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ANNUAL INFORMATION FORM







PACIFIC RIM MINING CORP.Suite 410  625 Howe Street
  Vancouver, British Columbia V6C 2T6 
  Telephone: (604) 689-1976
  Facsimile: (604) 689-1978

*E-Mail:**general@pacrim-mining.com**Website:** www.pacrim-mining.com*

**

For the year ended April 30, 2008

Dated July 18, 2008

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|TABLE OF CONTENTS                                                               
|--------------------------------------------------------------------------------
|                                                                                
|PRELIMINARY
      NOTES                                                         
|Currency                                                                        
|Cautionary
      Statement Regarding Forward-Looking Statements                 
|GLOSSARY
      OF TECHNICAL TERMS                                               
|CORPORATE
      STRUCTURE                                                       
|Name,
      Address and Incorporation                                           
|Intercorporate
      Relationships                                              
|GENERAL
      DEVELOPMENT OF THE BUSINESS                                       
|Three
      Year History and Significant Acquisitions                           
|DESCRIPTION
      OF THE BUSINESS                                               
|General                                                                         
|Risk
      Factors                                                              
|History
      of Losses                                                         
|Financing
      Risks                                                           
|Exploration
      Risks                                                         
|Uncertainty
      of Mineralization Estimates                                   
|Title
      to Properties                                                       
|Metal
      Price Volatility                                                    
|Government
      Law, Environmental and Other Regulatory Requirements           
|Forward
      Selling Activities                                                
|Dependence
      on Management                                                  
|Conflicts
      of Interest                                                     
|Competition
      for Other Assets                                              
|Currency
      Fluctuations May Affect the Costs of Doing Business              
|Insurance
      Coverage May Be Inadequate                                      
|Changes
      to the General Mining Law of 1872                                 
|Reclamation
      Risks at Denton-Rawhide                                       
|Increased
      Costs and Compliance Risks as a Result of Being a Public Company
|Environmental
      Risks and Hazards                                           
|Future
      Sales of Common Shares by Existing Shareholders                    
|Foreign
      Private Issuer Status                                             
|MINERAL
      PROJECTS                                                          
|El
      Salvador Properties                                                    
|Nevada
      Properties                                                         
|Production
      Highlights                                                     
|Argentina
      Properties                                                      
|Chile
      Properties                                                          
|Generative
      Program                                                        
|DIVIDENDS                                                                       
|DESCRIPTION
      OF CAPITAL STRUCTURE                                          
|Shareholder
      Rights Plan                                                   
|Stock
      Options                                                             
|Warrants                                                                        
|MARKET
      FOR SECURITIES                                                     
|Trading
      Price and Volume                                                  
|DIRECTORS
      AND OFFICERS                                                    
|Name,
      Occupation and Security Holding                                     

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- 2 -

|Cease
      Trade Orders, Bankruptcies, Penalties or Sanctions   | 45
|---------------------------------------------------------------- | --
|Conflicts
      of Interest                                      | 47
|AUDIT
      COMMITTEE INFORMATION                                | 47
|Audit
      Committee Charter                                    | 47
|Composition
      of the Audit Committee                         | 51
|Reliance
      on Certain Exemptions                             | 52
|Audit
      Committee Oversight                                  | 52
|Pre-Approval
      Policies and Procedures                       | 52
|External
      Auditor Service Fees (By Category)                | 53
|LEGAL
      PROCEEDINGS                                          | 53
|INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 54
|TRANSFER
      AGENTS AND REGISTRARS                             | 54
|MATERIAL
      CONTRACTS                                         | 54
|INTERESTS
      OF EXPERTS                                       | 54
|Names
      of Experts                                           | 54
|Interests
      of Experts                                       | 55
|ADDITIONAL
      INFORMATION                                     | 55

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- 1 -

PRELIMINARY NOTES

In this Annual Information Form, Pacific Rim Mining Corp. is
referred to either as the Company or Pacific Rim. All
information contained herein is as at April 30, 2008, unless otherwise
specified.

Currency

All sums of money which are referred to in this Annual
Information Form are expressed in lawful money of the United States, unless
otherwise specified.

Cautionary Statement Regarding Forward-Looking
Statements

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



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- political and regulatory risks associated with mining and exploration; and
- other risks and uncertainties related to the Corporations prospects,
  properties and business strategy.

Some of the important risks and uncertainties that could affect
forward looking statements are described in this Annual Information Form 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 and the
Company undertakes no obligation to update forward-looking statements if these
beliefs, estimates and opinions or other circumstances should change. Investors
are cautioned against attributing undue certainty to forward-looking
statements.

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GLOSSARY OF TECHNICAL TERMS

In this Annual Information Form, the following technical terms
have the following meanings:

|AMEX             | The American Stock Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|CIM              | Canadian Institute of Mining, Metallurgy and
      Petroleum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Dore             | A compound containing gold and silver metal and
      various impurities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|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.                                                                                                                                                                                                                                                                                  
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Ore              | A natural aggregate of one or more minerals
      which, at a specified time and place, may be mined and sold at a profit,
      or from which some part may be profitably separated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Qualified Person | Conforms to that definition under NI 43-101 for
      an individual (a) to be an engineer or geoscientist with at least five
      years experience in mineral exploration, mine development or operation or
      mineral project assessment, or any combination of these; (b) with
      experience relevant to the subject matter of the mineral project and the
      technical report; and (c) is a member in good standing of a professional
      association that, among other things, is self-regulatory, has been given
      authority by statute, admits members based on their qualifications and
      experience, requires compliance with professional standards of competence
      and ethics and has disciplinary powers to suspend or expel a member.
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|SG               | Specific gravity, a measurement of density.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|tpd              | Tonnes per day. One tonne equals 1.10231 tons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|TSX              | The Toronto Stock Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Conversion Factors

To Convert
      From
    To
    Multiply ByFeet
    Metres
    0.305Metres
    Feet
    3.281Miles
    Kilometres (km)
    1.609Kilometres
    Miles
    0.6214Acres
    Hectares (ha)
    0.405


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To Convert
      From
    To
    Multiply ByHectares
    Acres
    2.471Grams
    Ounces
      (Troy)
    0.03215Grams/Tonnes
    Ounces
      (Troy)/Short Ton
    0.02917Tonnes (metric)
    Pounds
    2,205Tonnes (metric)
    Short
      Tons
    1.1023


Mineral ElementsAg
      Silver
      Au
      GoldNI 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 Information
        Form 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 for 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 for 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.                                                       

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Cautionary Notes Concerning Resource Estimates and to U.S.
Investors

The terms Measured resource, Indicated resource and
Inferred resource used in this document are Canadian mining terms as defined
in NI 43-101 and CIM Standards on Mineral Resources and Mineral Reserves.
Mineral resources that are not mineral reserves have not been demonstrated to be
economically and legally extractable. Mineral resource estimates do not account
for mineability, selectivity, mining loss and dilution. It should not be assumed
that all or any part of a resource will ever be converted to a reserve. The
mineral resource estimates presented herein include Inferred mineral resources
that are normally considered too speculative geologically to have economic
considerations applied to them that would enable them to be categorized as
mineral reserves. There is also no certainty that these Inferred resources will
be converted to Measured and Indicated resource categories through further
drilling, or into mineral reserves once economic considerations are applied.

We advise U.S. Investors that while the terms "Measured
resource", "Indicated resource" and "Inferred resource" are recognized and
required to be reported by Canadian regulations, the U.S. Securities and
Exchange Commission does not recognize them. As such, information contained in
this document concerning descriptions of mineralization and resources under
Canadian standards may not be comparable to similar information made public by
U.S. companies subject to the reporting and disclosure requirements of the U.S.
Securities and Exchange Commission. Inferred resources have a great amount of
uncertainty as to their existence and a great uncertainty as to their economic
and legal feasibility. It cannot be assumed that all or any part of a Measured,
Indicated or Inferred resource will ever be upgraded to a higher category. U.S.
investors are cautioned not to assume that any part or all of an Inferred
mineral resource exists, or is economically or legally mineable. U.S. investors
are also cautioned not to assume that any part or all of the mineral deposits in
the Measured resource or Indicated resource categories will ever be converted
into reserves.

CORPORATE STRUCTURE

Name, Address and Incorporation

The legal and commercial name of the Company is Pacific Rim
Mining Corp..

The Company was formed by the amalgamation (the
Amalgamation) of Dayton Mining Corporation (Dayton) and
Pacific Rim Mining Corp. (Pacific Rim) (together, the Predecessor
Companies) on April 11, 2002 under the Company Act(British
Columbia).

Effective March 29, 2004, the British Columbia legislature
enacted the Business Corporations Act (British Columbia) (the New
Act) and repealed the former Company Act(British Columbia) which
previously governed the Company. The New Act removed many of the restrictions
contained in the former act, including restrictions on the residency of
directors, the place of annual general meetings and limits on authorized share
capital. The New Act also uses new forms and terminology. Under the New Act,
every company incorporated, amalgamated or continued under the former act must
complete a mandatory transition rollover under the New Act to substitute a
Notice of Articles for its Memorandum within two years of March 29, 2004, after
which existing articles may be altered to take advantage of new provisions
contained in the New Act. Under the New Act, the directors of the Company were
permitted to approve and complete this mandatory transition rollover and,
accordingly, the Company filed a transition application with the British
Columbia Registrar of Companies effective July 26 2004. At the annual general
meeting held on September 22, 2004, the Companys shareholders approved the
removal of pre-existing company provisions that applied to the Company relating
to restrictions in the former act and no longer required under the New Act. In
addition, the shareholders approved

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new articles (the New Articles) to bring the Companys
charter documents into line with the New Act and, as permitted by the New Act,
altered the authorized capital of the Company from 1,000,000,000 common shares
without par value to an unlimited number of common shares without par value and
the alteration of the Notice of Articles. The changes were effected and the
British Columbia Registrar of Companies issued a new Notice of Articles on
January 20, 2005.

The Company is domiciled in British Columbia, Canada and is a
company organized under the New Act. The Companys principal place of business
is located at Suite 410, 625 Howe Street, Vancouver, British Columbia, V6C 2T6
and its registered and records office is located on the 10th Floor,
595 Howe Street, Vancouver, British Columbia, V6C 2T5. The Company through its
subsidiaries has administration offices in Nevada and El Salvador.

Intercorporate Relationships

The Company has the following material subsidiary
companies:

Name
    Jurisdiction of incorporationor
      organization
    Percent of voting shares owned by
      the CompanyPacific Rim Exploration Inc.
    Nevada, USA
    100% indirectly owned throughPac Rim
      Cayman LLCDayton Mining (U.S.) Inc. (1)
    Nevada, USA
    100% directly ownedPac Rim Cayman LLC
    Nevada, USA
    100% directly ownedPacific Rim El Salvador S.A. de C.V. (2)
    El Salvador
    100% indirectly owned throughPac Rim
      Cayman LLCDorado Exploraciones SA de CV (3)
    El Salvador
    100% indirectly owned throughPac Rim
      Cayman LLC


|(1) | This subsidiary holds the Companys 49% interest
        in the Denton-Rawhide joint venture.                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | This subsidiary holds the Companys interest in
        the El Dorado exploration concession that is under application for conversion
        to an exploitation license. 
|(3) | This subsidiary holds the Companys interests in
        the El Dorado exploration concessions, the Santa Rita project and the
        Zamora project, all in El Salvador.

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

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

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

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- 8 -

The Companys current principal activities are exploration
activities mainly focused in El Salvador. The Company continues to search for
exploration projects to acquire in the Americas that may warrant drilling.

The Companys principal exploration property currently is the
El Dorado gold property (the El Dorado Property) located in El
Salvador. Predecessor Dayton originally acquired two exploration licenses
comprising the El Dorado Property through the acquisition of Mirage Resource
Company, in April 2000. In September 2005, the Company was granted three new
exploration licenses that expanded the El Dorado Property to 144 square
kilometres, replacing the original property area of 75 square kilometres. In
accordance with El Salvadoran law, on December 22, 2004 the Company presented a
request for the conversion of a portion of the El Dorado exploration licenses to
an exploitation concession (Exploitation Concession), which granting
would provide the Company the necessary permit to commence mining activities.
The conversion process is currently pending ministerial acceptance of the
Companys Environmental Impact Study (EIS) and issuance of the
environmental permits. El Salvadoran administrative rules and procedures give
the Company exclusive rights to the Exploitation Concession area while the
environmental permitting process is underway.

The Companys focus at El Dorado during fiscal 2008 was the
completion of drilling at the Balsamo deposit and publication of an updated
resource estimate incorporating the Balsamo deposit into the projects existing
resources. The Balsamo deposit delineation was completed in September 2007 and
the updated resource estimate was published in January 2008. Resources at the El
Dorado project grew to 1.4 million gold equivalent ounces in the Measured and
Indicated resource categories combined plus a further 0.3 million gold
equivalent ounces in the Inferred resource category. See El Dorado Property, El
Salvador for additional information about the January 2008 resource
estimate.

Following completion of the Balsamo deposit delineation
drilling the Companys El Dorado drill program focus returned to the exploration
for new gold zones within the central part of the project area, in the vicinity
of the Minita, South Minita and Balsamo deposits that form the foundation of the
projects gold and silver resources. While recent exploration drilling at El
Dorado has intersected many blind gold-bearing veins, no new deposits at El
Dorado have been delineated since completion of the Balsamo deposit
drilling.

Subsequent to the end of fiscal 2008 the Company suspended
drilling activity at the El Dorado project as part of an overall planned slow
down in exploration activity in El Salvador that will continue until such time
as the Government of El Salvador signals its willingness to proceed with
development of El Dorado by granting the long sought-after mining permit.

Equipment used for exploration drilling is rented or contracted
as needed.

In May 2008 the Company restarted work on the El Dorado gold
project feasibility study, which had been put on hold in March 2007 in order to
drill define the Balsamo gold deposit, quantify its gold resources and include
them in the feasibility study. The completion of the feasibility study will
provide the Company and its shareholders with a mine plan for El Dorado based on
the updated resource estimate and current input and commodity prices. The El
Dorado feasibility study is being led by SRK Consulting and will include an
underground mine plan for the Minita, South Minita and Balsamo deposits,
processing facility and tailings impoundment designs, and an economic analysis
of the proposed combined operation. It is expected to be completed by December
2008.

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- 9 -

In each of the 12 month periods ended April 30, 2006, April 30,
2007, and April 30, 2008, the Company spent approximately $5.9 million, $10.4
million, and $11.4 million respectively, on work programs to advance the El
Dorado Property.

Pacific Rims exploration activities elsewhere in El Salvador
during the past fiscal year included an extensive surface vein trenching program
at the Santa Rita project as well as geological mapping, sampling and target
generation programs at both Santa Rita and the Companys Zamora-Cerro Colorado
project.

The Santa Rita project is a 48.6 square kilometre (4,860
hectare) exploration license in central El Salvador staked by Pacific Rim in
July 2005 after its regional reconnaissance program in El Salvador resulted in
the discovery of gold-bearing quartz-calcite boulders. The southeast corner of
the Santa Rita exploration license is contiguous with the northwest corner of
the Companys El Dorado project, though the two projects host separate
epithermal systems.

During fiscal 2008 the Company undertook a surface trenching
and sampling program at the Santa Rita project which revealed the Trinidad vein,
an epithermal quartz-calcite vein system at Santa Rita that was discovered by
Pacific Rim in fiscal 2006, to be significantly wider than previously
understood, with high gold grades across its entire width in the southern
portion of the vein. The average width of the vein in the 26 trenches reported
on is 3.4 meters (ranging from 1.00 to 5.70 meters across) and gold grades
ranged from less than 1 g/t to 38.19 g/t gold. Subsequent to the end of fiscal
2008, Pacific Rim undertook a 9-hole drill program that tested the Trinidad vein
system over a strike length of approximately 500 meters. Results are currently
pending and will be released when received and compiled.

Pacific Rims fiscal 2008 Santa Rita trenching program marked
the Companys resumption of exploration work at the project following its
voluntary suspension of work there in December 2006, when Santa Rita became the
target of intermittent anti-mining protests led by a small El Salvadoran
Non-Governmental Organization (NGO) utilizing protestors imported from outside
the Santa Rita area. During the latter half of fiscal 2007 and the first half of
fiscal 2008, the Company purchased the surface rights over the high grade
section of the Trinidad vein, giving the Company unlimited access to the
property, upgraded and constructed access roads, and continued its public
service and charitable works in the Santa Rita area. By mid-fiscal 2008, the
Company assessed little risk to a resumption of limited exploration work and
commenced the trenching program described above.

In September 2006, Pacific Rim signed an amendment to the
Zamora option agreement to acquire a 100% interest in the Cerro Colorado
exploration licenses while maintaining the Companys interest in the Zamora
claims in El Salvador.

Upon TSX approval of the original agreement in fiscal 2006,
Pacific Rim made a payment of 50,000 shares of the Company to the property
vendor. Under the terms of the amended agreement the Company maintains an option
to purchase the Zamora and Cerro Colorado exploration licenses by making advance
royalty payments as follows: 100,000 shares plus 100,000 warrants upon
regulatory approvals of the arrangement: 100,000, 140,000, 200,000 and 300,000
shares on the first through fourth anniversaries of the agreement, respectively
and 400,000 shares on the fifth and subsequent anniversaries of the agreement
until the earlier of termination of the option, commencement of production or
expiry of the exploration concessions. Title to 100% of the Zamora and Cerro
Colorado claims will be transferred to the Company at such time as a positive
production decision is made by the Company. Upon achievement of commercial
production, the vendor will receive a 3% net smelter royalty to a maximum
purchase price of $10,000,000 (inclusive of the value of the advance royalty
payments made in shares).

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The Company, through its wholly owned subsidiary, Dayton Mining
(U.S.) Inc., holds a 49% joint venture interest in the Denton-Rawhide Mine,
Nevada, a residual heap leach gold-silver operation. Ore extraction at
Denton-Rawhide ceased in May 2003 and the operation has been in the residual
leaching phase, wherein gold is recovered from stockpiled ore on the heap leach
pad. Predecessor Dayton acquired the 49% interest in the Denton-Rawhide property
through the issue of shares in 2000.

In each of the 12 month periods ended April 30, 2006, April 30,
2007 and April 30, 2008, revenues from bullion (gold and silver) sales totaled
$8.0 million, $8.3 million and $7.7 million, respectively. The average price of
gold received, per ounce, was $497 in the 12 month period ended April 30, 2006,
$644 in the 12 month period ended April 30, 2007 and $750 in the 12 month period
ended April 30, 2008.

On October 28, 2004, Pacific Rim and Kennecott, Denton-Rawhide
joint venture partners (Rawhide Joint Venture), signed a Property Purchase and
Sale Agreement (the Agreement) with Nevada Resource Recovery Group LLC
(NRRG) of Reno, NV concerning the lands occupying the Denton-Rawhide open
pits, which are no longer in operation. NRRG intends to operate an approved
landfill business utilizing the open pits as a site for the disposal of
non-hazardous municipal waste. In return, NRRG will pay tipping fees to the
Rawhide Joint Venture over the life of the landfill operation, which Pacific Rim
estimates will amount to US $103 million in cash to the Companys credit over
the multi-decade life of the proposed operation, as well as a $1.5 million
up-front payment to the Rawhide Joint Venture ($0.5 million upon signing of the
Agreement paid in trust, and $1.0 million upon closing). The Agreement includes
a provision whereby NRRG can buyout future tipping fees according to a net
present value formula that is currently estimated at approximately $29 million
to the Company.

In November 2007 the Rawhide Joint Venture and NRRG signed an
amendment to the Agreement extending the closing date of the sale to on or
before October 31, 2008. All other material details of the Agreement remain the
same. Closing of the Agreement is subject to three key provisions including the
successful purchase by the Rawhide Joint Venture of a number of small parcels of
federal land contained within the Denton-Rawhide open pits, the subject of the
Agreement. The purchase of these land parcels from the Bureau of Land Management
(BLM) has proven to be a lengthier process than originally estimated.
Nonetheless much headway has been made and the Rawhide Joint Ventures purchase
of the BLM land slivers, currently in the final stages, is expected to be
completed in the first half of fiscal 2009. The remaining two provisions of the
Agreement include NRRGs obligation to obtain municipal waste contracts and
approval from the State of Nevada for use of the site as a municipal landfill,
both of which have been completed in draft or provisional form awaiting the
closing of the Agreement.

Redeveloping the Denton-Rawhide mine as a municipal solid waste
landfill is expected to provide a number of jobs, local and state tax revenues
and a local community host fee over the multi-decade term of the agreement. The
executed agreement provides the Rawhide Joint Venture the right to continue to
produce gold through residual leaching of the heap leach pads at Denton-Rawhide,
and restart mining activities, if warranted, on land adjacent to the land
conveyed to NRRG. The Rawhide Joint Venture will retain certain obligations
related to mining on the property conveyed to NRRG, whilst NRRG will accept all
obligations and liabilities related to the future impact of the landfill.

During fiscal 2006 Pacific Rim signed a final Share Purchase
Agreement to sell to an arms-length private corporation 100% of the shares in
the Companys subsidiaries that owned the Andacollo gold mine located in central
Chile, for total consideration of $5.4 million. Upon execution of the final
Share Purchase Agreement, Pacific Rim received a $2.1 million payment from the
purchaser and during fiscal 2007 a scheduled installment of $1.0 million was
received. The agreement provided for a final payment of $1.4 million which was
made to the Company in September 2007 and relieves Pacific Rim of any
further reclamation or environmental responsibilities at Andacollo. The
Andacollo mine, which was shut down in December 2000 by Pacific Rims
predecessor company, was a non-core asset that warranted monetization.

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In July 2008, the Company announced the suspension of its El
Dorado drill program which had been ongoing continuously since April 2002. There
are no major capital expenditures or divestitures currently in progress. The
Company anticipates that its fiscal 2009 exploration plans as outlined above
will cost approximately $1.0 million and that general and administrative costs
will decrease over fiscal 2008 expenditures due to anticipated staffing
reductions. If regulatory and political conditions warrant, and adequate
financing is available, the Company will resume aggressive exploration of its El
Dorado, Santa Rita and Zamora-Cerro Colorado projects in El Salvador, which will
result in increased exploration and general and administrative expenditures over
those currently anticipated for fiscal 2009. In order to undertake an expanded
exploration program the Company may require additional financing during fiscal
2009. Pacific Rim forecasts production levels, revenue and cash flow from the
Denton-Rawhide gold mine roughly 6 months in advance due to the variability in
recoveries that are inherent in a residual heap leach operation, and the
volatility in gold price. Though the Denton-Rawhide operation is expected to
contribute funds over the coming fiscal year that will be used for exploration
or general and administrative expenses, the operations contributions to the
Companys cash available for exploration is decreasing annually and in fiscal
2009 it is not expected to contribute significant amounts to the Companys
available working capital. The Company anticipates cash flow from tipping fees
related to the sale of the Denton-Rawhide open pits, if as and when the
Denton-Rawhide Property Purchase and Sale Agreement closes as expected in
October 2008. Substantial additional financing will be required if the Company
is able to commence development activities (construction of an access / haulage
ramp) at El Dorado during the coming fiscal year.

On March 1, 2006 the Company closed a short form prospectus
equity financing in which total gross proceeds of CDN $20,076,600 were raised
through the sale of 23,900,000 common shares of the Company at a price of
CDN$0.84 per share. The financing was undertaken through a syndicate of
underwriters led by BMO Nesbitt Burns Inc. and including Canaccord Capital
Corporation, Haywood Securities Inc. and Salman Partners Inc. (collectively, the
Underwriters). In consideration for their services, the Underwriters
received a 6% cash commission and 1,195,000 broker warrants entitling the
Underwriters to purchase up to 1,195,000 common shares of the Company at a price
of CDN$0.84 per common share on or before March 1, 2007. All 1,195,000 broker
warrants were exercised during fiscal 2007.

On February 29, 2008 the Company closed a private placement in
which total of CDN$7,046,550 was raised through the issuance of 6,711,000 units
(Units). Each Unit consists of one common share (a Share) and one share
purchase warrant (Warrant), with each Warrant exercisable into one Share for a
period of 18 months at an exercise price of CDN$1.35. The Company also issued
350,350 warrants (Finders Warrants) and paid an aggregate of CDN$367,867.50
in cash to certain finders in connection with the private placement. Each
Finders Warrant is exercisable into one Share for a period of 18 months at an
exercise price of CDN$1.11. The Shares, Warrants, Finders Warrants and all
common shares underlying the Warrants and Finders Warrants were subject to a
four-month hold period as required under applicable Canadian securities law,
expiring June 30, 2008.

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DESCRIPTION OF THE BUSINESS

General

The Company is a British Columbia based mineral resource
corporation engaged, through its subsidiaries, in the acquisition, exploration
and, if warranted, development of precious metals properties, primarily gold and
silver. See General Development of the Business  Three Year History
and Mineral Projects.

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. In particular, the following risk factors
apply:

History of Losses

The Company has a history of losses and may continue to incur
losses for the foreseeable future. As of April 30, 2008, the Company had an
accumulated deficit of $74.9 million. The Companys sole source of operating
revenue is derived from its interest in Denton-Rawhide, which provided revenues
from bullion (gold and silver) sales of $7.7 million, $8.3 million and $8.0
million provided in each of the fiscal years ended April 30, 2006, April 30,
2007 and April 30, 2008, respectively. Revenue for fiscal 2008 was slightly
lower than the 2007 and 2006 fiscal periods, in spite of significant
improvements in the average realized gold price ($750 per ounce for fiscal 2008
compared to $644 per ounce for fiscal 2007 and $497 per ounce for fiscal 2006),
due to declining gold production from the Denton-Rawhide mine (8,339 ounces of
gold for fiscal 2008 compared to 11,768 ounces for fiscal 2007 and 15,117 ounces
for fiscal 2006). Production at Denton-Rawhide decreased during the past fiscal
year and is expected to continue to decline as the operation progresses through
the residual leach phase. Because of uncertainties as to the total amount of
recoverable gold on the Denton-Rawhide heap leach pile, the ultimate vs.
projected recovery rate and other factors beyond the Company's control, the
Company is unable to reliably estimate its share of gold production from
Denton-Rawhide for the coming fiscal year and beyond. There can be no assurance
that the Company will realize revenue growth or achieve profitability.

Financing Risks

The Companys sources of financing include current cash and
cash equivalents, temporary investments and bullion balances combined with the
expected cash generated from leaching activities at Denton-Rawhide. The Company
utilizes these funding sources to finance its exploration activities and general
and administrative expenses, and though many corporate costs are fixed, the
Company is able to adjust its exploration expenses to reflect its current and
anticipated working capital balances. Additional financing may be required in
order to meet the Companys immediate and long term exploration and general and
administrative costs, or the Companys exploration program expenditures may need
to be reduced. Furthermore, current working capital balances are not sufficient
to fund significant development activities such as the construction of an
underground access/haulage ramp at the El Dorado Property. There can be no
assurance that the Company's exploration programs will result in locating
additional commercially exploitable mineral ores or that the Companys
properties will be successfully developed. There can also be no assurance that
the underlying assumed levels of expenses will prove to be accurate.

The Company has working capital of $4.6 million as of fiscal
year end April 30, 2008. There is no assurance that operating cash flow from
Denton-Rawhide will be sufficient (see Metal Price Volatility) or that

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additional funding will be available to the Company in the
future to conduct long term exploration and development of its projects or to
fulfill its obligations under any applicable agreements. Although the Company
has been successful in the past in obtaining financing through the sale of its
securities, there can be no assurance that it will be able to obtain adequate
financing in the future or that the terms of such financing will be favourable.
Failure to obtain such additional financing could result in delay or indefinite
postponement of further exploration and development of its projects with a
possible loss of some properties.

Exploration Risks

Resource exploration, development, and operation is a highly
speculative business that involves significant risks, which even a combination
of careful evaluation, experience and knowledge may not eliminate. While the
discovery of precious; metals and other minerals may result in substantial
rewards, few properties that are explored are ultimately developed into
producing mines. As described under Mineral Projects, except for the
Denton-Rawhide mine, which has ceased production and is in a residual leaching
phase, and the El Dorado Property, which contains proven and probable reserves,
none of the Companys properties have a known body of ore and any proposed
exploration programs are an exploratory search for ore. Major expenses may
be required to locate and establish economically viable mineral deposits, to
develop metallurgical processes and to construct mining and processing
facilities at a particular site. It is impossible to ensure that the exploration
or development programs planned by the Company will result in a profitable
commercial mining operation. The potential for any project to eventually become
an economically viable operation depends on numerous factors including: the
quantity and quality of the minerals discovered if any, the proximity to
infrastructure, metal and mineral prices (which vary considerably over time) and
government regulations. The exact effect these factors can have on any given
exploration property can not accurate be predicted but the effect can be
materially adverse.

Except for the Denton-Rawhide mine, which has ceased mining
activity and is in a residual leaching phase, and the El Dorado Project, on
which proven and probable reserves were defined 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 and reserve 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
reserves will in fact be realized or that an identified mineral resource will
ever qualify as a commercially mineable (or viable) ore body which can be
legally and economically exploited. Estimates of mineral resources and reserves,
production and capital costs can also be affected by such factors as
environmental permitting regulations and requirements, weather, environmental
factors, unforeseen technical difficulties, unusual or unexpected geological
formations and work interruptions. In addition, the grade of ore ultimately
mined may differ from that indicated by drilling results. There can be no
assurance that the percentage of gold recovered in small scale laboratory tests
will be duplicated in large scale tests under on-site conditions or in
production scale ore recovery.

The El Dorado Project is the Companys principal exploration
property, which along with its secondary grassroots exploration projects Santa
Rita and Zamora-Cerro Colorado, is located in El Salvador. 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. See
Mineral Projects  El Salvador PropertiesEl Salvador Mining
Regime. The Company

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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. The Company believes it has
and will continue to carefully evaluate the political and economic environment
in considering properties for acquisition. Nonetheless, there can be no
assurance that additional significant restrictions will not be placed on the
Company's existing or future properties or its operations. Such restrictions may
have a materially adverse effect on the Company's business and results of
operation.

Mining operations generally involve a high degree of risk. The
Companys operations are subject to all of the physical hazards and risks
normally encountered in the exploration, development and production of precious
metals and other minerals including unusual or unexpected geological formations,
seismic activity, rock bursts, cave-ins, flooding and other conditions involved
in the drilling and removal of material, any of which could result in damage to,
or destruction of, mines and other producing facilities, 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 additional revenues or achieve profitability.

Uncertainty of Mineralization Estimates

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

Title to Properties

The Company 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 El Salvadoran government is a requirement
  for approval of the exploitation concession by the economic ministry. The Company
  cannot say with certainty if or when the authorities in El Salvador will approve
  the El Dorado EIS or grant the Company an exploitation concession. The exploitation
  concession application area covers ground protected by an exploration licence
  granted to the Company that nominally expired in January 2005. Legal opinions
  secured by the Company indicate that El Salvadoran administrative rules and
  procedures assure the Company 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 the Companys legal rights to explore within the exploitation
  concession application area will be upheld indefinitely pending the outcome
  of the application process.

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The Company's exploration properties may be subject to prior
unregistered agreements or transfers or local land claims and title may be
affected by undetected defects. 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.

Metal Price Volatility

The Company's ability to generate profits from its residual
leach operations at Denton-Rawhide or any future mining operations is directly
related to the international price of gold, which is outside the Companys
control. The gold price has a history of extreme volatility and there can be
significant upward or downward movements in price in a short period of time.
During the year ended April 30, 2008, the annual high and low prices for gold
per ounce for the 10:30 a.m. fixings on the London Bullion Market were
US$1,023.50 and US$642.85, respectively. On July 18, 2008, the 10:30 a.m. fixing
on the London Bullion Market was US$961.50 and last spot market price of gold on
the New York Commodities Exchange was US$954.60 per ounce. Gold prices
historically have fluctuated widely and are influenced by a number of factors
beyond the control or influence of the Company. Some factors that affect the
price of gold include: industrial and jewelry demand; central bank lending or
purchases or sales of gold bullion; forward or short sales of gold by producers
and speculators; future level of gold production; and rapid short-term changes
in supply and demand due to speculative or hedging activities by producers,
individuals or funds. Gold prices are also affected by macroeconomic factors
including: confidence in the global monetary system; expectations of the future
rate of inflation; the availability and attractiveness of alternative investment
vehicles; the general level of interest rates; the strength of, and confidence
in the U.S. dollar, the currency in which the price of gold is generally quoted,
and other major currencies; global and regional political or economic events;
and costs of production of other gold producing companies whose costs are
denominated in currencies other than the U.S. dollar.

While gold production, sales and prices are by far the most
significant factor affecting the financial performance of the Company,
approximately 14% of the Companys sales revenues were derived from silver
during the 2008 fiscal year. Silver prices are determined in the international
marketplace through the interaction of supply and demand for this metal. The
Company has no influence over the price it receives from the sale of silver.

Government Law, Environmental and Other Regulatory
Requirements

The Company's El Dorado, Santa Rita and Zamora-Cerro Colorado
Projects are located in El Salvador and the Company holds or 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.

The management of the Company uses its collective experience in
international mineral exploration and development to assess the risks that exist
in various countries. When determining whether or not to proceed

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with an investment in a particular country, management compares
the potential benefits of a countrys geological potential with the long-term
political and economic risks. However, as with all other types of international
business operations, currency fluctuations, exchange controls, change to tax
regimes and political action could impair the value of the Company's assets in
such foreign jurisdictions.

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.
The Company strives to ensure, and to the best of the Company's knowledge, it is
operating in compliance with all applicable environmental and mine closing
regulations.

The Company has experienced significant delays in the
processing of its El Dorado EIS and exploitation concession application, and may
as a result be forced to consider legal recourse through CAFTA and/or El
Salvadoran law. There can be no assurance that the Company will be successful in
obtaining its sought-after El Dorado exploitation concession, or that any legal
challenges it may choose to undertake in order to resolve the Government of El
Salvadors failure to process the El Dorado EIS and/or exploitation concession
application will be successful.

Forward Selling Activities

The Companys primary business is the acquisition, exploration
and development of gold and silver properties and its revenue to date has almost
entirely been derived from proceeds from, or related to, the sale of gold and
silver. See Metal Price Volatility. Gold and silver prices are subject
to significant volatility and these changes, to the extent that the Companys
production is unhedged, can significantly affect the Companys profitability and
cash flow. Gold prices declined steadily between the latter part of 1996 and
August 1999 to the lowest price in twenty-one years, and until the spring of
2002 essentially remained near or below $300 per ounce. Since 2002, the gold
price has steadily increased, albeit with intermittent volatility and price
corrections, and is now trading at 25 year highs. Monthly prices over the past
financial year for gold have averaged from US$642.85 to US$1,023.50 per ounce.
Silver prices also have been volatile.

The Company may utilize forward sales contracts to protect the
selling price of a portion of its gold production from the Denton-Rawhide mine.
Silver production is sold in the spot market. The market risk to the Companys
cash flow from forward selling relates to the possible failure of the
counter-parties to honour their commitment to purchase the gold when the price
exceeds the appropriate spot price at maturity. Counter-parties to any forward
sale contracts are large international credit worthy institutions. The market
risk to the Company of any gold forward sale contracts would relate to the
possibility that the Company may not produce sufficient gold at the appropriate
time to meet the obligations as they arise.

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Dependence on Management

The success of the operations and activities of the Company is
dependent to a significant extent on the efforts and abilities of its management
team. See Directors and Officers for details of Companys current
management. Investors must be willing to rely to a significant extent on their
discretion and judgment. The Company does not maintain key employee insurance on
any of its employees.

Conflicts of Interest

The Company's directors and officers may serve as directors or
officers of other resource companies or have significant shareholdings in other
resource companies and, to the extent that such other companies may participate
in ventures in which the Company may participate, the directors of the Company
may have a conflict of interest in negotiating and concluding terms respecting
the extent of such participation. In the event that such a conflict of interest
arises at a meeting of the Company's directors, a director who has such a
conflict will declare their potential conflict and abstain from voting for or
against the approval of such participation or such terms. From time to time
several companies may participate in the acquisition, exploration and
development of natural resource properties thereby allowing for their
participation in larger programs, permitting involvement in a greater number of
programs and reducing financial exposure in respect of any one program. It may
also occur that a particular company will assign all or a portion of its
interest in a particular program to another of these companies due to the
financial position of the company making the assignment. In accordance with the
laws of British Columbia, the directors of the Company are required to act
honestly, in good faith and in the best interests of the Company. In determining
whether or not the Company will participate in a particular program and the
interest therein to be acquired by it, the directors will primarily consider the
degree of risk to which the Company may be exposed and its financial position at
that time. See Directors and Officers.

Competition for Other Assets

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

Currency Fluctuations May Affect the Costs of Doing
Business

The Company's offices and primary activities are currently
located in Canada, the United States, and El Salvador. Gold and silver are sold
in international markets at prices denominated in U.S. dollars. However, some of
the costs associated with the Company's activities in Canada may be denominated
in currencies other than the U.S. dollar. Any appreciation of these currencies
vis a vis the U.S. dollar could increase the Company's cost of doing business in
these countries. In addition, the U.S. 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.

Insurance Coverage May Be Inadequate

The mining industry is subject to significant risks that could
result in:

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- damage to or destruction of property and facilities;
- personal injury or death;
- environmental damage and pollution;
- delays in production; or
- expropriation of assets and loss of title to mining claims.

While where applicable the Company has purchased property,
business interruption (Denton-Rawhide only) and liability insurance that it
believes is appropriate for the level of risk incurred, it 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.

Changes to the General Mining Law of 1872

The majority of the Denton-Rawhide mine's processing activities
are located on unpatented lode and millsite claims located on U.S. federal
public lands. The right to use such claims is granted under the General Mining
Law of 1872. Unpatented mining claims are unique property interests in the
United States, and are generally considered to be subject to greater title risk
than other real property interests because the validity of unpatented mining
claims is often uncertain. This uncertainty arises, in part, out of the complex
federal and state laws and regulations under the General Mining Law and the
interaction of the General Mining Law and other federal and state laws, such as
those enacted for the protection of the environment. Unpatented mining claims
are subject to possible challenges of third parties or contests by the federal
government. The validity of an unpatented mining claim, in terms of both its
location and maintenance, is dependent on strict compliance with a complex body
of federal and state statutory or decisional law. In addition, there are few
public records that definitively control the issues of validity and ownership of
unpatentable mining claims. The U.S. Congress is considering a number of
proposed amendments to the General Mining Law. If adopted, such legislation
could, among other things: impose a royalty on the production of metals or
minerals from unpatented mining claims; reduce or prohibit the ability of a
mining company to expand its operations; and require a material change in the
method of exploiting the reserves located on unpatented mining claims. All of
the foregoing could adversely affect the economic and financial viability of
operations at Denton-Rawhide.

Reclamation Risks at Denton-Rawhide

The Denton-Rawhide mine is an open pit heap leach operation
that ceased active mining in October 2002. A reclamation and closure plan for
Denton-Rawhide has been submitted to the Bureau of Land Management and the
Nevada Department of Environmental Protection and is currently awaiting
approval. The Coordinating Committee of the Denton-Rawhide mine determined, for
the purposes of the Reclamation Trust, total reclamation and severance costs for
the Denton-Rawhide mine of $9.8 million, of which 49% are to the account of the
Company. $4.5 million in reclamation and severance costs have already been
incurred, leaving an estimated $5.3 million to be expended in the future, of
which $2.6 million is to the Companys account. This determination of
reclamation and severance costs is for the purposes of the Reclamation Trust
only and although the Companys closure fund balance of $3.8 million is believed
to be sufficient to cover all remaining closing costs for which it is
responsible, the estimate may not be a true reflection of actual reclamation and
closure costs of the Denton-Rawhide mine. See Mineral Projects  Nevada
Properties  Denton-Rawhide Mine, Nevada for additional information.

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Increased Costs and Compliance Risks as a Result of Being a
Public Company

Legal, accounting and other expenses associated with public
company reporting requirements have increased significantly in the past few
years. The Company anticipates that general and administrative costs associated
with regulatory compliance will continue to increase with recently adopted
corporate governance requirements, including requirements under the
Sarbanes-Oxley Act of 2002, as well as new rules implemented by the
United States Securities and Exchange Commission, Canadian Securities
Administrators, the AMEX and the TSX. The Company expects these rules and
regulations to significantly increase its legal and financial compliance costs
and to make some activities more time-consuming and costly. There can be no
assurance that the Company will continue to effectively meet all of the
requirements of the regulations to which it must comply, including
Sarbanes-Oxley Section 404 and Multilateral Instrument 52-109. Any
failure to effectively implement new or improved internal controls, or to
resolve difficulties encountered in their implementation, could harm the
Companys operating results, cause the Company to fail to meet reporting
obligations or result in management being required to give a qualified
assessment of the Companys internal controls over financial reporting or the
Companys independent auditors providing an adverse opinion regarding
managements assessment. Any such result could cause investors to lose
confidence in the Companys reported financial information, which could have a
material adverse effect on the Companys stock price. The Company also expects
these new 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 Multilateral Instrument 52-109
could be impaired, which could cause the Company's stock price to decrease.

Environmental Risks and Hazards

The Companys exploration, development and operational
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 of operators of the properties.

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

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

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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.

Future Sales of Common Shares by Existing Shareholders

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

Foreign Private Issuer Status

The Company is currently designated a foreign private issuer
as defined in Rule 3B-4 under the U.S. Securities and Exchange Act of 1934 (as
amended) for the purposes of U.S. securities law, which allows the Company to
use the Multi-Jurisdictional Disclosure System (MJDS). In order to maintain
this status, the Company must not have any of the following: (i) a majority of
its executive officers or directors are U.S. citizens or residents, (ii) more
than 50% of its assets are located in the U.S., or (iii) the business of the
Company is principally administered in the U.S. The Company may in the future
lose its foreign private issuer status if it fails to meet any of the
aforementioned criteria.

The regulatory and compliance costs to the Company under U.S.
securities laws as a U.S. domestic issuer may be significantly more than the
costs the Company incurs as a Canadian foreign private issuer eligible to use
the MJDS. 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. In addition, the Company may lose the
ability to rely upon exemptions from the American Stock Exchange corporate
governance requirements that are available to foreign private issuers. This
could have a materially adverse impact on the Companys corporate overhead costs
and its ability to raise future financing.

MINERAL PROJECTS

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

The Companys principal activities are exploration activities
currently chiefly focused in El Salvador. The Company continues to search for
exploration projects to acquire in the Americas that may warrant drilling.

The following is a description of the Companys mineral
properties and the nature of the Companys interests in such properties.

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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 fulfillment of the technical exploration program, which may be
modified on an annual basis. El Salvadorian mining laws do not discriminate
between nationals and foreigners.

The Salvadoran Mining Law, updated in 2001, provides a period
of eight years upon granting of an exploration license before which the holder
must convert the license into an exploitation concession. The application to
convert an exploration license to a 30-year (or longer) exploitation concession
must be accompanied by, among other things, a feasibility study, a development
work program and an approved environmental impact study. The royalty levied on
mineral production is 2% of net smelter returns.

The granting of an exploitation concession by the Ministry of
Economy (Division of Hydrocarbons and Mines) confers to the applicant the right
to produce and sell valuable commodities recovered from the natural resources
within the area of the Concession. The granting of an exploitation concession
(required to commence mining activities) requires an environmental permit, based
on an EIS approved by the Environmental and Natural Resources Ministry (MARN),
in addition to the applicant satisfying a number of other conditions. The
concession requires that the mine and associated facilities be built and
operated in accordance with the conditions of the environmental permit and that
development activities commence within 12 months of the date of the final
concession agreement.

In November 2007 the proposed new mining law was submitted to a
joint Environmental and Economic Commission of the El Salvadoran legislative
assembly. In January 2008 a new commission was established for the sole purpose
of evaluating the draft mining law. The new commission met regularly between
January and April 2008 to review the law, hear submissions from interested
stakeholders, and ultimately to provide a recommendation to the legislative
assembly. To date, the new commission has not concluded its review nor
recommended the mining law revisions for vote in the legislative assembly.

Advocates for the new mining law regard it as an important
advancement making El Salvador an international model for environmentally and
socially responsible mining and Pacific Rim supports this process.

El Dorado Property, El Salvador

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

The information presented below summarizes information prepared
under the supervision of Mr. Steven Ristorcelli, P.Geo., of Mine Development
Associates. This information is included in a report entitled

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Technical Report Update on the El Dorado Project Gold and
Silver Resources dated March 3, 2008 coauthored by Mr. Ristorcelli and Mr.
Peter Ronning, P.Eng. each of whom are independent Qualified Persons as defined
in NI 43-101. Information presented under the headings Recent Exploration and
Drilling, January 2008 Updated Resource Estimate, Environmental Impact Study
and Mining Permit and Summary has been updated by the Company to reflect
developments that have occurred since March 3, 2008, being the date of the most
recent El Dorado Technical Report.

Predecessor Dayton upon its acquisition of Mirage Resource
Corp. in April 2000 acquired the El Dorado Property. Mirage initially acquired
the El Dorado Property by option agreement dated June 23, 1993 from Zinc Metal
Company (ZMC) of Toronto, and its wholly owned subsidiary, New York and
El Salvador Mining Company. The option was exercised on August 25, 1994 in
accordance with its terms by payment of $175,000 to ZMC and by the parties
having incurred aggregate expenditures in excess of $800,000. Pursuant to the
terms of the option agreement, the El Dorado Property is subject to annual
advance minimum royalty payments, which is the greater of $50,000 per year or a
3% net smelter return royalty in favour of ZMC. The Company has the right to
purchase the royalty from ZMC for $4,000,000 ($1,000,000 for the first one-half
and $3,000,000 for the second one half) provided that at least one-half of the
royalty is acquired within six months of the commencement of commercial
production. In addition, the government of El Salvador is entitled to a 2% net
smelter return royalty.

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

Property Description and Location

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

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

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

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

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

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Accessibility, Climate, Local Resources, Infrastructure and
Physiography

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

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

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

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

History

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

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

Geological Setting

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

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

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

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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.

The geological mapping is continuing, along with
lithogeochemical sampling and prospecting.

The geological mapping is 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.

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.

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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.

Recent Exploration and Drilling

Following completion of the Balsamo deposit delineation
drilling the Companys ongoing El Dorado drill program focus returned to the
exploration for new gold zones within the central part of the project area, in
the vicinity of the Minita, South Minita and Balsamo deposits that form the
foundation of the projects gold and silver resources. These three deposits
occur in relatively close proximity within a series of north-south trending
structures and the Companys exploration for new gold zones in the central El
Dorado project area is focusing on similar gold-bearing structures. During the
course of its Balsamo deposit drilling, the Company identified two new
gold-bearing veins to the east of the Balsamo structure known as Cerro Alto and
La Luz, and during the latter half of fiscal 2008 focused its exploration on
these structures as well as the strike extensions of the Balsamo vein.

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While the Company continues to intersect many blind
gold-bearing veins, no new deposits at El Dorado have conclusively been
discovered since completion of the Balsamo deposit delineation drilling. A
complete list of drill results from the El Dorado property is available on the
Companys website.

Subsequent to the end of fiscal 2008 the Company suspended
drilling activity at the El Dorado project as part of an overall planned slow
down in exploration activity in El Salvador that will continue until such time
as the Government of El Salvador signals its willingness to proceed with
development of El Dorado by granting the long sought-after mining permit.

The foregoing disclosure under Recent Exploration and
Drilling 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 and
supervises the Companys exploration work on the El Dorado project. Mr. Gehlen
has verified that the sample results presented by the Company have been
accurately summarized from the official assay certificates provided to 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.

January 2008 Updated 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. The impetus for
the updated resource estimate was primarily to quantify the gold and silver
ounces at the Balsamo deposit, which has added approximately 17% to the Measured
and Indicated resources and 39% to the Inferred resources, compared to those
tabulated in the 2006 El Dorado resource estimate. The resources presented below
for the Minita, South Minita, Nance Dulce, Coyotera and Nueva Esperanza deposits
are unchanged from the 2006 El Dorado resource estimate.

El
      Dorado Project Resources (as of January 17, 2008)Deposit
    ResourceCategory
    Tonnes
    Gold Grade(g Au/t)
    Gold Ounces
    Silver Grade(g Ag/t)
    Silver Ounces
    Gold Equivalent
      Grade(g AuEq/t)
    GoldEquivalentOuncesBalsamo
    Indicated
    566,700
    9.86
    179,600
    112.95
    2,058,000
    11.47
    209,000Inferred
    281,200
    7.71
    69,700
    76.29
    690,000
    8.80
    79,600Minita
    Measured
    614,100
    12.23
    241,500
    80.59
    1,591,200
    13.39
    264,300Indicated
    1,175,100
    9.65
    364,400
    58.16
    2,197,300
    10.47
    395,700Total M&I
    1,789,200
    10.53
    605,900
    65.86
    3,788,500
    11.47
    660,000Inferred
    78,400
    10.39
    26,200
    67.44
    170,000
    11.39
    28,700South
      Minita
    Indicated
    1,070,900
    9.25
    318,400
    63.99
    2,203,000
    10.16
    349,900Inferred
    302,800
    7.20
    70,100
    48.23
    470,000
    7.89
    76,800


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El Dorado Project Resources (as of January
      17, 2008)Deposit
    ResourceCategory
    Tonnes
    Gold Grade(g Au/t)
    Gold Ounces
    Silver Grade(g Ag/t)
    **Silver Ounces**
    GoldEquivalent
      Grade (g AuEq/t)
    Gold Equivalent OuncesNance Dulce
    Inferred
    128,900
    19.56
    81,100
    121.98
    506,000
    21.30
    88,300Coyotera
    Measured
    166,000
    7.86
    42,100
    57.79
    309,000
    8.69
    46,500Indicated
    501,000
    7.15
    115,200
    58.68
    945,000
    7.99
    128,700Total M&I
    667,000
    7.34
    157,300
    58.48
    1,254,000
    8.17
    175,200Inferred
    19,000
    5.83
    3,600
    72.12
    44,000
    6.86
    4,200Nueva Esperanza
    Indicated
    183,000
    5.77
    33,900
    30.47
    179,000
    6.20
    36,400Inferred
    29,000
    4.67
    4,300
    35.49
    33,000
    5.17
    4,800TOTAL MEASURED ALLDEPOSITS
    
    780,100
    11.31
    283,600
    75.76
    1,900,200
    12.39
    310,800TOTAL INDICATED ALLDEPOSITS
    
    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 ALLDEPOSITS
    
    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 (seeNI 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 differ from standards of the U.S.
>       Securities and Exchange Commission (SEC). The resource estimates contained in
>       this discussion would not be permitted in reports of U.S. Companies filed with
>       the SEC. Readers are referred to the Cautionary Note Regarding Resource
>       Estimates above for further explanation.

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 meters)) 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..

A full feasibility study, utilizing current industry standard
input costs and commodity prices, was initiated in fiscal 2007 to investigate
the economics of mining the El Dorado project at a higher annual throughput rate
(by

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- 31 -

the inclusion of resources outlined in the South Minita
deposit) than that considered in the January 2005 El Dorado prefeasibility
study. In late fiscal 2007 the Company elected to defer completion of the full
feasibility study in order to include the resources being drilled at the newly
discovered Balsamo deposit in addition to the Minita and South Minita
resources.

Subsequent to the end of fiscal 2008, with the El Dorado
resource estimate completed, work on the El Dorado project feasibility study was
restarted. The El Dorado feasibility study is being led by SRK Consulting and
will include an underground mine plan for the Minita, South Minita and Balsamo
deposits, processing facility and tailings impoundment designs, and an economic
analysis of the proposed combined operation. It is expected to be completed by
December 2008.

Environmental Impact Study and Mining Permit

The granting of an exploitation concession by the El Salvadoran
Ministry of Economy (Division of Hydrocarbons and Mines) confers to the
applicant the right to produce and sell valuable commodities recovered from the
natural resources within the area of the concession. The granting of an
exploitation concession (required to commence mining activities) requires an
environmental permit based on an Environmental Impact Study (EIS) approved by
the El Salvadoran Environmental and Natural Resources Ministry (MARN), in
addition to the applicant satisfying procedural conditions. The concession
requires that the mine and associated facilities be built and operated in
accordance with the conditions of the environmental permit and that development
activities commence within 12 months of the date of the final concession
agreement.

In September 2004, the Company submitted an EIS to MARN for a
750 tonne per day operation based on producing precious metals from the Minita
deposit alone (the presentation of an EIS for expanded operations will be
required if and when the Company determines that a larger operation is
economically viable). In September 2005, the finalized EIS (incorporating
comments from MARN) was resubmitted to MARN, which then granted technical
approval of the EIS, and instructed the Company to submit the EIS for public
comment, which was carried out in October 2005. In March 2006, the Company
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. During
fiscal 2007 the amended EIS, which included additional clarification on a number
of items, was resubmitted to MARN. No further developments have since occurred.

The Company has experienced lengthy delays in the processing of
its El Dorado exploitation concession application, which in part relies on
regulatory approval of the El Dorado EIS. Nearly two-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 the Companys exploitation concession application.

Pacific Rim and its subsidiaries have met all of their
responsibilities under the countrys existing mining law and are committed to
the protection of their rights in El Salvador. The Company is continuing to seek
an amicable resolution to the El Dorado permitting issue with the Government of
El Salvador, however, should no workable solution develop in the near term,
Pacific Rim and its subsidiaries will be forced to pursue legal recourse,
including through The Central American Free Trade Agreement (CAFTA) and El
Salvadoran law. The Company has retained the Washington, DC legal firm of
Crowell & Moring LLP to represent it should it choose to proceed in the
future with CAFTA arbitration.

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- 32 -

Summary

The El Dorado gold project is the cornerstone of Pacific Rims
strategy for growth and currently represents the Companys sole material
project. The project 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 Inferred. Because the average grade
of these resources (approximately 10.5 gold equivalent grams per tonne) is
relatively high, the deposits are expected to be relatively low cost to produce
from underground workings. Importantly, the El Dorado deposits are also
environmentally clean and their 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 El Salvador government.

Virtually all of the $11.4 million the Company spent on direct
exploration costs during fiscal 2008 was expended on the El Dorado project,
primarily on the Balsamo deposit delineation drilling and updated resource
calculation, plus community relations initiatives. The Company will be reducing
its expenditures at El Dorado in the coming fiscal year, until such time as the
El Dorado exploitation concession is secured and development activities can
commence. At a minimum, exploration activities required to keep the El Dorado
property in good standing will be made during fiscal 2009.

Santa Rita Gold Project, El Salvador

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

The Santa Rita project is a 48.6 square kilometre (4,860
hectare) exploration license in central El Salvador staked by Pacific Rim in
July 2005 after its regional reconnaissance program in El Salvador resulted in
the discovery of gold-bearing quartz-calcite boulders. The southeast corner of
the Santa Rita exploration license is contiguous with the northwest corner of
the Companys El Dorado project, though the two projects host separate
epithermal systems.

An epithermal quartz-calcite vein system was discovered by
Pacific Rim at Santa Rita in fiscal 2006 through project-scale exploration and
sampling of float, sub-crop and outcrop. Surface rock channel samples collected
in fiscal 2006 by the Company from along the length of the 2+ kilometre long
Trinidad vein returned anomalous gold grades. In late fiscal 2006 the Company
received a permit from MARN to conduct a drill program on the Santa Rita gold
project.

During fiscal 2008 the Company undertook a surface trenching
  and sampling program at the Santa Rita project which revealed the Trinidad vein
  to be significantly wider than previously understood, with high gold grades
  across its entire width in the southern portion of the vein. The average width
  of the vein in the 26 trenches reported on is 3.4 meters (ranging from 1.00
  to 5.70 meters across) and gold grades ranged from less than 1 g/t to 38.19
  g/t gold. Trench results from the fiscal 2008 Santa Rita trenching program are
  presented in the table below. In addition, the Company discovered two new veins
  on the Santa Rita property during fiscal 2008, significantly expanding the target
  size on the property. These new veins were investigated further with a very
  limited trenching program, the results of which are currently pending and will
  be released when received and compiled. A complete list of available Santa Rita
  trench results is available on the Companys website.

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- 33 -

Fiscal 2008 Santa Rita Trenching Program Results

Trench Number
    Gold
      (g/t)
    Surface Vein Width (m)
    Trench ElevationSR-01
    36.44 g/t
    5.10
    385.2SR-02
    38.19 g/t
    4.90
    387.1SR-03
    12.83 g/t
    4.55
    379.5SR-04
    16.82 g/t
    5.40
    373.4SR-05
    17.52 g/t
    3.50
    364.4SR-06
    12.18 g/t
    3.65
    362.8SR-09
    11.86 g/t
    5.70
    352.3SR-10
    10.99 g/t
    3.35
    350.6SR-11
    8.47
      g/t
    1.80
    399.6SR-12
    6.26
      g/t
    2.35
    399.3SR-13
    1.74
      g/t
    2.50
    397.2SR-14
    8.93
      g/t
    2.65
    396.9SR-15
    17.97 g/t
    3.55
    393.9SR-17
    1.700 g/t
    3.45
    386.7SR-19
    0.226 g/t
    3.15
    411.7SR-20
    0.12
      g/t
    1.00
    413.6SR-21
    0.017 g/t
    2.30
    421.2SR-22
    0.17
      g/t
    2.00
    425.5SR-23
    0.12
      g/t
    2.28
    425.7SR-24
    0.43
      g/t
    2.60
    425.2SR-25
    0.05
      g/t
    2.35
    422.0SR-27
    0.37
      g/t
    4.15
    421.5SR-28
    1.85
      g/t
    5.00
    421.0SR-29
    0.54
      g/t
    3.00
    410.0SR-30
    1.00
      g/t
    1.95
    399.1SR-32
    0.51
      g/t
    3.75
    393.6


Pacific Rim dug these trenches perpendicular to the Trinidad
vein exposing its full surface width, over a strike length of approximately 750
meters at intervals of approximately 25 meters, and then mapped, chip sampled,
and reclaimed the trenches. As with previous surface sampling along the southern
portion of the Trinidad vein where the vein is traced up and over a hill, gold
grades appear to be highest on the flanks of the hill and decrease toward the
top of the hill. Pacific Rim believes that the top of the productive interval
at the Trinidad vein is at approximately 390 meters above sea level elevation.
Typical of many similar epithermal systems, vein exposures mapped and sampled by
the Company above the productive interval (i.e. above 390 meters elevation, at
the top of the hill) have returned low gold grades and vein exposures below that
elevation (i.e. within the productive interval, on the flanks of the hill) have
returned bonanza gold grades.

Subsequent to the end of fiscal 2008, Pacific Rim undertook a
9-hole drill program that tested the Trinidad vein system over a strike length
of approximately 500 meters. Results are currently pending and will be released
when received and compiled.

Pacific Rims fiscal 2008 Santa Rita trenching program marked
the Companys resumption of exploration work at the project following its
voluntary suspension of work there in December 2006, when Santa Rita became the
target of intermittent anti-mining protests led by a small El Salvadoran
Non-Governmental Organization (NGO) utilizing protestors imported from outside
the Santa Rita area. During the latter half of fiscal 2007 and the first half of
fiscal 2008, the Company purchased the surface rights over the high grade
section of the Trinidad vein, giving the Company unlimited access to the
property, upgraded and constructed access roads, and continued its public
service and charitable works in the Santa Rita area. By mid-fiscal 2008, the
Company assessed little risk to a resumption of limited exploration work and
commenced the trenching program described above.

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- 34 -

Notwithstanding the excellent exploration potential
demonstrated to date at the Santa Rita project, the Company intends to limit its
fiscal 2009 Santa Rita exploration work to trenching and sampling until such
time as the El Dorado exploitation concession is granted. Exploration
expenditures will be restricted to amounts necessary to maintain the Santa Rita
exploration licences in good standing.

The foregoing disclosure under Recent Exploration and
Drilling 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 and
supervises the Companys exploration work on the El Dorado project. Mr. Gehlen
has verified that the sample results presented by the Company have been
accurately summarized from the official assay certificates provided to the
Company. The Companys sampling procedures follow the Exploration Best Practices
Guidelines outlined by the Mining Standards Task Force and adopted by the TSX.
Samples have been assayed using fire assay with a gravimetric finish on a
30-gram split. Quality control measures, including check- and sample
standard-assaying, are being implemented. Samples were assayed by Inspectorate
America Corporation in Reno, Nevada, an ISO 9002 certified laboratory,
independent of the Company.

Zamora-Cerro Colorado Gold Project, El Salvador

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

Upon TSX approval of the original agreement in fiscal 2006,
Pacific Rim made a payment of 50,000 shares of the Company to the property
vendor. 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 CompanyYearly payments:
    The
      greater of:First anniversary
      100,000 shares or US $100,000 in
        shares of the CompanySecond anniversary
      140,000 shares or US $140,000 in
        shares of the CompanyThird anniversary
      200,000 shares or US $200,000 in
        shares of the CompanyFourth anniversary
      300,000 shares or US $300,000 in
        shares of the CompanyFifth and subsequent
      anniversaries
      400,000 shares or US
        $400,000 in shares of the Company


The above advanced royalty payments schedule applies to both
the Zamora and Cerro Colorado exploration license options and supersedes the
original agreement terms. The advanced royalty payments will continue until
production is achieved or the exploration concessions expire. Title to 100% of
the Cerro Colorado and Zamora exploration licenses will be transferred to
Pacific Rim at such time as a positive production decision is

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- 35 -

made by the Company. Upon achievement of commercial production
from the Cerro Colorado or Zamora claims, the sellers will receive a 3% net
smelter royalty to a maximum of US $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 kilometers north of San Salvador, in El
Salvador. The Company is in the process of staking additional ground between the
Cerro Colorado and Zamora claims to cover what the Company believes is a large
gold-bearing epithermal system situated on the same regional gold belt that
hosts the Companys El Dorado and Santa Rita gold systems in El Salvador and a
number of million-plus ounce gold systems in Guatemala.

During fiscal 2008 the Company continued its regional
geological mapping and prospecting work within the Zamora and Cerro Colorado
exploration licence areas, concentrating on trenching across known gold-bearing
veins. The epithermal vein system covered by these claims has been traced over a
strike length of approximately 21 kilometres, with high grade gold identified
locally on surface along its entire length.

During fiscal 2009 Pacific Rim will continue its surface
mapping and sampling of the Zamora  Cerro Colorado epithermal system, incurring
limited exploration costs sufficient to keep the exploration licences over this
property in good standing while the Company awaits receipt of the El Dorado
exploitation concession.

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.

Nevada Properties

Denton-Rawhide Mine, Nevada

Pacific Rim is 49% joint venture owner of the Denton-Rawhide
gold mine, located near Fallon, Nevada. Kennecott Rawhide Mining Company
(Kennecott), a subsidiary of Rio Tinto Plc, is 51% joint venture owner and
operator of the mine. Denton-Rawhide is a residual heap leach operation that
ceased active mining in October 2002. Crushing and stacking of a low-grade ore
stockpile continued until May 2003 at which time the operation commenced the
residual leach and reclamation phase.

The Company acquired its interest in the Denton-Rawhide Mine on
April 6, 2000 pursuant to an acquisition agreement dated February 13, 2000 (the
Acquisition Agreement) between Dayton, Kinross Gold Company
(Kinross), Kinross Rawhide Mining Company (Kinross Rawhide)
and Kinross Fallon Inc. (Kinross Fallon). The Company holds a 49%
interest and Kennecott Minerals Company owns the remaining 51% interest and is
the operator.

The Acquisition Agreement was negotiated on an arms length
basis by Dayton and Kinross, and provided, among other things, that:

|(a) | Kinross Rawhide and Kinross Fallon assigned all of their
      49% interest in the Denton-Rawhide Mine, including all of their rights
      under the Rawhide Joint Venture Agreement (as described below), to
    the Company in exchange for 7,235,500 common shares at a
      deemed price of Cdn$2.26 per share for a total acquisition price of
  Cdn$16,352,230.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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- 36 -

|(b) | Kinross Rawhide agreed to keep in place a $1,297,356
        reclamation letter of credit posted by it in connection with the Denton-Rawhide
        Mine until March 31, 2002. The Company agreed to pay to Kinross Rawhide
        a standby fee equal to the cost to Kinross Rawhide of the letter of credit
        plus a support fee equal to 1.75% per annum, payable on the first day
        of January, April, July and October in each year. In January 2001, the
        reclamation letter of credit was replaced on behalf of the joint venture
        by a surety provided by Kennecott Rawhide Mining Company (Kennecott
        Rawhide), an indirect whollyowned subsidiary of Rio Tinto
        Plc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(c) | Kinross Fallon and Kinross USA Inc. (Kinross
        USA) agreed to keep in place a $1,246,780 surface management
        surety bond posted by them in connection with the Denton-Rawhide Mine
        until March 31, 2001. The Company agreed to pay to Kinross Fallon a standby
        fee equal to the cost to Kinross Fallon of the surety bond (which is currently
        0.40%) plus a support fee equal to 1.75% per annum, payable on the first
        day of January, April, July and October in each year. In January 2001,
        the surety bond described in (c) was replaced on behalf of the joint venture
        by a surety provided by Kennecott Rawhide.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(d) | Kinross Fallon and Kinross Rawhide assigned all of their
        interest in the revocable reclamation and severance trust agreement dated
        effective January 1, 1999 (the Reclamation Trust Agreement)
        among Kennecott Rawhide, Kinross, Kinross Rawhide, Kinross USA and Bank
        of America, as trustee, to the Company for an amount equal to $2,118,403
        (being the amount held in the trust created thereby for the benefit of
        Kinross Rawhide and Kinross Fallon). Pursuant to promissory notes dated
        April 6, 2000, the Company agreed to pay to Kinross an amount equal to
        the amount held in the trust at that time, by no later than December 31,
        2004, provided that the Company made minimum annual prepayments on December
        31st in each year equal to 25% of the net internal cash flow received
        by the Company from its 49% interest in the Denton-Rawhide Mine. As part
        of the final reconciliation of working capital amounts, the amount outstanding
        on the promissory note was reduced to $1,848,863. An amount of $1,021,000
        was repaid on December 31, 2003 and the balance of $0.828 million was
        paid on December 31, 2004, from general corporate cash flows.

The ownership, management and operation of the Denton-Rawhide
Mine is governed by a construction and post-construction operating agreement
dated as of June 23, 1989, as amended by a first amendment agreement dated as of
December 15, 1992, (the Rawhide Joint Venture Agreement) between
Kennecott Rawhide and Dayton (as assignee of interest from Kinross Rawhide and
Kinross Fallon). The Rawhide Joint Venture Agreement provides, among other
things, that:

|(a) | Kennecott Rawhide holds a 51% interest in the
      Denton-Rawhide Mine;                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(b) | the Company holds a 49% interest in the Denton-Rawhide
      Mine;                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(c) | Kennecott Rawhide shall be the operator of the
      Denton-Rawhide Mine; and                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(d) | the operation of the Denton-Rawhide Mine shall be
      overseen by a coordinating committee comprised of three members nominated
      by Kennecott Rawhide and two members nominated by the Company, and the
      parties to the Rawhide Joint Venture Agreement are required to establish a
      trust as security for the payment of reclamation and severance costs
      resulting from the eventual closure of the Denton- Rawhide Mine. (See
      Reclamation  Denton-Rawhide below).

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- 37 -

Operations

A leach solution is circulated through the heaps to dissolve
the gold and silver. These precious metals are then precipitated from the
solution with either the addition of zinc oxide or by absorption onto carbon.
Dore is produced on site and the dore bars are then refined into gold and silver
bullion at an independent refinery.

Gold and Silver Production

Production Highlights

Year ended April 30, 2008
    Year endedApril 30, 2007
    Year ended April 30, 2006Ounces gold
      produced*
    8,339
    11,768
    15,117Ounces silver
      produced*
    62,763
    108,246
    135,085Total cash
      production cost per ounce**
    $561
    $378
    $223Average realized
      gold price
    $750
    $644
    $497Average actual
      gold price
    $785
    $634
    $492


*Pacific Rims 49% share of Denton-Rawhide
production

Pacific Rims share of production from the Denton-Rawhide
operation during fiscal 2008 was 8,339 ounces of gold and 62,763 ounces of
silver at a total cash production cost of $561per ounce of gold produced
(calculated as per industry standards and net of silver credits). During fiscal
2007 and fiscal 2006, Pacific Rims share of production was 11,768 ounces of
gold and 108,246 ounces of silver at total cash production costs of $378 per
ounce, and 15,117 ounces of gold and 135,085 ounces of silver at total cash
production costs of $223 per ounce, respectively. Cash production costs for
fiscal 2008 were $182 per ounce greater than in fiscal 2007 and $337 per ounce
greater than in fiscal 2006. The increase in fiscal 2008 production costs
relative to the previous two fiscal years is primarily due to decreasing
production since the cessation of active mining at the operation, which provides
fewer ounces over which to spread the operating costs.

The London Gold Fix gold price rose steadily from May 1, 2007
(the start of the Companys 2008 fiscal year) to an all-time high of $1023.50
per ounce on March 17, 2008 before dropping back to $871 per ounce on April 30,
2008 (the end of the Companys 2008 fiscal year) and has since held in the high
$800 to low $900 per ounce range.

Fiscal 2008 gold production from Denton-Rawhide was
approximately 29% lower than in fiscal 2007 and 45% lower than in fiscal 2006.
This decline in production represents the natural slowdown in recovery that
occurs in the residual leach phase of a heap leach operation that was further
impacted during fiscal 2008 by the removal of the Merrill-Crowe circuit. In lieu
of the Merrill-Crowe, expansion of the carbon circuit commenced during fiscal
2008 and remains in process. Replacing the Merrill-Crowe with an expanded carbon
circuit is expected to cut processing costs by reducing the cost of consumables.
Silver production will decline under this processing plan, however, the cost
savings are expected to exceed the value of silver no longer recovered.

A variety of techniques are being employed at the
Denton-Rawhide mine to maximize gold production as the operation continues
through the residual leach phase, including re-contouring and re-distributing
the heap leach pile and emplacing perforated pipes into the heap leach pile to
provide deeper access for the leaching fluids. These efforts may result in short
term increases in gold production at Denton-Rawhide but are not expected to
materially offset the slowdown in production which is typical of residual leach
operations. Gold production from Denton-Rawhide is anticipated to continue at
declining rates through the coming fiscal year. For the purposes of internal budgeting, the Companys projections for
Denton-Rawhide production look forward no more than 6 months at a time.

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- 38 -

The Company uses certain non-GAAP performance measures
including total cash production costs and actual cash production costs that
do not have any standardized meaning prescribed by GAAP and may not be
comparable to similar measures presented by other companies. The Company
believes that these measures are commonly used, in conjunction with conventional
GAAP measures, by certain investors to enhance their understanding of the
Companys performance. The Companys use of these non-GAAP measures is intended
to provide additional information that should not be considered in isolation or
as a substitute for performance measures prepared in accordance with GAAP.

The following table provides selected operating data for the
Denton-Rawhide Mine (49%):

Unit Costs(in thousands of US dollars except gold
ounces and cost per ounce)

Total Cash Production
      Costsfor Year EndedApril 30, 2005
    Total CashProduction
      Costsfor Year Ended April 30, 2007
    Total CashProduction Costs
      for Year EndedApril 30, 2006Operating costs
    $5,571
    $5,442
    $4,410Silver credits
      realized
    $(1,084)
    $(1,254)
    $(1,043)Inventory Change
    $188
    $265
    n/aCost base for
      calculation
    $4,675
    $4,453
    $3,367Gold ounces
      produced
    8,339
    11,768
    15,117Cost base per gold
      ounce produced
    $561
    $378
    $223


Forward Selling

In order to lock in a certain amount of revenue that Pacific
Rim requires to fund its ongoing exploration activities, the Company has
instituted a short-term forward sales program, where, from time to time, it will
sell forward up to 50% of its estimated gold production from Denton-Rawhide in
monthly contracts for future periods of up to six months. At May 1, 2007,
Pacific Rim had 1,000 ounces of gold sold forward at an average price of $688,
and a further 1,500 ounces of gold were sold forward and delivered during fiscal
2008 at an average price of $774 per ounce. At April 30, 2008, the Company had
no forward sales contracts in place and no new contracts have been established.
Pacific Rims forward selling program is purely a cash management strategy and
does not represent a corporate commentary on the outlook for gold.

Reclamation  Denton-Rawhide

The final reclamation and closure plan for Denton-Rawhide was
submitted to the Bureau of Land Management and the Nevada Department of
Environmental Protection and is currently awaiting approval. The Coordinating
Committee of the Denton-Rawhide mine determined, for the purposes of the
Reclamation Trust, total reclamation and severance costs for the Denton-Rawhide
mine of $9.8 million, of which 49% are to the account of the Company and
contributed to the Reclamation Trust. $4.5 million in reclamation and severance
costs have already been incurred, leaving an estimated $5.3 million to be
expended in the future, of which $2.6 million is to the Companys account. This
determination of reclamation and severance costs is for the purposes of the
Reclamation Trust only and although the Companys closure fund balance of $3.8
million is believed to be sufficient to cover all remaining closing costs for
which it is responsible, the estimate may not be a true reflection of actual reclamation and closure costs of the
Denton-Rawhide mine. The closure trust funds are provided as security to the
mine operator for the estimated closure liabilities.

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- 39 -

Denton-Rawhide Property Purchase and Sale Agreement

On October 28, 2004, Pacific Rim and Kennecott, Denton-Rawhide
joint venture partners (Rawhide Joint Venture), signed a Property Purchase and
Sale Agreement (the Agreement) with Nevada Resource Recovery Group LLC
(NRRG) of Reno, Nevada concerning the lands occupying the Denton-Rawhide open
pits, which are no longer in operation. NRRG intends to operate an approved
landfill business utilizing the open pits as a site for the disposal of
non-hazardous municipal waste. In return, NRRG will pay tipping fees to the
Rawhide Joint Venture over the life of the landfill operation, which Pacific Rim
estimates will amount to US $103 million in cash to the Companys credit over
the multi-decade life of the proposed operation, as well as a $1.5 million
up-front payment to the Rawhide Joint Venture ($0.5 million upon signing of the
Agreement  paid in trust, and $1.0 million upon closing). The Agreement
includes a provision whereby NRRG can buyout future tipping fees according to a
net present value formula that is currently estimated at approximately $29
million to the Company.

In November 2007 the Rawhide Joint Venture and NRRG signed an
amendment to the Agreement extending the closing date of the sale to on or
before October 31, 2008. All other material details of the Agreement remain the
same.

Closing of the Agreement is subject to three key provisions
including the successful purchase by the Rawhide Joint Venture of a number of
small parcels of federal land contained within the Denton-Rawhide open pits, the
subject of the Agreement. The purchase of these land parcels from the Bureau of
Land Management (BLM) has proven to be a lengthier process than originally
estimated. Nonetheless much headway has been made and the Rawhide Joint
Ventures purchase of the BLM land slivers, currently in the final stages, is
expected to be completed in the first half of fiscal 2009. The remaining two
provisions of the Agreement include NRRGs obligation to obtain municipal waste
contracts and approval from the State of Nevada for use of the site as a
municipal landfill, both of which have been completed in draft or provisional
form awaiting the closing of the Agreement.

Redeveloping the Denton-Rawhide mine as a municipal solid waste
landfill is expected to provide a number of jobs, local and state tax revenues
and a local community host fee over the multi-decade term of the agreement. The
executed agreement provides the Rawhide Joint Venture the right to continue to
produce gold through residual leaching of the heap leach pads at Denton-Rawhide,
and restart mining activities, if warranted, on land adjacent to the land
conveyed to NRRG. The Rawhide Joint Venture will retain certain obligations
related to mining on the property conveyed to NRRG, whilst NRRG will accept all
obligations and liabilities related to the future impact of the landfill.

Argentina Properties

San Francisco Property, Argentina

During fiscal 2008 APEX Silver Mines Ltd. notified Pacific Rim
that it had elected not to proceed with the San Francisco project joint venture
signed with the Company during fiscal 2007.

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- 40 -

Rosalito Copper Project, Argentina

Pacific Rim has let the exploration claim lapse covering its
Rosalito project as it was unsuccessful in finding a joint venture for this
non-core, base-metal focused asset.

Chile Properties

Carrera and Colina Gold Projects, Chile

Pacific Rim has let the exploration claims lapse covering its
Carrera and Colina gold project after initial exploration work on these projects
during the past several years failed to identify strong evidence of potential
ore deposits.

Generative Program

Pacific Rims project generation initiatives focus on acquiring
projects the Company believes have good exploration potential without incurring
onerous costs. The Company focuses solely on low-sulfidation epithermal gold
systems, which are environmentally-clean, high grade, and low cost.

In late fiscal 2008 the Company shifted the focus of its highly
successful grassroots exploration initiatives out of El Salvador and into Costa
Rica and Guatemala. These two jurisdictions offer outstanding gold potential and
have established mining industries. 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 and is ideally equipped to apply this formula for discovery to
neighbouring jurisdictions including Guatemala and Costa Rica.

The Company has filed for two large exploration concessions in
the Las Juntas de Abongares and La Union mining districts in Costa Rica, which
recently fully re-opened the doors to responsible gold mining. These projects
host epithermal vein systems with significant historic gold production. Drill
targets on these projects will be evaluated during fiscal 2009.

Pacific Rim is investigating potential project acquisitions in
Guatemala, where the Company can apply its proprietary geologic understanding of
the relationship between low-sulfidation type epithermal gold deposits and the
volcanic history of Central America to a grassroots reconnaissance effort. Two
gold mines (both epithermal vein systems similar to the Companys El Dorado and
Santa Rita systems in El Salvador) have gone into production in the past decade
in Guatemala along the Central American Gold Belt that hosts Pacific Rims El
Salvador gold deposits. Guatemala has outstanding gold potential and has seen
little modern exploration investment. With its positive reputation and track
record of community involvement and environmental sensitivity, the Company has
been welcomed and encouraged by Guatemalan government officials to pursue its
exploration goals within the country.

Andacollo Mine, Chile

During fiscal 2006 Pacific Rim signed a final Share Purchase
Agreement to sell to an arms-length private corporation 100% of the shares in
the Companys subsidiaries that owned the Andacollo gold mine located in central
Chile, for total consideration of $5.4 million. Upon execution of the final
Share Purchase Agreement, Pacific Rim received a $2.1 million payment from the
purchaser. Payments related to due diligence period

---

- 41 -

extensions totaling $0.9 million were made prior to closing of
the Share Purchase Agreement. During fiscal 2007 a scheduled installment of $1.0
million was received and during fiscal 2008 the final installment of $1.4
million was made on schedule. The Andacollo Share Purchase Agreement relieves
Pacific Rim of any further reclamation or environmental responsibilities at
Andacollo. The Andacollo mine, which was shut down in December 2000 by Pacific
Rims predecessor company, was a non-core asset that warranted monetization.

DIVIDENDS

The Company has not paid any dividends on its common shares
since its incorporation. Any decision to pay dividends on common shares in the
future will be made by the board of directors on the basis of the earnings,
financial requirements and other conditions existing at such time.

DESCRIPTION OF CAPITAL STRUCTURE

The authorized capital of the Company consists of an unlimited
number of common shares without par value. As at July 18, 2008, 116,915,460,
common shares of the Company were issued and outstanding as fully paid and
non-assessable shares.

All of the authorized common shares of the Company are of the
same class and, once issued, rank equally as to dividends, voting powers and
participation in assets and in all other respects, on liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company among its shareholders for the purpose
of winding up its affairs after the Company has paid out its liabilities. The
issued common shares are not subject to call or assessment rights or any
pre-emptive or conversion rights. There are no provisions for redemption,
purchase for cancellation, surrender or purchase funds.

All registered shareholders are entitled to receive a notice of
any general meeting to be convened by the Company. At any general meeting,
subject to the restrictions on joint registered owners of common shares, on a
show of hands every shareholder who is present in person and entitled to vote
has one vote and on a poll, every shareholder has one vote for each common share
of which he is the registered owner and may exercise such vote either in person
or by proxy.

Shareholder Rights Plan

On July 12, 2006, the board of directors of the Company adopted
a shareholder rights plan (the Rights Plan). The Rights Plan was
approved by the shareholders at the annual general meeting of shareholders held
on August 29, 2006.

To implement the Rights Plan, effective July 24, 2006 the
Company issued rights that attached to all outstanding common shares. The Rights
Plan is designed to protect shareholders from unfair, abusive or coercive
take-over strategies including the acquisition or control of the Company by a
bidder in transaction or series of transactions that may not treat all
shareholders fairly nor afford all shareholders an equal opportunity to share in
the premium paid upon an acquisition or control.

The Rights will become exercisable if a person, together with
its affiliates, associates and joint actors, acquires or announces its intention
to acquire beneficial ownership of the Companys common shares which when
aggregated with its current holders total 20% or more of the Companys
outstanding common shares (determined in the manner set out in the Rights Plan). The
right will permit the holder to purchase common shares of the Company at a 50%
discount to their market price (as defined in the Rights Plan Agreement).

---

- 42 -

A shareholder or other interested party may obtain a copy of
the Rights Plan by contacting the Corporate Secretary of the Company at Suite
410, 625 Howe Street, Vancouver, British Columbia, V6C 2T6, or by accessing the
Companys publicly filed documents, including the Rights Plan Agreement at www.sedar.com.

Stock Options

In 2002, the Company adopted the 2002 Incentive Stock Option
and Bonus Plan (the 2002 Plan) to govern all post-amalgamation options.
The 2002 Plan is divided into two components: a stock option component under
which up to 6,000,000 common shares were reserved for grant to eligible persons
at the discretion of the directors from time to time, and a stock bonus
component under which up to 367,000 common shares were reserved for grant to
eligible persons at the discretion of the directors from time to time.

On July 12, 2006, the board of directors of the Company adopted
a new evergreen stock option plan (the Evergreen Plan). The Evergreen
Plan was approved by the shareholders at the annual general meeting of
shareholders held on August 29, 2006.

The Evergreen Plan replaced the 2002 Plan, and the board of
directors approved the discontinuance of the granting of options under the 2002
Plan, though outstanding options that were granted under the 2002 Plan will
continue to be governed by the 2002 Plan. The method of establishing the maximum
number of shares reserved for grant under option will be equal to 10% of the
number of shares outstanding at the time of grant, including all outstanding
options granted under the 2002 Plan.

As at July 18, 2008, options were outstanding under both the
Evergreen Plan and the 2002 Plan exercisable to purchase up to 7,405,000 common
shares, representing approximately 6.33% of the Companys issued and outstanding
share capital, at prices ranging from $0.43 to $1.34 Canadian dollars per share
expiring between July 23, 2008 and March 9, 2013.

Generally the options vest cumulatively as to one-third on the
grant date and one-third upon each of the following two anniversaries of the
grant date. Options granted to non-management outside directors are vested 100%
at the issue date. Of the total options outstanding, 2,103,334 are not vested as
at July 18, 2008.

Warrants

The Company issued common share purchase warrants in connection
with previous transactions and financings. As at July 18, 2008, the Company had
7,161,350 outstanding warrants.

MARKET FOR SECURITIES

Trading Price and Volume

The Companys common shares are listed and traded in Canada on
the TSX under the symbol PMU. In addition, the common shares are listed and
traded in the United States on the AMEX under the symbol PMU. The Company has
also received advice that its common shares are listed and have traded on the
Berlin Stock Exchange under the symbol PRM since June 14, 2002 and in the
Regulated Unofficial Market (Freiverkehr) on the Frankfurt Stock Exchange on Xetra, the
Deutsche Borse AG electronic trading system, since May 31, 2002.

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- 43 -

During the period from May 1, 2007 to July 18, 2008, the
Companys common shares traded on the TSX as follows:

Period
    Volume
    High (Canadian Dollars)
    Low (Canadian Dollars)May 2007
    4,072,269
    $1.13
    $0.88June 2007
    5,348,034
    $1.17
    $0.86July 2007
    2.984,032
    $1.25
    $1.01August 2007
    1,712,997
    $1.15
    $0.91September 2007
    2,123,650
    $1.14
    $0.95October 2007
    5,123,833
    $1.30
    $1.05November 2007
    2,614,072
    $1.30
    $1.03December 2007
    754,001
    $1.16
    $0.97January 2008
    1,888,274
    $1.24
    $0.99February 2008
    1,267,279
    $1.20
    $1.04March 2008
    1,318,069
    $1.23
    $1.01April 2008
    1,000,753
    $1.09
    $0.83May 2008
    1,571,099
    $1.00
    $0.80June 2008
    642,604
    $0.88
    $0.75July 1, 2008 to July 18, 2008
    4,099,955
    $0.82
    $0.36$


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- 44 -

DIRECTORS AND OFFICERS

Name, Occupation and Security Holding

The name, province or state, country of residence, position or
office held with the Company and principal occupation during the past five years
of each director and executive officer of the Company are described below.

Name and Address(1)
    Office or Position
      Held
    Previous Service as
      a Director
    Principal Occupation
      during past five years(1)Catherine McLeod-Seltzer British
      ColumbiaCanada
    Chairman and Director
    Since April 11, (2) 2002
    Director and officer of Pacific Rim Mining Corp. since
      1997. Director and Chairman of Bear Creek Mining Corporation, Director and
      Chairman of Stornoway Diamond Corporation, Director of Kinross Gold
      Corporation and Troon Ventures Ltd. Formerly a director of Miramar Mining
      CorporationThomas Shrake(4)NevadaU.S.A.
    President, ChiefExecutive Officerand Director
    Since April 11, 2002(2)
    Director and officer of Pacific Rim Mining Corp. since
      1997.Anthony J. Petrina(4)(5)(6)British
      Columbia Canada
    Director
    Since April 11, 2002(2)
    Retired. Director of Bear Creek Mining Corporation.
      Formerly a director of Miramar Mining CorporationWilliam Myckatyn(3)(4)(6)British
      ColumbiaCanada
    Lead Director
    Since April 11,2002(2)
    Retired. CEO of Quadra Mining Ltd. to July 2006, current
      Chairman and Director of Quadra Mining Ltd. and Director of First Point
      Minerals Ltd. Formerly a director of Miramar Mining CorporationDavid K. Fagin(3)(5)(6)ColoradoU.S.A.
    Director
    Since April 11,
      2002(2)
    Investor. Director of Golden Star Resources Ltd., Atna
      Resources Ltd. and T. Rowe Price Mutual Funds.Paul B. Sweeney(3)(5)(6)British ColumbiaCanada
    Director
    Since July 2003
    Executive Vice President, Business Development of
      Plutonic Power Corporation, Former Vice President and Chief Financial
      Officer of Canico Resource Corp., Director of Pan American Silver Corp.,
      Director of Polaris Minerals Corporation, and Director of New Gold Inc.April Hashimoto WashingtonU.S.A.
    Chief FinancialOfficer
    N/A
    Chief Financial Officer of Pacific Rim Mining Corp. since
      August 2006, former Chief Financial Officer, Strategic Development
      Division, Placer Dome Inc. and Chief Financial Officer of Placer Dome
      Exploration Inc.


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- 45 -

Name and Address(1)
    Office orPosition
      Held
    Previous Service
      as a Director
    Principal
      Occupationduring past five years(1)J. Peter NeilansBritish
      ColumbiaCanada
    Chief OperatingOfficer
    N/A
    Chief Operating Officer of Pacific Rim since June 2006,
      Former President and Chief Executive Officer of Placer Dome USWilliam Gehlen Nevada U.S.A.
    Vice-President ofExploration
    N/A
    Vice-President of Exploration of Pacific Rim Mining Corp.
      since September 2005. Senior geologist of Pacific Rim Mining Corp. since
      1997.Barbara HendersonBritish ColumbiaCanada
    Vice-President of Investor Relations
    N/A
    Vice-President of Investor Relations of Pacific Rim
      Mining Corp. since August 2002. Manager of Investor Relations of Pacific
      Rim Mining Corp. since 1998.Ronda L. FullertonBritish ColumbiaCanada
    Corporate Secretary
    N/A
    Corporate Secretary of Pacific Rim Mining Corp. since
      April 2006, former Corporate Paralegal for QLT Inc., former Legal
      Assistant and Corporate Secretary for La Mancha Resources Inc., former
      Legal Assistant for Leisure Canada Inc. and X-Tal Minerals Inc.


| | (1) | The information as to the jurisdiction of residence and
      principal occupation, not being within the knowledge of the Company, has
      been furnished by the respective individuals individually.                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | April 11, 2002 was the effective date of the amalgamation
      of Dayton and Pacific Rim; Fagin, McLeod and Myckatyn were former
      directors of Dayton and McLeod, Myckatyn, Petrina and Shrake were former
      directors of Pacific Rim.
| | (3) | Denotes member of Compensation Committee.                                                                                                                                                                                                       
| | (4) | Denotes member of Environmental Committee.                                                                                                                                                                                                      
| | (5) | Denotes member of Audit Committee                                                                                                                                                                                                               
| | (6) | Denotes member of Nominating
Committee.                                                                                                                                                                                                         

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.

Based on information provided by such persons, as at July 18,
2008, the directors and executive officers of the Company as a group
beneficially owned, directly or indirectly, or exercised control or direction
over, an aggregate of 3,080,260 common shares of the Company, representing
approximately 2.64% of the issued and outstanding common shares of the Company.
In addition, the director and executive officers of the Company as a group held
stock options for the purchase of an aggregate of 5,010,000 common shares in the
capital of the Company, which options are exercisable at between $0.43 and $1.17
Canadian dollars per share and expire between July 23, 2008 and March 9,
2013.

Cease Trade Orders, Bankruptcies, Penalties or
Sanctions

Anthony J. Petrina, one of the Companys directors, was a
director of Rea Gold Corporation from approximately June or July of 1997 to
December 1997. Rea Gold Corporation filed for bankruptcy in December 1997. In
November 1998, TRIAX Resource Limited Partnership commenced legal proceedings in
an Ontario Court against all of the former directors of Rea Gold Corporation
seeking damages for alleged negligence, and/or negligent misrepresentation and a breach of
fiduciary duty. The action commenced by TRIAX Resource Limited Partnership has
since been dismissed.

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- 46 -

Mr. Petrina was also a director of Pegasus Gold Corporation
(Pegasus) until February 1999. Pegasus filed for bankruptcy on January
16, 1998 in Reno, Nevada,

Except as previously disclosed, no other Company directors or
executive officers or any shareholder holding a sufficient number of securities
of the Company to affect materially the control of the Company:

|(a) | is, as at the date of this Annual Information Form or has
      been, within the ten years before the date of this Annual Information
      Form, a director or executive officer of any company, that while that
      person was acting in that capacity;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)   | was the subject of a cease trade or similar
        order or an order that denied the relevant company access to any exemption
        under securities legislation, for a period of more than 30 consecutive
        days;                                                                                                                                                                 
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii)  | was subject to an event that resulted, after
        the director or executive officer ceased to be a director or executive
        officer, in the company being the subject of a cease trade or similar
        order or an order that denied the relevant company access to any exemption
        under securities legislation, for a period of more than 30 consecutive
        days; or
| |       |                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | within a year of that person ceasing to act
        in that capacity, became bankrupt, made a proposal under any legislation
        relating to bankruptcy or insolvency or was subject to or instituted any
        proceedings, arrangement or compromise with creditors or had a receiver,
        receiver manager or trustee appointed to hold its assets;                            

|(b) | has, within the ten years before the date of this Annual
      Information Form, become bankrupt, made a proposal under any legislation
      relating to bankruptcy or insolvency, or become subject to or instituted
      any proceedings, arrangement or compromise with creditors, or had a
      receiver, receiver manager or trustee appointed to hold the assets of the
      director, officer or shareholder; or
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|(c) | has been subject to:                                                                                                                                                                                                                                                                                                                                                                                                       

| | (i)  | any penalties or sanctions imposed by a court relating to
      securities legislation or by a securities regulatory authority or has
      entered into a settlement agreement with a securities regulatory
      authority; or
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                 
| | (ii) | any other penalties or sanctions imposed by a court or
      regulatory body that would likely be considered important to a reasonable
      investor in making an investment decision.                                         

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- 47 -

Conflicts of Interest

The directors of the Company are required by law to act
honestly and in good faith with a view to the best interest of the Company and
to disclose any interests which they may have in any project or opportunity of
the Company. If a conflict of interest arises at a meeting of the board of
directors, any director in a conflict will disclose his interest and abstain
from voting on such matter. In determining whether or not the Company will
participate in any project or opportunity, that director will primarily consider
the degree of risk to which the Company may be exposed and its financial
position at that time.

The spouse of a director received a finders fee comprised of
cash commission of CDN$0.14 million and 152,600 agent warrants in connection
with the February 2008 private placement discussed above. Otherwise, to the best
of the Companys knowledge, there are no other known existing or potential
conflicts of interest among the Company, its promoters, directors, officers or
other members of management of the Company as a result of their outside business
interests except that certain of the directors, officers, promoters and other
members of management serve as directors, officers, promoters and members of
management of other public companies, and therefore it is possible that a
conflict may arise between their duties as a director, officer, promoter or
member of management of such other companies.

The directors and officers of the Company are aware of the
existence of laws governing accountability of directors and officers for
corporate opportunity and requiring disclosures by directors of conflicts of
interest and the Company will rely upon such laws in respect of any directors
and officers conflicts of interest or in respect of any breaches of duty by any
of its directors or officers. Such directors or officers, in accordance with the
Business Corporations Act (British Columbia), will disclose all such
conflicts and they will govern themselves in respect thereof to the best of
their ability in accordance with the obligations imposed upon them by law.

AUDIT COMMITTEE INFORMATION

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 Boardcommittee 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

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- 48 -



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

c)            At least one member of the Committee shall be a
financial expert as defined by Item 401(h) of Regulation S-K, unless otherwise
determined by the Board, and at least one member shall meet the financial
sophistication standards under the Listing Rules. The designation or
identification of a member of the Committee as an audit committee financial
expert does not impose on such person any duties, obligations, or liability
that are greater than the duties, obligations, and liability imposed on such
person as a member of the Committee and Board of Directors in the absence of
such designation or identification; and (ii) the designation or identification
of a member of the Committee as an audit committee financial expert does not
affect the duties, obligations, or liability of any other member of the
Committee or Board of Directors

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

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.

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- 49 -

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

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

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

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

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

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

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

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

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

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.

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- 50 -

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, Paul
Sweeney and Anthony Petrina. All of the members are financially literate and
independent for the purposes of Multilateral Instrument 52-110 (MI
52-110).

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

Mr. Fagin does not have an accounting designation; instead his
expertise is derived from his high level involvement in the financial matters of
public corporations almost continuously for at least 35 years. Mr. Fagin was
involved in the valuation of oil and gas companies for ten years both as a
consultant and a bank appraisal engineer (1958-68); President of a subsidiary of
Rosario Resources Corporation, a NYSE company (1968-75) and then Executive
Vice-President (1975-77) then President (1977-82) during which period he was
intimately involved in financial and accounting matters. In 1982, he founded
Fagin Exploration Company and worked closely with an accountant and auditors to
maintain the records. From 1986 to 1991, Mr. Fagin was the President and Chief
Operating Officer for Homestake Mining Corporation (NYSE), responsible for
producing

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operations in six countries and was involved in decisions for
corporate financial reporting. Between 1992 and 1996, Mr. Fagin was Executive
Chairman of Golden Star Resources Ltd. (ASE and TSE) and managed all
administrative matters including annual reports, audits and registration in
Canada and the U.S. Since 1987, Mr. Fagin has served on boards and audit
committees of several public companies including T. Rowe Price Mutual Funds,
Golden Star Resources Ltd., Canyon Resources Corp. (recently acquired by Atna
Resources Ltd.), Dayton Mining Corp. and the Company, where he was either
Chairman or a member of each audit committee. He is currently a director of Atna
Resources Ltd.

Mr. Sweeney does not have an accounting designation. However,
Mr. Sweeney has a solid background in accounting and financial management and
started his accounting career in 1972. From 1987 to 1993 he worked with Placer
Dome Inc. as Chief Financial Officer (1987-1989) of an Australian subsidiary
operating five mines in Australia and Papua New Guinea. Mr. Sweeney was
responsible for all accounting, financial and marketing requirements; then
Assistant Treasurer (1989-1991) at Vancouver head office where he was
responsible for the review of financial needs for all members of the Placer Dome
group worldwide risk management and debt administration; and director,
development planning (1991-1993) where he was responsible for the development of
plans relating to the existing assets and cash flow by the group worldwide.
Since 1994, Mr. Sweeney has served as the Chief Financial Officer of several
public companies including Princeton Mining Corporation, Sutton Resources Ltd.,
Manhattan Minerals Corp. and Canico Resource Corp. where he was responsible for
all finance, accounting and taxation matters. Currently he is the Executive Vice
President, Business Development of Plutonic Power Corporation.

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

Reliance on Certain Exemptions

At no time since the commencement of the Companys most
recently completed financial year has the Company relied on the exemption in
Section 2.4 of MI 52-110 (De Minimis Non-audit Services), Section 3.2 of
MI 52-110 (Initial Public Offerings), Section 3.3(2) of MI 52-110
(Controlled Companies), Section 3.4 of MI 52-110 (Events Outside
Control of Member), Section 3.5 of MI 52-110 (Death, Disability or
Resignation of Audit Committee Member)or Section 3.6 of MI 52-110
(Temporary Exempion for Limited and Exceptional Circumstances)or Section
3.8 of MI 52-110(Acquisition of Financial Literacy), or an exemption
from MI 52-110, in whole or in part, granted under Part 8 of MI 52-110
(Exemptions).

Audit Committee Oversight

At no time since the commencement of the Companys most
recently completed financial year was a recommendation of the Committee to
nominate or compensate an external auditor not adopted by the board of
directors.

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

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

External Auditor Service Fees (By Category)

During the year ended April 30, 2007, Staley Okada &
Partners entered into a transaction with PricewaterhouseCoopers LLP under which
certain assets of Staley, Okada & Partners were sold to
PricewaterhouseCoopers LLP and a number of professional staff and partners of
Staley, Okada, & Partners joined PricewaterhouseCoopers LLP either as
employees or partners of PricewaterhouseCoopers LLP and will carry on practicing
as members of PricewaterhouseCoopers LLP. The directors subsequently appointed
PricewaterhouseCoopers LLP as the Companys auditors for the year ending April
30, 2008.

PricewaterhouseCoopers LLP acted at the Companys independent
auditor for the fiscal years ended April 30, 2007 and April 30, 2008. 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 YearEnded
    Audit Fees(1)
    Audit
      RelatedFees(2)
    Tax Fees(3)
    All Other Fees(4)April 30, 2008
    $230,000
    $44,841
    $5,000
    $7,500April 30, 2007
    $96,222
    $39,442
    $7,200
    $Nil


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

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

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

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

LEGAL PROCEEDINGS

The Company is continuing to seek an amicable resolution to the
El Dorado permitting issue with the Government of El Salvador, however, should
no workable solution develop in the near term, Pacific Rim and

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its subsidiaries will be forced to pursue legal recourse,
including through the Central American Free Trade Agreement (CAFTA) and El
Salvadoran law. The Company has retained the Washington, DC legal firm of
Crowell & Moring LLP to represent it should it choose to proceed in the
future with CAFTA arbitration (See Mineral Projects  El Salvador Properties
 Environmental Impact Study and Mining Permit). Other than described
above, the Company is not a party to any legal proceedings and is not aware of
any such proceedings known to be contemplated.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS

The spouse of a director received a finders fee comprised of
cash commission of CDN$0.14 million and 152,600 agent warrants in connection
with the February 2008 private placement discussed above. Otherwise, to the best
of the Companys knowledge, the directors, executive officers and principal
shareholders of the Company or any associate or affiliate of the foregoing have
had no material interest, direct or indirect, in any transactions in which the
Company has participated within the three most recently completed financial
years prior to the date of this Annual Information Form or in the current
financial year, and do not have any material interest in any proposed
transaction, which has materially affected or will materially affect the
Company.

TRANSFER AGENTS AND REGISTRARS

The registrar and transfer agent for the common shares of the
Company in British Columbia and Ontario is Computershare Trust Company of
Canada, Vancouver, British Columbia.

MATERIAL CONTRACTS

Other than contracts entered into in the ordinary course of
business, as described in this Annual Information Form, the Company is not a
party to any material contracts entered into since January 1, 2002.

INTERESTS OF EXPERTS

Names of Experts

Certain information of an economic (including economic
analysis), scientific or technical nature in respect of the Companys El Dorado
Property is contained in this Annual Information Form based upon the Technical
Report entitled Technical Report Update on the El Dorado Project Gold and
Silver Resources dated March 3, 2008 and co-authored by Mr. Steve Ristorcelli,
P.Geo., of Mine Development Associates and Mr. Peter Ronning, P.Eng., each of
whom are independent Qualified Persons as defined in NI 43-101.

William Gehlen, a Qualified Person as defined in NI 43-101, is
responsible for directing the Companys exploration programs on the El Dorado,
Santa Rita and Zamora-Cerro Colorado Projects in El Salvador.

The Companys independent auditors are PricewaterhouseCoopers
LLP, Chartered Accountants, who have issued an independent auditors report
dated July 18, 2008 in respect of the Companys consolidated financial
statements as at April 30, 2008 and April 30, 2007 and for each of the years
then ended and the Companys internal control over financial reporting as at
April 30, 2008. PricewaterhouseCoopers LLP has advised that

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they are independent with respect to the Company within the
meaning of the Rules of Professional Conduct of the Institute of Chartered
Accountants and the rules of the US Securities and Exchange Commission.

Interests of Experts

Based on information provided by the experts, other than as
described below, none of the experts named under Names of Experts, when or
after they prepared the statement, report or valuation, has received any
registered or beneficial interests, direct or indirect, in any securities or
other property of the Company or of one of the Companys associates or
affiliates (based on information provided to the Company by the experts) or is
or is expected to be elected, appointed or employed as a director, officer or
employee of the Company or of any associate or affiliate of the Company.

William Gehlen is the Vice-President of Exploration of the
Company.

ADDITIONAL INFORMATION

Additional information relating to the Company may be found on
SEDAR at www.sedar.com.

Additional information, including directors and officers
remuneration and indebtedness, principal holders of the Companys securities,
and securities authorized for issuance under equity compensation plans, where
applicable, is contained in the Companys information circular for its most
recent annual general meeting of securityholders that involved the election of
directors.

Additional financial information is provided in the Companys
consolidated financial statements and managements discussion and analysis for
its most recently completed financial year.

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