---

PACIFIC RIM MINING CORP.

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2008 and 2007

Expressed in US Funds

---

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. Financial information presented elsewhere in the annual
report is consistent with that disclosed in the financial statements.

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.

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

|April Hashimoto         | Thomas C. Shrake       
|----------------------- | -----------------------
|Chief Financial Officer | Chief Executive Officer
|Vancouver, Canada       | Vancouver, Canada      
|July 18, 2008           | July 18, 2008          

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DISCLOSURE CONTROLS AND INTERNAL CONTROL OVER
FINANCIAL REPORTING

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide
reasonable assurance that material information is gathered and reported to
senior management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate to permit timely decisions regarding public
disclosure.

Management, including the Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the design and operation
of our disclosure controls and procedures, as defined in the rules of the US
Securities and Exchange Commission and Canadian Securities Administration, as at
April 30, 2008. Based on this evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures
were effective to ensure that information required to be disclosed in reports
filed or submitted by us under the United States and Canadian securities
legislation is recorded, processed, summarized and reported within the time
periods specified in those rules.

Managements Report on Internal Control Over Financial
Reporting

Management is responsible for establishing and maintaining
adequate internal control over financial reporting. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. Also projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies may
deteriorate.

Management has used the criteria established in Internal
Control  Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) framework to evaluate the
effectiveness of internal control over financial reporting. Based on this
assessment, management has concluded that as at April 30, 2008, the Companys
internal control over financial reporting was effective.

The effectiveness of our internal controls over financial
reporting as at April 30, 2008 has been audited by PricewaterhouseCoopers LLP,
our independent auditors, as stated in their report included with our annual
consolidated financial statements.

---

| |                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | PricewaterhouseCoopers
      LLP
      Chartered Accountants
      PricewaterhouseCoopers Place
      250 Howe Street, Suite 700
      Vancouver, British Columbia
      Canada V6C 3S7
      Telephone +1 (604) 806 7000
      Facsimile +1 (604) 806 7806

**Independent Auditors’ Report**
    To the Shareholders of **Pacific Rim Mining Corp.**
    We have completed an integrated audit of Pacific Rim Mining Corp.’s
    2008 consolidated financial statements and of its internal control over financial
    reporting as at April 30, 2008 and an audit of the Company’s 2007 consolidated
    financial statements. Our opinions, based on our audits, are presented below.
    **Consolidated financial statements**
    We have audited the accompanying consolidated balance sheets of Pacific Rim
    Mining Corp. as at April 30, 2008 and April 30, 2007, and the related consolidated
    statements of loss, shareholders’ equity, cash flows and comprehensive
    loss for each of the years then ended. These financial statements are the
    responsibility of the Company’s management. Our responsibility is to
    express an opinion on these financial statements based on our audits. 
    We conducted our audit of the Company’s financial statements as at April
    30, 2008 and for the year then ended in accordance with Canadian generally
    accepted auditing standards and the standards of the Public Company Accounting
    Oversight Board (United States). We conducted our audit of the Company’s
    financial statements as at April 30, 2007 and for the year then ended in accordance
    with Canadian generally accepted auditing standards. Those standards require
    that we plan and perform an audit to obtain reasonable assurance about whether
    the financial statements are free of material misstatement. An audit of financial
    statements includes examining, on a test basis, evidence supporting the amounts
    and disclosures in the financial statements. A financial statement audit also
    includes assessing the accounting principles used and significant estimates
    made by management, and evaluating the overall financial statement presentation.
    We believe that our audits provide a reasonable basis for our opinion. 
    The consolidated financial statements as at April 30, 2006 and for the year
    then ended were audited by predecessor auditors who expressed an opinion without
    reservation on those statements, before the restatement as described in note
    15 of the April 30, 2007 financial statements, in their report dated June
    6, 2006. 
    In our opinion, the consolidated financial statements referred to above present
    fairly, in all material respects, the financial position of the Company as
    at April 30, 2008 and April 30, 2007 and the results of its operations and
    its cash flows for each of the years then ended in accordance with Canadian
    generally accepted accounting principles. **Internal control over financial reporting**
    We have also audited Pacific Rim Mining Corp.’s internal control over
    financial reporting as at April 30, 2008, based on criteria established in
    Internal Control - Integrated Framework issued by the Committee of Sponsoring
    Organizations of the Treadway Commission (COSO). The Company’s management
    is responsible for maintaining effective internal control over financial reporting
    and for its assessment of the effectiveness of internal control over financial
    reporting, included in the accompanying Management Report on Internal Controls
    over Financial Reporting. Our responsibility is to express an opinion on the
    effectiveness of the Company’s internal control over financial reporting
    based on our audit. PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers
    LLP and the other member firms of PricewaterhouseCoopers International Limited,
    each of which is a separate and independent legal entity.


---



We conducted our audit of internal control over financial reporting
  in accordance with the standards of the Public Company Accounting Oversight
  Board (United States). Those standards require that we plan and perform the
  audit to obtain reasonable assurance about whether effective internal control
  over financial reporting was maintained in all material respects. An audit of
  internal control over financial reporting includes obtaining an understanding
  of internal control over financial reporting, assessing the risk that a material
  weakness exists, testing and evaluating the design and operating effectiveness
  of internal control based on the assessed risk, and performing such other procedures
  as we consider necessary in the circumstances. We believe that our audit provides
  a reasonable basis for our opinion. 
  A company’s internal control over financial reporting is a process designed
  to provide reasonable assurance regarding the reliability of financial reporting
  and the preparation of financial statements for external purposes in accordance
  with generally accepted accounting principles. A company’s internal control
  over financial reporting includes those policies and procedures that (i) pertain
  to the maintenance of records that, in reasonable detail, accurately and fairly
  reflect the transactions and dispositions of the assets of the company; (ii)
  provide reasonable assurance that transactions are recorded as necessary to
  permit preparation of financial statements in accordance with generally accepted
  accounting principles, and that receipts and expenditures of the company are
  being made only in accordance with authorizations of management and directors
  of the company; and (iii) provide reasonable assurance regarding prevention
  or timely detection of unauthorized acquisition, use, or disposition of the
  company’s assets that could have a material effect on the financial statements.
  
  Because of its inherent limitations, internal control over financial reporting
  may not prevent or detect misstatements. Also, projections of any evaluation
  of effectiveness to future periods are subject to the risk that controls may
  become inadequate because of changes in conditions, or that the degree of compliance
  with the policies or procedures may deteriorate. 
  In our opinion, the Company maintained, in all material respects, effective
  internal control over financial reporting as at April 30, 2008 based on criteria
  established in Internal Control — Integrated Framework issued by the COSO.
  *(signed) PricewaterhouseCoopers LLP*

**Chartered Accountants**
  Vancouver, BC, Canada 
  July 18, 2008 **Comments by Auditor for U.S. Readers on Canada-U.S Reporting Difference**
  In the United States, reporting standards for auditors require the addition
  of an explanatory paragraph (following the opinion paragraph) where there are
  events that cast substantial doubt on the Company’s ability to continue
  as a going concern, such as those described in note 1 to the consolidated financial
  statements, and where there is a change in accounting principles that has a
  material effect on the comparability of the Company’s financial statements,
  such as the change described in note 3 to the consolidated financial statements.
  Our report to the shareholders dated July 18, 2008 is expressed in accordance
  with Canadian reporting requirements which do not permit a reference to such
  events and conditions in the auditor’s report when they are properly accounted
  for and adequately disclosed in the financial statements. *(signed) PricewaterhouseCoopers LLP*

**Chartered Accountants**
  Vancouver, BC, Canada 
  July 18, 2008

---

|Pacific Rim Mining Corp.                                              |   |         |   |   |         |  
|--------------------------------------------------------------------- | - | ------- | - | - | ------- | -
|Consolidated Balance Sheets                                           |   |         |   |   |         |  
|As at April 30,                                                       |   |         |   |   |         |  
|In thousands of U.S. dollars                                          |   |         |   |   |         |  
|                                                                      |   |         |   |   |         |  
|ASSETS                                                                |   | 2008    |   |   | 2007    |  
|Current Assets                                                        |   |         |   |   |         |  
|Cash and cash equivalents                                             | $ | 1,922   |   | $ | 2,484   |  
|Short term investments (Note 6)                                       |   | 4,232   |   |   | 7,937   |  
|Inventory (Note 7)                                                    |   | 1,290   |   |   | 1,077   |  
|Receivables, Deposits & Prepaids                                      |   | 222     |   |   | 310     |  
|                                                                      |   | 7,666   |   |   | 11,808  |  
|Property, Plant and Equipment(Note 8)                                 |   | 6,793   |   |   | 6,271   |  
|Restricted Cash(Note 5)                                               |   | 24      |   |   | 24      |  
|Closure Fund(Note 10(a))                                              |   | 3,787   |   |   | 3,391   |  
|                                                                      | $ | 18,270  |   | $ | 21,494  |  
|                                                                      |   |         |   |   |         |  
|LIABILITIES                                                           |   |         |   |   |         |  
|Current Liabilities                                                   |   |         |   |   |         |  
|Accounts payable and accrued
      liabilities                        | $ | 2,552   |   | $ | 2,285   |  
|Asset Retirement Obligation  current portion
      (Note 10(a))      |   | 260     |   |   | 135     |  
|Pension and Post-Retirement Benefit
      Liability - current portion |   |         |   |   |         |  
|(Note11)                                                              |   | 131     |   |   | 115     |  
|                                                                      |   | 2,943   |   |   | 2,535   |  
|                                                                      |   |         |   |   |         |  
|Future Income Tax Liability(Note
      14)                            |   | 1,046   |   |   | -       |  
|Asset Retirement Obligation(Note 10(a))                               |   | 1,664   |   |   | 1,917   |  
|Pension and Post-Retirement Benefit
      Liability(Note 11)          |   | 72      |   |   | 115     |  
|Severance Liability(Note 10(b))                                       |   | 384     |   |   | 290     |  
|                                                                      |   | 6,109   |   |   | 4,857   |  
|                                                                      |   |         |   |   |         |  
|SHAREHOLDERS EQUITY                                                  |   |         |   |   |         |  
|Share Capital(Note 12)                                                |   |         |   |   |         |  
|Authorized:                                                           |   |         |   |   |         |  
|unlimited
      common shares without par value                       |   |         |   |   |         |  
|Issued and fully paid:                                                |   |         |   |   |         |  
|116,915,460
      (2007  109,781,960) shares outstanding             |   | 82,649  |   |   | 76,765  |  
|Contributed Surplus                                                   |   | 4,170   |   |   | 1,993   |  
|Accumulated Other Comprehensive Income                                |   | 197     |   |   | -       |  
|Deficit                                                               |   | (74,855 | ) |   | (62,121 | )
|                                                                      |   | 12,161  |   |   | 16,637  |  
|                                                                      | $ | 18,270  |   | $ | 21,494  |  
|Nature of Operations and Going Concern(Note
      1)                  |   |         |   |   |         |  
|Measurement Uncertainty(Note
      8(iii))                            |   |         |   |   |         |  
|Commitments(Note 15)                                                  |   |         |   |   |         |  

|APPROVED BY THE BOARD OF DIRECTORS:         
|--------------------------------------------
|                                            
|__________________________________, Director
|                                            
|__________________________________, Director

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

---

|Pacific Rim Mining Corp.                                         |   |         |   |   |         |   |   |        |  
|---------------------------------------------------------------- | - | ------- | - | - | ------- | - | - | ------ | -
|Consolidated Statements of Loss                                  |   |         |   |   |         |   |   |        |  
|For the year ended April 30                                      |   |         |   |   |         |   |   |        |  
|                                                                 |   |         |   |   |         |   |   |        |  
|In thousands of U.S. dollars, except for per share
      amounts |   |         |   |   |         |   |   |        |  
|                                                                 |   |         |   |   |         |   |   |        |  
|                                                                 |   |         |   |   |         |   |   |        |  
|                                                                 |   | 2008    |   |   | 2007    |   |   | 2006   |  
|                                                                 |   |         |   |   |         |   |   |        |  
|Revenue                                                          | $ | 7,680   |   | $ | 8,337   |   | $ | 8,024  |  
|                                                                 |   |         |   |   |         |   |   |        |  
|Cost of Sales                                                    |   |         |   |   |         |   |   |        |  
|Operating costs                                                  |   | 5,571   |   |   | 5,442   |   |   | 4,410  |  
|Depreciation and accretion                                       |   | 513     |   |   | 140     |   |   | 79     |  
|                                                                 |   | 6,084   |   |   | 5,582   |   |   | 4,489  |  
|Mine Operating Income                                            |   | 1,596   |   |   | 2,755   |   |   | 3,535  |  
|                                                                 |   |         |   |   |         |   |   |        |  
|Expenses (Income)                                                |   |         |   |   |         |   |   |        |  
|Exploration                                                      |   |         |   |   |         |   |   |        |  
|- direct                                                         |   | 11,399  |   |   | 10,401  |   |   | 6,237  |  
|- stock-based compensation
      (Note 12)                       |   | 372     |   |   | 263     |   |   | 52     |  
|General and administrative                                       |   |         |   |   |         |   |   |        |  
|- direct                                                         |   | 3,099   |   |   | 2,346   |   |   | 1,504  |  
|- stock-based
      compensation (Note 12)                       |   | 622     |   |   | 705     |   |   | 166    |  
|Interest income                                                  |   | (408    | ) |   | (642    | ) |   | (251   | )
|Foreign exchange loss (gain)                                     |   | (438    | ) |   | 86      |   |   | (264   | )
|Gain on sale of property, plant and equipment                    |   | -       |   |   | -       |   |   | (11    | )
|                                                                 |   | 14,646  |   |   | 13,159  |   |   | 7,433  |  
|Loss Before Taxes and Discontinued Operations                    |   | (13,050 | ) |   | (10,404 | ) |   | (3,898 | )
|Income Taxes(Note 14)                                            |   | (1,084  | ) |   | (13     | ) |   | (59    | )
|Loss Before Discontinued Operations                              |   | (14,134 | ) |   | (10,417 | ) |   | (3,957 | )
|Discontinued Operations - Recovery of
      Investment           |   |         |   |   |         |   |   |        |  
|In Andacollo Mine(Note 1)                                        |   | 1,400   |   |   | 1,000   |   |   | 3,349  |  
|Loss for the Year                                                | $ | (12,734 | ) | $ | (9,417  | ) | $ | (608   | )
|                                                                 |   |         |   |   |         |   |   |        |  
|Loss Per Share before Discontinued
      Operations             |   |         |   |   |         |   |   |        |  
|Basic and Diluted                                                |   | (0.13   | ) |   | (0.10   | ) |   | (0.05  | )
|Loss Per Share after Discontinued
      Operations              |   |         |   |   |         |   |   |        |  
|Basic and Diluted                                                | $ | (0.11   | ) | $ | (0.09   | ) | $ | (0.01  | )
|                                                                 |   |         |   |   |         |   |   |        |  
|                                                                 |   |         |   |   |         |   |   |        |  
|                                                                 |   |         |   |   |         |   |   |        |  
|Weighted
      Average Shares Outstanding (thousands)            |   | 111,123 |   |   | 106,939 |   |   | 82,528 |  

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

---

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

|                                      |  |               |  |  |             |   |  |               |   |  | Accumulated |  |  |         |   |  |         |  
|------------------------------------- |  | ------------- |  |  | ----------- | - |  | ------------- | - |  | ----------- |  |  | ------- | - |  | ------- | -
|                                      |  | Share Capital |  |  | Contributed |   |  | Other         |   |  | Accumulated |  |  | Total   |  
|                                      |  | Common Shares |  |  | Surplus     |   |  | Comprehensive |   |  | Deficit     |  |  |         |  
|                                      |  |               |  |  |             |   |  |               |   |  | Income      |  |  |         |   |  |         |  
|                                      |  | Number        |  |  | $           |   |  | $             |   |  | $           |  |  | $       |   |  | $       |  
|Balance  April 30, 2005              |  | 80,642,194    |  |  | 57,435      |   |  | 810           |   |  | -           |  |  | (52,096 | ) |  | 6,149   |  
|                                      |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Shares issued for cash , net of costs |  | 23,900,000    |  |  | 16,361      |   |  | -             |   |  | -           |  |  | -       |   |  | 16,361  |  
|Shares issued for cash  options      |  | 783,766       |  |  | 347         |   |  | -             |   |  | -           |  |  | -       |   |  | 347     |  
|exercised                             |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Shares issued for property option     |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|payment                               |  | 50,000        |  |  | 38          |   |  | -             |   |  | -           |  |  | -       |   |  | 38      |  
|Shares issued for services            |  | 215,000       |  |  | 150         |   |  | -             |   |  | -           |  |  | -       |   |  | 150     |  
|Warrants issue costs                  |  | -             |  |  | (168        | ) |  | 168           |   |  | -           |  |  | -       |   |  | -       |  
|Stock-based compensation              |  | -             |  |  | -           |   |  | 218           |   |  | -           |  |  | -       |   |  | 218     |  
|Fair value of options exercised       |  | -             |  |  | 15          |   |  | (15           | ) |  | -           |  |  | -       |   |  | -       |  
|Loss for the Year                     |  | -             |  |  | -           |   |  | -             |   |  | -           |  |  | (608    | ) |  | (608    | )
|Balance  April 30, 2006              |  | 105,590,960   |  |  | 74,178      |   |  | 1,181         |   |  | -           |  |  | (52,704 | ) |  | 22,655  |  
|Shares issued for cash - options      |  | 2,644,000     |  |  | 1,208       |   |  | -             |   |  | -           |  |  | -       |   |  | 1,208   |  
|exercised                             |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Shares issued for cash  warrants     |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|exercised                             |  | 1,195,000     |  |  | 862         |   |  | -             |   |  | -           |  |  | -       |   |  | 862     |  
|Shares issued for services            |  | 152,000       |  |  | 111         |   |  | -             |   |  | -           |  |  | -       |   |  | 111     |  
|Shares issued for property option     |  | 200,000       |  |  | 199         |   |  | -             |   |  | -           |  |  | -       |   |  | 199     |  
|payment                               |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Fair value of warrants exercised      |  | -             |  |  | 168         |   |  | (168          | ) |  | -           |  |  | -       |   |  | -       |  
|Fair value of options exercised       |  | -             |  |  | 39          |   |  | (39           | ) |  | -           |  |  | -       |   |  | -       |  
|Warrants issued for property option   |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|payment                               |  | -             |  |  | -           |   |  | 51            |   |  | -           |  |  | -       |   |  | 51      |  
|Stock-based compensation              |  | -             |  |  | -           |   |  | 968           |   |  | -           |  |  | -       |   |  | 968     |  
|Loss for the year                     |  | -             |  |  | -           |   |  | -             |   |  | -           |  |  | (9,417  | ) |  | (9,417  | )
|Balance  April 30, 2007              |  | 109,781,960   |  |  | 76,765      |   |  | 1,993         |   |  | -           |  |  | (62,121 | ) |  | 16,637  |  
|Adoption of new accounting standards  |  | -             |  |  | -           |   |  | -             |   |  | 77          |  |  | -       |   |  | 77      |  
|(Note 3)                              |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Stock-based compensation              |  | -             |  |  | -           |   |  | 994           |   |  | -           |  |  | -       |   |  | 994     |  
|Fair value of options exercised       |  |               |  |  | 139         |   |  | (139          | ) |  | -           |  |  | -       |   |  | -       |  
|Shares issued for cash - options      |  | 282,500       |  |  | 216         |   |  | -             |   |  | -           |  |  | -       |   |  | 216     |  
|exercised                             |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Shares issued for cash, net of cost   |  | 6,711,000     |  |  | 5,496       |   |  | 1,204         |   |  | -           |  |  | -       |   |  | 6,700   |  
|Shares issued for property option     |  | 140,000       |  |  | 151         |   |  | -             |   |  | -           |  |  | -       |   |  | 151     |  
|payment                               |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Warrants issue costs                  |  | -             |  |  | (118        | ) |  | 118           |   |  | -           |  |  | -       |   |  | -       |  
|Unrealized gain on financial assets   |  | -             |  |  | -           |   |  | -             |   |  | 120         |  |  | -       |   |  | 120     |  
|classified as available-for-sale      |  |               |  |  |             |   |  |               |   |  |             |  |  |         |   |  |         |  
|Loss for the year                     |  | -             |  |  | -           |   |  | -             |   |  | -           |  |  | (12,734 | ) |  | (12,734 | )
|Balance  April 30, 2008              |  | 116,915,460   |  |  | 82,649      |   |  | 4,170         |   |  | 197         |  |  | (74,855 | ) |  | 12,161  |  

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

---

|Pacific Rim Mining Corp.                                       |   |         |   |   |         |   |   |         |  
|-------------------------------------------------------------- | - | ------- | - | - | ------- | - | - | ------- | -
|Consolidated Statements of Cash Flows                          |   |         |   |   |         |   |   |         |  
|For the year ended April 30                                    |   |         |   |   |         |   |   |         |  
|In thousands of U.S. dollars                                   |   |         |   |   |         |   |   |         |  
|                                                               |   |         |   |   |         |   |   |         |  
|                                                               |   |         |   |   |         |   |   |         |  
|                                                               |   | 2008    |   |   | 2007    |   |   | 2006    |  
|Operating Cash flows                                           |   |         |   |   |         |   |   |         |  
|Loss before Discontinued
      Operations                      | $ | (14,134 | ) | $ | (10,417 | ) | $ | (3,957  | )
|Items not affecting cash:                                      |   |         |   |   |         |   |   |         |  
|Depletion, depreciation
      and amortization                 |   | 571     |   |   | 155     |   |   | 98      |  
|Accretion and closure costs                                    |   | 229     |   |   | 60      |   |   | 91      |  
|Severance and
      pension costs                              |   | 106     |   |   | (50     | ) |   | 76      |  
|Warrants issued for property
      option payment              |   | -       |   |   | 51      |   |   | 38      |  
|Shares issued
      for property option payment                |   | 151     |   |   | 199     |   |   | -       |  
|Shares issued for services                                     |   | -       |   |   | 111     |   |   | 150     |  
|Stock based
      compensation                                 |   | 994     |   |   | 968     |   |   | 218     |  
|Interest earned on closure fund                                |   | (155    | ) |   | (143    | ) |   | (126    | )
|Future income
      tax                                        |   | 984     |   |   | -       |   |   | -       |  
|Gain from disposition of plant
      and equipment             |   | (3      | ) |   | -       |   |   | (11     | )
|                                                               |   | (11,257 | ) |   | (9,066  | ) |   | (3,423  | )
|Changes in non-cash working capital items:                     |   |         |   |   |         |   |   |         |  
|Accounts payable
      and accrued liabilities                 |   | 267     |   |   | 1,403   |   |   | (332    | )
|Closure cost expenditures                                      |   | (162    | ) |   | (127    | ) |   | (110    | )
|Inventories                                                    |   | (213    | ) |   | (266    | ) |   | (524    | )
|Receivables                                                    |   | 88      |   |   | (143    | ) |   | (50     | )
|Cash flow Used for Operating
      Activities                  |   | (11,277 | ) |   | (8,199  | ) |   | (4,439  | )
|Investing Activities                                           |   |         |   |   |         |   |   |         |  
|Net short term investment
      redemption                     |   | 3,779   |   |   | 6,683   |   |   | (14,262 | )
|Purchases of property, plant and equipment                     |   | (1,383  | ) |   | (798    | ) |   | (46     | )
|Increase in restricted cash                                    |   | -       |   |   | (24     | ) |   | -       |  
|Proceeds of disposition of property, plant and
      equipment |   | 3       |   |   | -       |   |   | 11      |  
|Proceeds from discontinued
      operations                    |   | 1,400   |   |   | 1,000   |   |   | 3,349   |  
|Cash Flow Provided By (Used for) Investing
      Activities    |   | 3,799   |   |   | 6,861   |   |   | (10,948 | )
|Financing Activities                                           |   |         |   |   |         |   |   |         |  
|Shares issued for cash, net of issuance costs                  |   | 6,916   |   |   | 2,065   |   |   | 16,708  |  
|Cash Flow Provided By Financing
      Activities               |   | 6,916   |   |   | 2,065   |   |   | 16,708  |  
|Net Increase (Decrease) in Cash and Cash Equivalents           |   | (562    | ) |   | 727     |   |   | 1,321   |  
|Cash and cash equivalents -
      Beginning of year            |   | 2,484   |   |   | 1,757   |   |   | 436     |  
|Cash and Cash
      Equivalents - End of Year                  | $ | 1,922   |   | $ | 2,484   |   | $ | 1,757   |  
|                                                               |   |         |   |   |         |   |   |         |  
|Supplementary Schedule of Cash Transactions:                   |   |         |   |   |         |   |   |         |  
|Income taxes paid during the period                            | $ | 100     |   | $ | 13      |   | $ | 59      |  

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

---

|Pacific Rim Mining Corp.                    
|--------------------------------------------
|Consolidated Statement of Comprehensive Loss
|For the Year Ended April 30                 
|In thousands of U.S. dollars                

|                                                         |   | 2008    |  
|-------------------------------------------------------- | - | ------- | -
|Net Loss for the Year                                    | $ | (12,734 | )
|Other comprehensive income                               |   |         |  
|Unrealized gains on
      investments available for sale |   |         |  
|(net of taxes of $62)                                    |   | 120     |  
|Comprehensive Loss for the Year                          | $ | (12,614 | )

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

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|*In thousands of U.S. dollars*            
|                                          
|                                          

|1. | Nature of Operations and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company is involved in the exploration, development
      and operation of gold properties. The Company owns a 49% interest in the
      Denton-Rawhide Mine, located near Fallon, Nevada, U.S.A., a 100% interest
      in certain mineral properties, known as El Dorado, located in El Salvador
      and carries out generative exploration activities in Costa Rica and
      Guatemala.                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company has not yet determined 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 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | These financial statements are prepared in accordance
      with Canadian generally accepted accounting principles on a going concern
      basis, which presume the realization of assets and discharge of
      liabilities in the normal course of business for the foreseeable future.
      During the year, the Company incurred a loss of $12,734 and as at April
      30, 2008 has an accumulated deficit of $74,855. The Company will require
      additional funding to maintain its ongoing exploration programs and
      property commitments as well as for administrative purposes. These
      conditions and risks cast substantial doubt on the validity of the going
      concern assumption.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The operations of the Company have been funded primarily
      by its interest in the Denton Rawhide Joint Venture, funds raised through
      a short form prospectus equity financing that closed on March 1, 2006 and
      funds raised through a private placement that closed on February 29, 2008.
      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.                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | These financial statements do not reflect the adjustments
      to the carrying values of assets and liabilities and the reported expenses
      and balance sheet classifications that would be necessary were the going
      concern assumption to be inappropriate, and these adjustments could be
      material.                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Shut Down and Sale of Andacollo Mine                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The carrying values of the assets and liabilities of the
      Chilean operating subsidiary that owned the Andacollo Mine were written
      off effective December 1, 2000 with a corresponding charge to income to
      reflect permanent closure of the mine and the estimated realizable value
      of capital assets after all liabilities had been liquidated.                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Proceeds from creditor distribution and payments related
      to subsequent sales of the previously written off assets are recorded as
      Discontinued Operations - Recovery of Investment In Andacollo
    Mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On September 21, 2005 the Company entered into an
      agreement to sell 100% of the shares of the Cayman and Chilean
      subsidiaries that owned the Andacollo Mine for a total price of $5,400.
      $3,000 of the proceeds was received upon signing this agreement and was
      recorded as described above. The remaining payments of $1,000 and $1,400
      against a promissory note were received as scheduled on September 26, 2006
      and September 20, 2007 respectively. The promissory note bore no interest
      and was secured by a charge over the assets
sold.                                                                                                                         

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|2. | Significant Accounting Policies and Changes in
      Accounting Policies                                                                                                                                                                                                                                                                                                                                          
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | These consolidated financial statements are presented in
      accordance with generally accepted accounting principles (GAAP)
      applicable in Canada and have been reconciled as to significant
      differences in measurement to generally accepted accounting principles
      applicable in the United States as disclosed in Note 17.                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | These consolidated financial statements include the
      accounts of the Companys wholly-owned active subsidiaries, Dayton Mining
      (U.S.) Inc., Pacific Rim Exploration Inc., Pac Rim Cayman, Pacific Rim El
      Salvador S.A. de C.V., Dorado Exploraciones S.A. de C.V., Pac Rim Caribe
      III and its wholly-owned subsidiaries International Pacific Rim S.A and
      Pacific Rim Chile Limitada.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The 49% joint venture interest in Denton-Rawhide is
      accounted for on the proportionate consolidation basis.                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Cash and cash equivalents consist of cash on deposit with
      banks and highly liquid short-term interest- bearing investments with
      maturities of three months or less at the purchase date. Cash equivalents
      are designated as available for sale and are recorded at fair value with
      unrealized gains and losses recorded in other comprehensive
  income.                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Short Term Investments                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Short term investments are comprised of interest-bearing
      deposits with a term to maturity from inception of greater than three
      months. These investments are designated as available for sale and are
      recorded at fair value with unrealized gains and losses recorded in other
      comprehensive income.                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Inventory                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Inventory is comprised of in-process inventory at the
      mine and gold and silver bullion. Inventory is valued at the lower of cost
      and net realizable value. Cost is comprised of production costs for the
      dore produced, including the materials, labour and depreciation relating
      to the processing of the ore in the heap leach.                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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. Mining property, plant and equipment is depreciated over the
      estimated useful lives of the assets on a units of production basis or on
      a straight-line basis as appropriate.                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Mineral Properties                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | All exploration expenditures are expensed as incurred.
      Significant property acquisition payments for active exploration
      properties are capitalized. If no mineable ore body is discovered,
      previously capitalized costs are expensed in the period the property is
      abandoned or sold.                                                                                                     

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|2. | Significant Accounting Policies and Changes in
      Accounting Policies- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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.                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Severance Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Where there is an existing plan to provide contractual
      termination benefits to employees, the Company recognizes the obligation
      as a liability and corresponding expense in the period that the employees
      entitlement to the benefits is probable and the amounts can be reasonably
      estimated. Changes to the estimate of the amount are accounted for as
      adjustments to the liability with a corresponding charge to
    earnings.                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Pension Plans and Other Post-Retirement
      Benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Defined Benefit Pension Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Defined benefit pension plan obligations are based on
      actuarial determinations. The projected benefit method prorated on
      services is used to determine the accrued benefit obligation. Actuarial
      assumptions used in the determination of defined benefit pension plan
      liabilities are based upon the best estimates including discount rate,
      inflation rate, expected plan performance, salary escalation and
      retirement dates of employees. The expected return on plan assets is
      estimated based on fair value of plan assets, asset allocation and
      expected long-term returns on these components.                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Actuarial gains or losses arise from the difference
      between actual long term rate of return on plan assets for a period and
      the expected long term rate of return on plan assets for that period or
      from changes in actuarial assumptions used to determine the accrued
      benefit obligation. These amounts are recognized as a charge to earnings
      as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Non-Pension Post-Retirement Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The costs of certain health and welfare benefit plans for
      certain employees are expensed over the period in which the employees
      render services. These non-pension retirement benefits are funded as they
      become due.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|2. | Significant Accounting Policies and Changes in
      Accounting Policies- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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 period 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.                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Share Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Share capital issued as non-monetary consideration is
      recorded at an amount based on fair market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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.                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company recognizes stock based compensation expense
      based on the estimated fair value of the options on the date of the grant,
      determined using a Black-Scholes option pricing model. 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. Proceeds arising from the exercise of options are
      credited to share capital.                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Revenues from the sale of all precious metal bullion are
      recognized when delivery has occurred, title to the bullion has passed to
      the buyer, evidence of an arrangement exists, the selling price is fixed
      or determinable, and collection is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Earnings (Loss) per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Basic earnings (loss) per share is computed by dividing
      income available to common shareholders by the weighted average number of
      common shares outstanding during the period. The 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.                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Derivative Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company periodically enters into derivative
      instruments to mitigate exposures to gold commodity prices. The Company
      does not apply hedge accounting. Derivative financial instruments,
      including embedded derivatives, are held-for-trading and recorded on the
      balance sheet at fair value with realized and unrealized gains and losses
      recorded in net earnings. Fair values for derivative instruments
      held-for-trading are determined using valuation techniques. Valuations use
      assumptions based on market conditions existing at the balance sheet date.
      Realized gains and losses are recorded as a component of operating cash
      flow.

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|2. | Significant Accounting Policies and Changes
        in Accounting Policies- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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.                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Integrated foreign operations are translated
        into the functional currency using the temporal method as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Gains and losses on translation are included
        in determining net income for the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The preparation of financial statements in
        conformity with Canadian GAAP requires management to make estimates and
        assumptions that affect the reported amounts of assets and liabilities
        and disclosures of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Comparative Figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Certain of the comparative figures have been
        reclassified to conform to the current years presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | Changes in Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On May 1, 2007, the Company adopted new accounting
        standards issued by the Canadian Institute of Chartered Accountants. These
        changes were adopted on a retroactive basis with no restatement of prior
        year financial statements. The new accounting standards are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In accordance with the new CICA handbook sections
        3855, Financial Instruments  Recognition and Measurement
        and 3861, Financial Instruments  Disclosure and Presentation,
        all financial instruments are classified as held-to-maturity, available-for-sale,
        held-for-trading or loans and receivables. Financial assets classified
        as held-to-maturity, loans and receivables and financial liabilities other
        than those held-for-trading are measured at cost. Financial instruments
        classified as available-for-sale are measured at fair value with unrealized
        gains and losses recognized in other comprehensive income. Financial instruments
        classified as held-for-trading are measured at fair value with unrealized
        gains and losses recognized in income.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Upon adoption of these new standards, the
        Company designated its cash and cash equivalents, short-term investments
        and closure fund as available for sale, which are measured at fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|3. | Changes in Accounting Policies-
      Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Financial Instruments - continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Receivables and deposits are classified as loans and
      receivables and accounts payable are classified as other financial
      liabilities and are recorded at amortized cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | As a consequence of adopting these standards at May 1,
      2007, the closure fund balance increased by $77, reflecting the adjustment
      for unrealized gains to state the balance at fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In accordance with the new CICA handbook section 1530,
      Comprehensive Income, a consolidated statement of comprehensive
      income/loss is now included in the Companys consolidated financial
      statements and accumulated comprehensive income has been added to the
      shareholders equity section of the consolidated balance sheets.
      Accumulated comprehensive income/loss includes unrealized gains and losses
      on the financial assets classified as available-for-sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | This new CICA handbook section 3865, Hedges, specifies
      the criteria under which hedge accounting can be applied, how the hedge
      accounting should be applied and the related required disclosures. The
      Company does not apply hedge accounting and therefore the adoption of this
      standard has no impact.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4. | New Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Recent accounting pronouncements issued which may affect
      the Company in the future are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Financial Instruments Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In February 2007, the CICA issued handbook section 3862,
      Financial Instruments  Disclosure and section 3863, Financial
      Instruments  Presentation, to replace existing section 3861, Financial
      Instruments  Disclosure and Presentation. The purpose of the new
      financial statement disclosure requirements of Section 3862 is to enable
      users to evaluate the significance of financial instruments on the
      Companys financial position and performance, the nature and extent of
      risks arising from financial instruments the Company is exposed to during
      the reporting period and as at the balance sheet date, and how the Company
      is managing those risks. Section 3863 carries forward, unchanged the
      presentation requirements of existing section 3861 to enhance the users
      understanding of the significance of financial instruments to the
      Companys financial position, performance and cash flows. The standards
      are effective for fiscal years beginning on or after October 1,
    2007.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Capital Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In December 2006, the CICA released Handbook Section
      1535, Capital Disclosures. The purpose of the new requirements of
      section 1535 is to enable users to evaluate the Companys objectives,
      policies and processes for managing capital. This standard is effective
      for fiscal years beginning on or after October 1,
2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|4. | New Accounting Standards-
      Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In June 2007, the CICA released Handbook Section 3031,
      Inventories, which replaces section 3030, Inventories. The new section
      establishes standards for the measurement and disclosure of inventories,
      including the determination of cost and its subsequent recognition as an
      expense, including any write-down to net realizable value. It also
      provides guidance on the cost formulas that are used to assign costs to
      inventories. This standard is effective for fiscal years beginning on or
      after January 1, 2008. The Company does not expect that the adoption of
      this standard will have a material impact on its consolidated financial
      statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | General Standards on Financial Statement
    Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In June 2007, the CICA amended Handbook Section 1400,
      General Standards on Financial Statement Presentation, which included
      changes to the requirements to assess and disclose a companys ability to
      continue as a going concern. The new amended standard is effective for
      fiscal years beginning on or after January 1, 2008.                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|5. | Restricted Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company has $24 (2007 - $24) in environmental bonds
      relating to exploration properties in El
Salvador.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|6. | Short Term Investments
|-- | ----------------------

| |                        |  |   | 2008  |  |   | 2007  | 
| | ---------------------- |  | - | ----- |  | - | ----- | 
| | Short Term Investments |  | $ | 4,232 |  | $ | 7,937 | 

At April 30, 2008 and 2007, short term investments are
comprised of guaranteed investments certificates and/or bankers acceptances
guaranteed by large North American banking institutions that are callable on
demand and pay interest for the period of the investment.

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

| |                      |   | 2008  |  |   | 2007  | 
| | -------------------- | - | ----- |  | - | ----- | 
| | Bullion              | $ | 1,060 |  | $ | 778   | 
| | In-process inventory | $ | 230   |  | $ | 299   | 
| |                      | $ | 1,290 |  | $ | 1,077 | 

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|8. | Property, Plant and
Equipment
|-- | -----------------------------

| |                                                       |   | 2008    |   |   | 2007    |  
| | ----------------------------------------------------- | - | ------- | - | - | ------- | -
| | Office Equipment and Vehicles                         | $ | 399     |   | $ | 252     |  
| | Accumulated Depreciation                              |   | (233    | ) |   | (175    | )
| |                                                       |   | 166     |   |   | 77      |  
| | Rawhide Mining Facility (Note 9)                      |   | 26,745  |   |   | 26,542  |  
| | Accumulated depreciation and amortization             |   | (25,572 | ) |   | (25,059 | )
| |                                                       |   | 1,173   |   |   | 1,483   |  
| | Mining Property Acquisition Costs  El
      Salvador |   | 5,454   |   |   | 4,711   |  
| |                                                       | $ | 6,793   |   | $ | 6,271   |  

El Salvador Properties

The Company holds a 100% interest in certain mineral properties
in El Salvador known as El Dorado. An Environmental Impact Study has been
submitted to governmental authorities for their consideration and required
approval before the exploration licence can be converted to an exploitation
concession which is required to carry out mining in the licence area.

| | i)   | Annual advance minimum royalty payments are required on
      the El Dorado property, which are the greater of $50 per year or a 3% net
      smelter return royalty (NSR). The Company has the right to purchase the
      NSR for $4,000 ($1,000 for 1.5% and $3,000 for the remainder) provided
      that the royalty is at least partially acquired within six months of
      commercial production.                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |      | All licences are subject to an El Salvador government NSR
      of 2%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ii)  | By agreement dated March 29, 2006, the Company has
      superceded an option agreement dated November 14, 2003 to acquire a parcel
      of land suitable for mineral exploitation activities within the El Dorado
      exploration licence area. During the third quarter of 2007, the Company
      commenced the process of exercising its option to purchase the parcel and
      advanced $300 of the $971 payment. During fiscal 2008, upon transfer of
      title in the parcel of land to the Company, the final $671 was
  paid.                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | iii) | 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. Subsequent to April 30,
      2008, the Company re-started the work on the El Dorado feasibility study;
      however the Company has experienced lengthy delays in the processing of
      the El Dorado exploitation concession application. The continued delays or
      one of more the issues noted above or other factors beyond the control of
      the Company could adversely impact operations in El Salvador or result in
      the impairment of the El Dorado property in the future; such impairment
      could be material.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | iv)  | The Company maintains an additional 4 exploration
      licences adjacent to the El Dorado property known as Santa Rita, Guaco,
      Huaucuco and Pueblos.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|8. | Property, Plant and Equipment -Continued
|-- | ----------------------------------------
|   |                                         
|   | El Salvador Properties - continued      
|   |                                         
|   | v)                                      

Upon TSX approval of the amended agreement
      100,000 shares plus 100,000 warrants
        of the CompanyAnnual
        advance royalty payments
      The greater
        of:First anniversary
      100,000 shares or $100 in shares of the
        CompanySecond anniversary
      140,000 shares or $140 in shares of the
        CompanyThird anniversary
      200,000 shares or $200 in shares of the
        CompanyFourth anniversary
      300,000 shares or $300 in shares of the
        CompanyFifth 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 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
amended agreement, 100,000 shares and 100,000 warrants of the Company were
issued on November 8, 2006. On February 13, 2007, 100,000 shares were issued
pursuant to the first anniversary payment. On February 11, 2008, 140,000 shares
were issued pursuant to the second anniversary payment.

Other Exploration Properties

The Company holds exploration rights on mineral claims in Costa
Rica which are largely unexplored and undeveloped.

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|9. | Denton-Rawhide Joint Venture
|-- | ----------------------------
|   |                             
|   | i)                          

2008
    
    
    2007
    
    
    2006Current assets
    $
    1,637
    
    $
    1,209
    
    
    814Property, plant and equipment
    
    1,173
    
    
    1,483
    
    
    453Closure fund
    
    3,787
    
    
    3,391
    
    
    3,248Current liabilities
    
    (1,573
    )
    
    (1,003
    )
    
    (431
    )Long-term liabilities
    
    (2,120
    )
    
    (2,322
    )
    
    (1,624
    )Net assets
    $
    2,904
    
    $
    2,758
    
    
    2,460


The condensed statements of operating income of the Companys
49% interest are as follows:

2008
    
    
    2007
    
    
    2006Sales
    $
    7,680
    
    $
    8,337
    
    $
    8,024Costs and expenses
    
    (6,084
    )
    
    (5,582
    )
    
    (4,489
    )$
    1,596
    
    $
    2,755
    
    $
    3,535


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

2008
    
    
    2007
    
    
    2006Cash flows provided by
      operations
    $
    2,075
    
    $
    2,790
    
    $
    2,862Cash flows provided by (used for)investment
      activities
    
    (438
    )
    
    (253
    )
    
    (3
    )Cash flows provided by (used for) financingactivities
    
    -
    
    
    -
    
    
    -Net cash flow
    $
    1,637
    
    $
    2,537
    
    $
    2,859


| | ii) | By agreement dated October 28, 2004 subsequently amended
      in October 2006 and November 2007 between the Company and Kennecott
      Rawhide Mining Company (the Denton-Rawhide joint venture partners 
      Rawhide) and Nevada Resource Recovery Group LLC (NRRG), Rawhide has
      agreed to the transfer of certain properties and assets required for an
      approved landfill business. The landfill will be operated and permitted by
      NRRG, utilizing the existing mine open pits as landfill sites, to dispose
      of permitted non-hazardous municipal wastes. As consideration for certain
      real property, including access and water rights, NRRG will pay $1,500. To
      date, $500 of the amount has been paid into trust by NRRG to fund
      additional activities needed to close the transaction, including the
      acquisition by Rawhide of title to additional lands within the area of
      interest and to perfect the title of lands required for the operation.
      Should Rawhide complete these items and NRRG does not or is not able to
      complete their undertakings, any unspent balance in the trust will be
      released to Rawhide. The remaining $1,000 balance of the NRRG
      consideration is to be paid on the closing date. Upon closing, Rawhide and
      NRRG will sign a royalty payment agreement based on tipping fees generated
      by the landfill operation. Additional consideration, still to be
      determined, for certain buildings and other property required for the
      operation, will be paid to Rawhide on closing. The $500 received from NRRG
      has not been reflected in these financial statements as Rawhide has not
      yet removed the conditions for release from escrow. The November 2007
      amendment extended the closing date of the sale of the lands comprising
      the Denton-Rawhide open pits to on or before October, 31, 2008 (formerly
      October 31, 2007 pursuant to the first amendment to the
  agreement).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|10. | Mine Post-Closure Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | (a) Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Asset retirement obligations arise from the acquisition,
      development, construction and normal operation of mining property, plant
      and equipment. The Company has future obligations relating to its share of
      the cost of retiring the mining assets at the Denton-Rawhide mine,
      including dismantling, remediation and ongoing treatment and monitoring of
      the site. The exact nature of the environmental issues and costs, if any,
      which the Company may encounter in the future are subject to change,
      primarily because of the changing character of environmental requirements
      that may be enacted by government agencies.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The following table details the changes in the Companys
      share of the asset retirement obligations at the Denton Rawhide
    mine:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

2008
    
    
    2007Opening balance
    $
    2,052
    
    $
    1,443Adjustments to closure cost
      estimate
    
    (49
    )
    
    676Reclamation
      spending
    
    (162
    )
    
    (127
    )Accretion
    
    83
    
    
    60Ending balance
    $
    1,924
    
    $
    2,052Less current portion
    
    (260
    )
    
    (135
    )$
      1,664
      
    $
    1,917 The key assumptions on which the carrying amount of the asset
    retirement obligation is based are:


2008
    
    
    2007Total undiscounted cashflows
    $
    2,075
    
    $
    2,115Expected timing of cashflows to settle
      obligation
    
    4 years
    
    
    5 yearsDiscount rate
    
    4.0%
    
    
    4.0% Closure Fund The Denton-Rawhide Closure Fund, held in trust, is provided
    as security to the mine operator for the Companys portion of estimated
    closure liabilities and severance obligations. The fund is comprised of investments
    held in a trust managed by a Trustee that is a large North American banking
    institution. The trust funds are invested in mutual funds composed of U.S.
    Government guaranteed fixed income securities with maturities of one to five
    years. The fair market value of the funds at April 30, 2008 was $3,787 (2007
    - $3,468). At April 30, 2008, closure trust funding is in excess of estimated
    total closure cost liabilities. The Company will not have access to any excess
    funds until all related closure liabilities are satisfied and reclamation
    work is deemed complete by the Denton-Rawhide joint venture operator.


---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|10. | Mine Post-Closure Obligations- Continued
|--- | ----------------------------------------
|    |                                         
|    | (b)                                     
|    |                                         
|    |                                         
|    |                                         
|    |                                         

|11. | Pension Plans and Other Post-Retirement
      Benefits
|--- | ------------------------------------------------------

Through its ownership of 49% of the Denton Rawhide joint
venture, the Company is responsible for its share of the cost of pension plans
and other post-retirement benefit plans (collectively, the retirement plans)
provided to the employees of the joint venture. Under an agreement between the
Company and the operator of the Denton Rawhide joint venture, the Companys
obligation to fund its share of the pension plan and post-retirement benefit
plans terminates one year after the cessation of continuous gold production from
the leach pads at the Denton-Rawhide mine.

The joint venture maintains a defined benefit pension plan for
its employees. The pension plan provides benefits based on length of service and
final average pay, both as defined by the plan. Contributions to the plan are
actuarially determined.

Under the health and welfare plan, joint venture employees are
provided with post-retirement health and dental benefits for themselves and
their dependents. Retirees share in the cost of benefit through caps and
deductibles.

|(a) Pension Plan (Companys 49% share)                               |   |        |   |   |        |  
|-------------------------------------------------------------------- | - | ------ | - | - | ------ | -
|                                                                     |   | 2008   |   |   | 2007   |  
|Fair value of plan assets                                            | $ | 1,156  |   | $ | 1,061  |  
|Benefit obligation                                                   |   | (1,106 | ) |   | (1,081 | )
|Funding Surplus/(Deficit)                                            | $ | 50     |   | $ | (20    | )
|                                                                     |   |        |   |   |        |  
|                                                                     |   |        |   |   |        |  
|(b) Post Retirement Benefits (Companys 49% share)                   |   |        |   |   |        |  
|                                                                     |   | 2008   |   |   | 2007   |  
|Fair value of plan assets                                            | $ | -      |   | $ | -      |  
|Benefit obligation                                                   |   | (253   | ) |   | (210   | )
|Funding Surplus/(Deficit)                                            | $ | (253   | ) | $ | (210   | )
|                                                                     |   |        |   |   |        |  
|                                                                     |   |        |   |   |        |  
|(c) Significant assumptions                                          |   |        |   |   |        |  
|                                                                     |   | 2008   |   |   | 2007   |  
|Discount rate                                                        |   | 6.3%   |   |   | 5.9%   |  
|Expected return on plan
      assets                                 |   | 7.3%   |   |   | 7.3%   |  
|Expected rate of salary increase                                     |   | 3.9%   |   |   | 4.0%   |  
|                                                                     |   |        |   |   |        |  
|(d) Employee future benefit expense                                  |   |        |   |   |        |  
|                                                                     |   |        |   |   |        |  
|The
      recovery recognized for the year was $(27) (2007 - $(50)). |   |        |   |  

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|12. | Share Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Common Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Authorized: unlimited number of common shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Stock and Warrant Issues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Through a non-brokered private placement that closed on
      February 29, 2008 the Company issued 6,711,000 Units priced at
      CDN$1.05/unit representing total gross proceeds of CDN$7,047. Each Unit is
      comprised of one common share in the Company and one non-transferable
      share purchase warrant that entitles the holder to acquire one additional
      share of the Company at a price of CDN$1.35 for a period of 18 months
      following the close of financing. Where third parties secured the sale of
      the Units, they were entitled to a finders fee comprised of 7% cash
      commission and 7% agent warrants. A total of 350,350 agent warrants were
      issued as a component of the finders fee. The spouse of a director
      received a finders fee comprised of cash commission of $137 and 152,600
      agent warrants in connection with the private placement. The proceeds
      received on the issuance of the Units have been allocated to the common
      share and warrant components on a relative fair value basis. The proceeds
      allocated to warrants totalled $1,204 and was based on the fair value of
      the share purchase warrants of CAD$0.25 per warrant which was determined
      using the Black-Scholes Option Pricing Model assumptions below.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On November 08, 2006 and February 13, 2007 200,000 shares
      and 100,000 warrants were issued under the terms of the Cerro Colorado
      exploration agreement dated February 06, 2006 and subsequently amended in
      September 2006 (see Note 8(a)(v)). The $38 non cash fair value of these
      warrants as calculated using the Black Scholes Option Pricing Model was
      charged as exploration expenditures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The assumptions used to determine the cost in the
      warrants pricing model are summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                   | 2008      | 2007   
| | ------------------------------------------------- | --------- | -------
| | Average risk free interest rate                   | 2.83%     | 4.00%  
| | Average expected option life                      | 1.5 years | 3 years
| | Stock volatility  based on
      trading history | 57%       | 54%    
| | Dividend payments during life of option           | nil       | nil    

Details of warrants issued, exercised
and outstanding are:

Number
      of warrants
    Exercise price ($Cdn)
    ExpiryApril 30, 2007
    100,000
    0.81
    November 07, 2009Issued: February 29, 2008 February 29,
      2008
    6,711,000  
      350,350
    1.35 1.11
    August 29, 2009 August 29,
      2009April 30, 2008
    7,161,350


---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|12. | Share Capital Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | 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 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. The 2006 Plan replaces the 2002 Plan and the
      Company has discontinued granting options under the 2002 Plan. However,
      any outstanding options granted under the 2002 Plan will continue to be
      governed by the 2002 Plan.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Current option details are as
follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                      |                     | Number of Options |             |          
|------------------------------------- | ------------------- | ----------------- | ----------- | ---------
|                                      |                     |                   |             |          
|                                      |                     | Pre-              | 2002 Plan   | 2006 Plan
|                                      |                     | Amalgamation      |             |          
|                                      |                     | Plans             |             |          
|                                      |                     |                   |             | -        
|Options outstanding at April 30, 2005 | 1,601,100           | 4,520,800         |             | 6,121,900
|                                      |                     |                   |             |          
|Year ended April 30, 2006             | - granted           | -                 | 12,500      | -        
|                                      |                     |                   |             |          
|                                      | - expired/cancelled | (30,800)          | (93,334)    | -        
|                                      |                     |                   |             |          
|                                      | - exercised         | (611,300)         | (172,466)   | -        
|                                      |                     |                   |             |          
|Options outstanding at April 30, 2006 | 959,000             | 4,267,500         | -           | 5,226,500
|                                      |                     |                   |             |          
|Year ended April 30, 2007             | - granted           | -                 | 1,000,000   | 1,795,000
|                                      |                     |                   |             |          
|                                      | - exercised         | (959,000)         | (1,685,000) | -        
|                                      |                     |                   |             |          
|Options outstanding at April 30, 2007 | -                   | 3,582,500         | 1,795,000   | 5,377,500
|                                      |                     |                   |             |          
|Year ended April 30, 2008             | - granted           | -                 | -           | 2,400,000
|                                      |                     |                   |             |          
|                                      | - expired/cancelled | -                 | (60,000)    | (30,000) 
|                                      |                     |                   |             |          
|                                      | - exercised         | -                 | (282,500)   | -        
|                                      |                     |                   |             |          
|Options outstanding at April 30, 2008 | -                   | 3,240,000         | 4,165,000   | 7,405,000
|                                      |                     |                   |             |          
|Vested as at April 30, 2008           | -                   | 2,906,667         | 2,208,333   | 5,115,000

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|12. | Share Capital -Continued                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                    
|    | Stock Options- Continued                                                                                                                           
|    |                                                                                                                                                    
|    | The following table summarizes information about stock
      options outstanding to directors, employees and consultants as at April
      30, 2008

|                                                                                                                          | Exercise Price   | Number      | Number   
|------------------------------------------------------------------------------------------------------------------------- | ---------------- | ----------- | ---------
|Expiry Date                                                                                                               | (in
      Cdn $) | Outstanding | Vested   
|July 23, 2008                                                                                                             | $0.43            | 130,000     | 130,000  
|October 8, 2008                                                                                                           | $0.85            | 1,065,000   | 1,065,000
|February 18, 2010                                                                                                         | $0.75            | 1,045,000   | 1,045,000
|June 27, 2010*                                                                                                            | $0.99            | 220,000     | -        
|June 15, 2011                                                                                                             | $0.74            | 500,000     | 333,334  
|August 27, 2011                                                                                                           | $0.92            | 500,000     | 333,333  
|August 28, 2011                                                                                                           | $0.92            | 1,440,000   | 1,065,000
|December 03, 2011                                                                                                         | $1.34            | 125,000     | 83,333   
|February 11, 2012                                                                                                         | $1.32            | 200,000     | 133,333  
|June 12, 2012                                                                                                             | $0.90            | 60,000      | 20,000   
|August 27, 2012                                                                                                           | $0.96            | 300,000     | 300,000  
|March 09, 2013                                                                                                            | $1.17            | 1,820,000   | 606,667  
|                                                                                                                          |                  | 7,405,000   | 5,115,000
|* These are performance vested options that have
      a term of three years and vest upon attaining specified milestones

Stock-based compensation expenses as calculated using the
Black-Scholes Option Pricing Model are as follows:

|                               |   | 2008 |  |   | 2007 |  |   | 2006 | 
|------------------------------ | - | ---- |  | - | ---- |  | - | ---- | 
|Administrative
      costs     | $ | 622  |  | $ | 705  |  | $ | 166  | 
|Exploration costs              |   | 372  |  |   | 263  |  |   | 52   | 
|Total stock-based compensation | $ | 994  |  | $ | 968  |  | $ | 218  | 

Black-Scholes assumptions for option grants during each year
are as follows:

|                                                          |   | 2008    |  |   | 2007      |  |   | 2006      | 
|--------------------------------------------------------- | - | ------- |  | - | --------- |  | - | --------- | 
|                                                          |   |         |  |   |           |  |   |           | 
|Average risk free interest rate                           |   | 3.94 %  |  |   | 4.01%     |  |   | 3.83%     | 
|Average expected option life (years)                      |   | 5 years |  |   | 4.2 years |  |   | 4.0 years | 
|Average stock volatility  based on trading
      history |   | 66%     |  |   | 78%       |  |   | 88%       | 
|Dividend payments during life of option                   |   | nil     |  |   | nil       |  |   | Nil       | 
|Total average fair value of option granted                | $ | 389     |  | $ | 309       |  | $ | 315       | 

Option pricing models require the input of highly subjective
assumptions regarding the expected volatility. Changes in assumptions can
materially affect the fair value estimate, and therefore, the existing models do
not necessarily provide a reliable measure of the fair value of the Companys
stock options at the date of grant.

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|13. | Financial Instruments                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | (a)                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company periodically enters into derivative
      instruments to mitigate exposures to gold commodity prices.                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | At April 30, 2008, the Company had no forward gold sales
      contracts (2007 - 1,000 ounces for future delivery of gold at various
      dates from May 2007 to June 2007 at an average price of US$688 per ounce).
      The estimated fair value of gold forward sales contracts at the April 30,
      2007 spot prices was $10.                           
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | (b)                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | Financial instruments that potentially subject the
      Company to credit risk consist of cash and cash equivalents, short term
      investments, closures fund balances and receivables and deposits. The
      Company deposits cash and cash equivalents, short term investments and
      closure fund balances with international financial institutions.
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | (c)                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company does not have any significant interest rate
      risk as all short term investments and closure fund investments are held
      in instruments with guaranteed interest rates.                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | (d)                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                 
|    | As at April 30, 2008, the Companys carrying values of
      receivables, deposits and accounts payable approximate fair values due to
      their short terms to maturity.                                                                                                                                                                                     

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|14. | Income Taxes
|--- | ------------

| | a) | A reconciliation between the Companys statutory and
      effective tax rates is as follows:
| | -- | ---------------------------------------------------------------------------------------------

| |                                                                  |   | 2008   |   |   | 2007   |  
| | ---------------------------------------------------------------- | - | ------ | - | - | ------ | -
| |                                                                  |   |        |   |   |        |  
| | Tax rate                                                         |   | 33.1%  |   |   | 34.1%  |  
| |                                                                  |   |        |   |   |        |  
| | Loss for the year before taxes and discontinued
      operations | $ | 13,050 |   | $ | 10,404 |  
| |                                                                  |   |        |   |   |        |  
| | Income tax recovery computed at statutory rate                   |   | 4,319  |   |   | 3,548  |  
| | Change in future tax rates                                       |   | (3,513 | ) |   | -      |  
| | Difference between statutory and foreign tax
      rates         |   | (989   | ) |   | (975   | )
| | Benefit of tax losses and other deductions not recognized        |   | (695   | ) |   | (2,280 | )
| | Stock based compensation                                         |   | (206   | ) |   | (306   | )
| |                                                                  |   |        |   |   |        |  
| | Income tax expense                                               | $ | (1,084 | ) | $ | (13    | )
| | Current income tax expense                                       | $ | (100   | ) | $ | (13    | )
| | Future income tax expense                                        | $ | (984   | ) | $ | -      |  

| | 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, 2008 the Company has the following tax loss carry forwards
        and deductions:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Country       | Category                                   |  |   | Amount |  | Expiry   
| | ------------- | ------------------------------------------ |  | - | ------ |  | ---------
| |               |                                            |  |   |        |  |          
| | Argentina     | Operating losses                           |  | $ | 2,633  |  | 2009-2013
| | Canada        | Non-capital losses                         |  | $ | 9,107  |  | 2009-2028
| |               | Net capital losses                         |  | $ | 58,210 |  | N/A      
| |               | Mineral expenditures                       |  | $ | 11,640 |  | N/A      
| | United States | Operating losses  Regular tax             |  | $ | 2,082  |  | 2009-2027
| |               | Operating losses  Alternative minimum tax |  | $ | 56     |  | 2009-2027

| | c) | Future income tax assets are not recorded for the above
        tax loss carry forwards as they are not considered to be more likely than
        not to be realized. The tax losses may be subject to audit and adjustment
        by local tax authorities as well as other local regulations. Significant
        components of the Companys future income tax assets, after applying
        substantively enacted corporate income tax rates are as follows:
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                       |   | 2008    |   |   | 2007    |  
| | ----------------------------------------------------- | - | ------- | - | - | ------- | -
| | Non-capital losses and other deductions               | $ | 4,305   |   | $ | 4,370   |  
| | Net capital losses                                    |   | 15,135  |   |   | 16,373  |  
| | Property plant and equipment and mineral expenditures |   | 3,859   |   |   | 9,374   |  
| | Accrued closure costs                                 |   | 649     |   |   | 900     |  
| |                                                       |   | 23,948  |   |   | 31,017  |  
| | Less: Valuation allowances                            |   | (23,948 | ) |   | (31,017 | )
| |                                                       |   | -       |   |   | -       |  
| |                                                       |   |         |   |   |         |  
| | Mineral property acquisition costs                    |   | (1,046  | ) |   | -       |  
| |                                                       | $ | (1,046  | ) | $ | -       |  

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|15. | Commitments                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                     
|    | Operating Leases                                                                                                                                    
|    | The Company has entered into operating leases for office
      premises, office equipment and vehicles. Minimum lease payments are as
      follows:

| |                 |   | Office       |  |   | Office    |  |   |          |  |   |       | 
| | --------------- | - | ------------ |  | - | --------- |  | - | -------- |  | - | ----- | 
| |                 |   | Premises (i) |  |   | Equipment |  |   | Vehicles |  |   | Total | 
| | 2009            | $ | 40           |  | $ | 7         |  | $ | 48       |  | $ | 95    | 
| | 2010            |   | 40           |  |   | 5         |  |   | 15       |  |   | 60    | 
| | 2011            |   | 40           |  |   | 5         |  |   | 4        |  |   | 49    | 
| | 2012            |   | 40           |  |   | 5         |  |   | -        |  |   | 45    | 
| | 2013 and beyond |   | 30           |  |   | 2         |  |   | -        |  |   | 32    | 
| |                 | $ | 190          |  | $ | 24        |  | $ | 67       |  | $ | 281   | 

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

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|                                          
|In thousands of U.S. dollars              

|**16.** | Segmented Information                                                                                                                                                                                                                         
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                               
|        | The Company has five operating segments
      comprised of the joint venture interest in the Denton Rawhide mine in the
      USA, exploration projects in Argentina, Chile and Argentina and the
      corporate head office based in Canada.

| |                                                |   | 2008    |   |   | 2007    |   |   | 2006   |  
| | ---------------------------------------------- | - | ------- | - | - | ------- | - | - | ------ | -
| | Total Assets                                   |   |         |   |   |         |   |   |        |  
| | Canada                                         | $ | 5,641   |   | $ | 9,748   |   | $ | 16,392 |  
| | USA                                            |   | 6,632   |   |   | 6,183   |   |   | 4,557  |  
| | El Salvador                                    |   | 5,987   |   |   | 5,554   |   |   | 4,347  |  
| | Argentina                                      |   | 10      |   |   | 9       |   |   | 24     |  
| | Total                                          | $ | 18,270  |   | $ | 21,494  |   | $ | 25,320 |  
| | Total Property, Plant and
      Equipment      |   |         |   |   |         |   |   |        |  
| | Canada                                         | $ | 17      |   | $ | 77      |   | $ | 17     |  
| | USA                                            |   | 1,173   |   |   | 1,483   |   |   | 453    |  
| | El Salvador                                    |   | 5,603   |   |   | 4,711   |   |   | 4,248  |  
| | Total                                          | $ | 6,793   |   | $ | 6,271   |   | $ | 4,718  |  
| | Revenue                                        |   |         |   |   |         |   |   |        |  
| | USA                                            |   | 7,680   |   |   | 8,337   |   |   | 8,024  |  
| | Total                                          | $ | 7,680   |   | $ | 8,337   |   | $ | 8,024  |  
| | Depreciation, Depletion and
      Amortization |   |         |   |   |         |   |   |        |  
| | Canada                                         | $ | 15      |   | $ | 13      |   | $ | 6      |  
| | USA                                            |   | 513     |   |   | 142     |   |   | 92     |  
| | El Salvador                                    |   | 43      |   |   | -       |   |   | -      |  
| | Total                                          | $ | 571     |   | $ | 155     |   | $ | 98     |  
| | Net Income (Loss)                              |   |         |   |   |         |   |   |        |  
| | Canada                                         | $ | (2,571  | ) | $ | (2,182  | ) | $ | (956   | )
| | USA                                            |   | 1,242   |   |   | 2,574   |   |   | 3,071  |  
| | El Salvador                                    |   | (12,573 | ) |   | (10,495 | ) |   | (5,896 | )
| | Argentina                                      |   | (229    | ) |   | (278    | ) |   | (149   | )
| | Chile                                          |   | 1,397   |   |   | 964     |   |   | 3,322  |  
| | Total                                          | $ | (12,734 | ) | $ | (9,417  | ) | $ | (608   | )

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|17. | United States Generally Accepted Accounting Principles
      (US GAAP)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The effect of the measurement differences between
      Canadian GAAP and US GAAP are summarized below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Accounting for Uncertainty in Income Tax
      Positions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | In June 2006, the Financial Accounting Standards Board
      (FASB) issued FIN 48, Accounting for Uncertainty in Tax Position, an
      Interpretation of FASB Statement No. 109. FIN 48 addresses the recognition
      and measurement of all tax positions. The recognition process involves
      determining whether it is more likely than not that a tax position would
      be sustained on an audit based solely on its technical merits. The amount
      of benefit recognized in the financial statements is the maximum amount
      that is more likely than not to be realized based on a cumulative
      probability approach. FIN 48 is effective for fiscal years beginning on or
      after December 15, 2006. The Company adopted FIN 48 effective May 1, 2007.
      The adoption did not result in any difference between Canadian GAAP and US
      GAAP.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Share Purchase Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | In June 2008, the EITF 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 consensus is
      applicable for fiscal years beginning after December 15, 2008 and
      accordingly will apply to the Company in the fiscal year commencing May 1,
      2009.                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Proportionate Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | US GAAP requires investments in joint ventures to be
      accounted for using the equity method, whereas under Canadian GAAP the
      accounts of joint ventures are proportionately consolidated. The Companys
      joint venture interest qualifies for the SEC accommodation, which allows
      the continued use of the proportionate consolidation method. Additional
      information regarding the Companys joint venture interest is disclosed in
      note 8.                                                                                                                                                                                                                                                                                                                                                                                                        

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|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|17. | United States Generally Accepted Accounting Principles
      (US GAAP)- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Under Canadian GAAP, prior to adopting the new financial
      instruments standard effective May 1, 2007, investments in short term
      investments and the closure fund were recorded at cost. For US GAAP, these
      investments are designated as available for sale and are recorded at
      fair value with unrealized gains or losses included in other comprehensive
      income until realized. With the adoption of the new Canadian financial
      instruments standards effective May 1, 2007, the treatment and recording
      of unrealized gain and losses on investments has been harmonized. The
      differences between Canadian and US GAAP in 2007 and 2006 were not
      material.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Recent U.S. Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | SFAS No 157, Fair Value Measurements, (SFAS 157) was
      issued in September 2006. SFAS 157 provides a consistent definition of
      fair value which focuses on exit price and prioritizes, within a
      measurement of fair value, the use of market-based inputs over
      entity-specific inputs. SFAS 157 requires expanded disclosures about fair
      value measurements and is effective for financial statements issued for
      fiscal years beginning after November 15, 2007. The provisions of SFAS 157
      will be applied prospectively. The Company is currently evaluating the
      effects that SFAS 157 may have on its consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | SFAS No 159, The Fair Value Option for Financial Assets
      and Financial Liabilities  including an Amendment of SFAS No 115 (SFAS
      159) was issued in February 2007. SFAS 159 permits an entity to measure
      certain financial assets and financial liabilities at fair value that are
      not currently required to be valued at fair value. Entities that elect the
      fair value option will report unrealized gains and losses in earnings at
      each subsequent reporting date. The fair value option may be elected on an
      instrument-by-instrument basis, with few exceptions. SFAS 159 also
      establishes presentation and disclosure requirements to help financial
      statement users understand the effect of the election. SFAS 159 is
      effective for fiscal years beginning after November 15, 2007. The Company
      does not expect the adoption of this standard to have a material impact on
      its consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | SFAS No 160, Non-controlling Interests in Consolidated
      Financial Statements, an Amendment of ARB 51 (SFAS 160) was issued in
      December 2007. SFS 160 specifies that non-controlling interests are to be
      trated as a separate component of equity, not as a liability or other item
      outside of equity. Because non-controlling interest are an element of
      equity, increases an decreases in the parent companys ownership interest
      that leave control intact are accounted for as a capital transaction
      rather than as a step acquisition or dilution of gains and losses. The
      carrying amount of non-controlling interests is adjusted to reflect the
      change in ownership interests, and any difference between the amount by
      which the non-controlling interests are adjusted and the fair value of the
      consideration paid or received is recognized directly in equity
      attributable to the controlling interest. SFAS 160 is effective for fiscal
      years beginning on or after December 15, 2008 and will be applied
      prospectively to all non-controlling interests, including those that arose
      before the effective date. The Company does not expect the adoption of
      this standard to have a material impact on its consolidated financial
      statements.

---

|Pacific Rim Mining Corp                   
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2008, 2007 and 2006             
|In thousands of U.S. dollars              
|                                          

|17. | United States Generally Accepted Accounting Principles
      (US GAAP) Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Recent U.S. Accounting Pronouncements
      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | SFAS No 161, Disclosures about Derivative Instruments
      and Hedging Activities  an amendment to FASB Statement No 133 (SFAS
      161) was issued in March 2008. SFAS 161 is intended to improve financial
      instruments standards for derivative instruments and hedging activities by
      requiring enhanced disclosures to enable investors to better understand
      their effects on an entitys financial position, financial performance,
      and cash flows. Entities are required to provide enhanced disclosures
      about: (a) how and why an entity uses derivative instruments; (b) how
      derivative instruments and related hedged items are accounted for under
      Statement 133 and its related interpretations; and (c) how derivative
      instruments and related hedged items affect an entitys financial
      position, financial performance and cash flows. It is effective for
      financial statements issue for fiscal years beginning after November 15
      2008, with early adoption encouraged. Since the Company does not apply
      hedge accounting, the adoption of this standard has no
  impact.

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