedule:

| | i)   | $500,000 on or before July 8, 2012;                  
| | ---- | -----------------------------------------------------
| |      |                                                      
| | ii)  | a further $1,000,000 on or before July 8, 2013;      
| |      |                                                      
| | iii) | a further $1,500,000 on or before July 8, 2014;      
| |      |                                                      
| | iv)  | a further $2,000,000 on or before July 8, 2015;      
| |      |                                                      
| | v)   | a further $3,000,000 on or before July 8, 2015;
  and

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 TSX Venture
      Exchange (issued); 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
      the Definitive Agreement being July 8, 2011.

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

|   |                        
|-- | -----------------------
|6. | Discontinued Operations

Sale of Denton-Rawhide
Joint-Venture

On October 28 2008, the Company sold
its 49% interest in the Denton Rawhide mine and its interest in the agreement
with the Nevada Resource Recovery Group LLC (NRRG) to Kennecott Rawhide Mining
Company for cash proceeds of $3.1 million.

In addition, the Company had the right
to a 49% interest in all dore produced and shipped from the Rawhide Mine on or
before December 31, 2008 and was responsible to fund its proportionate 49% share
of all cash calls for normal operating costs up to and including December 31,
2008. This contingent consideration was received and recorded in the year ended
April 30, 2009.

- 17 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

Pursuant to the terms of the sale
agreement, and subsequent to December 31, 2008, the Company is responsible for
its proportionate share of reclamation and environmental closure costs exceeding
$7 million related to the Denton Rawhide mine. The Company has not accrued any
closure costs for amounts greater than $7 million as at April 30, 2011. The
Company estimates total reclamation and environmental closure costs to be $4.9
million. The Company believes the contingent liability relating to the
reclamation and environmental closure costs exceeding $7 million is unlikely.
Therefore no amount has been recorded as a liability for these costs.

Also as a result of the sale, in the
fiscal year ending April 30, 2009, an unrealized gain of $197 from the mine
closure fund previously recognized as other comprehensive income was
reclassified as part of the gain on disposal in the statement of loss as the
mine closure fund was part of the assets disposed of.

The Company realized a gain on sale of
net assets and the results of operations for the year ended April 30, 2009 of
$1,239, net of tax as follows:

| |                                                                               |   | For the Year Ended   |  
| | ----------------------------------------------------------------------------- | - | -------------------- | -
| |                                                                               |   | April
      30, 2009 |  
| |                                                                               |   |                      |  
| | Cash proceeds from sale of 49% interest in
      Denton-Rawhide joint venture | $ | 3,100                |  
| | Fair value of bullion received in November and December
      2008            |   | 1,686                |  
| | Cash operating payments made in November
      and December 2008              |   | (754                 | )
| | Less net assets disposed                                                      |   | (2,753               | )
| |                                                                               |   | 1,279                |  
| | Income taxes net of tax losses carried forward                                |   | (40                  | )
| | Realized gain, net of tax, on sale of joint
      venture interest            | $ | 1,239                |  

In addition to the net gain on disposal
of $1,239, the Company recorded operating results for discontinued operations as
follows:

| |                                               |  | For the Year Ended
      April 30, | 
| | --------------------------------------------- |  | ---------------------------------- | 
| | Results of operations from
      Discontinued |  | 2011                               | 
| | Operations                                    |  | ($)                                | 
| | Revenue                                       |  | -                                  | 
| | Cost of sales                                 |  | -                                  | 
| | General                                       |  | -                                  | 
| | Income before taxes                           |  | -                                  | 
| | Income taxes                                  |  | -                                  | 
| |                                               |  | -                                  | 
| |                                               |  |                                    | 
| | Cash Flows From (Used In) Discontinued        |  |                                    | 
| | Operations                                    |  |                                    | 
| | Cash flow provided by operating activities    |  | -                                  | 
| | Cash flow used in investing activities        |  | -                                  | 
| |                                               |  | -                                  | 

- 18 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

|7. | Share Capital
|-- | -------------

Common Shares

Authorized: Unlimited number of common
shares

Private Placement Financing

During the year ended April 30, 2011,
the Company closed a private placement with the issuance of 19,600,000 Units at
a price of Cdn$0.17 per Unit for gross proceeds of $3,287 (Cdn$3,332). The
Company allocated $2,872 to the common shares and $415 to the share purchase
warrants based upon the relative fair values. Each Unit is comprised of one
common share and one half of one common share purchase warrant. Each warrant
will entitle the holder to acquire one common share of the Company for a period
of two years from the closing date at a price of Cdn$0.30.

The finders were issued a total of
660,000 Units. The Company allocated $97 to the common shares and $14 to the
share purchase warrants based upon the relative fair values. The finders were
also issued 660,000 warrants, the warrants having the same terms as the warrants
issued under the Units and having a fair value of $32.

During the prior year ended April 30,
2010, the Company closed a private placement with the issuance of 11,775,000
Units at a price of Cdn$0.20 per Unit for gross proceeds of $2,271 (Cdn $2,355).
The Company allocated $1,331 to the common shares and $940 to the share purchase
warrants based upon the relative fair values. Each Unit is comprised of one
common share and one common share purchase warrant. Each warrant will entitle
the holder to acquire one common share of the Company for a period of three
years from the closing date at a price of Cdn$0.30

The finders were issued a
  total of 483,000 Units with these Units having the same terms as the Units
  issued to the placees. The Company allocate $54 to the common shares and $39 to
  the share purchase warrants based upon the relative fair values. The finders
  were also issued 483,000 warrants, the warrants having the same terms as the
  warrants issued under the Units and having a fair value of $66.

The allocation of fair value of the
units and warrants issued during the current year and prior year was estimated
using the Black-Scholes option pricing model with the following weighted average
assumptions:

| |                                 |  | 2011         |  |  | 2010          | 
| | ------------------------------- |  | ------------ |  |  | ------------- | 
| | Risk-free interest rate         |  | 1.42%        |  |  | 1.27%         | 
| | Expected dividend yield         |  | NIL          |  |  | NIL           | 
| | Expected stock price volatility |  | 85%          |  |  | 109%          | 
| | Expected life in
      years    |  | 1
      year |  |  | 3
      years | 

Warrants

A summary of the Companys warrants is
as follows:

| |                          |  | Warrants    |   |   | Weighted Average | 
| | ------------------------ |  | ----------- | - | - | ---------------- | 
| |                          |  | Outstanding |   |   | Exercise Price   | 
| | Balance  April 30, 2009 |  | 7,161,350   |   | $ | 1.34             | 
| | Issued                   |  | 12,741,000  |   | $ | 0.30             | 
| | Expired                  |  | (100,000    | ) | $ | 0.81             | 
| | Balance  April 30, 2010 |  | 19,802,350  |   | $ | 0.61             | 
| | Issued                   |  | 10,790,000  |   | $ | 0.30             | 
| | Expired                  |  | (7,061,350  | ) | $ | 1.34             | 
| | Balance  April 30, 2011 |  | 23,531,000  |   | $ | 0.30             | 

- 19 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

At April 30, 2011, there were
23,531,000 (April 30, 2010  19,802,350) warrants outstanding with a weighted
average exercise price of Cdn$0.30.

| | Number of warrants |  | Exercise price ($Cdn) |  |  | Expiry           | 
| | ------------------ |  | --------------------- |  |  | ---------------- | 
| | 12,741,000*        |  | 0.30                  |  |  | January 14, 2013 | 
| | 10,790,000**       |  | 0.30                  |  |  | October 8, 2012  | 
| | 23,531,000         |  |                       |  |  |                  | 

* Exercise of these warrants can be
accelerated should the Companys stock trade above a weighted average price of
Cdn$0.40 for 20 consecutive days and the Company receives an approved
environmental permit for its El Dorado property in El Salvador.

** Exercise of these warrants can be
accelerated should the Companys stock trade above a weighted average price of
Cdn$0.50 for 20 consecutive days.

The 7,061,350 warrants were modified in
the prior year to have an expiry date of August 29, 2010 instead of August 29,
2009. These extended warrants were allocated an incremental fair value of $213
with a weighted-average fair value of $0.03 and the cost was recorded as
financing cost.

The allocation of fair value of the
warrant extension in the prior year and the fair value of units and warrants
issued during the current year and prior year was estimated using the
Black-Scholes option pricing model with the following weighted average
assumptions:

| |                                 |  | 2011         |  |  | 2010            | 
| | ------------------------------- |  | ------------ |  |  | --------------- | 
| | Risk-free interest rate         |  | 1.42%        |  |  | 1.19%-1.27%     | 
| | Expected dividend yield         |  | NIL          |  |  | NIL             | 
| | Expected stock price volatility |  | 85%          |  |  | 109%-147%       | 
| | Expected life in
      years    |  | 1
      year |  |  | 1-3
      years | 

Option pricing models require the input
of subjective assumptions including the expected price volatility. Changes in
the assumptions can materially affect the fair value estimate.

Stock Options

In April 2002 Dayton Mining Corporation
and Pacific Rim Mining Corporation were amalgamated. The stock option plans
existing at that date were combined.

In October 2002 shareholders approved a
stock option and bonus plan (2002 Plan) under which, up to 6,000,000 common
shares were reserved for the grant of stock options and up to 367,000 common
shares were reserved for the grant of bonus shares to directors, employees or
consultants (eligible parties).

On August 29, 2006, shareholders
adopted an evergreen incentive stock option plan (2006 Plan) whereby the
maximum number of shares reserved for grant to Eligible Parties under the 2006
Plan is equal to 10% of the number of shares outstanding at the time of the
grant, including all outstanding options granted under the 2002 Plan.

- 20 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

Current option details are as
follows:

| |                                             |  |                   |   |  |                 |   |  |            |   |   | Weighted         | 
| | ------------------------------------------- |  | ----------------- | - |  | --------------- | - |  | ---------- | - | - | ---------------- | 
| |                                             |  | Number of Options |   |  | Average         |  
| |                                             |  |                   |   |  |                 |   |  |            |   |   | Exercise Price   | 
| |                                             |  | 2002
      Plan   |   |  | 2006
      Plan |   |  | Total      |   |   | (in
      Cdn $) | 
| | Options outstanding at April 30,
      2008 |  | 3,240,000         |   |  | 4,165,000       |   |  | 7,405,000  |   | $ | 1.01             | 
| | Granted                                     |  | -                 |   |  | 2,855,000       |   |  | 2,855,000  |   | $ | 0.17             | 
| | Expired                                     |  | (1,195,000        | ) |  | -               |   |  | (1,195,000 | ) | $ | 0.80             | 
| | Forfeited                                   |  | -                 |   |  | (335,001        | ) |  | (335,001   | ) | $ | 1.17             | 
| | Options outstanding at April 30,
      2009 |  | 2,045,000         |   |  | 6,684,999       |   |  | 8,729,999  |   | $ | 0.70             | 
| | Granted                                     |  | -                 |   |  | 2,535,000       |   |  | 2,535,000  |   | $ | 0.22             | 
| | Exercised                                   |  | -                 |   |  | (16,666         | ) |  | (16,666    | ) | $ | 0.17             | 
| | Expired                                     |  | (920,000          | ) |  | -               |   |  | (920,000   | ) | $ | 0.75             | 
| | Forfeited                                   |  | (1,125,000        | ) |  | (1,069,999      | ) |  | (2,094,999 | ) | $ | 0.88             | 
| | Options outstanding at April 30, 2010       |  | -                 |   |  | 8,133,334       |   |  | 8,133,134  |   | $ | 0.58             | 
| | Granted                                     |  | -                 |   |  | 3,125,000       |   |  | 3,125,000  |   | $ | 0.21             | 
| | Forfeited                                   |  | -                 |   |  | (963,334        | ) |  | (963,334   | ) | $ | 0.70             | 
| | Options outstanding at April 30,
      2011 |  | -                 |   |  | 10,295,000      |   |  | 10,295,000 |   | $ | 0.39             | 
| |                                             |  |                   |   |  |                 |   |  |            |   |   |                  | 
| | Options vested as at April 30, 2011         |  | -                 |   |  | 7,733,334       |   |  | 7,733,334  |   | $ | 0.45             | 

The total stock-based compensation
recognized during the year ended April 30, 2011 was $335 (2010 - $358; 2009 -
$555) with the offsetting entry to contributed surplus.

The 3,125,000 options granted during
the year ended April 30, 2011 have been allocated a total fair value of $410
with a weighted average fair value of $0.13. The 2,535,000 options granted
during the year ended April 30, 2010 have been allocated a total fair value of
$354 with a weighted-average fair value of $0.15. The allocation of fair value
was estimated using the Black-Scholes option pricing model, with the following
weighted average assumptions:

| |                                 |  | 2011              |  |  | 2010              | 
| | ------------------------------- |  | ----------------- |  |  | ----------------- | 
| | Risk-free interest rate         |  | 2.24% - 2.29%     |  |  | 1.26% - 2.71%     | 
| | Expected dividend yield         |  | NIL               |  |  | NIL               | 
| | Expected stock price volatility |  | 96% - 99%         |  |  | 90% - 112%        | 
| | Expected life in
      years    |  | 4  5
      years |  |  | 3 - 5
      years | 

Option pricing models require the input
of subjective assumptions including the expected price volatility. Changes in
the assumptions can materially affect the fair value estimate.

|   |                           
|-- | --------------------------
|8. | Related Party Transactions

The following represents the details of
related party transactions paid or accrued during the year ended April 30,
2011:

| |                                                                                                         |   | 2011 |  |   | 2010 | 
| | ------------------------------------------------------------------------------------------------------- | - | ---- |  | - | ---- | 
| | Accounting fees and tax consulting paid to
      a firm in which an officer of the Company is a partner | $ | 117  |  | $ | 145  | 

Included in accounts payable is $8
(2010 - $7) of amounts due to related parties, which are unsecured, non-interest
bearing and payable on demand.

- 21 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

Related party transactions are in the
normal course of business and occur on terms similar to transactions with
non-related parties, and therefore are measured at the exchange amount.

|   |             
|-- | ------------
|9. | Income Taxes

| | a) | Income tax expense differs from the amount that would
      result from applying the federal and provincial income tax rate to loss
      before income taxes. These differences result from the following
    items:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                         |   | Year ended |   |   | Year ended |   |   | Year ended |  
| | --------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                                                                         |   | April 30,  |   |   | April 30,  |   |   | April 30,  |  
| |                                                                                         |   | 2011       |   |   | 2010       |   |   | 2009       |  
| | Loss before income taxes and discontinued
      operations                              | $ | (4,002     | ) | $ | (5,001     | ) | $ | (9,443     | )
| | Federal and
      provincial income tax rates                                           |   | 27.84%     |   |   | 29.5%      |   |   | 30.50%     |  
| |                                                                                         |   |            |   |   |            |   |   |            |  
| | Income tax recovery based on the above rates                                            | $ | (1,114     | ) | $ | (1,475     | ) | $ | (2,880     | )
| | Non-deductible expenses for income tax
      purposes                                   |   | 354        |   |   | 91         |   |   | 189        |  
| | Difference between Canadian and foreign tax rates                                       |   | (13        | ) |   | 77         |   |   | 285        |  
| | Foreign exchange losses in local currencies                                             |   | (5         | ) |   | (5         | ) |   | -          |  
| | Losses and other temporary differences for which no tax
      benefit has been recorded |   | 778        |   |   | 1,316      |   |   | 2,406      |  
| | Income tax expense                                                                      | $ | -          |   | $ | 4          |   | $ | -          |  
| |                                                                                         |   |            |   |   |            |   |   |            |  
| | Represented by:                                                                         |   |            |   |   |            |   |   |            |  
| | Current income tax                                                                      | $ | -          |   | $ | 4          |   | $ | -          |  
| | Future income
      tax                                                                 |   | -          |   |   | -          |   |   | -          |  
| |                                                                                         | $ | -          |   | $ | 4          |   | $ | -          |  

The tax effects of temporary
differences that give rise to significant portions of the future tax assets and
future tax liabilities at April 30, 2011 and April 30, 2010 are presented
below:

| |                                                            |   | April 30, |   |   | April 30, |  
| | ---------------------------------------------------------- | - | --------- | - | - | --------- | -
| |                                                            |   | 2011      |   |   | 2010      |  
| | Future income tax assets:                                  |   |           |   |   |           |  
| | Non-capital losses                                         | $ | 8,499     |   | $ | 7,376     |  
| | Net
      capital losses                                   |   | 15,453    |   |   | 14,571    |  
| | Mineral properties and property,
      plant and equipment |   | 702       |   |   | 705       |  
| | Share issue
      costs and other                          |   | 123       |   |   | 207       |  
| | Total future income tax assets                             |   | 24,777    |   |   | 22,859    |  
| | Valuation allowance                                        |   | (24,777   | ) |   | (22,859   | )
| | Net future income tax assets                               |   | -         |   |   | -         |  
| |                                                            |   |           |   |   |           |  
| | Future income tax liabilities:                             |   |           |   |   |           |  
| | Property,
      plant and equipment                        |   | 1,046     |   |   | 1,046     |  
| |                                                            |   | 1,046     |   |   | 1,046     |  
| |                                                            |   |           |   |   |           |  
| | Net future income
      tax liabilities                    | $ | 1,046     |   | $ | 1,046     |  

- 22 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

| | b) | The Company has various losses and deferred exploration
      expenditures that are available for carry forward to reduce taxable income
      of future years. As at April 30, 2011 the Company has the following tax
      loss carry forwards and deductions:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Non-capital losses, expiring |   |        |  |   | United |  |   |           |  |   |        | 
| | ---------------------------- | - | ------ |  | - | ------ |  | - | --------- |  | - | ------ | 
| | as follows:                  |   | Canada |  |   | States |  |   | Argentina |  |   | Panama | 
| | 2010-2013                    | $ | -      |  | $ | -      |  | $ | 2,633     |  | $ | -      | 
| | 2014                         |   | 1,591  |  |   | -      |  |   | -         |  |   | -      | 
| | 2015                         |   | 1,460  |  |   | -      |  |   | -         |  |   | 85     | 
| | 2017                         |   | -      |  |   | 664    |  |   | -         |  |   | -      | 
| | 2019                         |   | -      |  |   | 24     |  |   | -         |  |   | -      | 
| | 2020                         |   | -      |  |   | 269    |  |   | -         |  |   | -      | 
| | 2021                         |   | -      |  |   | 612    |  |   | -         |  |   | -      | 
| | 2022                         |   | -      |  |   | 719    |  |   | -         |  |   | -      | 
| | 2023                         |   | -      |  |   | 684    |  |   | -         |  |   | -      | 
| | 2024                         |   | -      |  |   | 808    |  |   | -         |  |   | -      | 
| | 2025                         |   | -      |  |   | 970    |  |   | -         |  |   | -      | 
| | 2026                         |   | 1,682  |  |   | 313    |  |   | -         |  |   | -      | 
| | 2027                         |   | 2,059  |  |   | 271    |  |   | -         |  |   | -      | 
| | 2028                         |   | 3,326  |  |   | 536    |  |   | -         |  |   | -      | 
| | 2029                         |   | 4,051  |  |   | 549    |  |   | -         |  |   | -      | 
| | 2030                         |   | 3,320  |  |   | 645    |  |   | -         |  |   | -      | 
| | 2031                         |   | 2,497  |  |   | 249    |  |   | -         |  |   | -      | 
| |                              | $ | 19,986 |  | $ | 7,313  |  | $ | 2,633     |  | $ | 85     | 

In addition, the Company has incurred
over $38 million in exploration expenditures in El Salvador that are not
recognized because there is uncertainty surrounding mining tax legislation in El
Salvador.

A full valuation allowance has been
recorded against the majority of the potential future income tax assets
associated with the Canadian loss carry-forwards and the exploration
expenditures in El Salvador as their utilization is not considered more likely
than not at this time.

|    |            
|--- | -----------
|10. | Commitments

The Company has entered into an
operating lease agreement, commencing February 1, 2008 to January 30, 2013. The
minimum monthly lease payments are $4 (Cdn$3).

|        |                      
|------- | ---------------------
|**11.** | Management of capital

The Company defines its capital as
shareholders equity as the Company has no debt.

The Companys objectives when managing
capital are:

- To maintain adequate capital to operate its
  business and safeguard its ability to continue as a going concern (Note 1);
  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.

- 23 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

|**12.** | Segmented Information
|------- | ---------------------

| | Total Assets |   | April
      30, 2011 |  |   | April
      30, 2010 | 
| | ------------ | - | -------------------- |  | - | -------------------- | 
| | Canada       | $ | 1,069                |  | $ | 1,186                | 
| | USA          |   | 22                   |  |   | 98                   | 
| | El Salvador  |   | 5,590                |  |   | 5,643                | 
| | Total        | $ | 6,681                |  | $ | 6,927                | 

| | Property, Plant and Equipment |   | April
      30, 2011 |  |   | April
      30, 2010 | 
| | ----------------------------- | - | -------------------- |  | - | -------------------- | 
| | Canada                        | $ | 8                    |  | $ | 16                   | 
| | USA                           |   | -                    |  |   | 1                    | 
| | El Salvador                   |   | 5,454                |  |   | 5,475                | 
| | Total                         | $ | 5,462                |  | $ | 5,492                | 

| |                               |   | Year Ended April 30 |  
| | ----------------------------- | - | ------------------- | -
| | Net Income (Loss)             |   | 2011                |  
| | Canada                        | $ | (823                | )
| | USA                           |   | (1,819              | )
| | El Salvador                   |   | (1,275              | )
| | Panama                        |   | (85                 | )
| | Argentina                     |   | -                   |  
| | Discontinued operations  USA |   | -                   |  
| | Chile                         |   | -                   |  
| | Total                         | $ | (4,002              | )

|    |                                                                         
|--- | ------------------------------------------------------------------------
|13. | United States Generally Accepted Accounting Principles
      (US GAAP)

The Companys consolidated financial
statements have been prepared according to Canadian GAAP which differs in
certain respects from those principles that the Company would have followed had
the consolidated financial statements been prepared in accordance with US GAAP.
The significant differences between Canadian GAAP and US GAAP and their effect
on the consolidated financial statements are detailed on the next page.

- 24 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

Consolidated Balance Sheets

|                                               |   | April 30, 2011 |   |   | April 30, 2010 |  
|---------------------------------------------- | - | -------------- | - | - | -------------- | -
|                                               |   |                |   |   |                |  
|                                               |   | Canadian       |   |   |                |  
|                                               |   | GAAP           |   |   | Adjustments    |  
|ASSETS                                         |   |                |   |   |                |  
|Current Assets                                 |   |                |   |   |                |  
|                                               |   |                |   |   |                |  
|Cash and cash equivalents                      | $ | 258            |   | $ | -              |  
|Short-term
      investments                   |   | 787            |   |   | -              |  
|Receivables, deposits and prepaids             |   | 150            |   |   | -              |  
|                                               |   | 1,195          |   |   | -              |  
|                                               |   |                |   |   |                |  
|Property, Plant and Equipment                  |   | 5,462          |   |   | -              |  
|Restricted Cash                                |   | 24             |   |   | -              |  
|                                               | $ | 6,681          |   | $ | -              |  
|                                               |   |                |   |   |                |  
|                                               |   |                |   |   |                |  
|LIABILITIES                                    |   |                |   |   |                |  
|                                               |   |                |   |   |                |  
|Current Liabilities                            |   |                |   |   |                |  
|Accounts payable
      and accrued liabilities | $ | 1,642          |   | $ | -              |  
|                                               |   | 1,642          |   |   | -              |  
|                                               |   |                |   |   |                |  
|Common stock warrant derivatives               |   | -              |   |   | 1,798          |  
|Future Income Tax Liability                    |   | 1,046          |   |   | -              |  
|                                               |   | 2,688          |   |   | 1,798          |  
|SHAREHOLDERS EQUITY                           |   |                |   |   |                |  
|Share Capital Subscribed                       |   | 93             |   |   | -              |  
|Share Capital                                  |   | 86,955         |   |   | -              |  
|Contributed Surplus                            |   | 7,045          |   |   | (3,092         | )
|Deficit                                        |   | (90,100        | ) |   | 1,294          |  
|                                               |   | 3,993          |   |   | (1,798         | )
|                                               | $ | 6,681          |   | $ | -              |  

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|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

The following table reconciles the
consolidated net loss and consolidated comprehensive loss as reported under
Canadian GAAP with that which would have been reported under US GAAP.

|                                                                       |  |    |  |       | For the years ended April
      30, |  
|---------------------------------------------------------------------- |  | -- |  | ----- | ----------------------------------- | -
|                                                                       |  |    |  |       | 2011                                |  
|                                                                       |  |    |  |       |                                     |  
|                                                                       |  |    |  |       |                                     |  
|Net loss  Canadian GAAP                                               |  |    |  |       | (4,002                              | )
|Reconciling items:                                                     |  |    |  |       |                                     |  
|Change in fair
      value of common stock warrants                    |  | a) |  |       | 267                                 |  
|                                                                       |  |    |  |       |                                     |  
|Net loss US GAAP                                                      |  |    |  | $     | (3,735                              | )
|                                                                       |  |    |  |       |                                     |  
|                                                                       |  |    |  |       |                                     |  
|Canadian GAAP                                                          |  |    |  |       |                                     |  
|Loss Per Share From Continuing
      Operations - Basic and Diluted    |  |    |  | $     | (0.03                               | )
|Loss Per Share After Discontinued
      Operations - Basic and Diluted |  |    |  | $     | (0.03                               | )
|                                                                       |  |    |  |       |                                     |  
|US GAAP                                                                |  |    |  |       |                                     |  
|Loss Per Share From Continuing Operations - Basic and
      Diluted    |  |    |  | $     | (0.03                               | )
|                                                                       |  |    |  |       |                                     |  
|Loss Per Share After Discontinued Operations - Basic and
      Diluted |  |    |  | **$** | ****(0.03                           | )

In 2011, 2010 and 2009, under US GAAP,
there would be no changes to cash flows for operating activities, investing
activities or financing activities.

| | a) | Differences in generally accepted accounting
      principles between Canada and the United States                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | Equity Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | In June 2008, EITF07-5 confirmed a consensus that
      warrants with an exercise price denominated in a currency that is
      different from the entitys functional currency cannot be classified as
      equity. As a result, these instruments would be treated as derivatives and
      recorded as liabilities carried at their fair value, with changes in the
      fair value from period to period recorded as a gain or loss in the
      Statement of Income/(Loss). The Companys functional currency is the U.S.
      dollar and it has issued and outstanding warrants that have an exercise
      price that is denominated in Canadian dollars. This guidance was adopted
      by the Company under US GAAP on May 1, 2009.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | Under US GAAP, for the year ended April 30, 2011, there
      would be an increase in the fair value of common stock warrants of $267,
      the deficit would decrease by $1,294 ($267 relating to 2011 and $1,027
      relating to 2010), the contributed surplus warrants would decrease by
      $3,092 ($461 relating to 2011 and $2,631 relating to 2010), and the common
      stock warrant derivatives would have a value of $1,798.                                                                                                                                                                                                                                                                                                  

- 26 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

| | b) | Impact of recent applicable United States
    accounting pronouncements
| | -- | -----------------------------------------------------------------------
| |    |                                                                        
| |    | i.                                                                     
| |    |                                                                        
| |    | ii.                                                                    
| |    |                                                                        
| |    | iii.                                                                   
| |    |                                                                        
| |    | iv.                                                                    

- 27 -

---

|Pacific Rim Mining Corp.                                    
|------------------------------------------------------------
|Notes to Consolidated Financial Statements                  
|April 30, 2011, 2010, and 2009                              
|In thousands of U.S. Dollars, except per share
      amounts
|                                                            

| |  | v. | In January 2010, FASB issued Accounting Standards Update
      No. 2010-06, Fair Value Measurements Disclosures which amends Subtopic
      820-10 of the FASB Accounting Standards Codification to require new
      disclosures for fair value measurements and provides clarification for
      existing disclosure requirements. More specifically, this update will
      require (a) an entity to disclose separately the amounts of significant
      transfers in and out of Levels 1 and 2 fair value measurements and to
      describe the reasons for the transfers; and (b) information about
      purchases, sales and issuances and settlements to be presented separately
      (i.e. present the activity on a gross basis rather than net) in the reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs). This update clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and liabilities measured at fair value and requires disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements using Level 2 and Level 3 inputs. The Company has adopted the standard for the annual period ending April 30, 2011, without significant effect.
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|    |                 
|--- | ----------------
|14. | Subsequent event

On May 3, 2011, the Company completed a
private placement with gross proceeds of $3,897 (Cdn$3,696) through the issuance
of 17,600,000 units. Each unit consisted of one share and one-half of one share
purchase warrant. The Company also issued 233,400 Finders units and 716,400
Finders warrants in connection with the private placement.

On July 8, 2011, the Company signed a
Definitive Agreement with ICN and WGI to acquire a 65% interest in the Hog Ranch
Property located in Washoe County, Nevada.

- 28 -

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