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**UNITED STATESSECURITIES AND EXCHANGE
COMMISSION**Washington, D.C. 20549

FORM 40-F

[   ] Registration statement pursuant to Section 12 of
the Securities Exchange Act of 1934

or

[X] Annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934

For the fiscal year ended April 30, 2006

Commission File Number: ________

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

|British Columbia                   | 1041                                        | Not Applicable     
|---------------------------------- | ------------------------------------------- | -------------------
|(Province or Other Jurisdiction of | (Primary Standard Industrial Classification | (I.R.S. Employer   
|Incorporation or Organization)     | Code)                                       | Identification No.)

Suite 410- 625 Howe Street Vancouver, British Columbia
Canada, V6C 2T6 (604) 689-1976(Address and telephone
number of Companys principal executive offices)

Dorsey & Whitney 370 Seventeenth Street, Suite 4700
Denver, CO 80202 (303) 629-3400(Name, address (including
zip code) and telephone number (including area code) of agent for service in the
United States)

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

|Title of Each Class:        | Name of Each Exchange On Which Registered:
|--------------------------- | ------------------------------------------
|Common Shares, no par value | American Stock Exchange                   

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

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

For annual reports, indicate by check mark the
information filed with this form:

|[X]  Annual Information Form | [X]  Audited Annual Financial Statements
|---------------------------- | ----------------------------------------

Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report. As at April 30, 2006, 105,590,960 Common Shares
without par value were issued. As at July 25, 2006, 106,701,960 Common
Shares without par value were issued.

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Indicate by check mark whether the Company by filing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934 (the Exchange Act). If Yes is marked, indicate the
filing number assigned to the Company in connection with such Rule.
[   ] Yes   [X] No

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

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Explanatory Note: Pacific Rim Mining Corp.(the Company) is a Canadian issuer that is permitted, under a multi-jurisdictional disclosure system adopted in the United States, to prepare its Annual Report pursuant to Section 13 of
the Securities Exchange Act of 1934 (the 1934 Act) in accordance with disclosure requirements in effect in Canada which differ from those of the United States. The Company is a foreign private issuer as defined in Rule 3b-4
under the 1934 Act and in Rule 405 under the Securities Act of 1933.  Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the 1934 Act pursuant to Rule 3a12-3.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This
Annual Report on Form 40-F and the Exhibits included herein contain
forward-looking statements concerning the Companys plans for its properties,
estimated production, capital and operating cash flow estimates and other
matters. These statements relate to analyses and other information that are
based on forecasts of future results, estimates of amounts not yet determinable
and assumptions of management. Statements concerning mineral resource estimates
may also be deemed to constitute forward-looking statements to the extent that
they involve estimates of the mineralization that will be encountered if the
property is developed. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always, using words
or phrases such as expects, is expected, anticipates, plans, projects,
estimates, assumes, intends strategy, goals, objectives, potential
or variations thereof or stating that certain actions, events or results may,
could, would, might or will be taken, occur or be achieved, or the
negative of any of these terms and similar expressions) are not statements of
historical fact and may be forward-looking statements.

Forward-looking
statements are subject to a variety of known and unknown risks, uncertainties
and other factors that could cause actual events or results to differ from those
reflected in the forward-looking statements, including, without limitation:

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

This
list is not exhaustive of the factors that may affect any of the Company's
forward-looking statements. Forward-looking statements are statements about the
future and are inherently uncertain, and actual achievements of the Company or
other future events or conditions may differ materially from those reflected in
the forward-looking statements due to a variety of risks, uncertainties and
other factors, including, without limitation, those referred to in

II-2

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the Companys Annual Information Form filed as Exhibit 1 to
this Annual Report on Form 40-F, under the heading Risk Factors'' and
elsewhere.

The
Company's forward-looking statements are based on the beliefs, expectations and
opinions of management on the date the statements are made, and the Company does
not assume any obligation to update forward-looking statements if circumstances
or management's beliefs, expectations or opinions should change. For the reasons
set forth above, investors should not place undue reliance on forward-looking
statements.

NOTE TO UNITED STATES READERS-DIFFERENCES IN
UNITED STATES AND CANADIAN REPORTING PRACTICES

The Company is permitted, under a
multijurisdictional disclosure system adopted by the United States, to prepare
this annual report in accordance with Canadian disclosure requirements, which
are different from those of the United States. The Company prepares its
financial statements, which are filed with this report on Form 40-F in
accordance with Canadian generally accepted accounting practices (GAAP), and
they may be subject to Canadian auditing and auditor independence standards.
They may not be comparable to financial statements of the United States
companies. Significant differences between Canadian GAAP and United States GAAP
are described in Note 15 of the comparative audited consolidated financial
statements of the Company.

RESOURCE ESTIMATES

The
Companys Annual Information Form filed as Exhibit 1 to this Annual Report on
Form 40-F has been prepared in accordance with the requirements of the
securities laws in effect in Canada, which differ from the requirements of
United States securities laws. Unless otherwise indicated, all resource
estimates included in the Companys Annual Information Form have been prepared
in accordance with Canadian National Instrument 43-101 (NI 43-101) and the
Canadian Institute of Mining and Metallurgy Classification System. NI 43-101 is
a rule developed by the Canadian Securities Administrators which establishes
standards for all public disclosure an issuer makes of scientific and technical
information concerning mineral projects. NI 43-101 permits a historical estimate
made prior to the adoption of NI 43-101 that does not comply with NI 43-101 to
be disclosed using the historical terminology if the disclosure: (a) identifies
the source and date of the historical estimate; (b) comments on the relevance
and reliability of the historical estimate; (c) states whether the historical
estimate uses categories other than those prescribed by NI 43-101; and (d)
includes any more recent estimates or data available.

Canadian
standards differ significantly from the requirements of the United States
Securities and Exchange Commission (SEC), and resource information contained
in the Companys Annual Information Form may not be comparable to similar
information disclosed by U.S. companies. In particular, and without limiting the
generality of the foregoing, the term resource does not equate to the term
reserves. Under U.S. standards, mineralization may not be classified as a
reserve unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve
determination is made. The SEC's disclosure standards normally do not permit the
inclusion of information concerning measured mineral resources, indicated
mineral resources or inferred mineral resources or other descriptions of the
amount of mineralization in mineral deposits that do not constitute reserves
by U.S. standards in documents filed with the SEC, unless such information is
required to be disclosed by the law of the Companys jurisdiction of
incorporation or of a jurisdiction in which its securities are traded. U.S.
Investors should also understand that inferred mineral resources have a great
amount of uncertainty as to their existence and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any party of an
inferred mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimated inferred mineral resources may not form the basis of
feasibility or pre-feasibility studies except in rare cases. Readers are
cautioned not to assume that all or any part of an inferred mineral resource
exists or is economically or legally mineable. Disclosure of contained ounces
is permitted disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report resources as in place tonnage and grade without
reference to unit measures.

II-3

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CURRENCY

Unless otherwise indicated, all dollar amounts in the Annual
Report on Form 40-F are expressed in United States dollars.

ANNUAL INFORMATION FORM

The Companys Annual Information Form for the fiscal year ended
April 30, 2006 is included herein as Exhibit 1 and incorporated by reference in
this report on Form 40-F.

AUDITED ANNUAL FINANCIAL STATEMENTS AND MANAGEMENTS
DISCUSSION AND ANALYSIS

Audited Annual Financial Statements

The Companys audited financial statements, including the
report of the auditors with respect thereto, are filed as Exhibit 2 and
incorporated herein by reference. The Companys financial statements are
prepared in accordance with Canadian generally accepted accounting principles
(GAAP), which differs from United States GAAP, and is subject to Canadian
auditing and auditor independence standards, and therefore may not be comparable
to financial statements of United States companies. For a reconciliation of
differences between Canadian and United States generally accepted accounting
principles, see Note 15 to the Companys audited consolidated financial
statements.

Managements Discussion and Analysis

The Companys managements discussion and analysis (MD&A)
is filed as Exhibit 3 and incorporated by reference in this report.

DISCLOSURE CONTROLS AND PROCEDURES

At the end of the period covered by this report, the Company
carried out an evaluation, under the supervision of the Companys Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures
pursuant to Rules 13a-15 and 15d-15 of the United States Securities Exchange Act
of 1934 (Exchange Act). Based upon that evaluation, the Companys Chief
Executive Officer and Chief Financial Officer have concluded that, at the end of
the period covered by this report, the Companys disclosure controls and
procedures are adequately designed and are effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms.

Additionally,
our Chief Executive Officer and Chief Financial Officer have determined that the
disclosure controls and procedures are effective to ensure the information
required to be disclosed in the reports that are filed under the Securities Act
is accumulated and communicated to the Companys management, including its
principal executive officer and principal financial officer, to allow timely
decision regarding required disclosure.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

During the period covered by this Annual Report on Form 40-F,
no changes occurred in the Companys internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.

The Companys management, including the Chief Executive Officer
and Chief Financial Officer, does not expect that its disclosure controls and
procedures or internal controls and procedures will prevent all error and all
fraud. A

II-4

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control system can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.

CODE OF ETHICS FOR CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL
OFFICER AND CONTROLLER

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

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

A copy of the code of ethics is posted on and available for
review on the Companys website www.pacrim-mining.com. There have been no
waivers granted to a provision of the code of ethics in the fiscal year ended
April 30, 2006 to any of the Companys principal officers.

CORPORATE GOVERNANCE GUIDELINES

The Companys corporate governance practices are set forth in
Companys Management Information Circular dated July 4, 2006 and filed with the
SEC as Exhibit 99.3 to on Form 6-K.

The Company is listed on the TSX and is required to describe
its practices and policies with regards to corporate governance with specific
reference to the TSX guidelines on an annual basis by way of a corporate
governance statement contained in the companys annual report or information
circular. The Company is also listed on AMEX and additionally complies as
necessary with the rules and guidelines of AMEX as well as the United States
Securities and Exchange Commission (SEC). The Company reviews its governance
practices on an ongoing basis to ensure it is in compliance. The Company is
complying with applicable new and revised rules and regulations, introduced
pursuant to the Sarbanes-Oxley Act in the United States, by the SEC and AMEX, as
well as changes arising from discussions between the TSX and Ontario Securities
Commission, within the timeframes specified as the revisions and new
requirements come into effect.

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

National Instrument 58-201 Corporate Governance
Guidelines ("NP 58-201") establishes corporate governance guidelines which
apply to all public companies. The Company has reviewed its own corporate
governance practices

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in light of these guidelines. In certain cases, the Company's
practices comply with the guidelines; however, the Board considers that some of
the guidelines are not suitable for the Company at its current stage of
development and therefore these guidelines have not been adopted. National
Instrument 58-101Disclosure of Corporate Governance Practices mandates
disclosure of corporate governance practices, which disclosure is set out
below.

Independence of Members of Board and Management Supervision
by Board

The Company's Board consists of six directors, a majority of
whom are independent based upon the tests for independence set forth in National
Instrument 52-110 Audit Committees("NI 52-110"). The Board will consist
of four (4) independent directors in Messrs. Myckatyn, Petrina, Fagin and
Sweeney. Mr. Shrake is not an independent director because he is the President
and Chief Executive Officer of the Company. Ms. McLeod-Seltzer is not an
independent director because she is the Chair.

The Board facilitates the exercise of independent judgement in
carrying out its responsibilities, by the effective supervision of management by
the independent directors on an informal basis through active and regular
involvement in reviewing and supervising the operations of the Company and
through regular and full access to management. Further independent supervision
is performed through the audit committee which is composed entirely of
independent directors who meet with the Company's auditors without management
being in attendance. The independent directors hold meetings without the
presence of non-independent directors on a quarterly basis and are also
encouraged to meet at any time they consider necessary without any members of
management, including the non-independent directors, being present. The
Company's auditors, legal counsel and certain employees may be invited to
attend. During the Companys most recently completed financial year, the
independent directors met a total of five (5) times.

The Board's Chairman, Ms. McLeod-Seltzer, is not an independent
director. Leadership is provided for the Board's independent directors through
access to management and the independent operation of the audit committee, as
discussed above, and through its Lead Director, Mr. Myckatyn. As Lead Director,
Mr. Myckatyns role and responsibilities are to:

| | (i)    | assist the Chairman to manage the Board and its
      committees in a manner that ensures that these relationships are effective
      and efficient and further the best interests of the Company;
| | ------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)   | oversee the process of evaluation of the Board, its
      committees and individual directors;                                                                                                     
| | (iii)  | act as the principal sounding board and counsellor for
      the Chairman;                                                                                                                         
| | (iv)   | ensure that the Chairman is aware of concerns of the
      independent directors, shareholders and other stakeholders;                                                                             
| | (v)    | work with the Chairman to assist the Chairman in
      fulfilling his responsibilities in managing the Board;                                                                                      
| | (vi)   | work with the Chairman to co-ordinate the agenda for
      Board meetings;                                                                                                                         
| | (vii)  | chair and manage all meetings for the independent
      directors;                                                                                                                                 
| | (viii) | attend committee meetings when it is appropriate to do
      so;                                                                                                                                   
| | (ix)   | and meet from time to time with the Chairman and the
      President and Chief Executive Officer to convey and discuss concerns of
      the independent directors.                                

Participation of Directors in Other Reporting
Issuers

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

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Name of Director
      Name of Other Public CompanyCatherine McLeod-Seltzer
    Miramar Mining Corporation, Bear Creek Mining
      Corporation, Stornoway Diamond Corporation, Kinross Gold Corporation and
      Peru Copper Inc.Anthony J. Petrina
    Bear Creek Mining Corporation and Miramar
      Mining CorporationWilliam Myckatyn
    Quadra Mining Ltd. and First Point Minerals
      Ltd.David K. Fagin
    Golden Star Resources Ltd. and Canyon Resource
      Corp.Paul B. Sweeney
    Pan American Silver Corp., Polaris Minerals
      Corporation, New Gold Inc.


Participation of Directors in Board Meetings

The Board meets at least once every quarter to review, among
other things, the performance of the Company. The Board also holds a meeting
each year to review and assess the Company's financial budget and business plan
for the ensuing year and its overall strategic objectives. Other meetings of the
Board are called to deal with special matters as circumstances require. During
the Companys most recently completed financial year, six (6) Board meetings
were held. The attendance record of each director for the Board meetings held is
as follows:

Name of Director
      No. of Board Meetings Attended in the Most
        Recently Completed Financial YearCatherine McLeod-Seltzer
    6Thomas Shrake
    6Anthony J. Petrina
    6William Myckatyn
    6David K. Fagin
    5Paul B. Sweeney
    6


Board Mandate

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

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

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

Position Descriptions

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

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

Orientation and Continuing Education

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

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

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

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Ethical Business Conduct

The Board has adopted a written Code of Conduct by which it and
all officers and employees of the Company abide. In addition, the Board, through
its meetings with management and other informal discussions with management,
encourages a culture of ethical business conduct and believes the Company's high
caliber management team promotes a culture of ethical business conduct
throughout the Company's operations and is expected to monitor the activities of
the Companys employees, consultants and agents in that regard. The Board
encourages any concerns regarding ethical conduct in respect of the Companys
operations to be raised, on an anonymous basis, with the President and CEO, the
Chairman, or another Board member as appropriate.

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

Nomination of Directors

The Nominating Committee is composed of three directors,
Messrs. Petrina (Chair), Sweeney and Myckatyn, all of whom are independent
within the meaning contained in 52-110. The Nominating Committee has the
responsibility for recommending to the Board the nominees to fill vacancies on
the Board or to be proposed by any member of the Board as candidates for
election as directors at the annual general meeting. The Nominating Committee
also recommends to the Board a desirable balance of expertise among the Board
members, seeks out possible candidates to fill Board positions and aids in
attracting qualified candidates to the Board. In addition, the Nominating
Committees responsibilities include reviewing and monitoring the orientation of
new Board members; reviewing and approving officers directorships in other
companies and reviewing directors relationships with outside entities with
regard to potential conflicts of interest.

Compensation

The Compensation Committee is composed of Messrs. Sweeney
(Chair), Myckatyn and Fagin, all of whom are independent within the meaning
contained in 52-110. The overall purpose of the Compensation Committee is to
make recommendations to the Board for human resources and compensation policies
and to implement and oversee same if the Board approves the recommendations for
the Company.

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

To determine compensation payable, the Compensation Committee
reviews compensation paid for directors and officers of companies of similar
size and stage of development in the mineral exploration industry and determines
an appropriate compensation reflecting the need to provide incentive and
compensation for the time and effort expended by the directors and senior
management while taking into account the financial and other resources of the
Company. See also "Report on Executive Compensation" and "Compensation of
Directors" above.

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

Other Committees

Committees of the Board are an integral part of the Company's
governance structure. The Boards committees presently consist of an Audit
Committee, a Compensation Committee, an Environmental Committee and a Nominating
Committee. The Boards committees have been established to devote the necessary
expertise and

II-9

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resources to particular areas, and to enhance the quality of
discussion at Board meetings. The Committees facilitate effective Board decision
making by providing recommendations to the Board on matters within their
respective responsibilities. The Board believes that the Committees assist in
the effective functioning of the Board and that the composition of the
Committees should ensure that the views of the independent directors are
effectively represented.

A discussion of the Companys Nominating and Compensation
Committees is provided above under the subheadings Nomination of Directors and
Compensation. Please refer to the section entitled Audit Committee
Information in the Companys AIF for the year ended April 30, 2006 for the
information required under 52-110 with respect to the Companys Audit
Committee.

The Companys Environmental Committee is composed of Messrs.
Myckatyn (Chair), Shrake and Petrina, a majority of whom are considered
independent within the meaning contained in 52-110. The Environmental Committee
has the responsibility for reviewing the Companys environmental policy and for
ensuring the Companys operations are operated in a manner consistent with the
environmental policy and also for ensuring the Companys operations are run in a
manner that does not unduly expose its employees to unnecessary risk of accident
or death.

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

Assessments

The Board annually, and at such other times as it deems
appropriate, reviews the performance and effectiveness of the Board, the
directors and its committees to determine whether changes in size, personnel or
responsibilities are warranted. To assist in its review, the Board conducts
informal surveys of its directors and receives reports from each committee
respecting its own effectiveness. As part of the assessments, the Board or the
individual committee may review their respective mandate or charter and conduct
reviews of applicable corporate policies.

Assessments are not regularly conducted; however, the Board
satisfies itself that the Board, its committees, and its individual directors
are performing effectively through frequent discussions between management and
individual Board members. There are also discussions between the independent
directors with resulting comments to the Board.

Shareholder Feedback and Concerns

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

AUDIT COMMITTEE

The Company has a separately designated standing Audit
Committee established in accordance with section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended. The members of the Audit Committee are David
Fagin, Paul Sweeney and Anthony Petrina.

Independence

The Company has adopted criteria for director independence
under Multilateral Instrument 52-110. These criteria are consistent with the
criteria prescribed by the Sarbanes-Oxley Act of 2002, Section 10A(m)(3) of the
Exchange

II-10

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Act and Rule 10A-3(b)(1) promulgated thereunder. Each member of
the Companys audit committee satisfies the criteria for director
independence.

Audit Committee Financial Expert

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

Mr. Fagin does not have an accounting designation; instead his
expertise is derived from his high level involvement in the financial matters of
public corporations almost continuously for at least 35 years. Mr. Fagin was
involved in the valuation of oil and gas companies for ten years both as a
consultant and a bank appraisal engineer (1958-68); President of a subsidiary of
Rosario Resources Corporation, a NYSE company (1968-75) and then Executive
Vice-President (1975-77) then President (1977-82) during which period he was
intimately involved in financial and accounting matters. In 1982, he founded
Fagin Exploration Company and worked closely with an accountant and auditors to
maintain the records. From 1986 to 1991, Mr. Fagin was the President and Chief
Operating Officer for Homestake Mining Corporation (NYSE), responsible for
producing operations in six countries and was involved in decisions for
corporate financial reporting. Between 1992 and 1996, Mr. Fagin was Executive
Chairman of Golden Star Resources (ASE and TSE) and managed all administrative
matters including annual reports, audits and registration in Canada and the U.S.
Since 1987, Mr. Fagin has served on Boards and Audit Committees of several
public companies including T. Rowe Price Mutual Funds, Golden Star, Canyon
Resource Corporation, Dayton Mining Corp. and the Company, where he has been
either Chairman or a member of each audit committee.

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

The third member of the Company's audit committee, Anthony
Petrina, is financially literate in that he has the ability to read and
understand a set of financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to the breadth and
complexity of the issues that can reasonably be expected to be raised by the
Company's financial statements. Mr. Petrina worked for Placer Dome for 32 years,
serving as President, Chief Executive Officer and Vice-Chairman, until his
retirement in 1992. Mr. Petrina has been a director of several other mining
companies since his retirement to date.

AUDIT COMMITTEE CHARTER

The Companys Audit Committee Charter is available on the
Companys website at www.pacrim-mining.com or in print to any shareholder who
provides the Company with a written request.

II-11

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PRINCIPAL ACCOUNTING FEES AND SERVICES  INDEPENDENT
AUDITORS

Staley, Okada & Partners, Chartered Accountants, serve as
the independent auditors for the Company and have acted as the Company's
independent auditor for the fiscal years ended April 30, 2005, and April 30,
2006. The chart below sets forth the total amount billed the Company by Staley,
Okada & Partners for services performed in the last two fiscal years and
breaks down these amounts by category of service (for audit fees, audit-related
fees, tax fees and all other fees) in Canadian dollars:

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

Financial Year Ended
    Audit Fees(1)
    Audit Related
      Fees(2)
    Tax Fees(3)
    All Other Fees(4)April 30, 2006
    Cdn.$78,602
    Cdn.$45,044
    Cdn.$22,595
    Cdn$NilApril 30, 2005
    Cdn.$113,461
    Cdn.$32,942
    Cdn.$10,680
    Cdn.$Nil


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

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

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

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

Fees disclosed under the category "All Other Fees" are related
to quarterly reviews.

PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PROVIDED BY
INDEPENDENT AUDITORS

The Audit Committee nominates and engages the independent
auditors to audit the financial statements, and approves all audit,
audit-related services, tax services and other services provided by Staley,
Okada & Partners. Any services provided by Staley, Okada & Partners that
are not specifically included within the scope of the audit must be pre-approved
by the audit committee prior to any engagement. The audit committee is permitted
to approve certain fees for audit-related services, tax services and other
services pursuant to a de minimusexception before the completion of the
engagement. In the fiscal year ended April 30, 2006, fees paid to Staley, Okada
& Partners were approved pursuant to the de minimusexception for tax
services.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has not entered into any off-balance sheet
arrangements.

II-12

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TABLE OF CONTRACTUAL COMMITMENTS

The following table lists as of April 30, 2006 information with
respect to the Companys known contractual obligations.

Payments due by period (in 000s)Contractual Obligations
    Total
    
    Less
    
    1- 3 years
    
    3  5 years
    
    Morethan 1
    
    
    
    
    
    than 5year
    
    
    
    
    
    yearsDebt Obligations
    $0
    
    $0
    
    $0
    
    $0
    
    $0Operating Lease Obligations
    $234
    
    $122
    
    $109
    
    $3
    
    $0Accounts Payable and Accrued
      Liabilities
    $882
    
    $882
    
    $0
    
    $0
    
    $0Other Long-Term Liabilities (Accrued Closure
    $1,992
    
    $143
    
    $697
    
    $996
    
    $156Costs) Reflected on the
      Company's Balance Sheetunder Canadian GAAPTotal
    $3,108
    
    $1,147
    
    $806
    
    $999
    
    $156


For additional information related to the Companys contractual
obligations and commitments see Notes 9 and 13 in the Companys consolidated
financial statements (Exhibit 2).

AMEX CORPORATE GOVERNANCE

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

Shareholder Meeting Quorum
Requirement: The AMEX minimum quorum requirement for a shareholder meeting
is one-third of the outstanding shares of common stock. In addition, a company
listed on AMEX is required to state its quorum requirement in its bylaws. The
Companys quorum requirement is set forth in its Memorandum and Articles. A
quorum for a meeting of members of the Company is two persons who are, or who
represent by proxy, shareholders who, in the aggregate, hold at least 5% of the
shares entitled to be voted at eting.

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

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

In addition, we may from time-to-time seek relief from AMEX
corporate governance requirements on specific transactions under Section 110 of
the AMEX Company Guide by providing written certification from independent local
counsel that the non-complying practice is not prohibited by our home country
law, in which case, we shall make the disclosure of such transactions available
on our website at www.pacrim-mining.com. Information contained on our website is
not part of this annual report.

II-13

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UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

Undertaking

The Company undertakes to make available, in person or by
telephone, representatives to respond to inquiries made by the Commission staff,
and to furnish promptly, when requested to do so by the Commission staff,
information relating to: the securities registered pursuant to Form 40-F; the
securities in relation to which the obligation to file an Annual Report on Form
40-F arises; or transactions in said securities.

Consent to Service of Process

The Company filed an Appointment of Agent for Service of
Process and Undertaking on Form F-X signed by the Company and its agent for
service of process on July 31, 2006 with respect to the class of securities in
relation to which the obligation to file the Form 40-F arises, which Form F-X is
incorporated herein by reference.

SIGNATURES

Pursuant
to the requirements of the Exchange Act, the Company certifies that it meets all
of the requirements for filing on Form 40-F and has duly caused this Annual
Report on Form 40-F to be signed on its behalf by the undersigned, thereunto
duly authorized.

| | PACIFIC RIM MINING CORP.             
| | -------------------------------------
| |                                      
| |                                      
| |                                      
| | /s/ Thomas Shrake                    
| | Thomas Shrake                        
| | President and Chief Executive Officer

Date: July 31, 2006

II-14

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EXHIBIT INDEX

The following exhibits have been filed as part of the Annual Report on Form 40-F :

|Exhibit            | Description                                                                                                                                                                                               
|------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |                                                                                                                                                                                                           
|Annual Information
|                  
|1                  | Annual Information
      Form of the Company for fiscal year ended April 30, 2006                                                                                                                         
|2                  | Audited consolidated
        financial statements of the Company and notes thereto for the years ended
        April 30, 2006, 2005 and 2004, together with the report of the auditors
        thereon    
|3                  | Managements
      Discussion and Analysis for the years ended April 30, 2006, 2005 and 2004                                                                                                              
|                   |                                                                                                                                                                                                           
|Certifications    
|                  
|4                  | Certifications
        by the Chief Executive Officer of the Company pursuant to Rule 13a-14(a)
        of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.
|5                  | Certifications
        by the Chief Financial Officer of the Company pursuant to Rule 13a-14(a)
        of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.
|6                  | Certificate
        of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                           
|7                  | Certificate of
        Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                           
|                  
|Consents          
|                  
|8                  | Consent of Staley,
      Okada and Partners                                                                                                                                                               
|9                  | Consent of William Gehlen, Certified
      Professional Geologist                                                                                                                                         
|10                 | Consent of David
      Ernst, Certified Professional Geologist                                                                                                                                            
|11                 | Consent of Steven Ristorcelli, Mine
      Development Associates                                                                                                                                          
|12                 | Consent of Peter
      Ronning, Consultant                                                                                                                                                                
|13                 | Consent of Nicholas Michael, SRK Consulting
      (U.S.) Inc.                                                                                                                                             
|14                 | Consent of Alva L. Kuestermeyer, SRK
      Consulting (U.S.) Inc.                                                                                                                                         
|15                 | Consent of Ken Reipas, P. Eng., SRK
      Consulting (U.S.) Inc.                                                                                                                                          
|16                 | Consent of Terry H. Braun, SRK Consulting
      (U.S.) Inc.                                                                                                                                               
|17                 | Consent of Tom Rannelli, P.Eng.                                                                                                                                                                           
|18                 | Consent of William F. Tanaka                                                                                                                                                                              

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