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- 1 -

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 20-F

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

OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF1934

For the fiscal year ended April 30, 2013

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

OR

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

Date of event require this shell company report:

For the transition period from ____ to _____

Commission file number: 001-31328

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

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

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

Barbara Henderson625 Howe Street, Suite 1050,
Vancouver, British Columbia, Canada V6E 2T6Tel: (604)
689-1976E-mail: bhenderson@pacrim-mining.com(Name,
Telephone, E-mail and or/Facsimile number and Address of Company Contact
Person)

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

|Title of Each Class:        | Name of Each Exchange On Which Registered:
|--------------------------- | ------------------------------------------
|Common Shares, no par value | None                                      

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

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

Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report: 210,951,708

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

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

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

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

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

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

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

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

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

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

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TABLE OF CONTENTS

|CAUTIONARY
      NOTE TO US INVESTORS REGARDING RESOURCE AND RESERVE ESTIMATES                    | 2 
|------------------------------------------------------------------------------------------------- | --
|GLOSSARY
      OF TECHNICAL TERMS                                                                 | 3 
|CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS                                   | 5 
|PART
      I                                                                                      | 7 
|ITEM
      1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                               | 7 
|ITEM
      2. OFFER STATISTICS AND EXPECTED TIMETABLE                                             | 7 
|ITEM
      3. KEY INFORMATION INCLUDING RISK FACTORS                                              | 7 
|ITEM
      4. INFORMATION ON THE COMPANY                                                          | 14
|ITEM
      4A. UNRESOLVED STAFF COMMENTS                                                          | 32
|ITEM
      5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                        | 32
|ITEM
      6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                          | 40
|ITEM
      7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                   | 57
|ITEM
      8. FINANCIAL INFORMATION                                                               | 58
|ITEM
      9. THE OFFER AND LISTING                                                               | 58
|ITEM
      10. ADDITIONAL INFORMATION                                                             | 60
|ITEM
      11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                          | 69
|ITEM
      12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                             | 70
|PART
      II                                                                                     | 71
|ITEM
      13. DEFAULTS, DIVIDENT ARREARAGES AND DELINQUENCIES                                    | 71
|ITEM
      14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS | 71
|ITEM
      15. CONTROLS AND PROCEDURES                                                            | 72
|ITEM
      16. [RESERVED]                                                                         | 74
|ITEM
      16A. AUDIT COMMITTEE FINANCIAL EXPERT                                                  | 74
|ITEM
      16B. CODE OF ETHICS                                                                    | 74
|ITEM
      16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                            | 74
|ITEM
      16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                        | 75
|ITEM
      16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
      PURCHASERS      | 75
|ITEM
      16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT                                      | 75
|ITEM
      16G. CORPORATE GOVERNANCE                                                              | 75
|ITEM
      16H. MINE SAFETY DISCLOSURE                                                            | 75
|PART
      III                                                                                    | 76
|ITEM
      17. FINANCIAL STATEMENTS                                                               | 76
|ITEM
      18. FINANCIAL STATEMENTS                                                               | 76
|ITEM
      19. EXHIBITS                                                                           | 76

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CAUTIONARY NOTE TO US INVESTORS REGARDING RESOURCE AND
RESERVE ESTIMATES

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

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

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

NI 43-101 Definitions

|Mineral resource   | Refers to a concentration or occurrence of natural,
      solid, inorganic or fossilized organic material in or on the Earths crust
      in such form and quantity and of such a grade or quality that it has
      reasonable prospects for economic extraction. The location, quantity,
      grade, geological characteristics and continuity of a mineral resource are
      known, estimated or interpreted from specific geological evidence and
      knowledge.                                                                                                                                                                                                                                                         
|-------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                     | The terms mineral resource, measured mineral
      resource, indicated mineral resource and inferred mineral resource
      used in this annual Form 20-F are Canadian mining terms as defined in
      accordance with NI 43-101 under the guidelines set out in the CIM
      Standards.                                                                                                                                                                                                                                                                                                                                                                                                                                
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Measured resource  | Refers to that part of a mineral resource for which
      quantity grade or quality, densities, shape and physical characteristics
      are so well established that they can be estimated with confidence
      sufficient to allow the appropriate application of technical and economic
      parameters, to support production planning and evaluation of the economic
      viability of the deposit. The estimate is based on detailed and reliable
      exploration, sampling and testing information gathered through appropriate
      techniques from locations such as outcrops, trenches, pits, workings and
      drill holes that are spaced closely enough to confirm both geological and
      grade continuity.
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Indicated resource | Refers to that part of a mineral resource for which
      quantity, grade or quality, densities, shape and physical characteristics
      can be estimated with a level of confidence sufficient to allow the
      appropriate application of technical and economic parameters, to support
      mine planning and evaluation of the economic viability of the deposit. The
      estimate is based on detailed and reliable exploration and testing
      information gathered through appropriate techniques from locations such as
      outcrops, trenches, pits, workings and drill holes that are spaced closely
      enough for geological and grade continuity to be reasonably assumed.                               

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NI 43-101 Definitions

|Inferred resource | Refers to that part of a mineral resource for which
      quantity and grade or quality can be estimated on the basis of geological
      evidence and limited sampling and reasonably assumed, but not verified,
      geological and grade continuity. The estimate is based on limited
      information and sampling gathered through appropriate techniques from
      locations such as outcrops, trenches, pits, workings and drill holes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Mineral reserve   | Refers to the economically mineable part of a measured or
      indicated mineral resource demonstrated by at least a preliminary
      feasibility study. The study must include adequate information on mining,
      processing, metallurgical, economic, and other relevant factors that
      demonstrate, at the time of reporting, that economic extraction can be
      justified. A mineral reserve includes diluting materials and allowances
      for losses that might occur when the material is mined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                    | Mineral reserves are categorized as follows on the basis
      of the degree of confidence in the estimate of the quantity and grade of
      the deposit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Proven reserve    | Means, in accordance with CIM Standards, for the part of
      a deposit which is being mined, or which is being developed and for which
      there is a detailed mining plan, the estimated quantity and grade or
      quality of that part of a measured mineral resource for which the size,
      configuration and grade or quality and distribution of values are so well
      established, and for which economic viability has been demonstrated by
      adequate information on engineering, operating, economic and other
      relevant factors, so that there is the highest degree of confidence in the
      estimate. This definition differs from the standards in the United States,
      where proven or measured reserves are defined as reserves which (a)
      quantity is computed from dimensions revealed in outcrops, trenches,
      workings or drill holes; (b) grade and/or quality are computed from the
      results of detailed sampling and (c) the sites for inspection, sampling
      and measurement are spaced so closely and the geographic character is so
      well defined that size, shape, depth and mineral content of reserves are
      well established.
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Probable reserve  | Means, in accordance with CIM Standards, the estimated
      quantity and grade or quality of that part of an indicated mineral
      resource for which economic viability has been demonstrated by adequate
      information on engineering, operating, economic and other relevant
      factors, at a confidence level which would serve as a basis for decisions
      on major expenditures. This definition differs from the standards in the
      United States, where probable mineral reserves are defined as reserves for
      which quantity and grade and/or quality are computed from information
      similar to that of proven reserves (under United States standards), but
      the sites for inspection, sampling, and measurement are further apart or
      are otherwise less adequately spaced, and the degree of assurance,
      although lower than that for proven mineral reserves, is high enough to
      assume continuity between points of observation. The degree of assurance,
      although lower than that for proven mineral reserves, is high enough to
      assume continuity between points of observation.                                                     

GLOSSARY OF TECHNICAL TERMS

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

|Arbitration | The arbitration claim initiated by Pac Rim Cayman, LLC, a
      Nevada, US-based wholly-owned subsidiary of the Company in respect of the
      El Dorado property, El Salvador
|------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|BLM         | the United States Bureau of Land Management                                                                                                                                    
|CAFTA       | The Dominican Republic-United States-Central America Free
      Trade Agreement                                                                                                
|CDN         | Canadian (usually in reference to currency)                                                                                                                                    

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|CIM                  | Canadian Institute of Mining, Metallurgy and Petroleum                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dore                 | A compound containing gold and silver metal and various
      impurities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Definitive Agreement | The Hog Ranch agreement finalizing the terms of the Hog
      Ranch letter of intent, which grants the Company, through its US
      subsidiary Pacific Rim Exploration Ltd. the option to acquire a 65%
      interest in the Hog Ranch Property located in Washoe County, Nevada (see
      Item 4B  Business Overview).                                                                                                                                                                                                                                                                                                                                                                                                                                            
|EIS                  | Environmental Impact Study                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Evergreen Plan       | The Companys Evergreen Incentive Stock Option Plan,
      originally established in 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Final Agreement      | A proposed agreement that would finalize the terms of the
      Remance property letter of intent (see Item 4B  Business Overview). The
      Remance Final Agreement has not been signed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|GOES                 | The Government of El Salvador                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|g/t or gpt         | Grams per tonne. One gram per tonne equals 0.02917 troy
      ounces per short ton                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|NI 43-101            | National Instrument 43-101 - Standards of Disclosure
      for Mineral Projects. An instrument developed by the Canadian
      Securities Administrators (an umbrella group of Canadas provincial and
      territorial securities regulators) that governs public disclosure by
      mining and mineral exploration issuers. The instrument establishes certain
      standards for all public disclosure of scientific and technical
      information concerning mineral projects                                                                                                                                                                                                                                                                                   
|ICSID                | The International Center for the Settlement of Investment
      Disputes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Investment Law       | The Investment Law of El Salvador                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|LOI                  | Letter of Intent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Ore                  | A natural aggregate of one or more minerals which, at a
      specified time and place, may be mined and sold at a profit, or from which
      some part may be profitably separated                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|OTCQX                | The United States-based OTCQX trading platform                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Qualified Person     | Conforms to that definition under NI 43-101 for an
      individual (a) to be an engineer or geoscientist with at least five years
      experience in mineral exploration, mine development or operation or
      mineral project assessment, or any combination of these; (b) with
      experience relevant to the subject matter of the mineral project and the
      technical report; and (c) is a member in good standing of a professional
      association that, among other things, is self-regulatory, has been given
      authority by statute, admits members based on their qualifications and
      experience, requires compliance with professional standards of competence
      and ethics and has disciplinary powers to suspend or expel a member
|SEC                  | The United States Securities and Exchange Commission                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|SG                   | Specific gravity, a measurement of density                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|tpd                  | Tonnes per day. One tonne equals 1.10231 tons                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Tribunal             | The three-member panel of experts at the International
      Center for the Settlement of Investment Disputes tasked with overseeing
      and ruling on Pac Rim Cayman, LLCs Arbitration claim                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|TSX                  | The Toronto Stock Exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|US                   | The United States of America                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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Conversion Factors

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


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

This Annual Report on Form 20-F and exhibits attached hereto
contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and Canadian securities laws. Such
forward-looking statements concern the Companys plans for its properties,
operations and other matters. These statements relate to analyses and other
information that are based on forecasts of future results, estimates of amounts
not yet determinable and assumptions of management. Statements concerning
estimates of mineral resources and reserves may also be deemed to constitute
forward-looking statements to the extent that they involve estimates of the
mineralization that will be encountered if the property is developed, and in the
case of mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically exploited. Any
statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or phrases such as
expects or does not expect, is expected, anticipates or does not
anticipate, plans, estimates or intends, or stating that certain actions,
events or results may, could, would, might or will be taken, occur or
be achieved) are not statements of historical fact and may be forward-looking
statements. Forward-looking statements are subject to a variety of risks and
uncertainties, which could cause actual events or results to differ from those
reflected in the forward-looking statements, including, without limitation:

- risks related to the outcome of legal arbitration proceedings;
- risks related to failure to obtain adequate financing on a timely basis
  and on acceptable terms and the Companys ability to remain a going concern;
- political and regulatory risks associated with mining and exploration;
- technical risks associated with mining and exploration;
- risks related to the maintenance of exchange listings;
- risks related to environmental regulation and liability;
- the potential for delays in exploration or development activities;
- the uncertainty of profitability based upon the Companys history of
  losses;
- risks and uncertainties relating to the interpretation of drill results,
  the geology, grade and continuity of mineral deposits;
- risks related to the inherent uncertainty of production and cost estimates
  and the potential for unexpected costs and expenses;
- results of prefeasibility and feasibility studies, and the possibility
  that future exploration, development or mining results will not be consistent
  with the Companys expectations;
- risks related to gold price and other commodity price fluctuations;
- risks related to the Companys responsibilities to Canadian and US
  securities commissions and costs associated with being a publicly traded
  company; and
- risks related to global market events and conditions

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This list is not exhaustive of the factors that may affect our
forward-looking statements. Some of the important risks and uncertainties that
could affect forward-looking statements are described in this Annual Report on
Form 20-F under Description of the Business Risk Factors. Should one
or more of these risks and uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in forward-looking statements. Forward-looking statements are made
based on managements beliefs, estimates and opinions on the date the statements
are made. Investors are cautioned against attributing undue certainty to
forward-looking statements.

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- 7 -

PART I

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

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISORS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The selected consolidated financial information set forth below
for the years ended April 30, 2013, 2012, and 2011has been derived from the
Company's audited consolidated financial statements as at and for the financial
years ended April 30, 2013, 2012 and 2011, which were prepared in accordance
with International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board (IASB), which differ in certain
respects from the principles the Company would have followed had its
consolidated financial statements been prepared in accordance with United States
Generally Accepted Accounting Principles (US GAAP). The financial data
presented below is qualified in its entirety by, and should be read in
conjunction with, the audited consolidated financial statements and notes
thereto as well as managements discussion and analysis of results of
operations, and the discussion in Item 5 of this Form 20-F. The Companys
reporting currency is the United States Dollar (U.S. Dollar, USD or $) and
monetary data not otherwise labeled in this annual report on Form 20-F is stated
in US Dollars. Historical results from any prior period are not necessarily
indicative of results to be expected for any future period.

(in thousands of US Dollars, except per share
amounts)

|                                                                                         | Year Ended
    April 30, 2013 | Year Ended
    April 30, 2012 | Year Ended
  April 30, 2011
|---------------------------------------------------------------------------------------- | ----------------------------- | ----------------------------- | ---------------------------
|Revenue                                                                                  | $Nil                          | $Nil                          | $Nil                       
|Operating Loss                                                                           | $(4,847)                      | $(3,859)                      | $(4,168)                   
|Net Loss and Comprehensive Loss for the year                                             | $(4,680)                      | $(1,834)                      | $(3,771)                   
|Loss per share (basic and diluted)                                                       | $(0.02)                       | $(0.01)                       | $(0.03)                    
|Current assets                                                                           | $1,514                        | $1,400                        | $1,195                     
|Total assets                                                                             | $7,010                        | $6,942                        | $6,681                     
|Total liabilities                                                                        | $1,979                        | $1,846                        | $3,291                     
|Net Assets                                                                               | $5,031                        | $5,096                        | $3,390                     
|Share capital                                                                            | $94,312                       | $90,058                       | $86,955                    
|Shareholders' equity                                                                     | $5,031                        | $5,096                        | $3,390                     
|Weighted average number of common sharesissued and
      outstanding (basic and diluted) | 192,900,201                   | 168,414,549                   | 141,631,705                

Outstanding Share Data

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

Number of Common
      Shares
    Number of Options
    Number of WarrantsBalance on April 30, 2013
    210,951,708
    15,260,000
    9,633,100Issued May 1 to July 22, 2013
    nil
    nil
    nilForfeited or expired May 1 to July 22, 2013
    nil
    nil
    9,633,100Balance on July 22, 2013
    210,951,708
    15,260,000
    nil


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Currency and Exchange Rates

Unless otherwise indicated, all dollar amounts in this annual
report on Form 20-F are in United States dollars. The exchange rate of Canadian
dollars into United States dollars, on July 15, 2013, based on the noon
rate of exchange as quoted by the Bank of Canada was CDN $1 = US $0.9603or US $1.00 = CDN $1.0413.

B. Capitalization and indebtedness Not applicable.

C. Reason for the offer and use of proceeds Not applicable.

D. Risk Factors

An investment in the common shares of the Company involves a
high degree of risk and must be considered highly speculative due to the nature
of the Companys business and the present stage of exploration and development
of its mineral resource properties.

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

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

In particular, the following risk factors apply:

We will need significant additional capital, which we may
be unable to obtain.

The Company has no source of revenue and is reliant on its cash
and short term investments in order to finance its exploration activities,
general and administrative and legal expenses. The Company currently has
negative working capital and its ability to continue operations and exploration
activities as a going concern is dependent upon its ability to obtain financing.
The Company will need to raise additional funds during fiscal 2014 to support
exploration and administration expenses as well as various costs under PacRims
Arbitration action (see Item 4B  Business Overview). Furthermore the
Company does not have the funds in place to conduct any significant exploration
programs, or mine development activities at the El Dorado property should the
Company receive the permits allowing it to undertake these activities.

While the Company has been successful in obtaining its required
funding in the past, there is no assurance that sufficient funds will be
available to the Company in the future, or be available on favourable terms.
Factors that could affect the availability of financing include fluctuations in
the Companys share price, the state of international debt and equity markets,
investor perceptions and expectations, global financial and metals markets,
progress on any of the Companys exploration properties, and developments, if
any, on the El Dorado project permitting application. Additional financing will
require, but may not be limited to, the issuance of additional equity, which may
be very dilutive to the Companys shares and shareholders.

Failure to obtain additional financing could result in the
Companys failure to remain a going concern, the Companys inability to continue
the Arbitration action, or could cause the delay or indefinite postponement of
further exploration and development of its projects with a possible loss of some
properties.

There is substantial doubt as to our ability to continue
as a going concern.

The Companys financial statements have been prepared on the
basis that the Company will continue as a going concern, which assumes that the
Company will be able to meet its commitments, continue operations, realize its
assets and discharge its liabilities in the normal course of business for the
foreseeable future. There are events and conditions that cast substantial doubt
on the validity of that assumption. The Company will require additional
financing for administrative purposes, for legal expenses related to the
Arbitration and to continue to conduct ongoing exploration programs and meet
future property commitments. The costs for the Arbitration are substantial and
are anticipated to increase as the case proceeds to through the final,
merits-based phase. Factors that could affect the availability of financing
include fluctuations in the Companys share price, the state of international
debt and equity markets, investor perceptions and expectations, global financial
and metals markets, progress on any of the Companys exploration properties, and
developments, if any, on the El Dorado project permitting application. Global
securities markets and commodity prices are volatile and have fluctuated
markedly in recent years. Most recently, commodity prices, in particular the
price of gold, have decreased substantially. Volatility, and in particular
decreases, in global stock markets and commodity prices may impact access to
capital and/or the terms and conditions under which financing may be available.
The Company believes it will be able to obtain the necessary financing to meet
its requirements on an ongoing basis; however, there can be no assurance that
the necessary financing will be obtained, and such financing, if available, may
be very dilutive to the Companys shares and shareholders. As it has in the
past, the Company plans to obtain additional financing through, but not limited
to, the issuance of additional equity.

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- 9 -

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

Because we have a history of losses and anticipate
continued losses unless and until we are able to generate sufficient revenues to
support our operations, we may lack the financial stability required to continue
operations.

The Company has a history of losses and may continue to incur
losses for the foreseeable future. As of April 30, 2013, the Company had an
accumulated deficit of $94.5 million. The Company currently has no source of
revenue and there can be no assurance that the Company will realize revenue
growth or achieve profitability in the future.

We may be unable to maintain exchange
listings.

The Companys shares currently trade on the TSX in Canada and
on the OTCQX platform in the US. The Company remains SEC-registered in the US.
The Companys ability to maintain its TSX listing will be dependent on meeting
the exchanges ongoing listing maintenance standards including provisions for
minimum exploration work expenditures. The TSX may elect at any time to
undertake a formal listing review of the Company, which could result in the
Companys shares being subject to delisting from the TSX, in which event the
Company would seek a listing on the TSX Venture Exchange. However, there is no
assurance that the Company would be successful in obtaining such a listing.

Our properties are in the exploration stage and are
highly speculative in nature, which means there can be no assurance that our
programs will result in the discovery of any economically feasible mineral
deposits.

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

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

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

The Companys exploration properties are located in El
Salvador. The Company may commence exploration programs in other jurisdictions
in the future. As with most jurisdictions, El Salvador imposes certain
requirements and obligations on the owners of exploratory properties including
application requirements, periodic reporting requirements, limited terms and
certain fees and royalty payments. The Company may acquire interests in
properties in other North, Central and South American countries that may place
substantial restrictions on the Companys exploratory and development
activities. There can be no assurance that additional significant restrictions
will not be placed on the Company's existing or future properties or its
operations. Such restrictions may have a materially adverse effect on the
Company's business and results of operation.

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Mining operations generally involve a high degree of risk. The
Companys operations are subject to all of the physical hazards and risks
normally encountered in the exploration, development and production of precious
metals and other minerals including unusual or unexpected geological formations,
seismic activity, rock bursts, cave-ins, flooding and other conditions involved
in the drilling and removal of material, any of which could result in damage to
or destruction of documents, samples or drill core, damage to life or property,
environmental damage and possible legal liability. It may not be possible to
insure against these risks, or for economic reasons the Company may elect not to
insure against these risks. The payment of liabilities as a result of the
occurrence of any of these hazards may have a material adverse effect on the
Companys financial position.

There can be no assurance that the Companys exploration and
acquisition programs will yield new reserves to expand current resources. The
development of the Companys properties will require the commitment of
substantial financial resources to conduct the time-consuming exploration and
development of properties. There can be no assurance that the Company will
generate any revenues or achieve profitability.

We cannot be certain that we have good title to our
properties.

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

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

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

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

Calculations of mineral reserves and of mineralized
material are estimates only, subject to uncertainty due to factors including
metal prices, inherent variability of the ore, and recoverability of metal in
the mining process.

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

Definitional standards for reporting mineralized material
differ between United States reporting standards and the Canadian standards use
in this Annual Report on Form 20-F.

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

Our operations are subject to the inherent risks
associated with mineral exploration activities in a foreign
jurisdiction.

The Company's current exploration projects are located in El
Salvador, and the Company may acquire exploration properties in other North,
Central and South American countries. Mineral exploration and mining activities
in foreign countries are subject to risks normally associated with the conduct
of business in foreign countries and in addition its business activities may be
affected in varying degrees by political stability and government regulations as
these evolve in sovereign nations. These risks may include foreign labour
disputes, invalidation of governmental orders, uncertain political and economic
environments, war or civil disturbances, changes in laws, changes in foreign
exchange rates, regulations and policies of governments, changes in foreign tax
laws, delays in obtaining necessary permits, limitations on the repatriation of
earnings and original investments and increased costs of and difficulty in
obtaining financing. Currency fluctuations, exchange controls, change to tax
regimes and political action could impair the value of the Company's assets in
the foreign jurisdictions in which the Company operates.

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

PRES has experienced significant delays in the processing of
its El Dorado EIS and exploitation concession application, and as a result
PacRim initiated an Arbitration action against the GOES at ICSID headquarters in
Washington, DC. There can be no assurance that PRES will be successful in either
obtaining its sought-after El Dorado exploitation concession, or that any legal
challenges PacRim has undertaken or that the Company or its subsidiaries may
choose to undertake in the future to resolve this issue will be successful.

We are subject to additional risks due to our operations
being in foreign countries.

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

The loss of key management personnel may adversely affect
our business and results of operations.

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

Certain of our directors or officers may be in a conflict
of interest position.

The Company's directors and officers may serve as directors or
officers of other resource companies or have significant shareholdings in other
resource companies and, to the extent that such other companies may participate
in ventures in which the Company may participate, the directors of the Company
may have a conflict of interest in negotiating and concluding terms respecting
the extent of such participation. In the event that such a conflict of interest
arises at a meeting of the Company's directors, directors who have such a
conflict will declare their potential conflict and abstain from voting for or
against the approval of such participation or such terms.

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From time to time several companies may participate in the
acquisition, exploration and development of natural resource properties thereby
allowing for their participation in larger programs, permitting involvement in a
greater number of programs and reducing financial exposure in respect of any one
program. It may also occur that a particular company will assign all or a
portion of its interest in a particular program to another of these companies
due to the financial position of the company making the assignment. In
accordance with the laws of British Columbia, the directors of the Company are
required to act honestly, in good faith and in the best interests of the
Company. In determining whether or not the Company will participate in a
particular program and the interest therein to be acquired by it, the directors
will primarily consider the degree of risk to which the Company may be exposed
and its financial position at that time.

The resource industry is very competitive.

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

Increased costs could affect our financial
condition.

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

We are subject to currency fluctuations that may affect
our costs of doing business.

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

Mineral exploration involves a high degree of risk for
which we may not be adequately insured.

The Company has purchased liability insurance that it believes
is appropriate for the level of risk incurred, however there are no guarantees
that the level of coverage of existing policies can or will be maintained.
Furthermore, the Company does not carry insurance for political risk, nor
environmental damage or pollution because such coverage cannot be purchased at
reasonable costs. This lack of insurance coverage could result in material
economic harm to the Company if a significant claim against the Company should
occur.

We are subject to uncertain costs related to reclamation
at Denton Rawhide.

During fiscal 2009 the Company sold the assets it held through
its 49% interest in the Denton-Rawhide joint venture to its 51% partner
Kennecott. At the time of this sale, future reclamation costs were estimated to
be $5.3 million. Subsequently, in late calendar 2010, Kennecott sold its 100%
interest in the Denton-Rawhide Joint Venture to a third party. According to the
terms of Kennecott's 2010 sale, reclamation obligations at the Denton-Rawhide
operation were separated such that Kennecott remains responsible for reclamation
expenditures due to any disturbances created prior to the sale, and the
purchaser becomes responsible for undertaking reclamation related to any
disturbances created after the sale. As part of the sale of its interest in
Denton-Rawhide to Kennecott, the Company had provided a guarantee on 49% of any
reclamation and closure costs in the event that these expenditures (limited to
those related to disturbances made up to the point the Company sold its interest
in the operation) were to exceed $7.0 million. In other words, the Company's
obligations are limited to pre-sale property conditions.

We are subject to environmental regulations pursuant to a
variety of federal, state, provincial and local laws and
regulations.

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

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

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

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

We are subject to ongoing and increasing compliance
obligations as a result of being a public company, which we may not be able to
satisfy.

Legal, accounting and other expenses associated with public
company reporting requirements have increased significantly in the past decade.
The Company anticipates that general and administrative costs associated with
regulatory compliance will continue to increase alongside corporate governance
requirements, including rules and requirements of the SEC, Canadian Securities
Administrators, the TSX and the OTCQX. The Company expects these rules and
regulations to continue to result in significant legal and financial compliance
costs and to make some activities more time-consuming and costly. There can be
no assurance that the Company will continue to effectively meet all of the
requirements of the regulations to which it must comply, including various
sections of the Sarbanes-Oxley Act of 2002 and Canadian National Instrument
52-109, Certification of Disclosure in Issuers Annual and Interim Filings (NI
52-109). Any failure to effectively implement new or improved internal
controls, or to resolve difficulties encountered in their implementation, could
harm the Companys operating results, and could cause the Company to fail to
meet reporting obligations or result in management being required to give a
qualified assessment of the Companys internal controls over financial
reporting. Any such result could cause investors to lose confidence in the
Companys reported financial information, which could have a material adverse
effect on the Companys stock price. The Company also expects these rules and
regulations may make it more difficult and more expensive for it to obtain
director and officer liability insurance, and it may be required to accept
reduced policy limits and coverage or incur substantially higher costs to obtain
the same or similar coverage. As a result, it may be more difficult for the
Company to attract and retain qualified individuals to serve on its board of
directors or as executive officers. If the Company fails to maintain the
adequacy of its internal controls, the Company's ability to provide accurate
financial statements and comply with the requirements of the Sarbanes-Oxley Act
of 2002 and/or NI 52-109 could be impaired, which could cause the Company's
stock price to decrease.

Future sales of common shares by existing shareholders
could decrease the trading price of our common shares.

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

We cannot guarantee that we will remain a foreign private
issuer, and if our status changes we will be subject to increased compliance
costs.

The Company is required to determine its Foreign Private
Issuer status (as defined in Rule 3b-4(c) under the U.S. Securities and
Exchange Act of 1934 (as amended) (the Exchange Act) for the purposes of U.S.
securities law), annually at the end of its second fiscal quarter. Less than 50%
of the Companys voting securities were held by U.S. residents as of the last
business day of its most recently completed second fiscal quarter and as such,
the Company is considered a Foreign Private Issuer. Though not strictly required
to, the Company also meets the following secondary conditions that would assure
its Foreign Private Issuer status: (i) a majority of its executive officers and
directors, taken separately, are non-U.S. citizens or residents, (ii) more than
50% of its assets are located outside the U.S., and (iii) the business of the
Company is principally administered outside the U.S. The Company may in the
future lose its foreign private issuer status if it fails to meet any of the
aforementioned criteria.

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

We are a foreign corporation and most of our directors
and officers are outside of the United States, which may make enforcement of
civil liabilities difficult.

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

We are subject to risks related to recent market
conditions and events.

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

- the global credit and liquidity crisis could impact the cost and
  availability of financing and our overall liquidity;
- decreases in and/or volatility of gold prices could impact the
  availability and terms of potential equity financing;
- inflationary pressures could impact the economic viability of our
  projects;
- volatile currency exchange rates could impact our business costs;
- the devaluation and volatility of global stock markets would impact the
  value of our securities.

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

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

The legal and commercial name of the Company is Pacific Rim
Mining Corp.. All references to Pacific Rim or the Company encompass the
Canadian corporation, Pacific Rim Mining Corp, its U.S. subsidiaries and
Salvadoran subsidiaries, inclusive.

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

The Company is domiciled in British Columbia, Canada and was
formed by the amalgamation of Dayton Mining Corporation (Dayton) and Pacific
Rim Mining Corp. (Pacific Rim) on April 11, 2002 under the former Company
Act(British Columbia).

Effective March 29, 2004, the British Columbia legislature
enacted the Business Corporations Act(British Columbia) (the New Act)
and repealed the former Company Act(British Columbia) which previously
governed the Company. At the Companys annual general meeting held on September
22, 2004, the Companys shareholders approved various changes and alterations to
the Companys articles and authorized capital that brought the Companys
articles in line with provisions of the New Act. The changes were effected and
the British Columbia Registrar of Companies issued a new Notice of Articles on
January 20, 2005.

The Companys principal place of business is located at Suite
#1050, 625 Howe Street, Vancouver, British Columbia, V6C 2T6 and its registered
and records office is located on the 10thFloor, 595 Howe Street,
Vancouver, British Columbia, V6C 2T5. The Company, through its subsidiaries, has
administration offices in Nevada and El Salvador. The Companys US agent is
Dorsey & Whitney LLP, located at 1400 Wewatta Street, Suite 400, Denver,
Colorado 80202-5549, USA.

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

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- 15 -

The Companys only capital expenditures over the past three
fiscal years (the twelve months ended April 30, 2013, 2012 and 2011) are
payments made to ICN Resources Ltd. of 200,000 common shares of the Company on
July 14, 2011 and 200,000 common shares of the Company on July 6, 2012 in
respect of the Hog Ranch Definitive Agreement (see Item 4D  Mineral
Properties  Other Properties). The Company made no capital divestures
during the past three fiscal years.

B. Business Overview

Pacific Rim is a mineral exploration company focused on high
grade, environmentally clean gold deposits in the Americas and committed to
excellence in environmental stewardship and social responsibility. Pacific Rims
primary asset is the advanced-stage, vein-hosted El Dorado gold deposit in El
Salvador (see Item 4D  Mineral Properties  El Salvador Properties), where
the Company also owns several grassroots gold projects. The Company is
continuously evaluating additional exploration opportunities elsewhere in the
Americas.

The Companys business activity in recent years has primarily
been focused on resolving the El Dorado project permitting impasse, including
legal recourse. In addition, the Company continues to seek new exploration
opportunities that fit its areas of focus and expertise.

The El Dorado gold project in El Salvador was the focus of
virtually all of the Companys exploration work between 2002 and 2008, when
efforts to advance its El Salvador projects, including El Dorado, ceased as a
result of the Government of El Salvadors (GOES) passive refusal to issue a
decision on the Companys application for environmental and mining permits for
the El Dorado project. The El Dorado project is now the subject of an
arbitration claim (the Arbitration) being heard at the International Center
for the Settlement of Investment Disputes (ICSID) in Washington, DC. Initiated
in 2009 by the Companys subsidiary and owner of the El Dorado project, PacRim,
the Arbitration claim was originally filed under the Dominican Republic-United
States-Central America Free Trade Agreement (CAFTA) and the Investment Law of
El Salvador (the Investment Law). In its decision related to jurisdiction
objections filed by the GOES, ICSID, in June 2012, ruled that the Arbitration
could proceed under the Investment Law to its final phase wherein the merits of
the claim will finally be addressed. Notwithstanding the ongoing legal action,
the Company continues to seek a negotiated resolution to the El Dorado
permitting impasse and to resuming its advancement of the El Dorado project.

Significant Corporate Events During Fiscal 2013

Significant technical and corporate events that occurred during
the twelve months ended April 30, 2013 include:

- In June 2012 a Tribunal overseeing the investor dispute of PacRim against
  the GOES at ICSID issued its ruling on "jurisdictional" objections filed by
  the GOES and decided that the case can proceed to the final, merits-based
  phase under El Salvadors Foreign Investment Law (the Investment Law). In
  this final phase of the Arbitration the Tribunal will determine whether El
  Salvador has breached Salvadoran and international law by refusing to issue
  the necessary mining licenses for the El Dorado project. They will also
  determine El Salvador's monetary liability for breaching the investment
  protections owed to a foreign investor as per in its own laws.
- In October 2012 the Company closed a non-brokered private placement
  financing whereby OceanaGold Corporation (OceanaGold) purchased 42,150,000
  common shares of Pacific Rim at CAD $0.10 per share, for total proceeds of CAD
  $4,215,000.
- In October 2012 the Company signed a service and fee agreement (the Final
  Phase Fee Agreement) with its legal counsel Crowell & Moring, LLP that
  will provide the Company with legal cost certainty as it proceeds through the
  final phase of the ICSID Arbitration claim.
- In March 2013 PacRim filed its statement of Claim (the Memorial) in
  connection with the final phase of the Arbitration. The Memorial is supported
  by detailed statements of multiple expert witnesses in the fields of economic
  geology, mine financing, environmental science and international mining law,
  and includes a valuation (the Valuation) performed by an independent expert.
  Based on this March 28, 2013 Valuation, PacRim is seeking compensation in the
  amount of $ 315 Million (including prejudgment interest) for its losses caused
  by the GOESs breaches of the Salvadoran Investment Law.

Subsequent to the end of fiscal 2013 the following events
occurred:

- In May 2013 the Company, on behalf of its US subsidiary PREx, informed
  Corazon Gold Corp. of its intent not to proceed further with its option
  agreement to acquire a 65% joint venture interest in the Hog Ranch property
  (Hog Ranch) in Nevada.

Important corporate and technical issues facing the Company in
the coming fiscal year (and beyond) include: the Companys ability to secure
financing for the continuation of PacRims Arbitration action; the Companys
ability to secure adequate financing for ongoing general working capital purposes and maintenance of the El
Salvador properties; the Companys ongoing efforts to persuade the GOES to
reconsider its actions and inactions in relation to mining and its role in the
economic development of El Salvador; developments related to the Arbitration
claim; developments related to the potential signing of a formal option
agreement to acquire the Remance project and the subsequent undertaking of an
exploration and drilling program at Remance if, as, and when it is formally
acquired; and, the continued search for additional exploration project
opportunities. Additional financing will be necessary during fiscal 2014 in
order for the Company to continue its business operations including the
Arbitration. The Company has been successful in raising funds through equity
financing in the past but there can be no assurance that such financing will be
available in the future, or if so, available under favourable terms, or that
alternatively, financing through means other than the issuance of equity can be
achieved. Readers are strongly encouraged to review the Risk Factors in Item 3D
 Risk Factors, above.

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- 16 -

Current Market Status

The business of mining and exploration involves a high degree
of risk. The Company is entirely reliant on its current cash and cash
equivalents and future financings and/or financial arrangements in order to fund
legal, exploration and administration expenses. Additional funding will be
required in the future to continue the Arbitration claim, to maintain its
exploration properties, and for administrative purposes. The Companys ability
to secure future financing is dependent on numerous factors, many of which are
outside of the Companys control, including fluctuations in the Companys share
price, the state of international debt and equity markets, investor perceptions
and expectations, global financial and metals markets, progress on any of the
Companys exploration properties, and developments, if any, on the El Dorado
project permitting application. While these factors are dynamic and likely to
change over time, at present, equity financing for mineral exploration companies
is difficult. The Company believes it will be able to obtain the necessary
financing to meet its requirements on an ongoing basis; however, there can be no
assurance that the necessary financing will be obtained. Furthermore, given the
Companys recent share price and the current state of equity markets, such
financing, if available, may be very dilutive to the Companys shares and
shareholders. As it has in the past, the Company would likely seek additional
financing through, but not limited to, the issuance of additional equity.
Readers are strongly encouraged to review the Risk Factors in Item 3D  Risk
Factors, above.

Competition

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

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

Seasonality

The Companys financial results are not significantly impacted
by seasonality. As it has no source of revenue, the Company typically incurs net
losses as a result of its expenses, which vary as a function of exploration work
undertaken, which has been minimal since July 2008, and the level of legal
activity related to the Arbitration action that commenced in April 2009.

Government Regulations

Pacific Rims exploration properties are located in El
Salvador. Federal regulatory agencieshaving authority over the Companys
exploration activities in El Salvador include but are not limited to the
Ministerio de Economia (Ministry of Economy, or MINEC), which has authority
over the granting of exploration and mining permits, and the Ministerio de Medio
Ambiente y Recursos Naturales (Environment and Natural Resources Ministry, or
MARN), which grants environmental permits and regulates environmental
protection within the country of El Salvador. See Risk Factors, above,
and Item 4 D Property, Plant and Equipment  El Salvador Mining Regime
for a discussion of government regulation of the Salvadoran mining industry.

C. Organizational Structure

The Company has the following material subsidiary
companies:

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- 17 -

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


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

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

D. Property, Plant and Equipment

Mineral Properties

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

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

El Salvador Properties

El Salvador Mining
Regime

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

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

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

El Dorado Property, El
Salvador

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- 18 -

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

The information presented below under the headings Property
Description and Location, Accessibility, Climate, Local Resources,
Infrastructure and Physiography, History, Geological Setting,
Exploration, Mineralization, Sampling and Analysis, Security of Samples,
Metallurgy, and January 2008 Resources Estimate summarizes information
prepared under the supervision of Mr. Steven Ristorcelli, P.Geo., of Mine
Development Associates and is drawn from a report dated March 3, 2008 entitled
Technical Report Update on the El Dorado Project Gold and Silver Resources(the March 2008 Technical Report) co-authored by Mr. Ristorcelli and Mr.
Peter Ronning, P.Eng., each of whom are independent Qualified Persons as defined
in NI 43-10. This information has been updated where necessary (for clarity and
to reflect developments that have occurred since the date of publication of the
March 2008 Technical Report) by or under the supervision of William Gehlen,
Certified Professional Geologist, a Qualified Person for the purposes of NI
43-101. Mr. Gehlen is the Vice-President of Exploration of the Company.
Information presented below for the El Dorado Property under all other headings
was prepared by the Company.

Predecessor Dayton upon its acquisition of Mirage Resource
Corp. in April 2000 acquired the El Dorado Property. Mirage initially acquired
the El Dorado Property by option agreement dated June 23, 1993 from Zinc Metal
Company (ZMC) of Toronto, and its wholly-owned subsidiary, New York and El
Salvador Mining Company. The option was exercised on August 25, 1994 in
accordance with its terms by payment of $175,000 to ZMC and by the parties
having incurred aggregate expenditures in excess of $800,000. Pursuant to the
terms of the option agreement, the El Dorado Property is subject to annual
advance minimum royalty payments, which are the greater of $50,000 per year or a
3% net smelter return royalty in favour of ZMC. The Company has the right to
purchase the royalty from ZMC for $4.0 million ($1.0 million for the first
one-half and $3.0 million for the second one half) provided that at least
one-half of the royalty is acquired within six months of the commencement of
commercial production. In addition, the government of El Salvador is entitled to
a 2% net smelter return royalty.

By agreement dated March 29, 2006, the Company superseded an
option agreement dated November 14, 2003 to acquire a parcel of land suitable
for mineral exploitation activities within the El Dorado exploration licence
area. Under the terms of the new agreement, the Company has prepaid an annual
rental fee in the amount of $29,000 with the option to purchase the parcel for a
payment of $971,000 at any time up to April 1, 2007. During fiscal 2007 the
Company commenced the process of exercising its option to purchase one of the
larger parcels of land over which it holds a purchase option agreement
(negotiated during fiscal 2004), and advanced to the property owner $0.3 million
of the $1.0 million total negotiated option payment. During fiscal 2008, upon
transfer of title in the parcel of land to the Company, the final $0.7 million
was paid. Although the El Dorado Property contains geological mineral
resources, none of the Companys properties in El Salvador, including the El
Dorado Property, contain known ore reserves (as defined under the SECs Industry
Guide 7) and all work programs are exploratory searches for ore grade
mineralization.

Property Description and Location

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

The El Dorado Property (see Figures 1 and 2 below) is comprised
of three exploration licenses totalling 14,407 hectares (approximately 144
square kilometres) with nominal expiry dates of September 28, 2013 (one license)
and September 29, 2013 (two licenses), and a 1,275 hectare (12.75 square
kilometre) area pending conversion to an exploitation concession (Exploitation
Concession), which underlying exploration license has a nominal expiry date of
January 1, 2005. In accordance with Salvadoran Law, PRES presented a request for
the conversion of this 12.75 square kilometre portion of the El Dorado
exploration licences to an exploitation concession in December 2004. The
conversion process is currently pending ministerial acceptance of PRESs
Environmental Impact Study and issuance of the environmental permits. As a
result of restricted access to documents in El Salvador during the on-going
Arbitration action, the Company has not had the ability to confirm or renew its
existing Salvadoran exploration licences during fiscal 2013. Legal opinions
secured by the Company indicate that El Salvadoran administrative laws and
procedures assure the Companys exclusive rights to the proposed exploitation
concession area while the application is in process, despite the underlying
exploration licence having expired. There can be no assurance however that this
opinion will not be challenged by regulatory authorities or other third parties
and that PRESs legal rights to explore within the exploitation concession
application area will be upheld indefinitely pending the outcome of the
application process. The Company continues to hold the 1,275 hectare pending
Exploitation Concession area beyond its expiry date as it has declared its
intention to convert the land holding to an Exploitation Concession, which will
have a term of 30 years and may be extended if warranted. See El Salvador
Mining Regime above. The cost to hold the licenses is a rental of $300 per
square kilometre, amounting to $47,046 per year. The Company is up to date with
the regulatory obligations required to maintain the licenses in good standing
and is awaiting final approval of the pending Exploitation Concession.

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

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- 19 -

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

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

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

---

- 20 -



Figure 1: Location of the El Dorado property in El
Salvador.

---

- 21 -



Figure 2: El Dorado property licence area.

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- 22 -

Accessibility, Climate, Local
Resources, Infrastructure and Physiography

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

The area has a large rural population and Sensuntepeque is a
moderate sized town of approximately 20,000 people. Unskilled labour and persons
with general business and technical skills should be readily available. El
Salvador does not have an indigenous mining industry, so personnel with
exploration and mining skills need to be trained or come from elsewhere.

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

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

History

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

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

Geological Setting

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

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

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

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

Exploration

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

Geological mapping to varying levels of detail, done by the
Company and its predecessors, covers approximately 2,000 hectares of the 14,400
hectare property. Digital maps have been generated at scales ranging from
1:1,000 to 1:10,000. In addition, the project archives contain numerous
individual maps of trenches, veins and target areas at various scales.

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

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- 23 -

Mineralization

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

The dimensions of mineralized veins are as varied as their
exploration status, ranging from those known only in single outcrops to those
that have been traced on the surface over lengths of between one and two
kilometres. Systems of related veins are up to three kilometres long. In those
veins that have been mined or extensively drilled, mineralization has been
demonstrated to exist over vertical intervals of up to 300 metres. (In
considering vein lengths and vertical dimensions it is important to note that at
a detailed level mineralization in this type of system is highly variable).

Sampling and Analysis

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

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

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

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

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

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

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

Security of Samples

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

Metallurgy

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

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- 24 -

January 2008 Resource Estimate

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

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


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

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

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- 25 -

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

Recent Developments

In July 2008, the Company suspended all drilling activity at
the El Dorado project. This decision was made in order to preserve capital and
substantially reduce Pacific Rims El Salvador investment activity while the El
Dorado permitting issue remains unresolved. See Environmental Impact Study
and Mining Permitbelow.The Company did not conduct any significant
exploration work to further advance the El Dorado project during fiscal 2013.
Exploration activities undertaken by the Company at the El Dorado project during
fiscal 2013 were restricted to care and maintenance responsibilities, baseline
environmental data collection and community consultations.

Environmental Impact Study and Mining
Permit

A summary of El Salvadors mining regime is presented in El
Salvador Mining Regime above.

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

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

Arbitration Action

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

Since PacRim initiated the Arbitration claim in 2009, the GOES
has filed two objections to the action (the Preliminary Objections and the
Jurisdiction Objections) in an attempt to terminate the Arbitration. On both
occasions the Tribunal disagreed and ruled that the action could proceed.
Additional details are provided below.

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

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- 26 -

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

Pacific Rims mandate to its shareholders is to build a gold
mining company that explores and develops gold deposits in an environmentally
responsible manner. The El Dorado Mine, as designed and submitted to the GOES
six years ago, would set new precedents for environmental protection in all of
the Americas and exceeds current Canadian and US environmental standards.
Preservation of water quality and quantity is a key component of the
industry-leading El Dorado mine design. The Company owns, or has negotiated
rights to work on all surface lands needed by the operation. The Company has met
or exceeded all the legal requirements necessary for a mining permit according
to El Salvadors mining, environmental and foreign investment laws. Despite
strong local support and the inclusion of carefully engineered and reliable
environmental protections for the proposed El Dorado Mine, the GOES has not met
its responsibility to approve the permits necessary to advance the project to
the final step of full production.

During fiscal 2013 (early June 2012), the ICSID Tribunal
overseeing the Arbitration action issued its ruling on the Jurisdiction
Objections filed by the GOES, wherein the GOES asserted that ICSID does not have
jurisdiction to hear PacRim's claims under CAFTA or the Investment Law based
largely on timing and nationality issues. In its ruling, the Tribunal determined
ICSID does have jurisdiction over this claim and will hear PacRims claims under
the Salvadoran Investment Law, but not under CAFTA. Accordingly, the Arbitration
claim is now proceeding under the Investment Law alone. ICSID, a branch of the
World Bank, continues to oversee this case at its headquarters in Washington, DC
and the three original arbitrators continue to hear the case.

In its decision, the Tribunal rejected the GOESs allegations
that ICSID does not have jurisdiction over PacRims claims under the Investment
Law. The Tribunal also rejected most of the GOESs objections to the Tribunal's
CAFTA jurisdiction (including rejecting the GOESs assertion that the case
constituted an abuse of process). However, while ruling that PacRim is in fact
a US company and is part of a group of companies that has substantial business
activities in the United States, the Tribunal concluded that the specific
subsidiary that filed the claim does not have sufficiently substantial
business activities in the US to allow the investment protections under CAFTA.

In October 2012, shortly after the Tribunals Jurisdiction
Objection ruling that allowed for continuation of the Arbitration to the next
and final phase, the Company signed a service and fee agreement (the Final
Phase Fee Agreement) with its legal counsel Crowell & Moring, LLP. The
Final Phase Fee Agreement provides the Company with cost certainty in regards to
Arbitration-related legal fees as it proceeds through the final phase of the
claim. It does not apply to ancillary Arbitration-related expenses such as court
costs, expert testimony, translation services, etc., which may be
significant.

The Arbitration claim is now in the final phase, wherein the
merits of PacRim's claims will finally be addressed. PacRims Memorial (the
initial, written statement of claim) was submitted to the Tribunal in late March
2013. The Memorial is supported by detailed statements of multiple expert
witnesses in the fields of economic geology, mine financing, environmental
science, international law and international mining law and includes a Valuation
Report (the Valuation) of PacRims El Salvador properties performed by an
independent business valuation expert.

Based on the March 28, 2013 Valuation, PacRim is seeking
compensation in the amount of $314 million (including prejudgment interest) for
its losses caused by the GOESs breaches of the Salvadoran Investment Law.

The Tribunal has now finalized the schedule for the remainder
of the final phase, with the next step being the submission of a
Counter-Memorial by the GOES by January 10, 2014. Both PacRim and the GOES will
then provide written rebuttals to the Tribunal, following which oral testimony
will be given, likely during mid-calendar 2014. Based on these submissions and
testimonies, the Tribunal will determine whether El Salvador has breached
Salvadoran and international law by refusing to issue the necessary mining
licenses for the El Dorado Mine. They will also determine El Salvador's monetary
liability for breaching the investment protections owed to a foreign investor as
per in its own laws.

A copy of the Memorial including the Valuation, and other
filings related to the Arbitration, are available on the Companys website
www.pacrim-mining.com.

Summary

The El Dorado gold project is Pacific Rims most advanced
exploration project. El Dorado has current estimated resources of 1.4 million
gold equivalent ounces in the Measured and Indicated categories combined, plus a
further 0.3 million gold equivalent ounces in the Inferred category (see
January 2008 Resource Estimate above). Because the average grade of
these resources (approximately 10.5 gold equivalent grams per tonne) is
relatively high, the underground mine planned for the El Dorado deposits is expected to have low unit operating costs. Importantly, the El
Dorado deposits are inherently environmentally clean and the production and
processing is expected to have a negligible impact on the local environment. The
El Dorado project has delivered many technical successes; however its path
forward to development and operation has been hampered by excessively lengthy
delays in the permitting process on the part of the GOES. The El Dorado project
is currently the subject of an Arbitration action under the auspices of the
Investment Law of El Salvador, as discussed above.

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- 27 -

The Company drastically reduced its Salvadoran exploration
expenditures during fiscal 2009, which primarily affected exploration work at
the El Dorado project. The Company does not intend to contemplate resuming
significant exploration work designed to advance the El Dorado project further
until such time as the environmental permit is received and the exploitation
concession is granted.

Santa Rita Gold Property, El
Salvador

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

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

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

Notwithstanding the excellent exploration potential
demonstrated to date at the Santa Rita project, exploration activities were
curtailed in July 2008 in keeping with the Companys decision to significantly
reduce its investment in El Salvador until such time as the El Dorado
environmental permit is received and the exploitation concession is granted. No
exploration work was undertaken by the Company at the Santa Rita property during
fiscal 2013.

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

Zamora-Cerro Colorado Gold
Property, El Salvador

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

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

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

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- 28 -

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

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


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

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

Despite the positive exploration results the Company has
generated to date on the Zamora-Cerro Colorado project, further exploration
activities were curtailed in July 2008 in keeping with the Companys decision to
significantly reduce its investment in El Salvador until such time as the El
Dorado environmental permit is received and the exploitation concession is
granted. The Companys exploration work at the Zamora-Cerro Colorado property
during fiscal 2013 was limited to activities required to keep the Zamora-Cerro
Colorado licences in good standing and did not include any exploration work to
advance the property.

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

Other Properties

Hog Ranch Property,
Nevada

In June 2011, Pacific Rim, through its US subsidiary Pacific
Rim Exploration Inc. (PREx) signed a Definitive Agreement with ICN Resources
Ltd. (ICN) and Washoe Gold Inc. (WGI) (collectively with the Company and
PREx, the Hog Ranch Parties) providing the Company with the option to acquire
a 65% joint venture interest in the Hog Ranch property located in Washoe County,
Nevada, approximately 180 km north of Reno. ICN (and its interest in the Hog
Ranch property) was subsequently acquired by Corazon Gold Corp (Corazon).

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

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

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- 29 -

|(i)   | $500,000 on or before July 8, 2012
    (completed);  
|----- | -----------------------------------------------------
|(ii)  | a further $1,000,000 on or before July 8, 2013;      
|(iii) | a further $1,500,000 on or before July 8, 2014;      
|(iv)  | a further $2,000,000 on or before July 8, 2015;      
|(v)   | a further $3,000,000 on or before July 8, 2016;
  and

Share payments of up to 1.0 million shares as follows:

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

As per the above expenditure and payment schedule, $1 million
in exploration expenditures on the property was required in the 12-month period
ended July 8, 2013. The Companys board of directors determined the Company was
not in a financial position to make these required exploration expenditures
before the July 2013 deadline. As a result, subsequent to the end of fiscal
2013, Pacific Rim, on behalf of PREx, informed Corazon of its intent not to
proceed further with its option agreement to acquire an interest in the Hog
Ranch property.

Remance Property,
Panama

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

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

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

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


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

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

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

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

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

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- 30 -

Generative Program

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

In recent years, the Company shifted the focus of its
grassroots exploration initiatives out of El Salvador to other jurisdictions
that have similarly prospective mineral potential but a more robust appreciation
of the economic benefits of the mining industry. Using its unique understanding
of epithermal gold systems in the Central American Gold Belt, particularly
within El Salvador, Pacific Rim has been very successful in locating new, high
grade gold-bearing systems in the past and is ideally equipped to apply this
formula for discovery to neighbouring jurisdictions and elsewhere along the
Pacific Rim. While the Company continues to seek additional high quality
projects that fit its exploration focus, there are no guarantees that any
project generation initiatives currently underway will result in a positive
outcome or that the Company will be successful in acquiring any of new
projects.

Environmental Matters

US Interests

US operations are subject to federal, state and local
environmental laws and regulations. While the Company currently has no active US
operations, its US interests during fiscal 2013 included the Hog Ranch property
(an early-stage exploration property), and its prior partial ownership of the
Denton-Rawhide operation remains.

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

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

Hog Ranch

As a result of the Companys due diligence investigation prior
to signing the Hog Ranch Definitive Agreement, the Company does not believe that
in optioning the property it inherited any significant reclamation liability
stemming from prior operations. Gold mining operations were conducted on the Hog
Ranch property in the 1990s. However, previous operators reclaimed all prior
workings to regulatory-approved conditions including partially backfilling the
open pits. The terms of the Hog Ranch Definitive Agreement preclude any
environmental liability for Pacific Rim stemming from these prior
operations.

The Companys exploration programs undertaken at Hog Ranch
during previous fiscal periods consisted of re-mapping the surface geology and a
soil sampling program over previously un-sampled ranch lands. Environmental
risks associated with exploration programs the Company undertook at Hog Ranch
during fiscal 2013 relate primarily the handling and storage of fuel. There were
no surface impacts as a result of work conducted by the Company during its
tenure at Hog Ranch.

Subsequent to the end of fiscal 2013 the Company terminated its
interest in the Hog Ranch property and has no further interest or rights in the
project, nor any reclamation or other environmental liabilities with the State
of Nevada, the Bureau of Land Management, nor the Hog Ranch property
vendors.

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- 31 -

Denton-Rawhide

During fiscal 2009 the Company sold its 49% interest in the
Denton-Rawhide operation to its joint venture partner, Kennecott-Rawhide Mining Company ("Kennecott"). At the time of this sale,
future reclamation costs were estimated to be $5.3 million. Subsequently, in
late calendar 2010, Kennecott sold its 100% interest in the Denton-Rawhide Joint
Venture to a third party. According to the terms of Kennecott's 2010 sale,
reclamation obligations at the Denton-Rawhide operation were separated such that
Kennecott remains responsible for reclamation expenditures due to any
disturbances created prior to the sale, and the purchaser becomes responsible
for undertaking reclamation related to any disturbances created after the sale.
As part of the sale of its interest in Denton-Rawhide to Kennecott, the Company
had provided a guarantee on 49% of any reclamation and closure costs in the
event that these expenditures (limited to those related to disturbances made up
to the point the Company sold its interest in the operation) were to exceed $7.0
million. In other words, the Company's obligations are limited to pre-sale
property conditions.

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

International
Properties

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

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

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

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

Proposed Transactions

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

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

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- 32 -

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Critical Accounting Policies

The Companys financial statements have been prepared in
accordance with IFRS as issued by the International Accounting Standards Board
(IASB). Prior to adopting IFRS at the commencement of fiscal 2012, the
Companys financial statements were prepared in accordance with Canadian
generally accepted accounting principles as set out in the Handbook of the
Canadian Institute of Chartered Accountants (CICA Handbook).

The following policies are considered by management to be
essential to understanding the processes and reasoning that go into the
preparation of the Companys financial statements and the uncertainties that
could have a bearing on its financial results. Readers are encouraged to review
Note 3 of the Companys fiscal 2013 audited consolidated financial statements
for a thorough description of all accounting policies.

Mineral Properties and Exploration Costs

The Company capitalizes the direct costs of acquiring mineral
property interests including option payments, until such time as the property is
put into production or the property is disposed of, either through sale or
abandonment or becomes impaired. If a mineral property is put into production
the costs of acquisition are expensed over the life of the property based on
estimated economic reserves. Proceeds received from the sale of any interest in
a property will be credited against the carrying value of the property with any
difference recognized in the statement of loss and comprehensive loss. If a
property is abandoned, the acquisition costs will be written off to the
statement of loss and comprehensive loss.

Exploration and evaluation costs are charged to operations in
the period incurred until such time as it has been determined that a property
has economically recoverable reserves, in which case subsequent exploration and
development costs are capitalized. Exploration costs include value-added taxes
because the recoverability of these amounts are uncertain.

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

Impairment of Non-financial Assets

The carrying amounts of non-financial assets are reviewed for
impairment whenever facts and circumstances suggest that the carrying amounts
may not be recoverable. If there are indicators of impairment, the recoverable
amount of the asset is estimated in order to determine the extent of any
impairment. For the purpose of measuring recoverable amounts, assets are grouped
at the lowest levels for which there are separately identifiable cash flows
(cash-generating units or CGUs). The recoverable amount is the higher of an
assets fair value less costs to sell and value in use (being the present value
of the expected future cash flows of the relevant asset or CGU). An impairment
loss is recognized for the amount by which the assets carrying amount exceeds
its recoverable amount.

Non-financial assets that have been impaired in prior periods
are tested for possible reversal of impairment whenever events or changes in
circumstances indicate that the impairment has reversed. If the impairment has
reversed, the carrying amount of the asset is increased to its recoverable
amount but not beyond the carrying amount that would have been determined had no
impairment loss been recognized for the asset in the prior periods. A reversal
of an impairment loss is recognized in the statement of loss.

Critical Accounting Estimates and Judgements

The preparation of the consolidated financial statements
requires estimates and assumptions that affect the amounts reported in the
consolidated financial statements. Significant areas where judgment is applied
include, going concern assumption and assessment of whether there are any
indicators of impairment over mineral property interests. Significant areas
where estimates are applied include the recoverability of mineral property
costs, valuation of warrant derivatives, and estimates with respect to
recognition of potential obligations and liabilities. Actual results could
differ from our estimates and readers are encouraged to thoroughly review Note 4
of the Companys fiscal 2013 audited consolidated financial statements.

The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that period or in the
period of the revision and further periods if the review affects both current and future periods.

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- 33 -

The following are considered critical accounting estimates and
judgements used in the preparation of the Companys financial statements for
fiscal 2013.

Impairment of Mineral Properties

The net carrying value of each mineral property is reviewed
regularly for conditions that suggest impairment. This review requires
significant judgment as the Company does not have any proven and probable
reserves that enable estimated future cash flows to be compared to the carrying
values. Factors considered in the assessment of asset impairment include, but
are not limited to, whether there has been a significant decrease in the market
price of the property; whether there has been a significant adverse change in
the legal, regulatory, accessibility, title, environmental or political factors
that could affect the propertys value; whether there has been an accumulation
of costs significantly in excess of the amounts originally expected for the
propertys acquisition, development or cost of holding; whether exploration
activities produced results that are not promising such that no more work is
being planned in the foreseeable future and whether the Company has the
necessary funds to be able to maintain its interest in the mineral property.

Recent Accounting Pronouncements

Certain new standards, interpretations, amendments and
improvements to existing standards were issued by the International Accounting
Standards Board (IASB) or International Financial Reporting Interpretations
Committee (IFRIC). The Standards impacted that are applicable to the Company
are as follows:

- IFRS 9, Financial Instruments (IFRS 9) was issued by IASB in November
  2009. This standard addresses classification and measurement of financial
  assets and replaces the multiple category and measurement models in
  International Accounting Standard (IAS) 39 for debt instruments with a new
  mixed measurement model having only two categories: amortized cost and fair
  value through profit or loss. IFRS 9 also replaces the models for measuring
  equity instruments with recognition at fair value through profit or loss or at
  fair value through other comprehensive earnings.IFRS 9 is effective
  for annual years beginning on or after January 1, 2015. The Company is
  currently assessing the impact of this standard on the financial statements.
- IFRS 10, Consolidated Financial Statements (IFRS 10), was issued in May
  2011 and will supersede the consolidation requirements in SIC-12,
  Consolidation  Special Purpose Entities (SIC-12), and IAS 27, Consolidated
  and Separate Financial Statements (IAS 27), effective for annual periods
  beginning on or after January 1, 2013, with early application permitted. IFRS
  10 builds on existing principles by identifying the concept of control as a
  determining factor in whether an entity should be included within the
  consolidated financial statements of the parent company. The standard also
  provides additional guidance to assist in the determination of control where
  this is difficult to assess. The Standard is not expected to have an impact on
  the Company.
- IFRS 11, Joint Arrangements (IFRS 11), was issued in May 2011 and will
  supersede existing IAS 31, Joint Ventures (IAS 31) effective for annual
  periods beginning on or after January 1, 2013, with early application
  permitted. IFRS 11 provides for the accounting of joint arrangements by
  focusing on the rights and obligations of the arrangement, rather than its
  legal form (as is currently the case). The Standard also eliminates the option
  to account for jointly controlled entities using the proportionate
  consolidation method. The Standard is not expected to have an impact on the
  Company.
- IFRS 12, Disclosure of Interests in Other Entities (IFRS 12), was issued
  in May 2011 and is a new and comprehensive standard on disclosure requirements
  for all forms of interest in other entities, including subsidiaries, joint
  arrangements, associates and unconsolidated structured entities. IFRS 12 is
  effective for annual periods beginning on or after January 1, 2013 with
  earlier application permitted. The Standard is not expected to have an impact
  on the Company.
- IFRS 13, Fair Value Measurements (IFRS 13) was issued in May 2011 and
  sets out, in a single IFRS, a framework for measuring fair value. IFRS 13
  defines fair value as the price that would be received to sell an asset or
  paid to transfer a liability in an orderly transaction between market
  participants at the measurement date. This definition of fair value emphasizes
  that fair value is a market-based measurement, not an entity specific
  measurement. In addition, IFRS 13 also requires specific disclosures about
  fair value measurement. IFRS 13 is effective for annual periods beginning on
  or after January 1, 2013, with earlier application permitted. The Standard is
  not expected to have an impact on the Company.
- IAS 1, Presentation of Items of Other Comprehensive Income (OCI) (IAS
  1), was revised in June 2011 to change the disclosure of items presented in
  OCI, including a requirement to separate items presented in OCI into two
  groups based on whether or not they may be recycled to profit or loss in the
  future. The revision is effective for annual periods beginning on or after
  July 1, 2012 with early application permitted. The Standard is not expected to
  have an impact on the Company.

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- 34 -

- IFRIC 20, Stripping Costs in the Production Phase of a Mine (IFRIC 20)
  was issued in October 2011. This interpretation provides guidance on the
  accounting for the costs of stripping activity in the production phase when
  two benefits accrue to the entity: usable ore that can be used to produce
  inventory and improved access to further quantities of material that will be
  mined in future periods. IFRIC 20 is applicable for annual periods beginning
  on or after January 1, 2013 with early adoption permitted. The Standard is not
  expected to have an impact on the Company.

A. Operating Results

For fiscal year ended April 30, 2013 compared to fiscal year
ended April 30, 2012

For the fiscal year ended April 30, 2013, Pacific Rim recorded
a loss of $(4.7) million or $(0.02) per share, compared to a loss of $(1.8)
million or $(0.01) per share for the fiscal year ended April 30, 2012. The
increase in net loss for fiscal 2013 compared to fiscal 2012, despite decreased
expenses for exploration activity, stock-based compensation and professional
services, is primarily related to a substantial increase in costs related to the
Arbitration year over year as well as substantially less gains on the Companys
derivative liability in fiscal 2013 compared to fiscal 2012.

Expenses

Due to a decrease in the level of exploration activity at the
Hog Ranch property during the past fiscal year, exploration expenditures were
lower in fiscal 2013 than in fiscal 2012 ($1.5 million and $1.8 million,
respectively).

General and administrative expenses were relatively stable year
over year ($0.4 million for fiscal 2013 compared to $0.5 million for fiscal
2012) as were costs related to stock-based compensation ($0.4 million for fiscal
2013 compared to $0.5 million for fiscal 2012). Costs related to professional
services decreased slightly year over year ($0.2 million for fiscal 2013
compared to $0.3 million for fiscal 2012) reflecting the Companys reduced
business activity.

Arbitration-related expenses totalled $2.0 million during
fiscal 2013 compared to $0.5 million during fiscal 2012. This increase reflects
the substantial activity undertaken during the current year related to
preparation and submission of the Memorial (see Mineral Properties  El
Dorado Property  Arbitration Action, above).

Gains on derivative liability (income related to changes in the
term to expiry and fair value of common stock warrants issued by the Company
during private placement financings) decreased substantially year over year,
from $2.1 million during fiscal 2012 to $0.2 million during fiscal 2013)
reflecting decreases in the Companys share price and the expiration of a
majority of the Companys outstanding warrants.

Unusual Items

There were no unusual items in either of fiscal 2013 or fiscal
2012.

Summary

As a result of increased Arbitration-related expenses and
substantially lower gains on the Companys derivative liability, the Companys
loss for fiscal 2013 was $(4.7) million or $(0.02) per share compared to $(1.8)
million or $(0.01) per share for fiscal 2012.

For fiscal year ended April 30, 2012 compared to fiscal year
ended April 30, 2011

For the fiscal year ended April 30, 2012, Pacific Rim recorded
a loss of $(1.8) million or $(0.01) per share, compared to a loss of $(3.8)
million or $(0.03) per share for the fiscal year ended April 30, 2011. The
decrease in net loss for fiscal 2012 compared to fiscal 2011, despite increased
exploration and general and administrative expenses, is primarily related to
substantially increased gains on the Companys derivative liability in fiscal
2012 compared to fiscal 2011, as well as a decrease in costs related to the
Arbitration year over year.

Expenses

Due to the commencement of exploration at the Hog Ranch
property in late fiscal 2011, exploration expenditures were higher in fiscal
2012 than in fiscal 2011 ($1.8 million and $1.2 million, respectively).

General and administrative expenses were stable year over year
($0.5 million in both fiscal 2011 and fiscal 2012) though the Company did
realize slight increases in stock-based compensation ($0.3 million in fiscal
2011 compared to $0.5 million in fiscal 2012 and professional services ($0.2 million in fiscal 2011 compared to
$0.3 million in fiscal 2012) due to the slightly higher level of business
activity undertaken by the Company during fiscal 2012.

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- 35 -

Arbitration-related expenses totaled $0.5 million during fiscal
2012 compared to $0.3 million during fiscal 2011, a slight increase attributable
to costs associated with the Jurisdiction Objection hearings held in early
fiscal 2012.

The Company booked a small foreign exchange loss of $0.1
million during fiscal 2012 compared to a foreign exchange gain of $0.1 million
during fiscal 2011, primarily reflecting the impact of the US-Canadian dollar
exchange rate on the Companys Canadian dollar-denominated investments on
hand.

Unusual Items

There were no unusual items in either of fiscal 2012 or fiscal
2011.

Summary

As a result of increased exploration expenditures, general and
administrative costs and Arbitration-related expenses, offset by substantially
increased gains on the Companys derivative liability, the Companys loss for
fiscal 2012 was reduced to $(1.8) million or $(0.01) per share from $(3.8)
million or $(0.03) per share for fiscal 2011.

Summary of Quarterly Results

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

Fiscal 2013*
    Fiscal 2012*Q4 2013
    Q3 2013
    Q2 2013
    Q1 2013
    Q4 2012
    Q3 2012
    Q2 2012
    Q1 2012Revenue from Continuing Operations
    $nil
    $nil
    $nil
    $nil
    $nil
    $nil
    $nil
    $nilIncome (Loss) and Comprehensive Income (Loss)
    $(1,906)
    $(865)
    $(1,351)
    $(558)
    $(343)
    $(920)
    $(783)
    $212Income (Loss) per share  basic and diluted
    $(0.02)
    $(0.00)
    $(0.01)
    $(0.00)
    $(0.00)
    $(0.01)
    $(0.00)
    $0.00


* Reported under IFRS

The Company typically incurs a net quarterly loss. Exploration
expenses have been relatively stable over the past 8 quarters. Legal expenses
related to the Arbitration action, which commenced in early fiscal 2010, are
periodically higher commensurate with the level of activity related to the
action. Consequently expenses, which impact net loss and comprehensive loss,
have occasionally spiked during certain of the last eight quarters including Q2,
Q3 and Q4 2013 when documents related to the final phase of the Arbitration were
under preparation. During all of fiscal 2012 and the first and third quarters of
fiscal 2013, the Company booked gains on its derivative liability, which in Q1
2012 was substantial enough to offset expenses and result in income for the
period. During the past three quarterly periods (Q2, Q3 and Q4 2013) all of the
Companys outstanding warrants expired. This substantially reduced gains on
derivative liability during Q4 2013 and resulted in a small loss on derivative
liability during Q2 2013, the result of which was an increase in Loss and
Comprehensive Loss for both periods. The results of operations for each of the
past eight quarterly periods are not affected by seasonal trends and are largely
a function of the relative impact of exploration, general and administrative and
Arbitration action expenses realized during each quarter as well as gains or
losses on the Companys derivative liability.

Fourth Quarter Fiscal 2013

Net loss for the three months ended April 30, 2013 was $(1.9)
million compared to $(0.3) million in the three month period ended April 30,
2012. This increase in net loss for Q4 2013 compared to Q4 2012 is a result of
two primary factors: a substantial increase in expenses related to the
Arbitration ($1.2 million for Q4 2013 compared to $0.2 for the same period a
year earlier), which reflects the significant work done during the last quarter
of fiscal 2013 in preparation and submission of the Memorial; and a decrease in
gains on derivative liability from $0.5 million during Q4 2012 to a nominal
amount during Q4 2013.

Impact on Operations as a Result of Governmental
Factors

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

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- 36 -

B. Liquidity and capital resources

For fiscal year ended April 30, 2013 compared to fiscal year
ended April 30, 2012

Liquidity

During fiscal 2013 the Companys cash increased by $0.1 million
from $0.8 million at April 30, 2012 to $0.9 million at April 30, 2013.
Short-term investments were unchanged year over year ($0.5 million at both April
30, 2013 and April 30, 2012). As a result assets were unchanged year over year
($7.0 million at both April 30, 2013 and April 30, 2012). The Companys current
asset position at April 30, 2013 reflects the proceeds of a private placement
equity financing that closed during the fiscal year, less cash spent on
exploration, expenditures related to the Arbitration and general and
administrative costs associated with maintaining a public company.

The Companys financial statements have been prepared on the
basis that the Company will continue as a going concern, which assumes that the
Company will be able to meet its commitments, continue operations, realize its
assets and discharge its liabilities in the normal course of business for the
foreseeable future. There are events and conditions that cast substantial doubt
on the validity of that assumption. The Company will require additional
financing in the near future for general working capital purposes and for legal
expenses related to the Arbitration. Furthermore, as the Company does not have a
source of revenue, it will require ongoing financing in the future for working
capital and general and administrative purposes, in order to conduct any future
exploration programs. The costs for the Arbitration are substantial and are
anticipated to increase in mid-fiscal 2014 as the case proceeds through the
final, merits-based phase with additional written and oral testimony. While the
Company has entered into a service and fee agreement with its Arbitration legal
counsel that provides legal fee cost certainty through the final phase,
additional Arbitration-related costs including but not limited to costs related
to expert witness testimony, that fall outside of the service and fee agreement,
will be incurred, and along with ongoing general and administrative and
regulatory expenses, will necessitate additional financing in the future.
Factors that could affect the availability of financing include fluctuations in
the Companys share price, the state of international debt and equity markets,
investor perceptions and expectations, global financial and metals markets,
progress on any of the Companys exploration properties, and developments, if
any, on the El Dorado project permitting application. The Company believes it
will be able to obtain the necessary financing to meet its requirements on an
ongoing basis; however, there can be no assurance that the necessary financing
will be obtained, and such financing, if available, may be very dilutive to the
Companys shares and shareholders. As it has in the past, the Company plans to
obtain additional financing through, but not limited to, the issuance of
additional equity.

Cash Flow Used For Operating
Activities

The Companys net loss for fiscal 2013 was $(4.7) million
compared to $(1.8) million for fiscal 2012. These losses were offset by a number
of non-cash items including, notably: unrealized gains on derivative liability
of $(0.2) million in fiscal 2013 compared to $(2.1) million in fiscal 2012;
stock-based compensation of $0.4 million in fiscal 2013 compared to $0.5 million
in fiscal 2012; and accounts payable and accrued liabilities of $0.3 million in
fiscal 2013 compared to a marginal amount in fiscal 2012. Although the fiscal
2013 loss from continuing operations was substantially higher than in fiscal
2012, unrealized gains from the Companys derivative liability, a non-cash item,
were substantially lower year over year. As a result, cash flow used for
operating activities during fiscal 2013 was $0.8 million higher than in fiscal
2012 ($(4.1) million and $(3.3) million, respectively) reflecting increased cash
expenditures related to the Arbitration.

Cash Flow Provided by (Used For)
Investing Activities

During fiscal 2013 the Company made net purchases of short term
investments of $(1.9) million compared to $(1.6) million during fiscal 2012.
Redemption of short term investments added $1.8 million to cash during both
fiscal 2013 and fiscal 2012. Negligible purchases of property plant and
equipment were made in fiscal 2012 compared to $nil in fiscal 2013. As a result,
cash flow provided by (used for) investing activities was $(0.1) million during
fiscal 2013 compared to $0.2 million during fiscal 2012.

Cash Flow Provided by Financing
Activities

The Company realized $4.2 million in cash flow from financing
activities during fiscal 2013, compared to $3.6 million during fiscal 2012. The
fiscal 2013 and fiscal 2012 financing cash flow amounts are related to the
issuance of common shares of the Company under two private placement equity
financings that closed in October 2012 and May 2011 respectively (details
below).

During fiscal 2013, the Company closed a non-brokered private
placement financing in which a single subscriber, OceanaGold Corporation,
purchased 42,150,000 common shares of the Company at CAD $0.10 per share, for
total proceeds of CAD $4,215,000. No warrants were issued and no finders fees
were paid in connection with this financing.

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- 37 -

During fiscal 2012, the Company closed a private placement
financing (previously announced in late fiscal 2011) in which gross proceeds of
CDN $3,696,000 were raised through the issuance of 17,600,000 Units at a price
of CDN $0.21 per Unit. Each Unit issued in the fiscal 2012 financing consists of
one common share in the Company and one half of one share purchase warrant that
entitles the holder to acquire one additional common share of the Company at a
price of CDN $0.30 for a period of 24 months following the closing of the
financing. Pacific Rim reserves the right to accelerate the exercise period of
the fiscal 2012 financing warrants should its common stock trade above CDN $0.50
for 20 consecutive trading days. The Company also issued 233,400 Units to
certain finders in connection with the private placement, in payment of a
finders fee of 6% of the proceeds raised from subscribers introduced by the
finders, and issued 716,400 warrants to finders representing 6% of the total
number of Units sold to purchasers introduced by the finders.

For fiscal year ended April 30, 2012 compared to fiscal year
ended April 30, 2011

Liquidity

During fiscal 2012 the Companys cash increased by $0.5 million
from $0.3 million at April 30, 2011 to $0.8 million at April 30, 2012.
Short-term investments decreased year over year from $0.8 million at April 30,
2011 to $0.5 million at April 30, 2012. As a result of the increase in cash and
the decrease in short-term investments, current assets increased by $0.2 million
year over year from $1.2 million at April 30, 2011 to $1.4 million at April 30,
2012. This modest increase reflects the proceeds of a private placement equity
financing that closed during fiscal 2012, less cash spent on exploration
expenses and project generation efforts, general and administrative costs
associated with maintaining a public company, and expenditures related to the
Arbitration.

Cash Flow Used For Operating
Activities

The Companys loss from continuing operations was $(1.8)
million in fiscal 2012 compared to $(3.8) million in fiscal 2011. These losses
were offset by a number of non-cash items including, notably: stock-based
compensation of $0.5 million in fiscal 2012 compared to $0.3 million in fiscal
2011; gains from the Companys derivative liability of $(2.1) million in fiscal
2012 compared to $(0.2) million in fiscal 2011; and a marginal decrease in
accounts payable and accrued liabilities in fiscal 2012 compared to $0.1 million
in fiscal 2011. Although the fiscal 2012 loss from continuing operations was
substantially lower than in fiscal 2011, gains from the Companys derivative
liability, a non-cash item, were substantially higher year over year. As a
result, cash flow used for operating activities during fiscal 2012 was only $0.4
million lower than in fiscal 2011 ($(3.3) million and $(3.7) million,
respectively).

Cash Flow Provided by (Used for)
Investing Activities

During fiscal 2012 the Company made net purchases of short term
investments of $(1.6) million compared to $(1.0) million during fiscal 2011.
Redemption of short term investments added $1.9 million to cash during fiscal
2012 compared to $0.3 million during fiscal 2011. Negligible purchases of
property plant and equipment were made in fiscal 2012 compared to $nil in fiscal
2011. As a result, cash flow provided by (used for) investing activities was
$0.2 million during fiscal 2012 compared to $(0.7) million during fiscal
2011.

Cash Flow Provided by Financing
Activities

The Company realized $3.7 million in cash flow from financing
activities during fiscal 2012, compared to $3.3 million during fiscal 2011. The
fiscal 2012 and fiscal 2011 financing cash flow amounts are related to the
issuance of common shares of the Company under two private placement equity
financings that closed in May 2011 and October 2010 respectively (details
below).

The fiscal 2012 private placement financing is described above
under Cash Flow Provided by Financing Activities for the fiscal year ended April
30, 2013 compared to the fiscal year ended April 30, 2012.

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

Capital Resources and Financial
Condition

---

- 38 -

Working Capital - For fiscal year
ended April 30, 2013 compared to fiscal year ended April 30, 2012

At April 30, 2013, the Company had current assets of $1.5
million, compared to $1.4 million at April 30, 2012, an increase of $0.1
million. The slight increase in current assets is primarily a result of cash
raised through private placement financings in both fiscal 2013 ($4.2 million)
and fiscal 2012 ($3.7 million) and subsequent expenditures of cash on
exploration, general and administrative and Arbitration-related expenses.
Resource property balances at April 30, 2013 were marginally lower than the
April 30, 2012 balances ($5.45 million $5.49 million respectively).

At April 30, 2013 the Company had current liabilities of $2.0
million, compared to $1.6 million at April 30, 2012. Of the accounts payable and
accrued liability balances, $1.6 million at April 30, 2013 and $1.4 million at
April 30, 2012 is due to one vendor associated with the Arbitration.

The $0.1 million increase in current assets combined with the
$0.4 million increase in current liabilities, resulted in a $0.3 million
increase in the working capital deficit from $(0.2) million at the end of fiscal
2012 to $(0.5) at the end of fiscal 2013.

Working Capital  For fiscal year
ended April 30, 2012 compared to fiscal year ended April 30, 2011

At April 30, 2012, the Company had current assets of $1.4
million, compared to $1.2 million at April 30, 2011, an increase of $0.2
million. The slight increase in current assets is primarily a result of cash
raised through a private placement financing in early fiscal 2012 and subsequent
expenditures of cash on exploration, general and administrative and
Arbitration-related expenses. Resource property balances at April 30, 2012 were
marginally higher than the April 30, 2011 balances ($5.49 million $5.45 million
respectively).

At both April 30, 2012 and April 30, 2011 the Company had
current liabilities of $1.64 million. Of the accounts payable and accrued
liability balances, $1.4 million at April 30, 2012 (compared to $1.4 million at
April 30, 2011) is due to one vendor associated with the Arbitration.

The $0.2 million increase in current assets combined with no
change in current liabilities, resulted in a $0.2 million improvement in working
capital from $(0.4) million at the end of fiscal 2011 to $(0.2) at the end of
fiscal 2012.

Financial Condition

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

Acquisition of the Remance project is in doubt and therefore,
no exploration plans for Remance are being contemplated at this time. However,
if a final acquisition agreement on Remance is signed, as per the terms of the
Remance LOI the Company will be responsible for undertaking a $1 million
exploration program in the first year of the option period. The Company intends
to continue its project generation initiatives with the aim of evaluating and
possibly acquiring new exploration properties of merit that fit its exploration
focus. Minimal expenditures are anticipated for generative exploration work in
the coming fiscal year. The Company will require additional financing in order
to carry out any other future exploration work of a substantive nature.

The Companys general and administrative costs are expected to
decrease slightly during fiscal 2014 as every effort is made to trim costs where
possible, including recent reductions in staffing expenditures. Expenditures
related to PacRims Arbitration claim are expected to vary widely through fiscal
2014 as each party prepares and submits its written testimonies in turn. The
Company has currently accumulated a liability of approximately $1.4 million
related to the Arbitration. Additional working capital (likely through equity
financing) will be required to fund ongoing general and administrative costs.
Though the Company has signed a service and fee agreement with its Arbitration
legal counsel that will preclude legal fee cost overruns, ancillary
Arbitration-related expenses such as expert witnesses, court costs, etc. are
less certain and may be substantial.

The business of mining and exploration involves a high degree
of risk and there can be no assurance that any of the Companys current
exploration projects will result in profitable mining operations. The Company
has no source of revenue, and will require additional cash in the future to fund
exploration and administrative expenses. As at April 30, 2013, the Company has
negative working capital of $(0.5) million, has incurred losses since inception
and has an accumulated deficit of $(94.5) million. The Companys ability to
continue operations and exploration activities as a going concern is dependent
upon its ability to obtain future financing. The Company will need to raise
additional funds to support exploration and administration expenses and to
support expenses related to the Arbitration action that fall outside of
its legal services agreement. While the Company has been successful in obtaining
financing in the past, there is no assurance that sufficient funds will be
available to the Company, or be available on favourable terms in the future.
Furthermore, given the Companys recent share price and the current state of
equity markets, such financing, if available, may be very dilutive to the
Companys shares and shareholders. Factors that could affect the availability of
financing include fluctuations in the Companys share price, the state of
international debt and equity markets, investor perceptions and expectations,
global financial and metals markets, progress on any of the Companys
exploration properties, and developments, if any, on the El Dorado project
permitting application. Additional financing will require, but may not be
limited to, the issuance of additional equity.

---

- 39 -

Outlook

Exploration

While no substantial exploration programs are envisioned at
this time for fiscal 2014, the Company will undertake work and make various
expenditures required to keep all of its exploration projects in good standing.
As a result of the termination of the Hog Ranch option and recent cuts to
exploration and support staff, exploration-related expenditures for fiscal 2014
are expected to be lower than in fiscal 2013, and total approximately $1.0
million. The Company will require additional financing in fiscal 2014 to meet
its anticipated exploration expenses.

The Company will continue to curtail its exploration programs
and expenditures in El Salvador until such time as PRES receives the El Dorado
environmental permit and exploitation concession. The Company remains hopeful
that it will either receive the El Dorado permit and mining concession or that
it will be appropriately compensated. The Company will continue to seek
opportunities for dialogue with the GOES aimed at resolving its permitting
issues in El Salvador including receipt of the environmental and mining permits
for the El Dorado project as well as re-establishing the exploration licence for
Santa Rita.

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

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

General and Administrative and
Legal

As a result of recently adopted measures aimed at reducing its
staffing costs, the Companys general and administrative costs are expected to
be marginally reduced during fiscal 2014. Additional working capital (likely
through equity financing) will be required in the future to fund ongoing general
and administrative costs. Expenditures related to the Arbitration claim are
expected to be substantial as the case proceeds through the final phase. Though
the Company has signed a service and fee agreement with its Arbitration legal
counsel that will preclude legal fee cost overruns, ancillary
Arbitration-related expenses such as expert witnesses, court costs, etc. are
less certain and may be substantial.

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

Unless these diplomatic efforts are successful, the Arbitration
action is expected to proceed during fiscal 2014 and beyond. Having submitted
its Memorial in late fiscal 2013, the Company and its legal counsel are
currently awaiting the GOESs submission of its Counter-Memorial anticipated in
January 2014. This submission will be followed by oral testimony by both parties
before the Tribunal. Based on these submissions and testimonies, the Tribunal
will determine whether El Salvador has breached Salvadoran and international law
by refusing to issue the necessary mining licenses for the El Dorado Mine. They
will also determine El Salvador's monetary liability for breaching the
investment protections owed to a foreign investor as per in its own laws. The
final phase of the Arbitration case is expected to continue through fiscal 2014
and potentially beyond.

Key Issues

Important corporate and technical issues facing the Company in
the coming fiscal year (and beyond) include: developments related to the
Arbitration action; ongoing efforts to reach a resolution to the El Dorado
permitting impasse with the GOES; the Companys ability to secure adequate
future financing for ongoing Arbitration-related costs, general working capital
purposes, and exploration expenses including maintenance of the El Salvador
properties; developments related to the potential signing of a formal option
agreement to acquire the Remance project and the subsequent undertaking of an
exploration and drilling program at Remance if, as, and when it is formally acquired; and, the continued search for
additional exploration project opportunities. The Company has been successful in
raising funds through equity financing in the past but there can be no assurance
that such financing will be available in the future, or if so, available under
favourable terms.

---

- 40 -

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

None.

D. Trend Information

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

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

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

E. Off-Balance Sheet Arrangements

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

F. Tabular Disclosure of Contractual Obligations

The Company is committed to payments under operating leases for
office premises. The following table lists as of April 30, 2013, information
with respect to the Companys known contractual obligations.

Contractual Obligations (all amounts in thousands of US
dollars)

Payments due by periodTotal
    < 1 year
    1- 3 years
    4  5 years
    > 5 yearsOperating Lease Obligations
    $35
    $21
    $14
    -
    -Accounts Payable and Accrued Liabilities
    $1,979
    $1,979
    -
    -
    -Total
    $2,014
    $2,000
    $14
    -
    -


Under the terms of the Final Phase Fee Agreement described in
Item 4 D Property Plan and Equipment  El Dorado Property, El
Salvador,Pacific Rim has agreed to pay its Arbitration legal counsel a
success fee of up to $2.5 million under certain circumstances wherein a
favorable outcome to the dispute is reached, which represents a contingent
contractual obligation of the Company.

G. Safe Harbor

See Note regarding Forward-Looking Statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table set out the names of the members of the
Companys board of directors (Board of Directors or Board) and/or senior
officers as at April 30, 2013, the province or state and country in which each
is ordinarily a resident, all offices of the Company now held by each of them,
their principal occupations, the period of time for which each has been a
director (Director) and/or officer of the Company and the number of shares
owned by each Director and/or officer.

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- 41 -

Name and Jurisdiction of
      Residence(1)
    Principal Occupation,
      Business or Employment(1)
    Service as a Director
      or officer of the Company
    Number of
      Shares(2)Catherine McLeod- SeltzerBritish
      Columbia, Canada
    Chairman and Director of the Company, Director
      and Chairman of Bear Creek Mining Corporation, Director of Kinross Gold
      Corporation, Director of Troon Ventures Ltd. and Director of Major
      Drilling Group International Inc.
    Since April 11, 2002(3)
    4,002,300Thomas Shrake(5)Nevada, USA
    President, CEO and Director of the Company
    Since April 11, 2002(3)
    509,100(8)William Myckatyn(4)(5)(6)(7)British
      Columbia, Canada
    Corporate Director. Lead Director of the
      Company, Director of First Point Minerals Corp., Director of San Marco
      Resources Inc., Director of OceanaGold Corporation and Director of Delta
      Gold Corporation
    Since April 11, 2002(3)
    287,660David K. Fagin(4)(6)Colorado, USA
    Corporate Director. Director of the Company,
      and Director of Atna Resources Ltd.
    Since April 11, 2002(3)
    223,000Timothy C. Baker(5)(6)(7)Ontario,
      Canada
    Corporate Director. Director of the Company,
      Executive Chairman of Golden Star Resources Ltd, Director of Augusta
      Resource Corporation and Director of Antofagasta, Plc.
    Since March 5, 2012
    0Steven KrauseBritish Columbia, Canada
    President of Avisar Chartered Accountants. CFO
      of the Company
    Since December, 2008
    120,000William GehlenNevada, US
    Vice President Exploration of the Company
    Since March, 1997
    78,200Barbara HendersonBritish Columbia, Canada
    Vice President Investor Relations and Corporate
      Secretary of the Company
    Since July, 1998
    42,000


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

Each of the Companys Directors is elected by the Companys
shareholders at an annual general meeting to serve until the next annual general
meeting of shareholders or until a successor is elected or appointed. The Board
of Directors appoints the Companys executive officers annually after each
annual general meeting, to serve at the discretion of the Board of
Directors.

B. Compensation

Executive Compensation

During the fiscal year ended April 30, 2013, the Company had
three Named Executive Officers (for the purposes of Canadian securities
legislation), namely:

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

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- 42 -

The following table (presented in accordance with the Canadian
Form 51-102F6 Statement of Executive Compensation (Form 51-102F6)) sets forth all annual and long term compensation for
services in all capacities to the Company (to the extent required by Form
51-102F6) for the three most recently completed financial years of the Company,
being the years ended April 30, 2011, April 30, 2012 and April 30, 2013, in
respect of each Chief Executive Officer and Chief Financial Officer who acted in
such capacity for all or any portion of the most recently completed financial
year, and each of the other three most highly compensated executive officers of
the Company, or the three most highly compensated individuals acting in a
similar capacity (other than the Chief Executive Officer and the Chief Financial
Officer), as at April 30, 2013, whose total compensation, for the most recently
completed financial year, individually, exceeded CDN$150,000, and any individual
who would have satisfied these criteria but for the fact that individual was
neither an executive officer of the Company, nor acting in a similar capacity,
at the end of the most recently completed financial year (collectively the
Named Executive Officers or NEOs).

Name
      andPrincipalPosition
    ***Year***
     ***Ended***April
     30
    Salary
     US($)
    Share-
     BasedAwardsUS($)
    Option-
     BasedAwards
     US($)(1)
    Non-Equity Incentive
     Plan Compensation($)
    Pension
     ValueUS($)
    All Other
     CompensationUS($)
    Total
     ***Compensation***US($)AnnualIncentivePlans
    ***Long-term***
     ***Incentive***PlansThomas ShrakeCEO
    201120122013
    180,000(2)180,000(2)191,667(2)
    NilNilNil
    65,83591,23671,187
    NilNilNil
    NilNilNil
    NilNilNil
    NilNilNil
    245,835271,236262,854Steven Krause (3)CFO
    201120122013
    NilNilNil
    NilNilNil
    65,83528,36618,733
    NilNilNil
    NilNilNil
    NilNilNil
    NilNilNil
    65,83528,36618,733William GehlenVP Exploration
    201120122013
    120,000120,000120,000
    NilNilNil
    39,50134,03918,733
    NilNilNil
    NilNilNil
    NilNilNil
    NilNilNil
    159,501154,039138,733


|(1) | The Company used the Black-Scholes model as the
      methodology to calculate the grant date fair value, and relied on the
      following key assumptions and estimates for each calculation: expected
      dividend yield 0%, expected stock price volatility of 103% and 114%, risk
      free interest rate 1.26%, and expected life of options of between 3.5 and
      4.8 years. The Company chose this methodology as it is the standard for
      exploration companies in Canada and has been consistently applied by the
      Company for valuing option-based awards since 2003. The stock-based awards
      are determined in Canadian funds and then translated into US funds at the
      fiscal 2013 average foreign currency exchange rate of $1.00US = $0.9822
      CDN or $1.00 CDN = $1.018 US.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Mr. Shrakes official annual salary is US$250,000 per
      year. Between November 2008 and September 2013, in light of economic and
      market conditions, Mr. Shrake voluntarily drew only US$180,000 in salary
      per year, representing 72% of his official salary. In September 2012
      (during the current financial year), Mr. Shrakes annual salary draw
      increased to US$200,000. See President and Chief Executive Officer and
      Chairmans Compensation above.                                                                                                                                                                                                                                                                                                                           
|(3) | Mr. Krause, as CFO, is not an employee of the Company. He
      is employed by Avisar Chartered Accountants (Avisar). The portion
      of the compensation paid to Mr. Krause by Avisar during the fiscal years
      ended April 30, 2013, 2012 and 2011 and which Avisar attributed to the CFO
      services provided by Mr. Krause to the Company (based on Avisars revenue
      received from the Company as per its service agreement (see below) as a
      percentage of its total revenues) was CDN $9,637, $13,284 and $11,331,
      respectively. During the 2013 fiscal year, Avisar charged the Company CDN
      $130,800 for accounting, tax and financial consulting
  services.                                                                                                                  

Mr. Shrake is employed by the Company under an employment
agreement. Mr. Krause is engaged by the Company under a consulting agreement for
his services as CFO, and a company in which Mr. Krause is a principal is engaged
by the Company under a separate service agreement for the provision of
accounting and tax services. Mr. Gehlen is employed by a subsidiary of the
Company under an employment agreement. These employment and consulting
agreements are more thoroughly described below under the heading Termination
and Change of Control Benefits for NEOs.

None of the options granted to Messrs. Shrake, Krause or Gehlen
were re-priced during the current fiscal year.

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

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

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- 43 -

Option-Based Awards
    Share-Based AwardsName
    Number of
     SecuritiesUnderlying
     UnexercisedOptions
     (#)
    Option
     Exercise Price
     US($)(2)
    Option
     Expiration Date
    Value of
     UnexercisedIn-The-Money
     Options(1,2)
     US($)
    Number of
     Shares or Unitsof Shares That
     Have NotVested(#)
    Market or
     Payout Valueof Share-Based
     Awards ThatHave Not
     VestedUS($)Thomas ShrakeCEO
    500,000
    0.17
    12/29/2013
    Nil
    N/A
    N/A400,000
    0.21
    01/26/2015
    Nil
    N/A
    N/A500,000
    0.21
    12/16/2015
    Nil
    N/A
    N/A800,000
    0.16
    09/28/2016
    Nil
    N/A
    N/A800,000
    0.11
    10/03/2017
    Nil
    N/A
    N/ASteven KrauseCFO
    250,000
    0.17
    12/29/2013
    Nil
    N/A
    N/A250,000
    0.21
    01/26/2015
    Nil
    N/A
    N/A250,000
    0.20
    06/10/2015
    Nil
    N/A
    N/A250,000
    0.21
    12/16/2015
    Nil
    N/A
    N/A250,000
    0.16
    09/28/2016
    Nil
    N/A
    N/A250,000
    0.11
    10/03/2017
    Nil
    N/A
    N/AWilliam GehlenVP Exploration
    200,000
    0.17
    12/29/2013
    Nil
    N/A
    N/A200,000
    0.21
    01/26/2015
    Nil
    N/A
    N/A300,000
    0.21
    12/16/2015
    Nil
    N/A
    N/A300,000
    0.16
    09/28/2016
    Nil
    N/A
    N/A250,000
    0.11
    10/03/2017
    Nil
    N/A
  N/A


|(1) | This amount is calculated based on the difference between
      the market value of the securities underlying the options at the end of
      the most recently completed financial year, which was CDN$0.04 per share,
      and the exercise or base price of the option. If the exercise price of the
      option is higher than the year-end market value of the securities
      underlying the options, options are not In-the-Money and their value is
      Nil.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Companys options are set with an exercise price in
      CDN dollars and were converted to US dollars at the April 30, 2013 foreign
      currency exchange rate of $1.00 US = $1.0072 CDN or $1.00 CDN = $0.99285
      US. The value of the unexercised in-the-money options is determined in
      Canadian funds and then translated into US funds at the exchange rate
      quoted above.                                                                     

Value Vested Or Earned During The
Year

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

NEO Name
    Option-Based Awards 
     Value VestedDuring The Year(1)US($)
    Share-Based Awards -
     Value VestedDuring The Year
     US($)
    Non-Equity Incentive Plan
     Compensation -Value Earned
     During The YearUS($)Thomas ShrakeCEO
    3,971
    Nil
    NilSteven KrauseCFO
    1,241
    Nil
    NilWilliam GehlenVP Exploration
    1,241
    Nil
  Nil


|(1) | This amount is the dollar value that would have been
      realized had the newly vested options been exercised on the vesting date,
      computed by obtaining the difference between the market price of the
      underlying securities at exercise and the exercise price of the options
      under the option-based award on the vesting date. As the Companys stock
      options and share price are quoted in $CDN, the value was computed in CDN
      dollars and converted to US dollars at the April 30, 2013 foreign currency
      exchange rate of $1.00 US = $1.0072 CDN or $1.00 CDN = $0.99285
  US.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Companys stock option awards normally vest as follows: 1/3
upon the date of grant; 1/3 upon the first anniversary of the grant date; and
1/3 upon the second anniversary of the grant date. During the period from May 1,
2012 to April 30, 2013, the following options vested: the last third of options
granted on to the NEOs on December 17, 2012; the second third of options granted
on September 29, 2012; and the first third of options granted on October 4,
2012.

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- 44 -

Description of Incentive
Plan

In 2006 the Company established an Evergreen Incentive Stock
Option Plan (the Evergreen Plan), which was initially approved by the
shareholders of the Company (the Shareholders) on August 29, 2006 and
reapproved by Shareholders on August 26, 2009 and September 6, 2012.

The following is only a summary of certain provisions of the
Evergreen Plan and is qualified in its entirety by the provisions of the
Evergreen Plan. A Shareholder or other interested party may obtain a copy of the
Evergreen Plan by contacting the Corporate Secretary of the Company in writing
at Suite 1050, 625 Howe Street, Vancouver, British Columbia, V6C 2TC or by
telephone at 604-689-1976.

Description of the Evergreen Plan

On September 6, 2012, Shareholders reapproved the Company's
Evergreen Plan, which was initially adopted in 2006 and reapproved in 2009. The
Evergreen Plan is designed to attract and retain highly qualified employees,
service providers, consultants, directors and officers of the Company and its
subsidiaries (collectively, the Eligible Participants). The method of
establishing the maximum number of shares reserved for grant under option is
equal to 10% of the number of shares outstanding at the time of grant. All of
the Companys outstanding options, including those currently granted to the NEOs
as well as to the directors, employees and consultants of the Company are
governed by the Evergreen Plan, as all options granted under the Companys
former 2002 incentive stock option and stock bonus plan have expired, been
exercised or cancelled.

Under the Evergreen Plan, the Board of Directors is authorized
to designate Eligible Participants to whom options should be granted. As well,
the directors have the power under the terms of the Evergreen Plan to appoint a
committee of not less than three (3) directors to administer the Evergreen Plan.
The exercise price for an option granted under the Evergreen Plan shall be
determined by the directors at the time of grant, provided such price shall not
be less than the "market price", being the volume weighted average trading price
for the five trading days immediately preceding the date of grant. The Company
presently does not have a share purchase plan and does not grant stock
appreciation rights.

The Board of Directors fixes the vesting terms which it deems
appropriate when options are granted. On a change of control (as defined in
the Evergreen Plan), all shares subject to outstanding options will become
vested and exercisable by the optionees. Options granted under the Evergreen
Plan have a maximum fixed term of ten (10) years, subject only to the expiration
date of the fixed term falling within, or immediately after, a blackout period
that was self-imposed by the Company, in which case the option will expire
within a 10 business day period after the blackout is lifted. No option may be
assigned other than by will or pursuant to the laws of succession, and to a
trust, RESP or RRSP or similar legal entity established by the optionee.

The Evergreen Plan provides that under no circumstances shall
the Evergreen Plan, together with all of the Company's other previously
established or proposed stock options, stock option plans, employee stock
purchase plans or any other compensation or incentive mechanisms involving the
issuance or potential issuance of shares, result, at any time, in the number of
shares: (i) issued to insiders, within any one year period, exceeding 10% of the
number of shares then outstanding; (ii) issuable to insiders, at any time,
exceeding 10% of the number of shares then outstanding; (iii) issued to any one
insider and such insider's associates, within any one year period, exceeding 5%
of the number of shares then outstanding; and (iv) issuable to any one
participant, at any time, exceeding 5% of the number of shares then
outstanding.

In the event of the death of an optionee, options held by such
optionee may be exercised until the earlier of the expiry date of such options
or one year from the date of death, after which the options terminate. In the
event that an optionee ceases to be an Eligible Participant for any reason other
than for cause or by virtue of death, then options held by such optionee shall
remain exercisable for a period of 30 days after the date on which such optionee
ceases to be an Eligible Participant or the expiration date of such options,
whichever is earlier. Where, however, the employment or service contract with an
optionee is terminated for cause, no option held by such optionee shall be
exercisable following the date on which such optionee ceases to be an Eligible
Participant.

Amendments to the Evergreen Plan

The Evergreen Plan requires Shareholder approval for amendments
to the Evergreen Plan (other than those requiring only Board approval as set out
below) including the following:

(a) any amendment to the fixed percentage of shares issuable
under the Evergreen Plan, including a change from the fixed maximum percentage
of 10% of the issued and outstanding shares to a fixed maximum number;(b)
any change to the definition of Eligible Participant which would have the
potential of broadening or increasing insider participation;(c) the
addition of any form of financial assistance;(d) the addition of a cashless
exercise feature, payable in cash or securities, which does not provide for a
full deduction of the number of underlying shares from the Evergreen Plan
reserve;
(e) the addition of a deferred or restricted share unit or any
other provision which results in Eligible Participants receiving shares while no cash consideration is received by the Company; and

---

- 45 -

(f) any other amendments that may lead to significant or
unreasonable dilution in the Company's outstanding securities or may provide
additional benefits to Eligible Participants, especially insiders of the
Company, at the expense of the Company and its existing Shareholders.

The Evergreen Plan requires only Board approval for the
following types of amendments, as outlined in the Evergreen Plan:

(a) amendments considered to be of a clerical nature;(b) a
change to the vesting provisions of a security or to the Evergreen Plan
itself;(c) a change to the termination provisions of a security or to the
Evergreen Plan itself which does not entail an extension beyond the original
expiry date;(d) a change to reduce the exercise price of a security for an
Eligible Participant who is not an insider (as defined in the Evergreen Plan);
(e) the addition of a cashless exercise feature, payable in cash or
securities, which provides for a full deduction of the number of underlying
securities from the Evergreen Plan's reserve; and(f) amendments of a
non-material nature which are approved by the TSX.

On August 26, 2009, the Shareholders approved certain
amendments to the Evergreen Plan in order to: adjust the securities that an
optionee will receive on exercise after the completion of a compulsory
acquisition or other going private transaction following a take-over bid; adjust
the expiry date of options received by an optionee in a new company in the event
that the Company completes a plan of arrangement or spin-out transaction;
clarify existing adjustment provisions with respect to outstanding options on
completion of share reorganizations, special distributions and other corporation
reorganizations; and update certain legislative and statutory references and
correct certain typographical errors and cross referencing errors.

On July 23, 2012, the Board of Directors also made certain
non-material amendments to the Evergreen Plan (a) to clarify, and conform to the
TSX Company Manual, the wording regarding the insider participation limits in
the Evergreen Plan, and (b) to provide that the Company's optionholders who are
resident in the United States are required to provide for certain
representations and warranties to the Company, in order to ensure compliance by
the Company with the provisions of the U.S. Securities Act. These non-material
amendments to the Evergreen Plan were ratified by Shareholders on September 6,
2012 and approved by the TSX on September 14, 2012.

The Evergreen Plan requires Shareholder approval every three
years. As the Evergreen Plan was implemented by the Company in 2006 and
re-approved by the Shareholders in 2009 and 2012, Shareholder approval of the
Evergreen Plan is not required at the Companys Annual General Meeting (the
Meeting) scheduled for September 12, 2013.

There is a maximum of 16,860,170 common shares reserved for
issuance under the Evergreen Plan, representing approximately 7.99% of the
issued and outstanding common shares of the Company as at the date of this
annual report on Form 20-F.

A total of 12,800,000 options were under grant prior to
re-approval of the Evergreen Plan by Shareholders in September 2012. Since then,
3,660,000 new options have been granted, 1,200,000 previously-granted options
expired and no options have been exercised. Accordingly, as of the date hereof,
15,260,000 options are currently under grant, representing approximately 7.23%
of the issued and outstanding common shares of the Company as of the date of
this annual report on Form 20-F.

Pension Plan Benefits

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

Termination and Change of Control
Benefits

Thomas Shrake, President and CEO

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

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

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

---

- 46 -

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

| | (a) | a change (other than changes that are clearly and
      exclusively consistent with a promotion) in the executives position or
      duties (including any position or duties as a Director of the Company),
      responsibilities (including, without limitation, the person(s) to whom the
      executive reports, and who report to the executive), title or office in
      effect immediately prior to the change of control, which includes any
      removal of the executive from or any failure to re-elect or re-appoint the
      executive to any such positions or offices;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | any failure by the Company to increase the executives
      remuneration in a manner consistent (both as to frequency and as to
      percentage increase) with increases granted generally to the Companys
      other senior personnel;                                                                                                                                                                                                                                                                                                                                                
| | (c) | the Company permanently relocating the executive to any
      place other than the location at which he reported to work on a regular
      basis immediately prior to the change of control;                                                                                                                                                                                                                                                                                                                                                                                              
| | (d) | the Company taking any action to deprive the executive of
      any material fringe benefits enjoyed by him immediately prior to the
      change of control or the Company failing to increase or improve such
      material fringe benefits on a basis consistent with increases or
      improvements granted to the Companys other senior personnel;                                                                                                                                                                                                                                 
| | (e) | any breach of the Company of any provision of the
      employment agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (f) | the good faith determination by the executive that, as a
      result of the change of control or any action or event thereafter, the
      executives status or responsibility in the Company has been diminished or
      the executive is effectively being prevented from carrying out his duties
      and responsibilities as they existed immediately prior to the change of
      control; or                                                                                                                                                                                     
| | (g) | failure by the Company to obtain, in a form satisfactory
      to the executive, an effective assumption of its obligations hereunder by
      a successor to the Company, including a successor to a material portion of
      its business.                                                                                                                                                                                                                                                                                                                                              

If, as a result of a change of control of the Company, Mr.
Shrake experiences an event of termination as described above, Mr. Shrake is
entitled to a severance payment of 24 months salary (based on his official
annual salary of US$250,000) and is able to exercise any stock options
previously granted within 45 business days in the event of termination after a
change of control. The estimated incremental value of his non-vested stock
options that would vest assuming a triggering event took place on the last day
of the most recently completed financial year would have been $Nil as the
Companys closing share price on April 30, 2013 was CDN$0.04, lower than the
exercise price of all vested and non-vested stock options granted to Mr.
Shrake.

Steven Krause, CFO

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

Should a change of control occur, all outstanding stock
options held by Mr. Krause will become fully vested in accordance with the terms
of the Evergreen Plan whereupon such options may be exercised in whole or in
part by Mr. Krause. The estimated incremental value of his non-vested stock
options that would vest assuming a triggering event took place on the last day
of the most recently completed financial year would have been $Nil as the
Companys closing share price on April 30, 2013 was CDN$0.04, lower than the
exercise price of all vested and non-vested stock options granted to Mr.
Krause.

William Gehlen, Vice President
Exploration

William Gehlen has an employment agreement with a subsidiary of
the Company that includes termination and change of control conditions which are
the same as those in Mr. Shrakes employment agreement described above. If, as a
result of a change of control of the Company, Mr. Gehlen experiences an event
of termination as defined above, Mr. Gehlen is entitled to a severance payment
of 12 months salary, plus one months salary per year of service after one
year, up to a maximum of 24 months salary, and is able to exercise any stock
options previously granted within 30 calendar days in the event of termination
after a change of control. The estimated incremental value of his non-vested
stock options that would vest assuming a triggering event took place on the last
day of the most recently completed financial year would have been $Nil as the
Companys closing share price on April 30, 2013 was CDN$0.04, lower than the
exercise price of all vested and non-vested stock options granted to Mr.
Gehlen.

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

Estimated Incremental Payment on
Change of Control

---

- 47 -

Under the terms of Thomas Shrakes employment agreement, the
estimated incremental payment to Mr. Shrake upon termination by the Company on a
change of control of the Company, would be approximately US$500,000 (calculated
as at April 30, 2013) based upon an amount equal to 24 months salary, plus any
amounts owed in respect of accrued vacation and the accelerated option value of
his existing stock options.

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

Under the terms of William Gehlens employment agreement, the
estimated incremental payment to Mr. Gehlen upon termination by the Companys
subsidiary on a change of control of the Company, would be approximately
US$240,000 (calculated as at April 30, 2013) based upon an amount equal to 12
months salary plus one months salary for every year of service beyond one year
to a maximum of 24 months salary, plus any amounts owed in respect of accrued
vacation and the accelerated option value of his existing stock options.

Director Compensation

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

DirectorName(1)
    FeesEarned
     US($)
    Share-Based
     AwardsUS($)
    Option-Based
     Awards
     US($)(2)
    Non-Equity
     IncentivePlan
     CompensationUS($)
    PensionValue
     US($)
    All Other
     CompensationUS($)
    TotalUS($)Catherine McLeod-Seltzer
    Nil
    Nil
    44,492
    Nil
    Nil
    Nil
    44,492William Myckatyn
    Nil
    Nil
    19,576
    Nil
    Nil
    Nil
    19,576David K. Fagin
    Nil
    Nil
    19,576
    Nil
    Nil
    Nil
    19,576Timothy C. Baker
    Nil
    Nil
    19,576
    Nil
    Nil
    Nil
  19,576


|(1) | Relevant disclosure has been provided in the Summary
      Compensation Table above, for Mr. Shrake, a Director who is also a Named
      Executive Officer. Mr. Shrakes total compensation is related to his role
      as CEO, and he receives no compensation for his services as a
    Director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Companys three independent directors (Messrs.
      Myckatyn, Fagin and Baker) are entitled to receive annual directors
      compensation of CDN $10,000 plus 100,000 stock options but elected to
      forego the cash component of this compensation during the current
      financial year (only) in lieu of 120,000 additional compensatory stock
      options, which proposal was approved by the Board of Directors on October
      3, 2012.                                                                                                                                                                                                                                                                                                                                                           
|(3) | The Company used the Black-Scholes model as the
      methodology to calculate the grant date fair value, and relied on the
      following key assumptions and estimates for each calculation: expected
      dividend yield 0%, expected stock price volatility of 103% and 114%, risk
      free interest rate 1.26%, and expected life of options of between 3.5 and
      4.8 years. The Company chose this methodology as it is the standard for
      exploration companies in Canada and has been consistently applied by the
      Company for valuing option-based awards since 2003. The stock-based awards
      are determined in Canadian funds and then translated into US funds at the
      fiscal 2013 average foreign currency exchange rate of $1.00US = $0.9822
      CDN or $1.00 CDN = $1.018 US.

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

| | (a) | each of the Companys three independent Directors
      (Messrs. Myckatyn, Fagin and Baker) is entitled to receive an annual fee
      of CDN$10,000 to be paid upon his election or re-election to the Board at
      the annual general meeting of the Company. See footnote (2) to the table
      above.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | each independent Director is currently entitled to
      receive a grant of 100,000 stock options upon his election or re- election
      at the Companys annual general meeting under the Evergreen Plan, which
      options immediately vest in full.                                                   
| | (c) | Directors are reimbursed for individual travel and other
      ancillary expenses incurred in connection with attending Board and
      committee meetings.                                                                                                                                                 

---

- 48 -

The Evergreen Plan, as described above, allows for the granting
of incentive stock options to the officers, employees and Directors of the
Company. The purpose of granting such options is to assist the Company in
compensating, attracting, retaining and motivating the Directors of the Company
and to closely align the personal interests of such persons to that of the
Shareholders.

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

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

|                        | Option-Based Awards                                                 | Share-Based Awards             
|----------------------- | ------------------------------------------------------------------- | -------------------------------
|Director Name           | Number of
     SecuritiesUnderlying
     UnexercisedOptions
    (#) | Option
     Exercise PriceUS($)
|
|
|
|
|
|
|CatherineMcLeod-Seltzer | 300,000                                                             | 0.17                           
|200,000                 | 0.21                                                                | 01/26/2015                     
|300,000                 | 0.21                                                                | 12/16/2015                     
|500,000                 | 0.16                                                                | 09/28/2016                     
|500,000                 | 0.11                                                                | 10/03/2017                     
|William Myckatyn        | 125,000                                                             | 0.17                           
|75,000                  | 0.17                                                                | 12/29/2013                     
|75,000                  | 0.21                                                                | 08/25/2014                     
|50,000                  | 0.21                                                                | 01/26/2015                     
|75,000                  | 0.17                                                                | 08/25/2015                     
|50,000                  | 0.21                                                                | 12/16/2015                     
|75,000                  | 0.19                                                                | 09/18/2016                     
|50,000                  | 0.16                                                                | 09/28/2016                     
|220,000(3)              | 0.11                                                                | 10/03/2017                     
|David K. Fagin          | 125,000                                                             | 0.17                           
|75,000                  | 0.17                                                                | 12/29/2013                     
|75,000                  | 0.21                                                                | 08/25/2014                     
|50,000                  | 0.21                                                                | 01/26/2015                     
|75,000                  | 0.17                                                                | 08/25/2015                     
|50,000                  | 0.21                                                                | 12/16/2015                     
|75,000                  | 0.19                                                                | 09/18/2016                     
|50,000                  | 0.16                                                                | 09/28/2016                     
|220,000(3)              | 0.11                                                                | 10/03/2017                     
|Timothy C. Baker        | 200,000                                                             | 0.13                           
|220,000(3)              | 0.11                                                                | 10/03/2017                     

|(1) | This amount is calculated based on the difference between
      the market value of the securities underlying the options at the end of
      the most recently completed financial year, which was CDN$0.04 per share,
      and the exercise or base price of the option. If the exercise price of the
      option is higher than the year-end market value of the securities
      underlying the options, options are not In-the-Money and their value is
      Nil.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Companys options are set with an exercise price in
      CDN dollars and were converted to US dollars at the April 30, 2013 foreign
      currency exchange rate of $1.00 US = $1.0072 CDN or $1.00 CDN = $0.99285
      US. The value of the unexercised in-the-money options is determined in
      Canadian funds and then translated into US funds at the exchange rate
      quoted above.                                                                     
|(3) | The Companys three independent Directors (Messrs.
      Myckatyn, Fagin and Baker) are entitled to receive annual directors
      compensation of CDN $10,000 plus 100,000 stock options but elected to
      forego the cash component of this compensation during the current
      financial year (only) in lieu of 120,000 additional compensatory stock
      options, which proposal was approved by the Board of Directors on October
      3, 2012.            

---

- 49 -

Incentive Plan Awards - Value
Vested Or Earned During The Year

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

Director Name
    Option-Based Awards -
     Value VestedDuring The Year(1)US($)
    Share-Based Awards -
     Value VestedDuring The Year
     US($)
    Non-Equity Incentive
     Plan Compensation -Value Earned
     During The YearUS($)Catherine McLeod-Seltzer
    2,482
    N/A
    N/AWilliam Myckatyn
    3,276
    N/A
    N/ADavid K. Fagin
    3,276
    N/A
    N/ATimothy C. Baker
    3,276
    N/A
  N/A


|(1) | This amount is the dollar value that would have been
      realized had the newly vested options been exercised on the vesting date,
      computed by obtaining the difference between the market price of the
      underlying securities at exercise and the exercise price of the options
      under the option-based award on the vesting date. As the Companys stock
      options and share price are quoted in $CDN, the value was computed in CDN
      dollars and converted to US dollars at the April 30, 2013 foreign currency
      exchange rate of $1.00 US = $1.0072 CDN or $1.00 CDN = $0.99285
  US.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Securities Authorized for Issuance Under Equity Compensation
Plans

Plan Category
    Number of Securities to be
     issued upon exercise ofoutstanding
      options,warrants and rights
    Weighted average
     exercise price ofoutstanding options,
     warrants and rightsCDN($)
    Number of securities
     remaining available forfuture issuance
      underequity compensation plans
     (excluding securitiesreflected in column
      (a))Equity compensation plans approved by securityholders
    15,260,000
    0.19
    5,835,170Equity compensation plans not approved by securityholders
    Nil
    N/A
    N/ATotal:
    15,260,000
    0.19
  5,835,170


Details of the Companys Evergreen Plan are set out above under
the heading Description of Incentive Plan.

C. Board Practices

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

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

Independence of Members of Board and Management Supervision
by Board

---

- 50 -

The Board currently consists of five Directors, a majority of
whom are independent based upon the tests for independence set forth in NI
52-110. Assuming each of the nominated Directors is elected by Shareholders at
the Meeting on September 12, 2013, the Board will include three (3) independent
Directors: Messrs. Myckatyn, Fagin and Baker. Mr. Shrake and Ms. McLeod-Seltzer
are not considered independent as they are the President and Chief Executive
Officer, and Board Chairman, respectively, of the Company.

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

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

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

Participation of Directors in Other Reporting
Issuers

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

Name of Director
    Name of Other Public CompanyCatherine McLeod-Seltzer
    Bear Creek Mining Corporation, Kinross Gold
      Corporation, Troon Ventures Ltd. and Major Drilling Group International,
      Inc.William Myckatyn
    First Point Minerals Corp., San Marco Resources
      Inc., OceanaGold Corporation and Delta Gold CorporationDavid K. Fagin
    Atna Resources Ltd.Timothy C. Baker
    Augusta Resource Corporation, Antofagasta Plc.,
  Golden Star Resources Ltd.


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Participation of Directors in Board Meetings

The Board meets at least once every quarter to review the
performance of the Company and address other business matters. The Board also
holds a meeting each year to review and assess the Companys financial forecasts
and business plan for the ensuing year and its overall strategic objectives. Other meetings of the Board are
called to deal with special matters as circumstances require. During the
Companys most recently completed financial year, five (5) 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 RecentlyCompleted Financial YearCatherine McLeod-Seltzer
    5Thomas Shrake
    5William Myckatyn
    5David K. Fagin
    5Tim Baker (2)
  5


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

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

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

Position Descriptions

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

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

Orientation and Continuing Education

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

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

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

Ethical Business Conduct

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

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

Audit Committee

Audit Committee
Charter

The following is the text of the Audit Committees Charter
(Amended and Restated effective July 29, 2004):

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

14.1 Composition of the Audit Committee:

a) Shall consist of a minimum of three directors at all
times, all of whom must be independent as required by applicable law and
applicable stock exchange listing rules (the Listing
Rules). A member of the Committee shall be considered independent if
(a) he or she is not an employee of the Company; (b) he or she does not accept,
directly or indirectly, any consulting, advisory or other compensatory fee from
the Company or its subsidiaries other than in connection with serving on the
Committee, any other Board committee or as a member of the Board; (c) he or she
is not an affiliated person of the Company or any Company subsidiary as
defined by applicable law and Listing Rules; and (d) he or she meets all other
requirements for independence imposed by law and the Listing Rules from time to
time and any requirements imposed by any Canadian or other governmental body
having jurisdiction over the Company

b) All members of the Committee shall have a practical
knowledge of finance and accounting and be able to read and understand
fundamental financial statements from the time of their respective appointments
to the Committee.

c) At least one member of the Committee shall be a
financial expert as defined by Item 401(h) of Regulation S-K, unless otherwise
determined by the Board, and at least one member shall meet the financial
sophistication standards under the Listing Rules.

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The designation or identification of a member of the
Committee as an audit committee financial expert does not impose on such
person any duties, obligations, or liability that are greater than the duties,
obligations, and liability imposed on such person as a member of the Committee
and Board of Directors in the absence of such designation or identification; and
(ii) the designation or identification of a member of the Committee as an audit
committee financial expert does not affect the duties, obligations, or
liability of any other member of the Committee or Board of Directors

d) Each member of the Committee shall be appointed by the
Board and shall serve until the earlier to occur of the date on which he or she
shall be replaced by the Board, resigns from the Committee, or resigns from the
Board.

e) Shall meet no less than four times annually and at least
quarterly, on such dates that the Chair of the Audit Committee determine. Notice
of meetings shall be given by letter, facsimile or other means of recorded
electronic communication or by telephone not less than 24 hours before the time
fixed for the meeting. Members may waive notice of any meetings before or after
the holding thereof. A majority of the members present at a meeting will
constitute a quorum.

f) The Chair of the Audit Committee shall be appointed by
the Board following the recommendation of the Chair of the Board, who will
prepare and / or approve an agenda in advance of each meeting and shall preside
over meetings of the Committee.

14.2 Terms of Reference

The responsibilities and duties of the Audit Committee shall
be to:

a) Review and recommend for Board approval the annual and
quarterly financial statements of the Company, including Managements Discussion
and Analysis, and determine whether they are complete and consistent with the
information known to committee members. Determine that the auditors are
satisfied that the financial statements have been prepared in accordance with
applicable generally accepted accounting principles.

b) Make regular reports to the Board.

c) Have the sole authority to appoint or replace the
independent auditor (subject, if applicable, to shareholder ratification). The
independent auditor shall report directly to the Audit Committee.

d) Review the scope of the audit to be conducted by the
external auditor of the Company.

e) Be directly responsible for the compensation and
oversight of the work of the independent auditor (including resolution of
disagreements between management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or related
work.

f) Review and pre-approve all auditing services, internal
control related services and permitted non-audit services (including the terms
thereof) to be performed for the Company by its independent auditor, subject to
the de minimus exceptions for non-audit services described in Section
10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended, which are
approved by the Audit Committee prior to completion of the audit. The Audit
Committee may form and delegate authority to subcommittees consisting of one or
more members when appropriate, including the authority to grant pre-approvals of
audit and permitted non-audit services, provided that decisions of such
subcommittee to grant pre-approvals shall be presented to the full Audit
Committee at this next scheduled meeting.

g) Pre-approve all engagement letters for all auditing and
non-audit services to be provided to the Company or its subsidiaries, before and
after completion of work and assess the performance of external and internal
auditors.

h) Review and determine the compensation to be paid to the
independent auditor for all auditing services, internal control related services
and permitted non-audit services. The Company shall provide appropriate funding,
as determined by the Audit Committee, for payment of compensation to the
independent auditor for the purpose of rendering or issuing an audit report and
to advisors employed by the Audit Committee.

i) Review all public disclosure documents containing audited
or unaudited financial information before release, including but not limited to
prospectus, annual report, annual information form and managements discussion
and analysis.

j) Review, at least semi-annually, all expenses paid by the
Company to or in behalf of the CEO and the President and any other financial
arrangements or transactions with them and their affiliates.

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k) Review all post-audit or management letters containing
the recommendations of the external auditor and managements response/follow-ups
of any identified weakness.

l) Have the right, for the purpose of performing their
duties, of inspecting all of the books and records of the Company and its
affiliates and of discussing such accounts and records and any matters relating
to the financial position or condition of the Company with the officers and
auditors of the Company and its affiliates.

m) Review any transaction involving the Company and a
related party at least once a year or upon any significant change in the
transaction or relationship.

n) Review and discuss with the independent auditors and
management (including the senior internal audit executive) any significant
matters regarding the Companys internal controls and procedures over financial
reporting that have come to the attention of the independent auditor during the
conduct of their annual audit, and review whether internal control
recommendations made by the auditors have been implemented by management and
review any special steps adopted in light of material control deficiencies and
the adequacy of disclosures about changes in internal control over financial
reporting.

o) Review major risk exposures (whether financial, operating
or otherwise) and the guidelines and policies that management has put in place
to govern the process of monitoring, controlling and reporting such exposures
(including any hedging).

p) Review and discuss reports from the independent auditors
on:

(i) all critical accounting policies
and practices used in preparation of the Companys financial statements;

(ii) all alternative treatments of
financial information within generally accepted accounting principles that have
been discussed with management, ramifications of the use of such alternative
disclosures and treatments and the treatment preferred by the independent
auditors; and

(iii) other material written
communications between the independent auditor and management, such as
management letters or schedules of adjusted differences.

q) Discuss with management and the independent auditors the
Companys use of non-GAAP information in any report, earnings release or other
publicly disseminated document and any off-balance sheet structures and the
effect of regulatory and accounting initiatives on the Company.

r) Review annually managements report on internal controls
and any auditors attestation regarding managements assessment of internal
controls, required by law or Listing Rules and review whether internal control
recommendations made by the auditors have been implemented by
management.

s) Establish procedures for: (a) the receipt, retention and
treatment of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters; and (b) the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
business conduct, accounting or auditing matters.

t) Have such other duties, powers and authorities,
consistent with the provisions of applicable laws and Listing Rules, or as the
Board may by resolution delegate to the Audit Committee from time to
time.

u) At the Companys expense, retain independent counsel,
accountants or other experts for such purposes as the Committee, in its sole
discretion, determines to be appropriate to carry out its responsibilities, and
set the compensation to be paid to such experts.

v) Review on an annual basis and if necessary update this
Charter and have changes approved by the Board.

14.3 Regulations

The following regulations shall apply to the proceedings of
the Audit Committee.

a) The business of the Audit Committee shall be transacted
either at meetings thereof or by conference telephone or other communications
facilities that permit all persons participating in the meeting to hear each
other, or by resolution in writing. All questions at a meeting shall be decided
in accordance with the vote of a majority of those present and the Chair of the
meeting shall not have a second or casting vote.

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b) A resolution in writing signed by all members of the
Audit Committee entitled to vote on that resolution at a meeting of the Audit
Committee shall be as valid as if it had been passed at a duly called and
constituted meeting. Such resolutions in writing may be in one or more
counterparts, all of which, when taken together, shall be deemed to constitute
one resolution.

c) The auditor of the Company shall, at the expense of the
Company, be entitled to attend and be heard at or may be invited to any meeting
of the Audit Committee, except for portions of meetings in which their work,
fees and performance may be discussed.

d) The Audit Committee Chair shall regularly report on the
activities of the Audit Committee, to the Board of Directors.

e) The external auditor and senior management shall have the
opportunity or may be invited to meet separately with the Audit
Committee.

f) The minutes of the proceedings of the Audit Committee and
any resolutions in writing shall be kept in a book provided for that purpose
which shall always be open for inspection by any director of the
Company.

g) Subject to the foregoing, the calling, holding and
procedure at meetings of the Audit Committee shall be determined by the Audit
Committee Chair.

14.4 Limitation of Audit Committees Role

While the Audit Committee has the responsibilities and
powers set forth in this Charter, it is not the duty of the Audit Committee to
plan or conduct audits or to determine if the Companys financial statements or
disclosures are complete and accurate and are in accordance with GAAP and
applicable rules and regulations. These are responsibilities of management and
the independent auditors.

Composition of the Audit
Committee

The members of the Audit Committee are David Fagin, William
Myckatyn and Tim Baker. All of the members are financially literate and
independent for the purposes of Canadas National Instrument 52-110 (NI
52-110) and the standards set forth in the NYSE MKT Company Guide.

Mr. Fagin is a financial expert, in that he has an
understanding of International Financial Reporting Standards and financial
statements; is able to assess the general application of accounting principles
in connection with the accounting for estimates, accruals and reserves; has
experience preparing, auditing, analyzing or evaluating financial statements
that entail accounting issues of equal complexity to the Companys financial
statements (or actively supervising another person who did so); has an
understanding of internal controls and procedures for financial reporting and an
understanding of audit committee functions. Mr. Fagin does not have an
accounting designation; instead his expertise is derived from his high level
involvement in the financial matters of public corporations almost continuously
for at least 35 years. Mr. Fagin was involved in the valuation of oil and gas
companies for ten years both as a consultant and a bank appraisal engineer
(1958-68); President of a subsidiary of Rosario Resources Corporation, a NYSE
company (1968-75), Executive Vice-President (1975-77) then President (1977-82)
during which period he was intimately involved in financial and accounting
matters. In 1982, he founded Fagin Exploration Company and worked closely with
an accountant and auditors to maintain the records. From 1986 to 1991, Mr. Fagin
was the President and Chief Operating Officer for Homestake Mining Corporation
(NYSE), responsible for producing operations in six countries and was involved
in decisions for corporate financial reporting. Between 1992 and 1996, Mr. Fagin
was Executive Chairman of Golden Star Resources Ltd. (ASE and TSE) and managed
all administrative matters including annual reports, audits and registration in
Canada and the US. Since 1987, Mr. Fagin has served on boards and audit
committees of several public companies including T. Rowe Price Mutual Funds,
Golden Star Resources Ltd., Canyon Resources Corp. (acquired by Atna Resources
Ltd.), Dayton Mining Corp. and the Company, where he was either Chairman or a
member of each audit committee. He currently remains a director of Atna
Resources Ltd.

Mr. Myckatyn does not have an accounting designation. However,
Mr. Myckatyn is financially literate in that he has the ability to read and
understand a set of financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to the breadth and
complexity of the issues that can reasonably be expected to be raised by the
Companys financial statements. Mr. Myckatyn has over 30 years experience in
the mining industry. Mr. Myckatyn was the co-founder and CEO of Quadra Mining
Ltd. from 2002 to 2006 and was the Chairman, President and Chief Executive
Officer of Dayton Mining Corporation from 1998 to April, 2002 during which time
he oversaw the restructuring of Dayton and its subsequent merger with the
Company. Prior to 1998, Mr. Myckatyn was the President and CEO of Princeton
Mining Corporation, overseeing completion in 1997 of the construction of the
Huckleberry open-pit copper mine in British Columbia and the 1998 merger of the
company with Imperial Metals Corporation. Mr. Myckatyn worked for Gibraltar
Mines Limited from 1991 to 1996, initially as Mine Manager and ultimately as
President and CEO as the company transitioned from being controlled by Placer
Dome Inc. into an independent growth oriented public company, and through its
acquisition by Westmin Resources Inc. in 1996. For over ten years prior to that,
Mr. Myckatyn worked for various operations controlled by Placer Dome Inc. and
its associated and predecessor companies including four separate mines in Australia and the Philippines. Mr. Myckatyn is a
director of First Point Minerals Corporation, San Marco Resources Inc.,
OceanaGold Corporation and Delta Gold Corporation. Mr. Myckatyn received his
Bachelor of Applied Science in Mining Engineering from the University of British
Columbia in 1972.

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The third member of the Companys audit committee, Tim Baker,
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. Baker has worked in a senior executive capacity for
several senior mining companies including Placer Dome Inc. and Kinross Gold
Corporation. Since his retirement in 2011, Mr. Baker has joined the boards of
several other mining companies and is currently the Executive Chairman of Golden
Star Resources Ltd.

Nomination of Directors

The Nominating Committee is composed of two Directors, Messrs.
Baker (Chair) and Myckatyn, each of whom is independent based upon the tests for
independence set forth in NI 52-110 and in the NYSE MKT Company Guide. The
Nominating Committee has the responsibility for recommending to the Board the
nominees to fill vacancies on the Board or to be proposed by any member of the
Board as candidates for election as Directors at the annual general meeting. The
Nominating Committee also recommends to the Board a desirable balance of
expertise among the Board members, seeks out possible candidates to fill Board
positions and aids in attracting qualified candidates to the Board. In addition,
the Nominating Committees responsibilities include reviewing and monitoring the
orientation of new Board members; reviewing and approving officers
directorships in other companies and reviewing Directors relationships with
outside entities with regard to potential conflicts of interest.

Compensation Committee

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

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

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

Other Committees

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

The Companys Health, Safety and Environmental Committee is
composed of Messrs Myckatyn (Chair), Shrake and Baker, a majority of whom are
considered independent based upon the tests for independence set forth in NI
52-110. The Health, Safety and Environmental Committee has the responsibility
for reviewing the Companys environmental policy and for ensuring that the
Companys operations are conducted in a manner consistent with the environmental
policy and in a manner that does not unduly expose its employees to unnecessary
risk of accident or death.

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

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Assessments

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

Shareholder Feedback and Concerns

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

D. Employees

As at April 30, 2013, the Company (including its subsidiaries)
had one employee in Canada, five employees in the US and 4 full time plus 24
part-time employees in El Salvador. None of the Companys employees are
represented by labor unions.

E. Share Ownership

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

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS

A. Major Shareholders

According to registered shareholder information provided by the
Companys transfer agent, the following are the only shareholders of the Company
that beneficially own, directly or indirectly, or exercise control over, shares
carrying more than 5% of the outstanding voting rights attached to the Companys
common shares as at July 8, 2013:

Name of Shareholder
    No. of Shares
    % of Issued SharesCDS & Co.
    145,653,861
    69.05%OceanaGold Corporation
    42,150,000
    19.98%CEDE & Co.
    16,561,622
    7.85%


Other than as set forth below, no Director or executive officer
of the Company, no proposed Director of the Company, no person or company which
beneficially owns, or controls or directs, directly or indirectly, more than 10%
of the shares of the Company, nor any associate or affiliate of any of such
persons, has any material interest, direct or indirect, in any transactions
since May 1, 2012 (being the commencement of the Companys last completed
financial year), or proposed transactions, which has materially affected or
would materially affect the Company or any of its subsidiaries.

On October 3, 2012, the Company completed a non-brokered
private placement financing pursuant to which OceanaGold Corporation
("OceanaGold") purchased 42,150,000 common shares of the Company at CDN$0.10 per
share, for total proceeds of CDN$4,215,000. Upon closing of the private
placement, and as of the date of this annual report on Form 20-F, OceanaGold
owned and controlled approximately 19.98% of the Company's issued and
outstanding share capital. In connection with the private placement, Oceanagold
was granted the right, until October 3, 2014, to participate in future equity
financings to maintain its percentage interest in the Company or, subject to
regulatory and Shareholder approval, to increase its percentage interest in the
Company to 25%. In addition, if Oceanagold elects to sell its shares prior to
October 3, 2014, the Company has the right to attempt to find a purchaser for
such common shares.

In regards to the private placement financing detailed above,
Mr. Myckatyn delivered a notice to the Company disclosing his interest as a
Director of both the Company and of OceanaGold and abstained from the Board of
Directors discussions regarding the merits of the private placement financing,
did not participation in any negotiations regarding the private placement
financing and abstained from voting on approval of the private placement financing.

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Voting Rights

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

Change of Control

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

Geographic Breakdown

According to registered shareholder information provided by the
Companys transfer agent, as at July 8, 2013, there were 173 US registered
holders owning 20,362,136 (or 9.65%) of the Companys outstanding shares.

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

B. Related party transactions

The Company received accounting and tax preparation services
from an accounting firm in which an Officer of the Company is a partner. The
total accounting fees paid during fiscal 2013 were $132 thousand, compared to
$135 thousand during fiscal 2012.

C. Interests of Experts and counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

The audited consolidated financial statements of the Company
for the years ended April 30, 2013 and April 30, 2012 are attached to this 20-F
annual report and are incorporated herein by reference. These audited
consolidated financial statements are accompanied by auditors reports and
related notes, and were prepared under IFRS as issued by the IASB.

Legal Proceedings

PacRim, a Nevada corporation and a wholly-owned subsidiary of
Pacific Rim, is involved in a legal proceeding against the Government of El
Salvador related to the El Dorado Property in El Salvador. See Item 4 D
Property Plant and Equipment El Dorado Property, El Salvador(specifically, Arbitration Action section) for a detailed description of the
Arbitration Action.

Dividend Policy

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

B. Significant Changes

There have been no significant changes since April 30, 2013
that are not disclosed herein.

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

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

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- 59 -

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

Fiscal Period Ended
    TSX
      CDN($)
    OTCQX (1)
      US($)High
    Low
    High
    LowApril 30, 2013
    0.125
    0.04
    0.127
    0.04April 30, 2012
    0.23
    0.075
    0.248
    0.062April 30, 2011
    0.35
    0.155
    0.35
    0.16April 30, 2010
    0.40
    0.16
    0.36
    0.165April 30, 2009
    0.99
    0.09
    0.99
  0.08


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

The following table outlines the high and low closing prices of
the Companys common shares for each fiscal financial quarter for the two most
recent full financial years and any subsequent period:

Fiscal Financial Quarter Ended
    TSX
      CDN($)
    OTCQX (1)
      US($)High
    Low
    High
    LowApril 30, 2013
    0.10
    0.04
    0.0823
    0.04January 31, 2013
    0.11
    0.065
    0.111
    0.065October 31, 2012
    0.125
    0.055
    0.127
    0.051July 31, 2012
    0.125
    0.06
    0.12
    0.06April 30, 2012
    0.155
    0.075
    0.161
    0.062January 31, 2012
    0.17
    0.115
    0.163
    0.11October 31, 2011
    0.195
    0.13
    0.191
    0.125July 31, 2011
    0.23
    0.15
    0.248
  0.153


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

The following table outlines the high and low closing prices of
the Companys common shares for each of the most recent six months:

Month
    TSX
      CDN($)
    OTCQX (1)
      US($)High
    Low
    High
    LowJune 2013
    0.07
    0.04
    0.069
    0.04May 2013
    0.045
    0.035
    0.049
    0.035April 2013
    0.075
    0.04
    0.075
    0.04March 2013
    0.075
    0.045
    0.08
    0.04February 2013
    0.10
    0.07
    0.082
    0.06January 2013
    0.09
    0.065
    0.095
  0.065


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

B. Plan of Distribution

Not Applicable.

C. Markets

The Companys common shares are listed and trade on the TSX
under the symbol PMU and additionally trade on the OTCQX platform under the
symbol PFRMF. The Company has received advice that its shares are listed and
have traded since June 14, 2002 on the Berlin Stock Exchange under the symbol
PRM, German Cusip Number 577332 and in the Regulated Unofficial Market
(Freiverkehr) on the Frankfurt Stock Exchange on the Xetra, the Deutsche Borse
AG electronic trading system since May 31, 2002.

D. Selling Shareholders

Not Applicable.

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- 60 -

E. Dilution

Not Applicable.

F. Expenses of the issue

Not Applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

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

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- 61 -

|6.  | The constating documents of the Company contain no
      limitations on the rights of non-resident or foreign shareholders to hold
      or exercise rights on the shares of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|7.  | There are no provisions in the Companys constating
      documents that would have an effect of delaying, deferring or preventing a
      change in control of the Company and that would operate only with respect
      to a merger, acquisition or corporate restructuring involving the Company
      or any of its subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|8.  | There are no provisions in the Companys constating
      documents that govern the ownership threshold above which shareholder
      ownership must be disclosed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|9.  | There is no limitation at law upon the right of a
      non-resident to hold shares in a Canadian company. However, the Investment
      Canada Act (Canada) (the Investment Act) requires certain non-Canadian
      individuals, governments, corporations, agencies or entities who wish to
      acquire a Canadian business or to establish a new Canadian business as
      those terms are defined in the Investment Act, to file a notification or
      an application for review with Investment Canada, a Canadian federal
      governmental agency. The Investment Act requires that certain acquisitions
      of control of a Canadian business by a non-Canadian must be reviewed by
      the Minister responsible for the Investment Act and approved on the basis
      that the Minister is satisfied that the acquisition is likely to be of net
      benefit to Canada, having regard to the criteria set forth in the
      Investment Act. The Investment Act makes the acquisition of control a
      reviewable event. The Investment Act sets out detailed rules for
      determining whether control has been acquired. The acquisition of
      one-third or more of the voting shares of a corporation may, in some
      circumstances, be deemed to constitute acquisition of control. A
      reviewable acquisition of control may not be implemented before being
      approved by the Minister. If not ultimately approved, a reviewable
      acquisition that has been completed may be subject to an order to divest,
      enforceable by injunction or a court order directing disposition of assets
      or shares.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10. | There are no provisions in the Companys constating
      documents that govern changes in capital that are more stringent that
      required by law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

C. Material contracts

In June 2011, Pacific Rim, through its US subsidiary Pacific
Rim Exploration Inc. signed a Definitive Agreement with ICN Resources Ltd. and
Washoe Gold Inc. providing the Company with the option to acquire a 65% joint
venture interest in the Hog Ranch Property located in Washoe County, Nevada,
approximately 180 km north of Reno. ICN (and its interest in the Hog Ranch
property) was subsequently acquired by Corazon Gold Corp (Corazon)

The Company held the Hog Ranch Property through fiscal 2013 but
subsequently, in May 2013, Pacific Rim, on behalf of PREx, informed Corazon of
its intent not to proceed further with its option agreement to acquire an
interest in the Hog Ranch property. This decision resulted from the Board of
Directors determination that the Company was not in a financial position to make
the $1.0 million exploration expenditures that were required before the July
2013 deadline as per the terms of the Definitive Agreement. See Item 4D 
Property Plant and Equipment, specifically Hog Ranch Property, Nevada
above for further details.

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

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

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

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- 62 -

In October 2012 the Company signed a service and fee agreement
(the Final Phase Fee Agreement) with its legal counsel Crowell & Moring,
LLP. The Final Phase Fee Agreement provides the Company with cost certainty in
regards to Arbitration-related legal fees as it proceeds through the final phase
of the claim. It does not apply to ancillary Arbitration-related expenses such
as court costs, expert testimony, translation services, etc., which may be
significant. Under the terms of the Final Phase Fee Agreement, Pacific Rim will
pay $750,000 of its outstanding liability to Crowell & Moring before the end
of calendar 2013. Crowell & Moring has agreed to bill the Company
periodically for legal fees, at a discounted rate, incurred through the Final
Phase of the Arbitration to a maximum of $1.4 million. The Company has agreed to
pay Crowell & Moring a success fee of up to $2.5 million under certain
circumstances wherein a favorable outcome to the dispute is reached.

D. Exchange controls

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

E. Taxation

Although not free from doubt, the Company believes it was
classified as a "passive foreign investment company" during the tax year ended
April 30, 2013, and may be classified as a passive foreign investment company
in future tax years. If the Company is a passive foreign investment company
for a tax year, such classification will likely have adverse US federal income
tax consequences for US shareholders.

US investors in our Common Shares should be aware that the
Company believes it was classified as a passive foreign investment company
(PFIC) during the tax year ended April 30, 2013 and may be classified as a
PFIC for future tax years. If the Company is a PFIC for any year during a US
shareholders holding period, then such US shareholder generally will be
required to treat any gain realized upon a disposition of Common Shares, or any
so-called excess distribution received on its Common Shares, as ordinary
income, and to pay an interest charge on a portion of such gain or
distributions, unless the shareholder makes a timely and effective "qualified
electing fund" election (QEF Election) or a "mark-to-market" election with
respect to the Common Shares. A US shareholder who makes a QEF Election
generally must report on a current basis its share of the Company's net capital
gain and ordinary earnings for any year in which the Company is a PFIC, whether
or not the Company distributes any amounts to its shareholders. However, US
shareholders should be aware that there can be no assurance that the Company
will satisfy record keeping requirements that apply to a qualified electing
fund, or that the Company will supply US shareholders with information that such
US shareholders require to report under the QEF rules, in the event that the
Company a PFIC and a US shareholder wishes to make a QEF Election. Thus, US
shareholders may not be able to make a QEF Election with respect to their Common
Shares. A US shareholder who makes the mark-to-market election generally must
include as ordinary income each year the excess of the fair market value of the
Common Shares over the taxpayers basis therein. This paragraph is qualified in
its entirety by the discussion below under the heading Certain United States
Federal Income Tax Considerations. Each US shareholder should consult its own
tax advisor regarding the US federal, US federal alternative minimum, US federal
estate and gift, US state and local, and foreign tax consequences of the PFIC
rules and the acquisition, ownership, and disposition of our Common Shares.

United States Federal Income Tax Considerations

The following is a general summary of certain material US
federal income tax considerations applicable to a US Holder (as defined below)
arising from and relating to the acquisition, ownership, and disposition of
Common Shares.

This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential US federal
income tax considerations that may apply to a US Holder arising from and
relating to the acquisition, ownership, and disposition of Common Shares. In
addition, this summary does not take into account the individual facts and
circumstances of any particular US Holder that may affect the US federal income
tax consequences to such US Holder, including specific tax consequences to a US
Holder under an applicable tax treaty. Accordingly, this summary is not intended
to be, and should not be construed as, legal or US federal income tax advice
with respect to any US Holder. Each US Holder should consult its own tax advisor
regarding the US federal, US federal alternative minimum, US federal estate and
gift, US state and local, and foreign tax consequences relating to the
acquisition, ownership and disposition of Common Shares.

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

---

- 63 -

Scope of this Summary

Authorities

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

US Holders

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

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

Non-US Holders

For purposes of this summary, a non-US Holder is a beneficial
owner of Common Shares that is not a US Holder. This summary does not address
the US federal income tax consequences to non-US Holders arising from and
relating to the acquisition, ownership, and disposition of Common Shares.
Accordingly, a non-US Holder should consult its own tax advisor regarding the US
federal, US federal alternative minimum, US federal estate and gift, US state
and local, and foreign tax consequences (including the potential application of
and operation of any income tax treaties) relating to the acquisition,
ownership, and disposition of Common Shares.

US Holders Subject to Special US
Federal Income Tax Rules Not Addressed

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

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

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- 64 -

Tax Consequences Not
Addressed

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

Passive Foreign Investment Company Rules

If the Company were to constitute a passive foreign investment
company under the meaning of Section 1297 of the Code (a PFIC, as defined
below) for any year during a US Holders holding period, then certain different
and potentially adverse rules will affect the US federal income tax consequences
to a US Holder resulting from the acquisition, ownership and disposition of
Common Shares.

Recently enacted U.S. legislation requires each U.S. person who
directly or indirectly owns an interest in a PFIC to file an annual report with
the IRS, and failure to file such report could result in the imposition of
penalties on such U.S. person and in the extension of the statute of limitations
with respect to federal income tax returns filed by such U.S. person. However,
this reporting requirement has been temporarily suspended. Filings will
eventually be required with respect to any year in which the requirement was
suspended.

The PFIC rules are complex, and each U.S. Holder should consult
an independent tax adviser regarding the PFIC rules, including the potential
effect of this legislation on such U.S. Holders filing requirements and the
advisability of making a QEF election or, if applicable, a mark-to-market
election, with respect to each PFIC.

PFIC Status of the
Company

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

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

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

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

The Company believes that it was classified as a PFIC during
the tax year ended April 30, 2013 and may be classified as a PFIC for current
and future tax years. The determination of whether any corporation was, or will
be, a PFIC for a tax year depends, in part, on the application of complex US
federal income tax rules, which are subject to differing interpretations. In
addition, whether any corporation will be a PFIC for any tax year depends on the
assets and income of such corporation over the course of each such tax year and,
as a result, cannot be predicted with certainty as of the date of this document.
Accordingly, there can be no assurance that the IRS will not challenge any
determination made by the Company (or a Subsidiary PFIC) concerning its PFIC
status or that the Company (and each Subsidiary PFIC) was not, or will not be, a
PFIC for any tax year. Each US Holder should consult its own tax advisor
regarding the PFIC status of the Company and each Subsidiary PFIC.

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- 65 -

Default PFIC Rules Under Section
1291 of the Code

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

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

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

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

QEF Election

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

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

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

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

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- 66 -

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

Mark-to-Market
Election

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

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

A US Holder that makes a Mark-to-Market Election will include
in ordinary income, for each tax year in which the Company is a PFIC, an amount
equal to the excess, if any, of (a) the fair market value of the Common Shares,
as of the close of such tax year over (b) such US Holders tax basis in such
Common Shares. A US Holder that makes a Mark-to-Market Election will be allowed
a deduction in an amount equal to the excess, if any, of (a) such US Holders
adjusted tax basis in the Common Shares, over (b) the fair market value of such
Common Shares (but only to the extent of the net amount of previously included
income as a result of the Mark-to-Market Election for prior tax years).

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

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

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

Other PFIC Rules

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

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

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- 67 -

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

The PFIC rules are complex, and each US Holder should consult
its own tax advisor regarding the PFIC rules and how the PFIC rules may affect
the US federal income tax consequences of the acquisition, ownership, and
disposition of Common Shares.

US Federal Income Tax Consequences of the Acquisition,
Ownership, and Disposition of Common Shares

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

Distributions on Common
Shares

Subject to the PFIC rules discussed above, a US Holder that
receives a distribution, including a constructive distribution, with respect to
a Common Share will be required to include the amount of such distribution in
gross income as a dividend (without reduction for any Canadian income tax
withheld from such distribution) to the extent of the current or accumulated
earnings and profits of the Company, as computed for US federal income tax
purposes. A dividend generally will be taxed to a US Holder at ordinary income
tax rates. To the extent that a distribution exceeds the current and accumulated
earnings and profits of the Company, such distribution will be treated first
as a tax-free return of capital to the extent of a US Holder's tax basis in the
Common Shares and thereafter as gain from the sale or exchange of such Common
Shares. (See  Sale or Other Taxable Disposition of Common Shares below).
However, the Company may not maintain the calculations of earnings and profits
in accordance with US federal income tax principles, and each US Holder should
therefore assume that any distribution by the Company with respect to the Common
Shares will constitute ordinary dividend income. Dividends received on Common
Shares generally will not be eligible for the dividends received deduction. In
addition, the Company does not anticipate that its distributions will be
eligible for the preferential tax rates applicable to long-term capital gains.
The dividend rules are complex, and each US Holder should consult its own tax
advisor regarding the application of such rules.

Sale or Other Taxable Disposition
of Common Shares

Subject to the PFIC rules discussed above, upon the sale or
other taxable disposition of Common Shares, a US Holder generally will recognize
capital gain or loss in an amount equal to the difference between the amount of
cash plus the fair market value of any property received and such US Holder's
tax basis in such Common Shares sold or otherwise disposed of. Subject to the
PFIC rules discussed above, gain or loss recognized on such sale or other
disposition generally will be long-term capital gain or loss if, at the time of
the sale or other disposition, the Common Shares have been held for more than
one year.

Gain or loss recognized by a US Holder on the sale or other
taxable disposition of Common Shares generally will be treated as US source
for purposes of applying the US foreign tax credit rules unless the gain is
subject to tax in Canada and is resourced as foreign source under the
Canada-US Tax Convention and such US Holder elects to treat such gain or loss as
foreign source.

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

Additional Tax on Passive
Income

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

Additional Considerations

Receipt of Foreign
Currency

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

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- 68 -

Foreign Tax Credit

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

Complex limitations apply to the foreign tax credit, including
the general limitation that the credit cannot exceed the proportionate share of
a US Holders US federal income tax liability that such US Holders foreign
source taxable income bears to such US Holders worldwide taxable income. In
applying this limitation, a US Holders various items of income and deduction
must be classified, under complex rules, as either foreign source or US
source. Generally, dividends paid by a foreign corporation should be treated as
foreign source for this purpose, and gains recognized on the sale of stock of a
foreign corporation by a US Holder should be treated as US source for this
purpose, except as otherwise provided in an applicable income tax treaty, and if
an election is properly made under the Code. However, the amount of a
distribution with respect to the Common Shares that is treated as a dividend
may be lower for US federal income tax purposes than it is for Canadian federal
income tax purposes, resulting in a reduced foreign tax credit allowance to a US
Holder. In addition, this limitation is calculated separately with respect to
specific categories of income. The foreign tax credit rules are complex, and
each US Holder should consult its own US tax advisor regarding the foreign tax
credit rules.

Backup Withholding and
Information Reporting

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

Payments made within the US or by a US payor or US middleman,
of dividends on, and proceeds arising from the sale or other taxable disposition
of, Common Shares generally may be subject to information reporting and backup
withholding tax, at the rate of 28% (and increasing to 31% for payments made
after December 31, 2012), if a US Holder (a) fails to furnish such US Holders
correct US taxpayer identification number (generally on Form W-9), (b) furnishes
an incorrect US taxpayer identification number, (c) is notified by the IRS that
such US Holder has previously failed to properly report items subject to backup
withholding tax, or (d) fails to certify, under penalty of perjury, that such US
Holder has furnished its correct US taxpayer identification number and that the
IRS has not notified such US Holder that it is subject to backup withholding
tax. However, certain exempt persons, such as corporations, generally are
excluded from these information reporting and backup withholding rules. Any
amounts withheld under the US backup withholding tax rules will be allowed as a
credit against a US Holders US federal income tax liability, if any, or will be
refunded, if such US Holder furnishes required information to the IRS in a
timely manner. Each US Holder should consult its own tax advisor regarding the
information reporting and backup withholding rules.

F. Dividends and paying agents

Not applicable

G. Statement by experts

Not applicable.

H. Documents on display

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

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- 69 -

100 F Street, NEWashington D.C.
20549

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

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

Pacific Rim Mining Corp.Suite 1050, 625 Howe Street
Vancouver, British ColumbiaV6C 2T6Canada

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK

A. Quantitative Information about Market Risk

The Company holds its cash and cash equivalents primarily in US
dollar and Canadian dollar denominated accounts and its expenses are primarily
incurred in US dollars. At April 30, 2013 the amount of cash held was $914
thousand, the amount of short term investments was $495 thousand, the amount of
accounts receivable was $104 thousand and the amount of accounts payable and
accrued liabilities was $1,779 thousand. Based on these net exposures at April
30, 2013, the impact of a 10% depreciation or appreciation of the US dollar
against the Canadian dollar would result in an increase or decrease of $0.07
million in the Companys net earnings.

The following table summarizes the remaining contractual
maturities of the Companys financial liabilities and operating and capital
commitments at April 30, 2013:

Payments due by periodTotal
    < 1 year
    1- 3 years
    4  5 years
    > 5 yearsOperating Lease Obligations
    $35
    $21
    $14
    -
    -Accounts Payable and Accrued Liabilities
    $1,979
    $1,979
    -
    -
    -Total
    $2,014
    $2,000
    $14
    -
  -


Under the terms of the Final Phase Fee Agreement described in
Item 4 D Property Plan and Equipment  El Dorado Property, El Salvador,
Pacific Rim has agreed to pay its Arbitration legal counsel a success fee of up
to $2.5 million under certain circumstances wherein a favorable outcome to the
dispute is reached, which represents a contingent contractual obligation of the
Company.

The exposure of the Companys financial instruments to interest
risk continues to be limited. B. Qualitative Information about Market Risk The
Companys objectives when managing capital and risk are:

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

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

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

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- 70 -

Fair Values

Financial instruments measured at fair value are classified
into one of three levels in the fair value hierarchy according to the relative
reliability of the inputs used to estimate the fair values. The three levels of
the fair value hierarchy are:

Level 1  Unadjusted quoted prices in
active markets for identical assets and liabilitiesLevel 2  Inputs other
than quoted prices that are directly or indirectly observable for the asset or
liability; andLevel 3  Inputs that are not based on observable market
data.

The carrying values of receivables, and accounts payable and
accrued liabilities approximate their fair value because of the short-term
nature of these instruments. The derivative warrant liabilities are recognized
at fair value each reporting period and are considered level 3 financial
instruments.

Market Risks

Liquidity Risk

Liquidity risk is the risk that the Company will encounter
difficulty in meeting obligations associated with financial liabilities that are
settled by delivering cash or another financial asset.

The Company does not presently have sufficient working capital
to meet its accounts payable and accrued liabilities in addition to its
anticipated general and administrative or exploration expenses, or the estimated
costs of pursuing the Arbitration action during fiscal 2014 (although the
service and fee agreement provides certainty as to legal expenses, additional
expenses related to the Arbitration including but not limited to costs related
to expert witness testimony, will be incurred and additional unforeseen costs
may arise). The Company will require financing during fiscal 2014 to meet these
expenses and obligations.

The Company seeks to manage liquidity by maintaining adequate
cash and cash equivalent balances to meet its short term commitments and by
raising equity or debt financing as required to meet long term commitments The
Company has no assurance that such financing will be available or be available
on favourable terms. Factors that could affect the availability of financing
include fluctuations in the Companys share price, the state of international
debt and equity markets, investor perceptions and expectations, global financial
and metals markets, progress on any of the Companys exploration properties, and
developments, if any, on the El Dorado project permitting application.

Credit Risk

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

Foreign Exchange Risk

The Companys exposure to foreign currency risk is primarily
related to Canadian dollar-denominated transactions. The Company does not enter
into foreign exchange contracts to manage this exposure. At April 30, 2013 the
impact of a 10% depreciation or appreciation of the US dollar against the
Canadian dollar would result in an increase or decrease of $0.07 million in the
Companys net earnings. The Company has not entered into any derivative
contracts to manage foreign exchange risk at this time.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The risk that the Company will realize a loss as a result of a
decline in the fair value of the investments included in cash and cash
equivalents is limited because these investments are generally held to maturity.
Based on the amount of cash and cash equivalents invested as at April 30, 2013
and assuming that all other variables remain constant, a 0.5% change in the
applicable interest rate would not be significant.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES

Not Applicable.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
DELINQUENCIES

Not Applicable.

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

A. Modifications to the Rights of Security Holders

Majority Voting for Directors

As disclosed on June 7, 2013, the Board of Directors has
adopted a majority voting policy (the "Majority Voting Policy") for the election
of directors of the Company at uncontested meetings, the purpose of which is to
bring the Company's policies in line with recent amendments to the TSX Company
Manual. Shareholders will continue to vote for, or withhold from voting for,
each director nominee separately. The Majority Voting Policy provides that, if a
director nominee has a greater number of votes "withheld" from his or her
election than votes that are voted in favour of such nominee, the nominee shall
promptly submit his or her offer of resignation to the Chairman of the Board of
Directors for consideration by the Nominating Committee of the Board. The
Majority Voting Policy only applies to uncontested elections, meaning elections
where the number of nominees for election is equal to the number of directors to
be elected as set out in the management proxy circular for the particular
meeting.

Promptly following receipt of an offer of resignation arising
from the foregoing circumstances, the Nominating Committee will meet to review
the matter and make a recommendation to the Board of Directors. The Nominating
Committee of the Board of Directors will consider all factors deemed relevant by
its members, including, without limitation, the stated reasons why shareholders
who cast "withhold" votes for the director did so, the length of service and
qualifications of the director, the director's contributions to the Company and
the effect that such resignation may have on the Company, including on the
Company's ability to comply with applicable governance rules and policies. The
director who submitted his or her offer of resignation shall not participate in
any Board or Nominating Committee deliberations on whether to accept the
resignation. The decision of the Board of Directors regarding whether to accept
or reject a resignation offer will be disclosed to the public.

Shareholders should note that, as a result of the Majority
Voting Policy, withholding a vote in respect of a director nominee is
effectively the same as a vote against a director nominee in an uncontested
election.

A copy of the Company's Majority Voting Policy is filed as
Exhibit 1.2 and incorporated by reference in this Annual Report on Form
20-F.

Advance Notice Policy

On June 7, 2013, the Board adopted an advance notice policy
(the Advance Notice Policy) for the purpose of providing Shareholders,
Directors and management of the Company with a clear framework for nominating
directors of the Company in connection with any annual or special meeting of
Shareholders.

The purpose of the Advance Notice Policy is to (i) ensure that
all Shareholders receive adequate notice of director nominations and sufficient
time and information with respect to all nominees to make appropriate
deliberations and register an informed vote; and (ii) facilitate an orderly and
efficient process for annual or, where the need arises, special meetings of
Shareholders. The Advance Notice Policy fixes the deadlines by which
Shareholders must submit director nominations to the Company prior to any annual
or special meeting of Shareholders and sets forth the information that a
Shareholder must include in a written notice to the Company for any director
nominee to be eligible for election at such annual or special meeting of
Shareholders.

A copy of the Company's Advance Notice Policy is filed as
Exhibit 1.2 and incorporated by reference in this Annual Report on Form 20-F. In
order to remain effective following the Meeting, the Advance Notice Policy must
be ratified, confirmed and approved by the Shareholders at the Meeting.

The following is a brief summary of certain provisions of the
Advance Notice Policy and is qualified in its entirety by the full text of the
Advance Notice Policy.

|1. | Other than pursuant to a proposal or requisition of the
      Shareholders made in accordance with the Business Corporations Act(British Columbia), Shareholders must give advance written notice to
      the Company of any nominees for election to the Board of
  Directors.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 72 -

|2. | The Advance Notice Policy fixes a deadline by which
      Shareholders must submit, in writing, nominations for directors to the
      Corporate Secretary of the Company prior to any annual or special meeting
      of Shareholders, and sets forth the specific information that such
      Shareholders must include with their nominations in order to be effective.
      Only persons who are nominated in accordance with the Advance Notice
      Policy are eligible for election as directors of the Company.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3. | For an annual meeting of Shareholders, notice to the
      Company must be not less than 30 days and not more than 65 days prior to
      the date of the annual meeting; provided, however, that in the event that
      the annual meeting is to be held on a date less than 50 days after the
      date on which the first public announcement of the date of such annual
      meeting was made, notice may be given not later than the close of business
      on the 10th day following such public announcement. 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4. | For a special meeting of Shareholders (that is not also
      an annual meeting), notice to the Company must be given not later than the
      close of business on the 15thday following the day on which
      the first public announcement of the date of such special meeting was
      made.                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|5. | The time periods for giving notice set forth above shall
      in all cases be determined based on the original date of the applicable
      annual meeting and/or special meeting of Shareholders, and in no event
      shall any adjournment or postponement of a meeting of Shareholders, or the
      reconvening of any adjourned or postponed meeting of Shareholders, or the
      announcement thereof, commence a new time period for the giving of notice
      as described above.                           

For the purposes of the Advance Notice Policy, "public
announcement" means disclosure in a press release reported by a national news
service in Canada, or in a document publicly filed by the Company under its
profile on SEDAR at www.sedar.com.

The Board may, in its sole discretion, waive any provision or
requirement of the Advance Notice Policy.

If approved at the Meeting, the Advance Notice Policy will
continue to be effective in accordance with its terms. The Advance Notice Policy
will be subject to annual review by the Board, and will be updated from time to
time to reflect changes required by securities regulatory agencies or stock
exchange, or to conform to industry standards, as determined by the Board.

If not approved at the Meeting, the Advance Notice Policy will
terminate and be of no further force and effect from and after the termination
of the Meeting.

Shareholder Rights Plan

At the Annual General & Special Meeting (AGSM) of the
Company held on September 6, 2012, shareholders of the Company approved a
shareholder rights plan (the Shareholder Rights Plan), which became effective
immediately after the close of the AGSM, at which time the Companys existing
shareholder rights plan (previously approved by shareholders on August 26, 2009)
concurrently expired.

The terms of the Shareholder Rights Plan are set out in an
agreement (the "Rights Plan Agreement") between the Company and Computershare
Investor Services Inc. A copy of the Company's Shareholder Rights Plan is filed
as Exhibit XX and incorporated by reference in this Annual Report on Form
20-F

B-D.

None

E. Use of Proceeds

Not Applicable.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure controls and procedures

The Company's management, with the participation of the Chief
Executive Officer and Chief Financial Officer, conducted an evaluation, pursuant
to Rule 13a-15 promulgated under the Securities Act of 1934, as amended (the
"Exchange Act"), of the effectiveness of its disclosure controls and procedures
as of April 30, 2013. Based on this evaluation, and as a result of the material
weakness in the Companys internal control over financial reporting discussed
below under Managements annual report on internal control over financial
reporting, the Chief Executive Officer and Chief Financial Officer also
concluded that the disclosure controls and procedures were not effective as of
April 30, 2013.

Disclosure controls and procedures means controls and other
procedures that are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms and that such information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is accumulated
and communicated to our management, including our principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosures.

---

- 73 -

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

The Companys management, including its Chief Executive Officer
and Chief Financial Officer, is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in Rule 13a-15(f)
under the Exchange Act.

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. Projections of any
evaluation of effectiveness to future periods are subject to the risks that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies and procedures may deteriorate.

The Companys management, including the CEO and CFO, have
evaluated the effectiveness of the Companys internal control over financial
reporting as at April 30, 2013. This evaluation was based on the framework in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

Based on that assessment, management concluded that the
Companys internal control over financial reporting was not effective as of
April 30, 2013.

A material weakness is a deficiency (as defined in PCAOB
Auditing Standard No. 5), or a combination of deficiencies, such that there is a
reasonable possibility that a material misstatement of the annual or interim
financial statements will not be prevented or detected on a timely basis.

As of April 30, 2013, the Company identified the following
material weakness that applies to both disclosure controls and procedures and
internal controls over financial reporting:

The company does not maintain adequate segregation of duties
necessary to ensure complete and accurate financial reporting. Specifically, the
Companys Chief Financial Officer is responsible for preparing, authorizing, and
reviewing information that is integral to the preparation of financial reports.
He is also responsible for preparing and reviewing the resulting financial
reports. The weakness has the potential to result in material misstatements in
the Companys consolidated financial statements that would not be prevented or
detected, and as such has been determined to be a material weakness in internal
controls over financial reporting which also impacts the companys disclosure
controls and procedures.

As of the date of this report, management has not yet developed
a plan to remediate the material weakness. Management has concluded that taking
into account the present stage of the Companys development the Company does not
have sufficient size and scale to warrant hiring of additional staff that would
be required to correct the weakness at this time.

C. Attestation Report of the Independent Registered Public
Accounting Firm

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

D. Changes in internal control over financial reporting

During the period covered by this annual report on Form 20-F,
there has been no change to the Companys internal controls over financial
reporting that has materially affected, or is reasonably likely to materially
affect, its internal control over financing reporting.

---

- 74 -

ITEM 16 [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

David Fagin is a financial expert, in that he has an
understanding of International Financial Reporting Standards and financial
statements; is able to assess the general application of accounting principles
in connection with the accounting for estimates, accruals and reserves; has
experience preparing, auditing, analyzing and evaluating financial statements
that entail accounting issues of equal complexity to the Companys financial
statements (or actively supervising another person who did so); has an
understanding of internal controls and procedures for financial reporting and an
understanding of audit committee functions.

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

Mr. Fagin is considered an independent director according to
Canadian securities regulations (Multilateral Instrument 52-110), Toronto Stock
Exchange guidelines and the NYSE MKT Company Guide.

ITEM 16B. CODE OF ETHICS

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

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

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers LLP acted at the Companys independent
auditor for the fiscal years ended April 30, 2011, 2012 and 2013. The chart
below sets forth the total amount billed to the Company by
PricewaterhouseCoopers LLP for services performed in the last two fiscal years
and breaks down these amounts by category of service (for audit fees,
audit-related fees, tax fees and all other fees) in Canadian dollars.

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, 2013
    $50,400
    Nil
    Nil
    NilApril 30, 2012
    $65,000
    $2,500
    Nil
  Nil


|(1) | The aggregate fees billed by PricewaterhouseCoopers LLP
      for the audit of the Companys consolidated annual financial statements
      and attestation services that are provided in connection with statutory
      and regulatory filings or engagements.                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The aggregate fees billed by PricewaterhouseCoopers LLP
      for assurance and related services that are reasonably related to the
      performance of the audit or review of the Companys financial statements
      and are not reported under Audit Fees. This category comprises fees
      billed for independent accountant review of the interim financial
      statements and Management Discussion and Analysis, as well as advisory
      services associated with the Companys financial reporting.
|(3) | The fees billed for professional services rendered by
      PricewaterhouseCoopers LLP 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.                                                                                                                                                                                                                                                                                                                                                           

Pre-Approval Policies and Procedures

The Audit Committee nominates and engages the independent
auditors to audit the financial statements, and approves all audit,
audit-related services, tax services and other services provided by independent
auditors. Any services provided by the independent auditors that are not
specifically included within the scope of the audit must be pre-approved by the
Audit Committee prior to any engagement.

---

- 75 -

The Audit Committee is permitted to approve certain fees for
audit-related services, tax services and other services pursuant to a de
minimusexception before the completion of the engagement.

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

Not applicable.

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

None.

ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING
ACCOUNTANT

None.

ITEM 16G. CORPORATE GOVERNANCE

Not applicable.

ITEM 16H. MINE SAFETY DISCLOSURE

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), issuers that
are operators (or that have operations), or that have a subsidiary that is an
operator (or that has operations), of a coal or other mine in the United States
are required to disclose in their periodic reports filed with the SEC
information regarding specified health and safety violations, orders and
citations, related assessments and legal actions, and mining-related fatalities.
During the fiscal year ended April 30, 2013, the Company had no such specified
health and safety violations, orders or citations, related assessments or legal
actions, mining-related fatalities, or similar events in relation to the
Companys United States operations requiring disclosure pursuant to Section
1503(a) of the Dodd-Frank Act.

---

- 76 -

PART III

ITEM 17. FINANCIAL STATEMENTS

The Company has provided financial statements pursuant to Item
18.

ITEM 18. FINANCIAL STATEMENTS

The financial statements and schedules are commence on page F1
of this annual report and are incorporated herein by reference.

Auditors Report on Consolidated
Financial Statements; Consolidated Statement of Financial Position as at April
30, 2013 and April 30, 2012;

Consolidated Statements of Loss and
Comprehensive Loss for the years ended April 30, 2013, April 30, 2012 and April
30, 2011;

Consolidated Statements of
Shareholders Equity for the years ended April 30, 2013, April 30, 2012 and
April 30, 2011;

Consolidated Statements of Cash Flows
for the years ended April 30, 2013, April 30, 2012 and April 30, 2011;

Notes to Consolidated Financial
Statements

ITEM 19. EXHIBITS

EXHIBITS

|1.1  | Articles of the Company (1)                                                                                                                                            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                        
|1.2  | Majority Voting and Advance Notice Policies                                                                                                                            
|     |                                                                                                                                                                        
|4.1  | Shareholder Rights Plan                                                                                                                                                
|     |                                                                                                                                                                        
|4.2  | Legal Fee Services Agreement between the Company and
      Crowell & Moring LLP                                                                                        
|     |                                                                                                                                                                        
|4.3  | Option and Royalty Agreement among Mirage Resource
      Corporation, Zinc Metal Corporation and New York and El Salvador Mining
      Co. Inc. dated June 25, 1993 (2)
|     |                                                                                                                                                                        
|8.1  | List of Subsidiaries                                                                                                                                                   
|     |                                                                                                                                                                        
|12.1 | Certificate of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act                                                                                  
|     |                                                                                                                                                                        
|12.2 | Certificate of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act                                                                                  
|     |                                                                                                                                                                        
|13.1 | 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                        
|     |                                                                                                                                                                        
|13.2 | 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                        

|(1) | Incorporated by reference to exhibits filed as part of
      the Companys January 31, 2005 filing on Form 6k.
|--- | --------------------------------------------------------------------------------------------------------------
|(2) | Incorporated by reference to exhibit filed as part of the
      Companys 20-F dated August 26, 2002          

---

PACIFIC RIM MINING CORP.

(an exploration stage enterprise)

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2013 and 2012

Expressed in US Funds

F-1

---

Independent Auditors Report

To the Shareholders of Pacific Rim Mining Corp.

We have audited the accompanying consolidated financial
statements of Pacific Rim Mining Corp. which comprise the consolidated
statements of financial position as at April 30, 2013 and April 30, 2012 and the
consolidated statements of loss and comprehensive loss, shareholders equity and
cash flows for each of the years in the three year period ended April 30, 2013,
and the related notes, which comprise significant accounting policies and other
explanatory information.

Managements responsibility for the consolidated financial
statementsManagement is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or
error.

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

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

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

F-2

---

OpinionIn our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of
Pacific Rim Mining Corp. as at April 30, 2013 and April 30, 2012 and its
financial performance and its cash flows for each of the years in the three year
period ended April 30, 2013 in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board.

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

signed PricewaterhouseCoopers LLP

Chartered AccountantsVancouver, British
Columbia July 24, 2013

F-3

---

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

|                                                         |   | April 30, |   |   | April 30, |  
|-------------------------------------------------------- | - | --------- | - | - | --------- | -
|ASSETS                                                   |   | 2013      |   |   | 2012      |  
|Current Assets                                           |   |           |   |   |           |  
|Cash and cash
      equivalents                          | $ | 914       |   | $ | 816       |  
|Short-term investments                                   |   | 496       |   |   | 455       |  
|Receivables and
      prepaids                           |   | 104       |   |   | 129       |  
|                                                         |   | 1,514     |   |   | 1,400     |  
|                                                         |   |           |   |   |           |  
|Equipment                                                |   | 18        |   |   | 26        |  
|Resource property costs(Note 7)                          |   | 5,454     |   |   | 5,492     |  
|Restricted Cash                                          |   | 24        |   |   | 24        |  
|                                                         | $ | 7,010     |   | $ | 6,942     |  
|                                                         |   |           |   |   |           |  
|LIABILITIES                                              |   |           |   |   |           |  
|Current Liabilities                                      |   |           |   |   |           |  
|Accounts payable
      and accrued liabilities (Note 10) | $ | 1,979     |   | $ | 1,636     |  
|                                                         |   | 1,979     |   |   | 1,636     |  
|                                                         |   |           |   |   |           |  
|Derivative warrant liability(Note 8)                     |   | -         |   |   | 210       |  
|                                                         |   | 1,979     |   |   | 1,846     |  
|                                                         |   |           |   |   |           |  
|SHAREHOLDERS EQUITY                                     |   |           |   |   |           |  
|Share Capital(Note 9)                                    |   | 94,312    |   |   | 90,058    |  
|Contributed Surplus                                      |   | 5,214     |   |   | 4,853     |  
|Deficit                                                  |   | (94,495   | ) |   | (89,815   | )
|                                                         |   | 5,031     |   |   | 5,096     |  
|                                                         |   |           |   |   |           |  
|                                                         | $ | 7,010     |   | $ | 6,942     |  
|Nature of Operations and Going Concern(Note 1)           |   |           |   |   |           |  
|Measurement Uncertainty(Note 7 (a))                      |   |           |   |   |           |  
|Contingency(Note 12)                                     |   |           |   |   |           |  

APPROVED BY THE BOARD OF DIRECTORS:

signed Thomas Shrake,Director

signed David Fagin,Director

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

F-4

---

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

|                                                        |   | 2013        |   |   | 2012        |   |   | 2011        |  
|------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                        |   |             |   |   |             |   |   |             |  
|Expenses                                                |   |             |   |   |             |   |   |             |  
|                                                        |   |             |   |   |             |   |   |             |  
|Exploration                                             | $ | 1,514       |   | $ | 1,808       |   | $ | 1,225       |  
|Stock based compensation (Note 9)                       |   | 361         |   |   | 454         |   |   | 335         |  
|General and administrative                              |   | 402         |   |   | 450         |   |   | 456         |  
|Salaries & benefits                                     |   | 408         |   |   | 367         |   |   | 306         |  
|Professional services                                   |   | 183         |   |   | 287         |   |   | 230         |  
|Depreciation                                            |   | 8           |   |   | 20          |   |   | 30          |  
|International arbitration
      (Note 7(a))             |   | 2,017       |   |   | 473         |   |   | 1,586       |  
|Write-down of resource property costs (Note
      7(c)) |   | 57          |   |   | -           |   |   | -           |  
|Other income                                            |   | (103        | ) |   | (81         | ) |   | (78         | )
|Operating loss                                          |   | 4,847       |   |   | 3,778       |   |   | 4,090       |  
|                                                        |   |             |   |   |             |   |   |             |  
|Other income and expense                                |   |             |   |   |             |   |   |             |  
|Gains on derivative liability
      (Note 8)            |   | (210        | ) |   | (2,051      | ) |   | (232        | )
|Foreign exchange loss                                   |   | 54          |   |   | 121         |   |   | (81         | )
|Finance income                                          |   | (11         | ) |   | (14         | ) |   | (6          | )
|                                                        |   |             |   |   |             |   |   |             |  
|Net Loss and Comprehensive Loss for the Year            | $ | (4,680      | ) | $ | (1,834      | ) | $ | (3,771      | )
|                                                        |   |             |   |   |             |   |   |             |  
|Loss Per Share  Basic and Diluted                      | $ | (0.02       | ) | $ | (0.01       | ) | $ | (0.03       | )
|                                                        |   |             |   |   |             |   |   |             |  
|Weighted Average Number of Shares Outstanding           |   | 192,900,201 |   |   | 168,414,549 |   |   | 141,631,705 |  

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

F-5

---

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

|                               |  | Share Capital |  |  | Share Capital |   |  | Contributed |   |  | Accumulated |  |  |         |  
|------------------------------ |  | ------------- |  |  | ------------- | - |  | ----------- | - |  | ----------- |  |  | ------- | -
|                               |  | Common Shares |  |  | Subscribed    |   |  | Surplus     |   |  | Deficit     |  |  | Total   |  
|                               |  | Number        |  |  | $             |   |  | $           |   |  | $           |  |  | $       |  
|Balance  May 1, 2010          |  | 130,308,308   |  |  | 84,133        |   |  | -           |   |  | 3,942       |  |  | (84,210 | )
|Private placement              |  |               |  |  |               |   |  |             |   |  |             |  |  |         |  
|- Units issued for cash        |  | 19,600,000    |  |  | 2,872         |   |  | -           |   |  | -           |  |  | -       |  
|- Finders units               |  | 660,000       |  |  | 89            |   |  | -           |   |  | 14          |  |  | -       |  
|Share issuance costs           |  |               |  |  |               |   |  |             |   |  |             |  |  |         |  
|- Finders units               |  | -             |  |  | (89           | ) |  | -           |   |  | -           |  |  | -       |  
|- Finders warrants            |  | -             |  |  | (32           | ) |  | -           |   |  | 32          |  |  | -       |  
|- Cash                         |  | -             |  |  | (18           | ) |  | -           |   |  | -           |  |  | -       |  
|Stock-based compensation       |  | -             |  |  | -             |   |  | -           |   |  | 335         |  |  | -       |  
|Share capital subscribed       |  | -             |  |  | -             |   |  | 93          |   |  | -           |  |  | -       |  
|Loss for the year              |  | -             |  |  | -             |   |  | -           |   |  | -           |  |  | (3,771  | )
|Balance  April 30, 2011       |  | 150,568,308   |  |  | 86,955        |   |  | 93          |   |  | 4,323       |  |  | (87,981 | )
|Private placement              |  |               |  |  |               |   |  |             |   |  |             |  |  |         |  
|- Units issued for cash        |  | 17,600,000    |  |  | 3,239         |   |  | (93         | ) |  | -           |  |  | -       |  
|- Finders units               |  | 233,400       |  |  | 43            |   |  | -           |   |  | 9           |  |  | -       |  
|Share issuance costs           |  |               |  |  |               |   |  |             |   |  |             |  |  |         |  
|- Finders units               |  | -             |  |  | (43           | ) |  | -           |   |  | -           |  |  | -       |  
|- Finders warrants            |  | -             |  |  | (56           | ) |  | -           |   |  | 67          |  |  | -       |  
|- Cash                         |  | -             |  |  | (118          | ) |  | -           |   |  | -           |  |  | -       |  
|Shares issued for property     |  | 200,000       |  |  | 38            |   |  | -           |   |  | -           |  |  | -       |  
|Stock-based compensation       |  | -             |  |  | -             |   |  | -           |   |  | 454         |  |  | -       |  
|Loss for the year              |  | -             |  |  | -             |   |  | -           |   |  | -           |  |  | (1,834  | )
|Balance  April 30, 2012       |  | 168,601,708   |  |  | 90,058        |   |  | -           |   |  | 4,853       |  |  | (89,815 | )
|Private placement              |  |               |  |  |               |   |  |             |   |  |             |  |  |         |  
|- Shares issued for
      cash |  | 42,150,000    |  |  | 4,271         |   |  | -           |   |  | -           |  |  | -       |  
|- Share issuance costs         |  | -             |  |  | (36           | ) |  | -           |   |  | -           |  |  | -       |  
|Shares issued for property     |  | 200,000       |  |  | 19            |   |  | -           |   |  | -           |  |  | -       |  
|Stock-based compensation       |  | -             |  |  | -             |   |  | -           |   |  | 361         |  |  | -       |  
|Loss for the year              |  | -             |  |  | -             |   |  | -           |   |  | -           |  |  | (4,680  | )
|Balance  April
      30, 2013 |  | 210,951,708   |  |  | 94,312        |   |  | -           |   |  | 5,214       |  |  | (94,495 | )

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

F-6

---

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

|                                                                  |   | 2013   |   |   | 2012   |   |   | 2011   |  
|----------------------------------------------------------------- | - | ------ | - | - | ------ | - | - | ------ | -
|Operating Activities                                              |   |        |   |   |        |   |   |        |  
|Net loss for the year                                             | $ | (4,680 | ) | $ | (1,834 | ) | $ | (3,771 | )
|Items not affecting cash:                                         |   |        |   |   |        |   |   |        |  
|Depreciation                                                      |   | 8      |   |   | 20     |   |   | 30     |  
|Non-cash
      finance income                                     |   | (11    | ) |   | (14    | ) |   | (6     | )
|Non-cash exploration
      costs                                  |   | -      |   |   | 15     |   |   | -      |  
|Write-down of resource property costs                             |   | 57     |   |   | -      |   |   | -      |  
|Gain on derivative
      warrant liability                        |   | (210   | ) |   | (2,051 | ) |   | (232   | )
|Foreign
      exchange loss (gain)                                |   | 46     |   |   | 85     |   |   | (78    | )
|Stock-based compensation                                          |   | 361    |   |   | 454    |   |   | 335    |  
|                                                                  |   | (4,429 | ) |   | (3,325 | ) |   | (3,722 | )
|Changes in non-cash working capital:                              |   |        |   |   |        |   |   |        |  
|Accounts
      payable and accrued liabilities                    |   | 345    |   |   | (7     | ) |   | 63     |  
|Receivables, deposits and
      prepaids                          |   | 27     |   |   | 2      |   |   | (65    | )
|Finance
      income received                                     |   | 7      |   |   | 18     |   |   | 1      |  
|Cash Flow Used for Operating Activities                           |   | (4,050 | ) |   | (3,312 | ) |   | (3,723 | )
|                                                                  |   |        |   |   |        |   |   |        |  
|Investing Activities                                              |   |        |   |   |        |   |   |        |  
|Short term investment purchase                                    |   | (1,925 | ) |   | (1,613 | ) |   | (982   | )
|Short term investment redemption                                  |   | 1,837  |   |   | 1,864  |   |   | 263    |  
|Increase in restricted cash                                       |   | -      |   |   | -      |   |   | (3     | )
|Purchase of property, plant and equipment                         |   | -      |   |   | (38    | ) |   | -      |  
|Cash Flow Provided by (Used For)
      Investing Activities       |   | (88    | ) |   | 213    |   |   | (722   | )
|                                                                  |   |        |   |   |        |   |   |        |  
|Financing Activities                                              |   |        |   |   |        |   |   |        |  
|Units issued for cash, net of issuance cost                       |   | 4,234  |   |   | 3,661  |   |   | 3,267  |  
|Cash received for shares
      subscribed                         |   |        |   |   |        |   |   | 93     |  
|Cash Flow Provided by Financing Activities                        |   | 4,234  |   |   | 3,661  |   |   | 3,360  |  
|                                                                  |   |        |   |   |        |   |   |        |  
|Effect of exchange rate change on cash and cash
      equivalents |   | 2      |   |   | (4     | ) |   | 10     |  
|                                                                  |   |        |   |   |        |   |   |        |  
|                                                                  |   |        |   |   |        |   |   |        |  
|Change in Cash                                                    |   | 98     |   |   | 558    |   |   | (1,075 | )
|                                                                  |   |        |   |   |        |   |   |        |  
|Cash  Beginning of Year                                          |   | 816    |   |   | 258    |   |   | 1,333  |  
|                                                                  |   |        |   |   |        |   |   |        |  
|Cash  End of Year                                                | $ | 914    |   | $ | 816    |   | $ | 258    |  
|                                                                  |   |        |   |   |        |   |   |        |  
|                                                                  |   |        |   |   |        |   |   |        |  
|Schedule of non-cash financing transactions:                      |   |        |   |   |        |   |   |        |  
|Fair value of shares issued
      for property                    | $ | 19     |   | $ | 38     |   | $ | -      |  
|Fair value of finder fees warrants                                |   | -      |   |   | 119    |   |   | 143    |  
|Fair value of private placement warrants                          |   | -      |   |   | 613    |   |   | 398    |  

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

F-7

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

|1. | Nature of Operations and Going
  Concern
|-- | ----------------------------------------

Pacific Rim Mining Corporation
(Pacific Rim or the Company) is involved in the exploration and development
of gold properties. The Company is a public company with shares listed on the
TSX Exchange and the PFRMF on OTCQX. The head office, principal address and
records office of the Company are located at 625 Howe Street, Suite 1050,
Vancouver, British Columbia, Canada, V6C 2T6.

The Company owns a 100% interest in the
mineral property known as El Dorado and certain other exploration licenses
located in El Salvador and carries out other exploration activities in the
United States and Central America.

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 and permitting to complete the exploration and
development of its exploration properties, and upon future profitable production
or proceeds from the disposition of its properties.

Going Concern

While these consolidated financial
statements have been prepared on the basis that the Company will continue as a
going concern, which assumes that the Company will be able to meet its
commitments, continue operations, realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future, there
are events and conditions that raise substantial doubt on the validity of that
assumption. During the year ended April 30, 2013, the Company had a loss of
$4,680 and as at April 30, 2013 had an accumulated deficit of $94,495 and a
working capital deficiency of $465. The Company will require additional funding
to maintain its ongoing exploration programs and property commitments, for
administrative purposes and for the arbitration and legal costs related to the
case under the El Salvadors Foreign Investment Law (Investment Law) between
the Company and the Government of El Salvador, which is being administered by
the Centre for Settlement of Investment Disputes (ICSID). The legal and
arbitration costs for the case are substantial (Note 9(a)).

While the Company has been successful
in obtaining funding in the past, there is no assurance that sufficient funds
will be available on favourable terms to the Company in the future. Factors that
could affect the availability of financing include the progress and results of
the El Dorado project and its permitting application, the resolution of
international arbitration proceedings over the non-issuance of permits in El
Salvador, the state of international debt and equity markets, investor
perceptions and expectations and the global financial and metals markets. The
Company anticipates that it will require additional financing through, but not
limited to, the issuance of additional equity in order to fund its ongoing
exploration and case costs. There can be no assurance the Company will be
successful in this endeavour.

These consolidated financial statements
do not reflect adjustments in the carrying values of the assets and liabilities,
the reported revenues and expenses, and the balance sheet classifications used,
that would be necessary if the company were unable to realize its assets and
settle its liabilities in the normal course of operations. Such adjustments
could be material.

F-8

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

|2. | Basis of Preparation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The financial statements of the Company have been
      prepared in accordance with International Financial Reporting Standards
      (IFRS) as issued by the International Accounting Standards Board
      (IASB). The policies presented in Note 3 were consistently applied to
      all periods presented. The Board of Directors approved the consolidated
      financial statements on July 22, 2013.                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | All dollar amounts are presented in US dollars unless
      otherwise specified.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | This summary of significant accounting policies described
      below has been applied consistently to all periods presented in these
      consolidated financial statements, unless otherwise stated.                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | a) Basis of Measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The consolidated financial statements have been prepared
      on the historical cost basis, except for the Derivative financial warrant
      liabilities which are measured at fair value through profit and
    loss.                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b) Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The consolidated financial statements include the
      accounts of the Companys wholly-owned subsidiaries, Dayton Mining (U.S.)
      Inc., Pacific Rim Exploration Inc., Pacific Rim Cayman, Pacific Rim El
      Salvador S.A. de C.V., Dorado Exploraciones S.A. de C.V., Pacrimco S.A.,
      Pac Rim Caribe III and its wholly-owned subsidiary Pacific Rim Chile
      Limitada. All significant intercompany transactions and balances have been
      eliminated.                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | c) Foreign Currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The functional currency is the currency of the primary
      economic environment in which the entity operates. The functional currency
      of the Company and of all of its subsidiaries is the United States (US)
      Dollar. The functional currency determinations were conducted through an
      analysis of the consideration factors identified in IAS 21, The Effects of
      Changes in Foreign Exchange Rates (IAS 21).                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The consolidated financial statements have been presented
      in US dollars. Transactions in foreign currencies are translated to the
      functional currency of the entity at the exchange rate in existence at the
      date of the transaction. Monetary assets and liabilities denominated in
      foreign currencies at the balance sheet date are translated at the period
      end date exchange rates. Non-monetary items which are measured using
      historical cost in a foreign currency are translated using the exchange
      rate at the date of the transaction.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Companys presentation currency is the US
    dollar.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | d) Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Cash and cash equivalents consist of cash on deposit with
      banks and short-term interest-bearing investments with maturities of three
      months or less at the purchase date.                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | e) Short Term Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Short term investments are comprised of interest-bearing
      deposits with a term to maturity from inception of greater than three
      months and less than one year.                                                                                                                                                                                                                                                                                                                                                                                                                 

F-9

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

f) Financial Instruments

Financial assets and liabilities are
recognized when the Company becomes a party to the contractual provisions of the
instrument. Financial assets are derecognized when the rights to receive cash
flows from the assets have expired or have been transferred and the company has
transferred substantially all risks and rewards of ownership. Financial
liabilities are derecognized when the obligation specified in the contract is
discharged, cancelled or expires.

At initial recognition, the Company
classifies its financial instruments in the following categories depending on
the purpose for which the instruments were acquired:

| | (i)   | Financial assets and liabilities at fair value through
      profit or loss: A financial asset or liability is classified in this
      category if acquired principally for the purpose of selling or
      repurchasing in the short-term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | Financial instruments in this category are recognized
      initially and subsequently at fair value. Transaction costs are expensed
      in the statement of income. Gains and losses arising from changes in fair
      value are presented in the statement of loss and comprehensive loss in the
      period in which they arise. Financial assets and liabilities at fair value
      through profit or loss are classified as current.                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (ii)  | Available-for-sale investments: Available-for-sale
      investments are non-derivatives that are either designated in this
      category or not classified in any of the other categories. The Company
      does not hold any available-for-sale assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (iii) | Held-to-Maturity investments: Held-to-maturity
      investments are non-derivatives that are designated in this category where
      the Companys intent is to hold the investment to maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | Held-to-maturity investments are initially measured at
      fair value including transaction costs, and subsequently carried at
      amortized cost. The Company does not hold any held-to- maturity
    assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (iv)  | Loans and receivables: Loans and receivables are
      non-derivative financial assets with fixed or determinable payments that
      are not quoted in an active market. The Companys loans and receivables
      are comprised of cash and cash equivalents, restricted cash, short term
      investments, deposits, and receivables, and are included in current assets
      due to their short- term nature with the exception of restricted cash.
      Loans and receivables are initially recognized at the amount expected to
      be received, less, when material, a discount to reduce the loans and
      receivables to fair value. Subsequently, loans and receivables are
      measured at amortized cost using the effective interest method less a
      provision for impairment.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (v)   | Financial liabilities at amortized cost: Financial
      instruments held by the Company and classified in this category include
      trade payables and accrued liabilities. Trade payables and accrued
      liabilities are initially recognized at the amount required to be paid,
      less, when material, a discount to reduce the payables to fair value.
      Subsequently, trade payables and accrued liabilities are measured at
      amortized cost using the effective interest method.                                                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | The effective interest rate method calculates the
      amortized cost of a financial asset and allocates interest income over the
      corresponding period. The effective interest rate is the rate that
      discounts estimated future cash receipts over the expected life of the
      financial instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | Financial liabilities are classified as current
      liabilities if payment is due within twelve months. Otherwise, they are
      presented as non-current liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-10

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

| | (vi) | Derivative financial instruments: Derivative instruments,
      including embedded derivatives, are recorded at fair value through profit
      or loss (FVTPL) and accordingly are recorded on the balance sheet at
      fair value. Gains and losses on re-measurement to fair value of these
      derivatives are classified separately in these consolidated financial
      statements as gain on derivative liability. Fair values for derivative
      instruments are determined using valuation techniques, using assumptions
      based on market conditions existing at the balance sheet date. Derivatives
      embedded in non-derivative contracts are recognized separately unless they
      are closely related to the host contract.                                    
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |      | Warrants issued in a private placement that have an
      exercise price denominated in a currency other than the Companys
      functional currency meet the definition of a derivative liability and are
      recorded as a financial liability and are marked-to-market each period,
      its fair value determined using the Black-Scholes valuation model.
      Subsequent changes in the fair value of the warrants are recognized as
      gains or losses in the Statement of Income (Loss) and Comprehensive Income
      (Loss) until they are fully exercised. Warrants that have been issued to
      agents for services provided for a capital raising transaction are
      accounted for under IFRS 2. These warrants are not derivatives and are not
      subject to IAS 32.

g) Equipment and Leasehold
Improvements

Equipment and leasehold improvements
are stated at cost less accumulated depreciation and accumulated impairment
losses. Cost includes expenditures that are directly attributable to the
acquisition of the asset. Subsequent costs are included in the assets carrying
amount or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the
Company and the cost can be measured reliably. The carrying amount of a replaced
asset is derecognized when replaced. Repairs and maintenance costs are charged
to the statement of loss during the period they are incurred.

The major categories of equipment and
leasehold improvements are depreciated on a straight-line basis as follows:

Office furniture and equipment
    5 yearsComputer equipment
    2 yearsVehicles
    5 years


The Company allocates the amount
initially recognized to each assets significant components and depreciates each
component separately. Residual values, amortization methods and useful lives of
the assets are reviewed periodically and adjusted on a prospective basis as
required.

Gains and losses on disposals of
equipment are determined by comparing the proceeds with the carrying amount of
the asset and are included as part of other gains and losses in the statement of
loss.

h) Mineral Properties and
Exploration Costs

The Company capitalizes the direct
costs of acquiring mineral property interests including option payments, until
such time as the property is put into production or the property is disposed of,
either through sale or abandonment or becomes impaired. If a mineral property is
put into production the costs of acquisition are expensed over the life of the
property based on estimated economic reserves. Proceeds received from the sale
of any interest in a property will be credited against the carrying value of the
property with any difference recognized in the statement of loss and
comprehensive loss. If a property is abandoned, the acquisition costs will be
written off to the statement of loss and comprehensive loss.

Exploration and evaluation costs are
charged to operations in the period incurred until such time as it has been
determined that a property has economically recoverable reserves, in which case subsequent exploration and development costs are capitalized. Exploration costs include value-added taxes because the recoverability of these amounts are uncertain.

F-11

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

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

i) Impairment of Non-financial
Assets

The carrying amounts of non-financial
assets are reviewed for impairment whenever facts and circumstances suggest that
the carrying amounts may not be recoverable. If there are indicators of
impairment, the recoverable amount of the asset is estimated in order to
determine the extent of any impairment. For the purpose of measuring recoverable
amounts, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units or CGUs). The recoverable amount
is the higher of an assets fair value less costs of disposal and value in use
(being the present value of the expected future cash flows of the relevant asset
or CGU). An impairment loss is recognized for the amount by which the assets
carrying amount exceeds its recoverable amount.

Non-financial assets that have been
impaired in prior periods are tested for possible reversal of impairment
whenever events or changes in circumstances indicate that the impairment has
reversed. If the impairment has reversed, the carrying amount of the asset is
increased to its recoverable amount but not beyond the carrying amount that
would have been determined had no impairment loss been recognized for the asset
in the prior periods. A reversal of an impairment loss is recognized in the
statement of loss.

j) Provisions

(i) Decommissioning and restoration
provision:Future obligations to retire an asset, including dismantling,
remediation and ongoing treatment and monitoring of the site related to normal
operations are initially recognized and recorded as a liability based on
estimated future cash flows discounted at a risk free rate. The decommissioning
and restoration provision is adjusted at each reporting period for changes to
factors including the expected amount of cash flows required to discharge the
liability, the timing of such cash flows and the pre-tax discount rate which
reflects the risks specific to the liability.

The liability is also accreted to full
value over time through periodic charges to earnings. This unwinding of the
discount is charged to financing expense in the statement of income.

The amount of the decommissioning and
restoration provision initially recognized is capitalized as part of the related
assets carrying value and amortized to earnings. The method of amortization
follows that of the underlying asset. The costs related to a decommissioning and
restoration provision are only capitalized to the extent that the amount meets
the definition of an asset and can bring about future economic benefit.

(ii) Other provisions:Provisions are recognized when a current legal or constructive obligation
exists, as a result of past events, and it is probable that an outflow of
resources that can be reliably estimated will be required to settle the
obligation. Where the effect is material, the provision is discounted using an
appropriate pre-tax rate, risk specific to the liability.

k) Income Taxes

Income tax comprises current and
deferred tax. Income tax is recognized in the statement of loss except to the
extent that it relates to a business combination or to items recognized directly
in equity, in which case the income tax is also recognized directly in
equity.

F-12

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

Current tax is the expected tax payable
on the taxable income for the year, using tax rates enacted or substantively
enacted, at the end of the reporting period, and any adjustment to tax payable
in respect of previous years.

In general, deferred tax is recognized
in respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements.
However, deferred tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined on a non-discounted basis using tax
rates and laws that have been enacted or substantively enacted at the balance
sheet date and are expected to apply when the deferred tax asset or liability is
settled. Deferred tax assets are recognized to the extent that it is probable
that the assets can be recovered.

Deferred income tax is provided on
temporary differences arising on investments in subsidiaries and associates,
except, in the case of subsidiaries, where the timing of the reversal of the
temporary difference is controlled by the Company and it is probable that the
temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and
liabilities are presented as non-current.

Deferred tax assets and liabilities are
offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities, when they relate to income taxes levied by the
same taxation authority and when the Company intends to settle its current tax
assets and liabilities on a net basis.

l) Share Capital

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

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

m) Stock-based Compensation

All stock-based awards made to
employees and non-employees are measured and recognized using the Black-Scholes
fair value based method. For employees, the Company recognizes stock based
compensation expense based on the estimated fair value of the options on the
date of the grant. For non-employees, the fair value of the options is based on
the fair value of services received and recognized at the time of services
rendered. The fair value of the options is recognized over the vesting period of
the options granted as stock based compensation expense and corresponding
adjustment to contributed surplus. The number of options expected to vest is
periodically reviewed and the estimated option forfeiture rate is adjusted as
required throughout the life of the option. Upon exercise these amounts are
transferred to share capital.

n) Earnings (Loss) per Share

Basic loss per share is computed by
dividing loss attributable to common shareholders by the weighted average number
of common shares outstanding during the period. The computation of diluted
earnings per share assumes the conversion, exercise or contingent issuance of
securities only when such conversion, exercise or issuance would have a dilutive
effect on earnings per share. The dilutive effect of outstanding options and
their equivalents are reflected in diluted earnings per share by application of
the treasury stock method. Since the Company has losses, the assumed exercise of
outstanding stock options has not been included in this calculation as it would
be anti-dilutive.

F-13

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

|4. | Significant Accounting Estimates and
    Judgments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The preparation of the consolidated financial statements
      requires management to make estimates and assumptions that affect the
      amounts reported in the consolidated financial statements. Significant
      areas where judgment is applied include the determination of an entitys
      functional currency, the carrying value and recoverability of mineral
      property costs, estimated depreciable lives of equipment, inputs used in
      accounting for share-based compensation and provisions for site
      restoration. Actual results could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Managements key estimates and the underlying assumptions
      are reviewed on an ongoing basis. Revisions to accounting estimates are
      recognized in the period in which the estimate is revised if the revision
      affects only that period or in the period of the revision and further
      periods if the review affects both current and future periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Critical accounting estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Significant assumptions relate to, but are not limited
      to, the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a) Share-based compensation: The Company provides
      compensation benefits to our employees, directors and officers through a
      stock option plan. The fair value of each option award is estimated on the
      date of the grant using the Black-Scholes option pricing model. Expected
      volatility is based on historical volatility of the Companys share price.
      Historical data is utilized to estimate option exercises and forfeiture
      behaviour with the valuation model. The risk-free rate for the expected
      term of the option is based on the Government of Canada yield curve in
      effect at the time of the grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | b) Impairment of mineral properties: The net carrying
      value of each mineral property is reviewed regularly for conditions that
      suggest impairment. This review requires significant judgment as the
      Company does not have any proven and probable reserves that enable
      estimated future cash flows to be compared to the carrying values. Factors
      considered in the assessment of asset impairment include, but are not
      limited to, whether there has been a significant decrease in the market
      price of the property; whether there has been a significant adverse change
      in the legal, regulatory, accessibility, title, environmental or political
      factors that could affect the propertys value; whether there has been an
      accumulation of costs significantly in excess of the amounts originally
      expected for the propertys acquisition, development or cost of holding;
      whether exploration activities produced results that are not promising
      such that no more work is being planned in the foreseeable future and
      whether the Company has the necessary funds to be able to maintain its
      interest in the mineral property.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Certain new standards, interpretations, amendments and
      improvements to existing standards were issued by the International
      Accounting Standards Board (IASB) or International Financial Reporting
      Interpretations Committee (IFRIC) that are applicable to the Company are
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-14

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

| |    | IFRS 9 is effective for annual years beginning on or
      after January 1, 2015. The Company is currently assessing the impact of
      this standard on the financial statements and does not intend to early
      adopt this standard.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | b) | IFRS 10, Consolidated Financial Statements (IFRS 10),
      was issued in May 2011 and will supersede the consolidation requirements
      in SIC-12, Consolidation  Special Purpose Entities (SIC-12), and IAS
      27, Consolidated and Separate Financial Statements (IAS 27), effective
      for annual periods beginning on or after January 1, 2013, with early
      application permitted. IFRS 10 builds on existing principles by
      identifying the concept of control as a determining factor in whether an
      entity should be included within the consolidated financial statements of
      the parent company. The standard also provides additional guidance to
      assist in the determination of control where this is difficult to assess.
      The Standard is not expected to have an impact on the Company.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | c) | IFRS 11, Joint Arrangements (IFRS 11), was issued in
      May 2011 and will supersede existing IAS 31, Joint Ventures (IAS 31)
      effective for annual periods beginning on or after January 1, 2013, with
      early application permitted. IFRS 11 provides for the accounting of joint
      arrangements by focusing on the rights and obligations of the arrangement,
      rather than its legal form (as is currently the case). The Standard also
      eliminates the option to account for jointly controlled entities using the
      proportionate consolidation method. The Standard is not expected to have
      an impact on the Company.                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | d) | IFRS 12, Disclosure of Interests in Other Entities (IFRS
      12), was issued in May 2011 and is a new and comprehensive standard on
      disclosure requirements for all forms of interest in other entities,
      including subsidiaries, joint arrangements, associates and unconsolidated
      structured entities. IFRS 12 is effective for annual periods beginning on
      or after January 1, 2013 with earlier application permitted. The Standard
      is not expected to have an impact on the Company.                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | e) | IFRS 13, Fair Value Measurements (IFRS 13) was issued
      in May 2011 and sets out, in a single IFRS, a framework for measuring fair
      value. IFRS 13 defines fair value as the price that would be received to
      sell an asset or paid to transfer a liability in an orderly transaction
      between market participants at the measurement date. This definition of
      fair value emphasizes that fair value is a market-based measurement, not
      an entity specific measurement. In addition, IFRS 13 also requires
      specific disclosures about fair value measurement. IFRS 13 is effective
      for annual periods beginning on or after January 1, 2013, with earlier
      application permitted. The Standard is not expected to have an impact on
      the Company.                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | f) | IAS 1, Presentation of Items of Other Comprehensive
      Income (OCI) (IAS 1), was revised in June 2011 to change the
      disclosure of items presented in OCI, including a requirement to separate
      items presented in OCI into two groups based on whether or not they may be
      recycled to profit or loss in the future. The revision is effective for
      annual periods beginning on or after July 1, 2012 with early application
      permitted. The Standard is not expected to have an impact on the
      Company.                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | g) | IFRIC 21, Levies was issued May 20 and provides an
      interpretation on the accounting for levies imposed by governments and is
      effective for annual periods beginning on or after January 1, 2014. The
      Company is currently assessing the impact of this standard on the
      financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-15

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

|6. | Financial Instruments
|-- | ---------------------

a) Financial instruments

Financial instruments measured at fair
value are classified into one of three levels in the fair value hierarchy
according to the relative reliability of the inputs used to estimate the fair
values. The three levels of the fair value hierarchy are:

Level 1  Unadjusted quoted prices in
active markets for identical assets and liabilities Level 2  Inputs other
than quoted prices that are directly or indirectly observable for the asset or
liability; and Level 3  Inputs that are not based on observable market
data.

| |                                    |   | April
      30, 2013 |  |   | April
      30, 2012 | 
| | ---------------------------------- | - | -------------------- |  | - | -------------------- | 
| | Level 3                            |   |                      |  |   |                      | 
| | Derivative
      warrant liability | $ | -                    |  | $ | 210                  | 

| | b) Management of financial
  risk
| | ---------------------------------
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  
| |                                  

| |                  |  | 2014  |  |  | 2015 and later |  |  | Total | 
| | ---------------- |  | ----- |  |  | -------------- |  |  | ----- | 
| |                  |  | $     |  |  | $              |  |  | $     | 
| | Accounts payable |  | 1,979 |  |  | -              |  |  | 1,979 | 
| | Operating leases |  | 21    |  |  | 14             |  |  | 35    | 
| | Totals           |  | 2,000 |  |  | 14             |  |  | 2,014 | 

| | (iii) | Interest Rate Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | Interest rate risk is the risk that the fair value or
      future cash flows of a financial instrument will fluctuate because of
      changes in market interest rates. The risk that the Company will realize a
      loss as a result of a decline in the fair value of the investments
      included in cash and cash equivalents is limited because these investments
      are generally held to maturity. Based on the amount of cash and cash
      equivalents invested as at April 30, 2013 and assuming that all
    other variables remain constant, a 0.5% change in the
  applicable interest rate would not be significant.

F-16

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

| | (iv) | Credit risk                                                                                                                                                                                                                                                                                            
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                        
| |      | Credit risk is the risk of an unexpected loss if a
      customer or third party to a financial instrument fails to meet its
      contractual obligations. The maximum credit risk the Company is exposed to
      is 100% of cash and cash equivalents, short-term investments and
      receivables.
| |      |                                                                                                                                                                                                                                                                                                        
| |      | The Companys cash and short-term investments are held
      through large Canadian financial institutions. Short-term investments are
      composed of financial instruments issued by Canadian banks. These
      investments mature at various dates over the current operating
    period.        

| | c) | Management of capital risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The Companys objectives when managing capital are to
      safeguard the Companys ability to continue as a going concern in order to
      pursue the development of its mineral properties and to maintain a
      flexible capital structure which optimizes the costs of capital at an
      acceptable risk. In the management of capital, the Company includes the
      components of shareholders equity.                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The Company manages the capital structure and makes
      adjustments to it in light of changes in economic conditions and the risk
      characteristics of the underlying assets. To maintain or adjust the
      capital structure, the Company may attempt to issue new shares, acquire or
      dispose of assets or obtain debt financing. In order to facilitate the
      management of its capital requirements, the Company prepares annual
      expenditure budgets that are updated as necessary depending on various
      factors, including successful capital deployment and general industry
      conditions. The annual and updated budgets are approved by the Board of
      Directors. In order to maximize ongoing development efforts, the Company
      does not pay out dividends.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The Companys investment policy is to invest its cash in
      highly liquid short-term interest-bearing investments with maturities 90
      days or less from the original date of acquisition, selected with regards
      to the expected timing of expenditures from continuing operations.
      Additional information regarding capital management is disclosed in Note
      1.                                                                                                                                                                                                                                                                                                                                                                                                                     

|   |                                           
|-- | ------------------------------------------
|7. | Resource Property Costs
      a) El Dorado

| |                                                       |   | April 30, |  |   | April 30, | 
| | ----------------------------------------------------- | - | --------- |  | - | --------- | 
| |                                                       |   | 2013      |  |   | 2012      | 
| |                                                       |   |           |  |   |           | 
| | Mining Property Acquisition Costs  El
      Dorado   | $ | 5,454     |  | $ | 5,454     | 
| | Resource Property
      Acquisition Costs  Hog Ranch |   | -         |  |   | 38        | 
| |                                                       | $ | 5,454     |  | $ | 5,492     | 

The Company holds a 100% interest in
certain mineral properties in El Salvador known as El Dorado. El Dorado is
subject to a 3% net smelter return royalty. Pacific Rim has the right to buy
back the royalty for $1 million for the first 1.5% and $3 million for the second
1.5%, provided that at least one half of the royalty is acquired within six
months of the commencement of commercial production.

As of April 30, 2013, the Company has
spent a cumulative total of $55,022 in El Salvador relating to exploration. Of
this amount $41,547 has been sent directly to its wholly owned subsidiary,
Pacific Rim El Salvador, S.A. De C.V.

An Environmental Impact Study has been
submitted to governmental authorities for their consideration and requires
approval before the exploration licence can be converted to an exploitation concession which is required to carry out mining in the licence area. In meeting its responsibilities, a mine design for the Company’s El Dorado gold project was submitted to the Government of El Salvador in its final form in October 2006. The issuance of the permit remains outstanding and consequently the Company has sought a legal remedy to secure its right to develop the El Dorado project.

F-17

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

On April 30, 2009 Pac Rim Cayman LLC, a
Nevada corporation and a wholly-owned subsidiary of Pacific Rim Mining Corp.
filed international arbitration proceedings against the Government of El
Salvador (GOES) under CAFTA and the Investment Law in its own name and on
behalf of its three wholly-owned El Salvadoran enterprises, Pacific Rim El
Salvador, Sociedad Anónima de Capital Variable and Dorado Exploraciones,
Sociedad Anónima de Capital Variable. The arbitration is administered under the
Convention on the Settlement of Investment Disputes Between States and Nationals
of Other States and under the Rules of Procedure for Arbitration Proceedings of
the ICSID. ICSID is an affiliate of the World Bank and is headquartered in
Washington, D.C.

On May 31, and June 1, 2010, hearings
on a preliminary objection filed by the GOES, which sought to dispose of nearly
all of the claims brought by PacRim against the GOES under CAFTA and the
Investment Law of El Salvador (Investment Law), were held. On August 2, 2010
the ICSID tribunal panel that is hearing the investment claims of PacRim against
the GOES, and that presided over the Preliminary Objection hearings, ruled in
favour of PacRim, rejecting all of the arguments made by the GOES in its
Preliminary Objection.

Between May 2 and 4, 2011, hearings on
a jurisdiction objection filed by the GOES in relation to PacRims action under
CAFTA and the Investment Law took place at the ICSID headquarters in Washington,
DC. The purpose of these objection hearings was for the ICSID Tribunal to hear
objections filed by the GOES in August 2010 wherein the GOES asserted that ICSID
did not have jurisdiction to hear PacRim's claims under CAFTA or the Investment
Law based largely on timing and nationality issues. On June 1, 2012, the ICSID
Tribunal issued its ruling on the Jurisdiction Objections and determined that
PacRims Arbitration claim would proceed. The Tribunal confirmed ICSID (at the
World Bank) has jurisdiction to hear PacRims claims under the Investment Law,
but not under CAFTA. Accordingly, the Arbitration claim can and will proceed
under the Investment Law alone. ICSID, a branch of the World Bank, will continue
to adjudicate the case at its headquarters in Washington, DC.

The Company is unable to determine an
outcome of its international arbitration proceedings against the GOES under the
Investment Law. As at April 30, 2013, the Company has now incurred $6,309
relating to the arbitration proceedings.

Measurement uncertainty(Note
12):

The Companys activities in El Salvador
are subject to the effects of changes in legal, tax and regulatory regimes,
national and local political issues, labour and economic developments and
government bureaucracy. The Company has experienced lengthy delays in the
processing of the El Dorado exploitation concession application and has
commenced a legal claim under the Investment Law as noted above. In addition,
because of the Investment Law dispute, the Company has not had the ability to
confirm or renew its exploration licences as a result of the claims that are
under the Investment Law arbitration. If the Company is unsuccessful in
obtaining a permit for El Dorado or in its Investment Law claim, or is impacted
by other factors beyond the control of the Company, this would adversely impact
operations in El Salvador or result in the impairment of the El Dorado property
in the future; such impairment could be material.

b) Other El Salvador
Properties

By agreement dated February 6, 2006,
the Company agreed to acquire from a consortium of private companies a 100%
interest in an El Salvador exploration concession to be known as the Zamora
property. Upon TSX approval of the original agreement, the Company was required
to make a payment of 50,000 shares (issued). The agreement was amended in September 2006 to include the acquisition of a 100% interest in the Cerro Colorado claims while maintaining the provisions in the agreement for the Company’s acquisition of the Zamora claims. The agreement was amended in February 2010 to adjust the fourth anniversary payment date to be the earlier of the date the Company receives confirmation that the Government of the Republic of El Salvador has granted a mining exploitation concession for the El Dorado Project and February 11, 2015. Under the terms of the amended agreement, the Company maintains an option to purchase the exploration concessions by making advance royalty payments as follows:

F-18

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

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


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

The Company has also staked the other
mining projects, including the Santa Rita project, located in El Salvador.

c) Hog Ranch, Nevada, USA

In 2011, the Company, through its US
subsidiary Pacific Rim Exploration Ltd. (PREx), signed a Definitive Agreement
with ICN Resources Ltd. (ICN) and Washoe Gold Inc. (WGI) to acquire a 65%
interest in the Hog Ranch Property located in Washoe County, Nevada.

The Company, at its option, was
required to spend an aggregate of $8 million in exploration expenditures and to
issue an aggregate of one million common shares of Pacific Rim.

The Company decided not to proceed
further with the Hog Ranch option agreement. The acquisition costs of $57 were
written off during the year ended April 30, 2013.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. | Derivative Warrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Warrants issued in a private placement that had an
      exercise price denominated in a currency other than the Companys
      functional currency met the definition of a derivative liability and were
      recorded as a financial liability and were carried at fair value each
      period. The warrants issued in the January 2010, October 2010 and May 2011
      private placements had an exercise price denominated in Canadian dollars,
      which is not the Companys functional currency. As a result, the warrants
did not meet the definition of an equity instrument and were recorded at fair value as a derivative liability, with the difference between the fair value and the carrying value being recognized in equity. Subsequent changes in the fair value of the warrants were recognized as gains or losses in the Statement of Income (Loss) and Comprehensive Income (Loss) until they were fully exercised or expired. Of the total number of warrants outstanding as at April 30, 2013, a total of 8,800,000 had been classified as a financial liability and were marked to market each period. These warrants had an expiry date of May 2, 2013, were not in the money at April 30, 2013 and, therefore, were valued at Nil as of April 30, 2013.

F-19

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

The remaining 833,100 warrants had been
issued to agents for services provided for a capital raising transaction and
were not classified as a financial liability of the Company because they were
accounted for under IFRS 2. The initial fair value of these warrants had been
recognized as a share issuance cost and included in contributed surplus.

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

| |                          |  | Warrants    |   |   | Weighted Average | 
| | ------------------------ |  | ----------- | - | - | ---------------- | 
| |                          |  | Outstanding |   |   | Exercise Price   | 
| |                          |  |             |   |   | (Cdn$)           | 
| | Balance  April 30, 2011 |  | 23,531,000  |   | $ | 0.30             | 
| | Issued                   |  | 9,633,100   |   | $ | 0.30             | 
| | Balance  April 30, 2012 |  | 33,164,100  |   | $ | 0.30             | 
| | Expired                  |  | (23,531,000 | ) | $ | 0.30             | 
| | Balance  April 30, 2013 |  | 9,633,100   |   | $ | 0.30             | 

At April 30, 2013, there were 9,633,100
(April 30, 2012  33,164,100) warrants outstanding with a weighted average
exercise price of Cdn$0.30.

| | Number of warrants | Exercise price (Cdn$) | Expiry     
| | ------------------ | --------------------- | -----------
| | 9,633,100*         | 0.30                  | May 2, 2013

* These warrants expired unexercised on
May 2, 2013 subsequent to the year end.

| | Derivative warrant liability  April 30,
      2011 | $ | 1,649  |  
| | --------------------------------------------------- | - | ------ | -
| | Derivative warrants
      issued                    |   | 656    |  
| | Derivative warrant issuance costs                   |   | (44    | )
| | Fair market value change                            |   | (2,051 | )
| | Derivative warrant liability  April 30,
      2012 |   | 210    |  
| | Fair market value change                            |   | (210   | )
| | Derivative warrant liability  April 30, 2013       | $ | -      |  

The fair value of the warrants has been
estimated at April 30 using the Black-Scholes option pricing model with the
following weighted average assumptions:

| |                                 |  | April 30, 2013   |  |  | April 30, 2012  | 
| | ------------------------------- |  | ---------------- |  |  | --------------- | 
| | Risk-free interest rate         |  | 0.97%            |  |  | 1.34%           | 
| | Expected dividend yield         |  | NIL              |  |  | NIL             | 
| | Expected stock price volatility |  | 0%               |  |  | 103%            | 
| | Expected life in
      years    |  | 0.01
      years |  |  | 0.7
      years | 

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

F-20

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

|9. | Share Capital
|-- | -------------

Common Shares

Authorized: Unlimited number of common
shares without par value.

Private Placement Financing

On October 3, 2012, the Company
completed a non-brokered private placement with gross proceeds of $4,271 (Cdn
$4,215) through the issuance of 42,150,000 common shares. The total share
issuance costs relating to this transaction amounted to $36.

On May 3, 2011, the Company completed a
private placement with gross proceeds of $3,897 (Cdn$3,696) through the issuance
of 17,600,000 units. Each unit consisted of one share and one-half of one share
purchase warrant. The Company allocated $3,239 to the common shares and $658 to
the share purchase warrants based upon the relative fair values. Each warrant
will entitle the holder to acquire one common share of the Company for a period
of two years from the closing date at a price of Cdn$0.30.

The finders were issued a total of
233,400 units. The Company allocated $43 to the common shares and $9 to the
share purchase warrants based upon the relative fair values. The finders were
also issued 716,400 warrants, the warrants having the same terms as the warrants
issued under the units and having a fair value of $67. The Company allocated $56
to the common shares and $11 to the share purchase warrants based upon the
relative fair values.

The total share issuance costs relating
to this transaction amounted to $142. The Company allocated $118 to the common
shares and $24 to warrants derivative issuance costs.

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

| |                                 |  | May 3, 2011   | 
| | ------------------------------- |  | ------------- | 
| | Risk-free interest rate         |  | 1.67%         | 
| | Expected dividend yield         |  | NIL           | 
| | Expected stock price volatility |  | 91%           | 
| | Expected life in
      years    |  | 2
      years | 

Stock Options

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

a) Current options details are as
follows:

| |                                           |  |                   |   |   | Weighted Average | 
| | ----------------------------------------- |  | ----------------- | - | - | ---------------- | 
| |                                           |  |                   |   |   | Exercise Price   | 
| |                                           |  | Number of Options |   |   | (in
      Cdn $) | 
| | Options outstanding at April 30, 2011     |  | 10,295,000        |   | $ | 0.39             | 
| | Granted                                   |  | 3,635,000         |   | $ | 0.16             | 
| | Expired                                   |  | (1,130,000        | ) | $ | 1.00             | 
| | Options outstanding at April 30, 2012     |  | 12,800,000        |   | $ | 0.27             | 
| | Granted                                   |  | 3,660,000         |   | $ | 0.11             | 
| | Expired                                   |  | (1,200,000        | ) | $ | 1.13             | 
| | Options outstanding at April 30, 2013     |  | 15,260,000        |   | $ | 0.17             | 
| | Options vested
      as at April 30, 2013 |  | 12,090,000        |   | $ | 0.18             | 

F-21

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

b) Stock options outstanding at the end
of April 30, 2013 are as follows:

RemainingOptions
    Options
    Price per
    contractual lifeOutstanding
    Exercisable
    Share
    (years)
    Expiry Date2,555,000
    2,555,000
    Cdn$0.17
    0.67
    December 29, 2013225,000
    225,000
    Cdn$0.21
    1.32
    August 25, 201430,000
    30,000
    Cdn$0.29
    1.36
    September 10, 20142,030,000
    2,030,000
    Cdn$0.21
    1.74
    January 26, 2015250,000
    250,000
    Cdn$0.20
    2.11
    June 10, 2015225,000
    225,000
    Cdn$0.17
    2.32
    August 25, 20152,550,000
    2,550,000
    Cdn$0.21
    2.63
    December 16, 2015100,000
    -
    Cdn$0.92
    2.73
    January 23, 2016225,000
    225,000
    Cdn$0.19
    3.39
    September 18,20163,160,000
    2,106,667
    Cdn$0.16
    3.42
    September 28, 201650,000
    33,333
    Cdn$0.17
    3.47
    October 16, 2016200,000
    200,000
    Cdn$0.13
    3.91
    March 26, 20173,660,000
    1,660,000
    Cdn$0.11
    4.43
    October 3, 201715,260,000
    12,090,000
    
    2.77


c) Fair value of stock options
granted

The 3,660,000 options granted during
the year ended April 30, 2013 have been allocated a total fair value of $301
with a weighted average fair value of Cdn$0.08. The allocation of fair value was
estimated using the Black-Scholes option pricing model, with the following
weighted average assumptions:

| |                                 |  | 2013             |  |  | 2012             | 
| | ------------------------------- |  | ---------------- |  |  | ---------------- | 
| | Risk-free interest rate         |  | 1.25%            |  |  | 1.31%            | 
| | Expected dividend yield         |  | NIL              |  |  | NIL              | 
| | Expected stock price volatility |  | 109%             |  |  | 104%             | 
| | Expected life in
      years    |  | 4.13
      years |  |  | 4.52
      years | 

The total stock-based compensation
recognized during the year ended April 30, 2013 was $361 (2012 - $454) with the
offsetting entry to contributed surplus.

Option pricing models require the input
of subjective assumptions including the expected price volatility. The expected
share price volatility is estimated using historical daily share prices over the
expected life of the option. Changes in the assumptions can materially affect
the fair value estimate.

|    |                           
|--- | --------------------------
|10. | Related Party Transactions

Details of the transactions between the
Company and other related parties are disclosed below.

Trading transactions

The Companys Chief Financial Officer
renders services to the Company through a company in which he is a partner.

F-22

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

| |                              | Nature of transactions
| | ---------------------------- | ----------------------
| | Avisar Chartered Accountants | Accounting fees       

The Company incurred the following fees
and expenses in the normal course of operations in connection with related
parties.

| |                 |   | Year Ended           |  |   | Year Ended           |  |   | Year Ended           | 
| | --------------- | - | -------------------- |  | - | -------------------- |  | - | -------------------- | 
| |                 |   | April
      30, 2013 |  |   | April
      30, 2012 |  |   | April
      30, 2011 | 
| | Accounting fees | $ | 131                  |  | $ | 135                  |  | $ | 117                  | 

Amounts due to related parties are
unsecured, non-interest bearing and due on demand. Accounts payable at April 30,
2013 included $9 (April 30, 2012 - $10) which were due to a company which the
Chief Financial Officer is a partner.

Compensation of key management
personnel

The remuneration of the directors,
chief executive officer, chief financial officer, vice president of investor
relations and vice president of exploration (collectively, the key management
personnel) during the years ended April 30, 2013 and 2012 was as follows:

| |                                |  |      |  |   | Year Ended           |  |   | Year Ended           |  |   | Year Ended           | 
| | ------------------------------ |  | ---- |  | - | -------------------- |  | - | -------------------- |  | - | -------------------- | 
| |                                |  | Note |  |   | April
      30, 2013 |  |   | April
      30, 2012 |  |   | April
      30, 2011 | 
| | Salaries and directors fees   |  |      |  | $ | 414                  |  | $ | 400                  |  | $ | 399                  | 
| | Share-based
      compensation |  | (i)  |  |   | 276                  |  |   | 320                  |  |   | 259                  | 
| |                                |  |      |  | $ | 690                  |  | $ | 720                  |  | $ | 658                  | 

| | (i)  | Share-based compensation represents the expense for the
      years ended April 30, 2013 and 2012, translated at the foreign exchange
      rate on the day of the grant.     
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) | Key management personnel were not paid post-employment
      benefits, termination benefits, or other long-term benefits during the
      years ended April 30, 2013 and 2012.

|    |             
|--- | ------------
|11. | Income Taxes

Income tax expense differs from the
amount that would result from applying the Canadian federal and provincial
income tax rate to earnings before income taxes. These differences result from
the following items:

| |                                                                                  |   | Year ended |   |   | Year ended |   |   | Year ended |  
| | -------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                                                                  |   | April 30,  |   |   | April 30,  |   |   | April 30,  |  
| |                                                                                  |   | 2013       |   |   | 2012       |   |   | 2011       |  
| |                                                                                  |   |            |   |   |            |   |   |            |  
| | Net loss and comprehensive loss                                                  | $ | (4,680     | ) | $ | (1,834     | ) | $ | (3,771     | )
| | Federal and
      provincial income tax rates                                    |   | 25.00%     |   |   | 26.00%     |   |   | 27.84%     |  
| |                                                                                  |   |            |   |   |            |   |   |            |  
| | Income tax recovery based on the above rates                                     | $ | (1,170     | ) | $ | (477       | ) | $ | (1,050     | )
| |                                                                                  |   |            |   |   |            |   |   |            |  
| | Increase (decrease) due to:                                                      |   |            |   |   |            |   |   |            |  
| | Stock based
      compensation                                                   |   | 94         |   |   | 118        |   |   | 93         |  
| | Difference between
      Canadian and foreign tax rates                          |   | (172       | ) |   | (307       | ) |   | (13        | )
| | Other
      non-deductible and deductible items                                  |   | 981        |   |   | (192       | ) |   | 191        |  
| | Tax effect of deferred tax
      assets for which no benefit has been recognized |   | 267        |   |   | 858        |   |   | 779        |  
| | Income tax expense                                                               | $ | -          |   | $ | -          |   | $ | -          |  

F-23

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

| | Represented by:          |   |   |  |   |   |  |   |   | 
| | ------------------------ | - | - |  | - | - |  | - | - | 
| | Current income
      tax | $ | - |  | $ | - |  | $ | - | 
| | Deferred income tax      |   | - |  |   | - |  |   | - | 
| |                          | $ | - |  | $ | - |  | $ | - | 

Unrecognized deductible temporary
differences, unused tax losses, and unused tax credits are attributable to the
following:

| |                                                            |   | April 30, |  |   | April 30, | 
| | ---------------------------------------------------------- | - | --------- |  | - | --------- | 
| |                                                            |   | 2013      |  |   | 2012      | 
| | Unrecognized deferred income tax assets:                   |   |           |  |   |           | 
| | Non-capital losses                                         | $ | 8,635     |  | $ | 8,016     | 
| | Net capital
      losses                                   |   | 14,545    |  |   | 14,822    | 
| | Mineral properties and property,
      plant and equipment |   | 755       |  |   | 817       | 
| | Share issue costs and other                                |   | 124       |  |   | 136       | 
| | Total unrecognized
      deferred income tax assets        | $ | 24,059    |  | $ | 23,791    | 

The Canadian federal and provincial
statutory combined tax rate decreased to 25% due to legislative changes.

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, 2013, the Company has the
following tax loss carry forwards and deductions, with respect to its Canadian
and US operations and expire as follows:

| | Non-capital losses, expiring |   |        |  |   | United | 
| | ---------------------------- | - | ------ |  | - | ------ | 
| | as follows:                  |   | Canada |  |   | States | 
| | 2014                         | $ | 1,499  |  | $ | -      | 
| | 2015                         |   | 1,375  |  |   | -      | 
| | 2017                         |   | -      |  |   | 664    | 
| | 2019                         |   | -      |  |   | 24     | 
| | 2020                         |   | -      |  |   | 269    | 
| | 2021                         |   | -      |  |   | 612    | 
| | 2022                         |   | -      |  |   | 719    | 
| | 2023                         |   | -      |  |   | 684    | 
| | 2024                         |   | -      |  |   | 808    | 
| | 2025                         |   | -      |  |   | 970    | 
| | 2026                         |   | 1,584  |  |   | 313    | 
| | 2027                         |   | 1,939  |  |   | 271    | 
| | 2028                         |   | 3,132  |  |   | 536    | 
| | 2029                         |   | 3,815  |  |   | 549    | 
| | 2030                         |   | 3,127  |  |   | 645    | 
| | 2031                         |   | 2,352  |  |   | 602    | 
| | 2032                         |   | 1,056  |  |   | 678    | 
| | 2033                         |   | 2,439  |  |   | 281    | 
| |                              | $ | 22,318 |  | $ | 8,624  | 

F-24

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

| |                 |   | As at April 30, 2013 | 
| | --------------- | - | -------------------- | 
| |                 |   | Local                | 
| |                 |   | currency             | 
| | Canadian dollar | $ | 22,478               | 
| | US dollar       | $ | 8,624                | 
| |                 |   |                      | 

In addition, the Company has incurred
over $43 million in exploration expenditures in El Salvador that are not
recognized because there is uncertainty surrounding mining tax legislation in El
Salvador.

|    |                     
|--- | --------------------
|12. | Contingent Liability
|    |                     
|    | a)                  
|    |                     
|    |                     
|    |                     
|    |                     
|    |                     
|    |                     
|    | b)                  

|    |                      
|--- | ---------------------
|13. | Segmented Information

The Companys business consists of a
single reportable segment being mineral exploration and development. Details on
a geographic basis are as follows:

| | Total Assets |   | April
      30, 2013 |  |   | April
      30, 2012 | 
| | ------------ | - | -------------------- |  | - | -------------------- | 
| | Canada       | $ | 1,393                |  | $ | 1,114                | 
| | USA          |   | 98                   |  |   | 138                  | 
| | El Salvador  |   | 5,519                |  |   | 5,690                | 
| | Total        | $ | 7,010                |  | $ | 6,942                | 

F-25

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2013 and 2012                                   
|In thousands of U.S. Dollars, except share and per share
      amounts
|                                                                      

| | Equipment   |   | April
      30, 2013 |  |   | April
      30, 2012 | 
| | ----------- | - | -------------------- |  | - | -------------------- | 
| | Canada      | $ | 1                    |  | $ | 3                    | 
| | USA         |   | 17                   |  |   | 23                   | 
| | El Salvador |   | -                    |  |   | -                    | 
| | Total       | $ | 18                   |  | $ | 26                   | 

| |                   |   | Year Ended April 30, |  
| | ----------------- | - | -------------------- | -
| | Net Income (Loss) |   | 2013                 |  
| | Canada            | $ | (696                 | )
| | USA               |   | (2,928               | )
| | El Salvador       |   | (1,056               | )
| | Other             |   | -                    |  
| | Total             | $ | (4,680               | )

|    |                 
|--- | ----------------
|14. | Subsequent Event

Subsequent to the year ended April 30, 2013, 9,633,100 warrants
expired unexercised on May 2, 2013.

F-26

---

SIGNATURES

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

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

Date: July 26, 2013

---