---





PACIFIC RIM MINING CORP.

(an exploration stage enterprise)

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2012 and 2011

Expressed in US Funds

**

**

---

Independent Auditors Report

To the Shareholders of Pacific Rim Mining Corp.

We have audited the accompanying consolidated financial
statements of Pacific Rim Mining Corp. and its subsidiaries, which comprise the
consolidated statements of financial position as at April 30, 2012, April 30,
2011 and May 1, 2010 and the consolidated statements of loss and comprehensive
loss, shareholders equity, and cash flows for the years ended April 30, 2012
and April 30, 2011, and the related notes, which comprise a summary of
significant accounting policies and other explanatory information.

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

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

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

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

OpinionIn our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of
Pacific Rim Mining Corp. and its subsidiaries as at April 30, 2012, April 30,
2011 and May 1, 2010 and their financial performance and their cash flows for
the years ended April 30, 2012 and April 30, 2011 in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board.

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

(signed) PricewaterhouseCoopers LLP

Chartered Accountants

Vancouver, British ColumbiaJuly 26, 2012

---

Pacific Rim Mining Corp.(an
exploration stage enterprise) Consolidated Statements of Financial
PositionIn thousands of U.S. Dollars

|                                                         |   | April 30, |   |   | April 30,   |   |   | May 1,      |  
|-------------------------------------------------------- | - | --------- | - | - | ----------- | - | - | ----------- | -
|                                                         |   | 2012      |   |   | 2011        |   |   | 2010        |  
|ASSETS                                                   |   |           |   |   | *(Note 16)* |   |   | *(Note 16)* |  
|Current Assets                                           |   |           |   |   |             |   |   |             |  
|Cash and cash equivalents                                | $ | 816       |   | $ | 258         |   | $ | 1,333       |  
|Short-term investments                                   |   | 455       |   |   | 787         |   |   | -           |  
|Receivables and prepaids                                 |   | 129       |   |   | 150         |   |   | 81          |  
|                                                         |   | 1,400     |   |   | 1,195       |   |   | 1,414       |  
|                                                         |   |           |   |   |             |   |   |             |  
|Equipment(Note 7)                                        |   | 26        |   |   | 8           |   |   | 38          |  
|Resource property costs(Note 8)                          |   | 5,492     |   |   | 5,454       |   |   | 5,454       |  
|Restricted Cash                                          |   | 24        |   |   | 24          |   |   | 21          |  
|                                                         | $ | 6,942     |   | $ | 6,681       |   | $ | 6,927       |  
|                                                         |   |           |   |   |             |   |   |             |  
|LIABILITIES                                              |   |           |   |   |             |   |   |             |  
|Current Liabilities                                      |   |           |   |   |             |   |   |             |  
|Accounts payable and accrued
      liabilities (Note 11) | $ | 1,636     |   | $ | 1,642       |   | $ | 1,580       |  
|                                                         |   | 1,636     |   |   | 1,642       |   |   | 1,580       |  
|                                                         |   |           |   |   |             |   |   |             |  
|Derivative warrant liability(Note 9)                     |   | 210       |   |   | 1,649       |   |   | 1,482       |  
|                                                         |   | 1,846     |   |   | 3,291       |   |   | 3,062       |  
|                                                         |   |           |   |   |             |   |   |             |  
|SHAREHOLDERS
      EQUITY                               |   |           |   |   |             |   |   |             |  
|Share Capital Subscribed                                 |   | -         |   |   | 93          |   |   | -           |  
|Share Capital(Note 10)                                   |   | 90,058    |   |   | 86,955      |   |   | 84,133      |  
|Contributed Surplus                                      |   | 4,853     |   |   | 4,323       |   |   | 3,942       |  
|Deficit                                                  |   | (89,815   | ) |   | (87,981     | ) |   | (84,210     | )
|                                                         |   | 5,096     |   |   | 3,390       |   |   | 3,865       |  
|                                                         |   |           |   |   |             |   |   |             |  
|                                                         | $ | 6,942     |   | $ | 6,681       |   | $ | 6,927       |  

Nature of Operations and Going Concern(Note 1)Measurement Uncertainty(Note 8 (a))Contingency(Note 14)Commitments(Note 13)

APPROVED BY THE BOARD OF DIRECTORS:

Thomas C. Shrake, Director

David K. Fagin, Director

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

---

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

|                                                    |   | 2012        |   |   | 2011        |  
|--------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                    |   |             |   |   | *(Note 16)* |  
|                                                    |   |             |   |   |             |  
|Expenses (Income)                                   |   |             |   |   |             |  
|                                                    |   |             |   |   |             |  
|Exploration                                         | $ | 1,808       |   | $ | 1,225       |  
|Stock based compensation (Note 10)                  |   | 454         |   |   | 335         |  
|General and administrative                          |   | 450         |   |   | 456         |  
|Salaries & benefits                                 |   | 367         |   |   | 306         |  
|Professional services                               |   | 287         |   |   | 230         |  
|Depreciation                                        |   | 20          |   |   | 30          |  
|International arbitration (Note 8(a))               |   | 473         |   |   | 1,586       |  
|Operating loss                                      |   | 3,859       |   |   | 4,168       |  
|                                                    |   |             |   |   |             |  
|Other income and expense                            |   |             |   |   |             |  
|Gains on derivative liability
      (Note 9)        |   | (2,051      | ) |   | (232        | )
|Foreign exchange loss (gain)                        |   | 121         |   |   | (81         | )
|Finance income                                      |   | (14         | ) |   | (6          | )
|Other
      income                                  |   | (81         | ) |   | (78         | )
|                                                    |   |             |   |   |             |  
|Net Loss and
      Comprehensive Loss for the Year  | $ | (1,834      | ) | $ | (3,771      | )
|                                                    |   |             |   |   |             |  
|Loss Per ShareBasic and Diluted                    | $ | (0.01       | ) | $ | (0.03       | )
|                                                    |   |             |   |   |             |  
|Weighted
      Average Number of Shares Outstanding |   | 168,414,549 |   |   | 141,631,705 |  

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

---

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

|                           |  |               |  |  |               |   |  | Contributed |   |  | Accumulated     |  |  |                 |  
|-------------------------- |  | ------------- |  |  | ------------- | - |  | ----------- | - |  | --------------- |  |  | --------------- | -
|                           |  | Share Capital |  |  | Share Capital |   |  | Surplus     |   |  | Deficit         |  |  | Total           |  
|                           |  | Common Shares |  |  | Subscribed    |   |  | $           |   |  | $               |  |  | $               |  
|                           |  | Number        |  |  | $             |   |  | $           |   |  | (note
      16) |  |  | (note
      16) |  
|BalanceMay 1, 2010        |  | 130,308,308   |  |  | 84,133        |   |  | -           |   |  | 3,942           |  |  | (84,210         | )
|Private placement          |  |               |  |  |               |   |  |             |   |  |                 |  |  |                 |  
|- Units issued for cash    |  | 19,600,000    |  |  | 2,872         |   |  | -           |   |  | -               |  |  | -               |  
|- Finders units           |  | 660,000       |  |  | 89            |   |  | -           |   |  | 14              |  |  | -               |  
|Share issuance costs       |  |               |  |  |               |   |  |             |   |  |                 |  |  |                 |  
|- Finders units           |  | -             |  |  | (89           | ) |  | -           |   |  | -               |  |  | -               |  
|- Finders warrants        |  | -             |  |  | (32           | ) |  | -           |   |  | 32              |  |  | -               |  
|- Cash                     |  | -             |  |  | (18           | ) |  | -           |   |  | -               |  |  | -               |  
|Stock-based compensation   |  | -             |  |  | -             |   |  | -           |   |  | 335             |  |  | -               |  
|Share capital subscribed   |  | -             |  |  | -             |   |  | 93          |   |  | -               |  |  | -               |  
|Loss for the year          |  | -             |  |  | -             |   |  | -           |   |  | -               |  |  | (3,771          | )
|BalanceApril 30, 2011     |  | 150,568,308   |  |  | 86,955        |   |  | 93          |   |  | 4,323           |  |  | (87,981         | )
|Private placement          |  |               |  |  |               |   |  |             |   |  |                 |  |  |                 |  
|- Units issued for cash    |  | 17,600,000    |  |  | 3,239         |   |  | (93         | ) |  | -               |  |  | -               |  
|- Finders units           |  | 233,400       |  |  | 43            |   |  | -           |   |  | 9               |  |  | -               |  
|Share issuance costs       |  |               |  |  |               |   |  |             |   |  |                 |  |  |                 |  
|- Finders units           |  | -             |  |  | (43           | ) |  | -           |   |  | -               |  |  | -               |  
|- Finders warrants        |  | -             |  |  | (56           | ) |  | -           |   |  | 67              |  |  | -               |  
|- Cash                     |  | -             |  |  | (118          | ) |  | -           |   |  | -               |  |  | -               |  
|Shares issued for property |  | 200,000       |  |  | 38            |   |  | -           |   |  | -               |  |  | -               |  
|Stock-based compensation   |  | -             |  |  | -             |   |  | -           |   |  | 454             |  |  | -               |  
|Loss for the year          |  | -             |  |  | -             |   |  | -           |   |  | -               |  |  | (1,834          | )
|BalanceApril 30, 2012     |  | 168,601,708   |  |  | 90,058        |   |  | -           |   |  | 4,853           |  |  | (89,815         | )

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

---

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

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

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

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

The Company owns a 100% interest in the
mineral property known as El Dorado and certain other exploration licenses
located in El Salvador, is earning a controlling interest in the Hog Ranch
project in Washoe County, Nevada through exploration and carries out other
exploration activities in the United States and Central America.

The Company has not yet determined
whether any of its exploration properties contain mineral deposits that are
economically recoverable. The recoverability of any amounts capitalized for
Mining Property Acquisition costs in El Salvador is dependent upon the existence
of economically recoverable mineral deposits, the ability of the Company to
obtain the necessary financing and permitting to complete the exploration and
development of its exploration properties, and upon future profitable production
or proceeds from the disposition of its properties.

Going Concern

While these consolidated financial
statements have been prepared on the basis that the Company will continue as a
going concern, which assumes that the Company will be able to meet its
commitments, continue operations, realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future, there
are events and conditions that raise substantial doubt on the validity of that
assumption. During the year ended April 30, 2012, the Company had a loss of
$1,834 and as at April 30, 2012 has an accumulated deficit of $89,815 and a
working capital deficiency of $0.2. The Company will require additional funding
to maintain its ongoing exploration programs and property commitments, for
administrative purposes and for the arbitration and legal costs related to the
case under the El Salvadors Foreign Investment Law (Investment Law) between
the Company and the Government of El Salvador, which is being administered by
the Centre for Settlement of Investment Disputes (ICSID). The legal and
arbitration costs for the case are substantial (Note 8(a)).

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

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

|2. | Basis of Preparation and First Time Adoption
      of IFRS
|-- | ----------------------------------------------------------

We prepare our financial statements in
accordance with Canadian generally accepted accounting principles as set out in
the Handbook of the Canadian Institute of Chartered Accountants (CICA
Handbook). In 2010, the CICA Handbook was revised to incorporate International
Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB), and require publicly accountable enterprises to apply
such standards effective for years beginning on or after January 1, 2011.
Accordingly, we have commenced reporting on this basis in the consolidated
financial statements. In these financial statements, the term Canadian GAAP
refers to Canadian GAAP before the adoption of IFRS.

The consolidated financial statements
have been prepared in accordance with IFRS as issued by IASB. Subject to certain
transition elections disclosed below, we have consistently applied the same
accounting policies in our opening IFRS balance sheet as at May 1, 2010 and
throughout all periods presented, as if these policies had always been in
effect. Note 15 discloses the impact of the transition to IFRS on our reported
statement of financial position, comprehensive loss and cash flows, including
the nature and effect of significant changes in accounting policies from those
used in our consolidated financial statements for the year ended April 30, 2011.

The accounting policies applied in
these consolidated financial statements are based on IFRS effective for the year
ended April 30, 2012, as issued and effective, and were approved by the Board of
Directors for issue on July 23, 2012.

All dollar amounts are presented in US
dollars unless otherwise specified.

|   |                                
|-- | -------------------------------
|3. | Significant Accounting Policies

This summary of significant accounting
policies described below have been applied consistently to all periods presented
in these consolidated financial statements, unless otherwise stated. The
exemptions we have taken in applying IFRS for the first time are set out in Note
15.

a) Basis of Measurement

The consolidated financial statements
  have been prepared on the historical cost basis, except for the Derivative
  financial warrant liabilities which are measured at fair value.

b) Consolidation

The consolidated financial statements
  include the accounts of the Companys wholly-owned subsidiaries, Dayton Mining
  (U.S.) Inc., Pacific Rim Exploration Inc., Pacific Rim Cayman, Pacific Rim El
  Salvador S.A. de C.V., Dorado Exploraciones S.A. de C.V., Pacrimco S.A., Pac Rim
  Caribe III and its wholly-owned subsidiary Pacific Rim Chile Limitada. All
  significant intercompany transactions and balances have been eliminated.

c) Significant Accounting Estimates
and Judgements

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

d) Foreign Currencies

The functional currency is the currency
of the primary economic environment in which the entity operates. The functional
currency of the Company and of all of its subsidiaries is the United States
(US) Dollar. The functional currency determinations were conducted through an
analysis of the consideration factors identified in IAS 21, The Effects of
Changes in Foreign Exchange Rates (IAS 21).

The consolidated financial statements
have been presented in US dollars.. Transactions in foreign currencies are
translated to the functional currency of the entity at the exchange rate in
existence at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the period end date exchange rates. Non-monetary items which are measured using
historical cost in a foreign currency are translated using the exchange rate at
the date of the transaction.

The Companys presentation currency is
the US dollar.

e) Cash and Cash Equivalents

Cash and cash equivalents consist of
cash on deposit with banks and short-term interest-bearing investments with
maturities of three months or less at the purchase date.

f) Short Term Investments

Short term investments are comprised of
interest-bearing deposits with a term to maturity from inception of greater than
three months and less than one year.

g) Financial Instruments

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

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

| | (i)  | Financial assets and liabilities at fair value through
      profit or loss: A financial asset or liability is classified in this
      category if acquired principally for the purpose of selling or
      repurchasing in the short-term.                                                                                                                                                                                                  
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |      | Financial instruments in this category are recognized
      initially and subsequently at fair value. Transaction costs are expensed
      in the statement of income. Gains and losses arising from changes in fair
      value are presented in the statement of loss and comprehensive loss in the
      period in which they arise. Financial assets and liabilities at fair value
      through profit or loss are classified as current.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (ii) | Available-for-sale investments: Available-for-sale
      investments are non-derivatives that are either designated in this
      category or not classified in any of the other categories. The Company
      does not hold any available-for-sale assets.                                                                                                                                                                                   

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

| | (iii) | Held-to-Maturity investments: Held-to-maturity
      investments are non-derivatives that are designated in this category where
      the Companys intent is to hold the investment to maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | Held-to-maturity investments are initially measured at
      fair value including transaction costs, and subsequently carried at
      amortized cost. The Company does not hold any held-to- maturity
    assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (iv)  | Loans and receivables: Loans and receivables are
      non-derivative financial assets with fixed or determinable payments that
      are not quoted in an active market. The Companys loans and receivables
      are comprised of cash and cash equivalents, restricted cash, short term
      investments, deposits, and receivables, and are included in current assets
      due to their short- term nature with the exception of restricted cash.
      Loans and receivables are initially recognized at the amount expected to
      be received, less, when material, a discount to reduce the loans and
      receivables to fair value. Subsequently, loans and receivables are
      measured at amortized cost using the effective interest method less a
      provision for impairment.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (v)   | Financial liabilities at amortized cost: Financial
      instruments held by the Company and classified in this category include
      trade payables and accrued liabilities. Trade payables and accrued
      liabilities are initially recognized at the amount required to be paid,
      less, when material, a discount to reduce the payables to fair value.
      Subsequently, trade payables and accrued liabilities are measured at
      amortized cost using the effective interest method.                                                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | The effective interest rate method calculates the
      amortized cost of a financial asset and allocates interest income over the
      corresponding period. The effective interest rate is the rate that
      discounts estimated future cash receipts over the expected life of the
      financial instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | Financial liabilities are classified as current
      liabilities if payment is due within twelve months. Otherwise, they are
      presented as non-current liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (vi)  | Derivative financial instruments: Derivative instruments,
      including embedded derivatives, are recorded at fair value through profit
      or loss (FVTPL) and accordingly are recorded on the balance sheet at
      fair value. Gains and losses on re-measurment to fair value of these
      derivatives are classified separately in these consolidated financial
      statements as  gain on derivative liability. Fair values for derivative
      instruments are determined using valuation techniques, using assumptions
      based on market conditions existing at the balance sheet date. Derivatives
      embedded in non-derivative contracts are recognized separately unless they
      are closely related to the host contract.                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | Warrants issued in a private placement that have an
      exercise price denominated in a currency other than the Companys
      functional currency meet the definition of a derivative liability and are
      recorded as a financial liability and are marked-to-market each period,
      its fair value determined using the Black-Scholes valuation model.
      Subsequent changes in the fair value of the warrants are recognized as
      gains or losses in the Statement of Income (Loss) and Comprehensive Income
      (Loss) until they are fully exercised. Warrants that have been issued to
      agents for services provided for a capital raising transaction are
      accounted for under IFRS 2. These warrants are not derivatives and are not
      subject to IAS 32.      

h) Equipment and Leasehold
Improvements

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

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


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

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

i) Mineral Properties and
Exploration Costs

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

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

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

j) Impairment of Non-financial
Assets

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

k) Provisions

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

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

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

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

l) Income Taxes

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

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

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

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

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

---

|Pacific Rim Mining Corp.                                                
|------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                              
|Years Ended April 30, 2012 and 2011                                     
|In thousands of
      U.S. Dollars, except share and per share
  amounts

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

m) Share Capital

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

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

n) Stock-based Compensation

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

o) Earnings (Loss) per Share

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

|   |                                 
|-- | --------------------------------
|4. | Recent Accounting Pronouncements

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

| | a) | IFRS 9, Financial Instruments (IFRS 9) was issued by
      IASB in November 2009. This standard addresses classification and
      measurement of financial assets and replaces the multiple category and
      measurement models in International Accounting Standard (IAS) 39 for
      debt instruments with a new mixed measurement model having only two
      categories: amortized cost and fair value through profit or loss. IFRS 9
      also replaces the models for measuring equity instruments with recognition
      at fair value through profit or loss or at fair value through other
      comprehensive earnings.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | IFRS 9 is effective for annual years beginning on or
      after January 1, 2015. The Company is currently assessing the impact of
      this standard on the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

| | b) | IFRS 10, Consolidated Financial Statements (IFRS 10),
      was issued in May 2011 and will supersede the consolidation requirements
      in SIC-12, Consolidation  Special Purpose Entities (SIC-12), and IAS
      27, Consolidated and Separate Financial Statements (IAS 27), effective
      for annual periods beginning on or after January 1, 2013, with early
      application permitted. IFRS 10 builds on existing principles by
      identifying the concept of control as a determining factor in whether an
      entity should be included within the consolidated financial statements of
      the parent company. The standard also provides additional guidance to
      assist in the determination of control where this is difficult to assess.
      The company has not yet determined the impact this new standard may have
      on its consolidated financial statements
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | c) | IFRS 11, Joint Arrangements (IFRS 11), was issued in
      May 2011 and will supersede existing IAS 31, Joint Ventures (IAS 31)
      effective for annual periods beginning on or after January 1, 2013, with
      early application permitted. IFRS 11 provides for the accounting of joint
      arrangements by focusing on the rights and obligations of the arrangement,
      rather than its legal form (as is currently the case). The Standard also
      eliminates the option to account for jointly controlled entities using the
      proportionate consolidation method. This standard will impact the
      accounting treatment for the Companys joint venture arrangement for
      further exploration and development of Hog Ranch, if the Company has
      earned its interest in the Hog Ranch property (Note 8d) .                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | d) | IFRS 12, Disclosure of Interests in Other Entities (IFRS
      12), was issued in May 2011 and is a new and comprehensive standard on
      disclosure requirements for all forms of interest in other entities,
      including subsidiaries, joint arrangements, associates and unconsolidated
      structured entities. IFRS 12 is effective for annual periods beginning on
      or after January 1, 2013 with earlier application permitted. The company
      has not yet determined the impact this new standard may have on its
      consolidated financial statements                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | e) | IFRS 13, Fair Value Measurements (IFRS 13) was issued
      in May 2011 and sets out, in a single IFRS, a framework for measuring fair
      value. IFRS 13 defines fair value as the price that would be received to
      sell an asset or paid to transfer a liability in an orderly transaction
      between market participants at the measurement date. This definition of
      fair value emphasizes that fair value is a market-based measurement, not
      an entity specific measurement. In addition, IFRS 13 also requires
      specific disclosures about fair value measurement. IFRS 13 is effective
      for annual periods beginning on or after January 1, 2013, with earlier
      application permitted. The Company is currently assessing the impact of
      this Standard.                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | f) | IAS 1, Presentation of Items of Other Comprehensive
      Income (OCI) (IAS 1), was revised in June 2011 to change the
      disclosure of items presented in OCI, including a requirement to separate
      items presented in OCI into two groups based on whether or not they may be
      recycled to profit or loss in the future. The revision is effective for
      annual periods beginning on or after July 1, 2012 with early application
      permitted. The standard is not expected to have an impact on the Company
      in its current form.                                                                                                                                                                                                                                                                                                                                           

|   |                      
|-- | ---------------------
|5. | Financial Instruments

a) Financial instruments

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

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

b) Management of capital
risk

The Companys objectives when managing
capital are to safeguard the Companys ability to continue as a going concern in
order to pursue the development of its mineral properties and to maintain a
flexible capital structure which optimizes the costs of capital at an acceptable
risk. In the management of capital, the Company includes the components of
shareholders equity. Additional information regarding capital risk management
is disclosed in note 1.

The Company manages the capital
structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the
capital structure, the Company may attempt to issue new shares, acquire or
dispose of assets or obtain debt financing. In order to facilitate the
management of its capital requirements, the Company prepares annual expenditure
budgets that are updated as necessary depending on various factors, including
successful capital deployment and general industry conditions. The annual and
updated budgets are approved by the Board of Directors. In order to maximize
ongoing development efforts, the Company does not pay out dividends.

The Companys investment policy is to
invest its cash in highly liquid short-term interest-bearing investments.

c) Management of financial
risk

| | (i)  | Market Risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | Foreign Currency Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | The Companys exposure to foreign currency risk is
      primarily related to Canadian dollar- denominated financial instruments.
      The Company does not enter into foreign exchange contracts to manage this
      exposure. At April 30, 2012 the impact of a 10% depreciation or
      appreciation of the US dollar against the Canadian dollar would result in
      an increase or decrease of $59 in the Companys net loss.                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (ii) | Liquidity Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | Liquidity risk is the risk that the Company will
      encounter difficulty in raising funds to meet its operating commitments.
      The Company seeks to manage liquidity by maintaining adequate cash and
      cash equivalent balances to meet its short term commitments and by raising
      equity or debt financing as required to meet long term commitments. As
      disclosed in Note 1, the Company has no assurance that such financing will
      be available or be available on favourable terms. Factors that could
      affect the availability of financing include Pacific Rims performance as
      measured by various factors including the progress and permitting of the
      El Dorado project, the state of international debt and equity markets,
      investor perceptions and expectations and the global financial and metals
      markets.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | The following table summarizes the remaining contractual
      maturities of the Companys financial liabilities and operating and
      capital commitments at April 30, 2012:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                  |  | 2013  |  |  | 2014 and later |  |  | Total | 
| | ---------------- |  | ----- |  |  | -------------- |  |  | ----- | 
| |                  |  | $     |  |  | $              |  |  | $     | 
| | Accounts payable |  | 1,636 |  |  | -              |  |  | 1,636 | 
| | Operating leases |  | 47    |  |  | 18             |  |  | 65    | 
| |                  |  |       |  |  |                |  |  |       | 
| | Totals           |  | 1,683 |  |  | 18             |  |  | 1,701 | 

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

| | (iii) | Interest Rate Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | Interest rate risk is the risk that the fair value or
      future cash flows of a financial instrument will fluctuate because of
      changes in market interest rates. The risk that the Company will realize a
      loss as a result of a decline in the fair value of the investments
      included in cash and cash equivalents is limited because these investments
      are generally held to maturity. Based on the amount of cash and cash
      equivalents invested as at April 30, 2012 and assuming that all other
      variables remain constant, a 0.5% change in the applicable interest rate
      would not be significant.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iv)  | Credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | Credit risk is the risk of an unexpected loss if a
      customer or third party to a financial instrument fails to meet its
      contractual obligations. The maximum credit risk the Company is exposed to
      is 100% of cash and cash equivalents, short-term investments and
      receivables.                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | The Companys cash and short-term investments are held
      through large Canadian financial institutions. Short-term investments are
      composed of financial instruments issued by Canadian banks. These
      investments mature at various dates over the current operating period.
      .                                                                                                                                                                                                                                                                                                                                               

|   |                         
|-- | ------------------------
|6. | Receivables and prepaids

| |                   |   | April 30, |  |   | April 30, |  |   | May 1, | 
| | ----------------- | - | --------- |  | - | --------- |  | - | ------ | 
| |                   |   | 2012      |  |   | 2011      |  |   | 2010   | 
| |                   |   |           |  |   |           |  |   |        | 
| | Other receivables | $ | 60        |  | $ | 56        |  | $ | 34     | 
| | Prepaids          |   | 69        |  |   | 94        |  |   | 47     | 
| |                   |   |           |  |   |           |  |   |        | 
| |                   | $ | 129       |  | $ | 150       |  | $ | 81     | 

|   |                                     
|-- | ------------------------------------
|7. | Equipment and Leasehold Improvements

| |                                |   | April 30, |   |   | April 30, |   |   | May 1, |  
| | ------------------------------ | - | --------- | - | - | --------- | - | - | ------ | -
| |                                |   | 2012      |   |   | 2011      |   |   | 2010   |  
| | Office equipment and vehicles  | $ | 414       |   | $ | 376       |   | $ | 376    |  
| | Accumulated
      depreciation |   | (388      | ) |   | (368      | ) |   | (338   | )
| |                                | $ | 26        |   | $ | 8         |   | $ | 38     |  

|   |                        
|-- | -----------------------
|8. | Resource Property Costs

a) El Dorado

| |                                                       |   | April 30, |  |   | April 30, |  |   | May 1, | 
| | ----------------------------------------------------- | - | --------- |  | - | --------- |  | - | ------ | 
| |                                                       |   | 2012      |  |   | 2011      |  |   | 2010   | 
| |                                                       |   |           |  |   |           |  |   |        | 
| | Mining Property Acquisition Costs  El
      Dorado   | $ | 5,454     |  | $ | 5,454     |  | $ | 5,454  | 
| | Resource Property
      Acquisition Costs  Hog Ranch |   | 38        |  |   | -         |  |   | -      | 
| |                                                       | $ | 5,492     |  | $ | 5,454     |  | $ | 5,454  | 

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

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

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

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

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

The Company is unable to determine an
outcome of its international arbitration proceedings against the GOES under the
Investment Law. As at April 30, 2012, the Company has now incurred $4.3 million
relating to the preliminary objections arbitration proceedings.

Measurement uncertainty:

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

b) Other El Salvador Properties

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

Upon TSX approval of the agreement:
    100,000 shares plus 100,000 warrants of theCompanyAdvance payments:
    The
      greater of:First anniversary
      (shares issued)
    100,000 shares or $100 in shares of the CompanySecond anniversary
      (shares issued)
    140,000 shares or $140 in shares of the CompanyThird anniversary
      (shares issued)
    200,000 shares or $200 in shares of the CompanyFourth payment - Payment date is earlier of
    300,000 shares or $300 in shares of the Companythe date the Company receives confirmationthat the Government of the Republic of ElSalvador has granted a mining exploitationconcession for the El Dorado Project andFebruary 11, 2015Fifth payment  due on anniversary of fourth
    400,000 shares or $400 in shares of the Companypayment per February 2010 amendedagreement and subsequent anniversaries


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

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

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

c) Panama

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

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

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

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

d) Hog Ranch, Nevada, USA

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

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

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

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

Share payments of up to 1.0 million
shares as follows:

| | i)  | 200,000 common shares of Pacific Rim within five business
      days of receipt of approval of the Definitive Agreement by the TSX Venture
      Exchange (issued July 14, 2011); and        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii) | 200,000 common shares of Pacific Rim on or before each of
      the second, third, fourth and fifth anniversaries of the effective date of
      the Definitive Agreement being July 8, 2011.

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

|9. | Derivative Warrant
|-- | ------------------

Warrants issued in a private placement
that have an exercise price denominated in a currency other than the Companys
functional currency meet the definition of a derivative liability and are
recorded as a financial liability and are carried at fair value each period. The
warrants issued in the February 2008, January 2010, October 2010 and May 2011
private placements have an exercise price denominated in Canadian dollars, which
is not the Companys functional currency. As a result, the warrants do not to
meet the definition of an equity instrument and will be recorded at fair value
as a derivative liability, with the difference between the fair value and the
carrying value, upon transition, being recognized in equity. Subsequent changes
in the fair value of the warrants will be recognized as gains or losses in the
Statement of Income (Loss) and Comprehensive Income (Loss) until they are fully
exercised. Of the total number of warrants outstanding as at April 30, 2012, a
total of 30,375,000 have been classified as a financial liability and are marked
to market each period.

The remaining 2,789,100 warrants have
been issued to agents for services provided for a capital raising transaction
and are not classified as a financial liability of the Company because they are
accounted for under IFRS 2. The initial fair value of these warrants have been
recognized as a share issuance costs and included in contributed surplus.

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

| |                                |  | Warrants    |   |  | Weighted Average | 
| | ------------------------------ |  | ----------- | - |  | ---------------- | 
| |                                |  | Outstanding |   |  | Exercise Price   | 
| |                                |  |             |   |  | (Cdn$)           | 
| | Balance  April 30, 2010       |  | 19,802,350  |   |  | $0.61            | 
| | Issued                         |  | 10,790,000  |   |  | $0.30            | 
| | Expired                        |  | (7,061,350  | ) |  | $1.34            | 
| | Balance  April 30, 2011       |  | 23,531,000  |   |  | $0.30            | 
| | Issued                         |  | 9,633,100   |   |  | $0.30            | 
| | Balance  April
      30, 2012 |  | 33,164,100  |   |  | $0.30            | 

At April 30, 2012, there were
33,164,100 (April 30, 2011  23,531,000) warrants outstanding with a weighted
average exercise price of Cdn$0.30.

| | Number of
      warrants |    | Exercise price (Cdn$) |  |  | Expiry           | 
| | ------------------------ | -- | --------------------- |  |  | ---------------- | 
| | 12,741,000               | *  | 0.30                  |  |  | January 14, 2013 | 
| | 10,790,000               | ** | 0.30                  |  |  | October 8, 2012  | 
| | 9,633,100                | ** | 0.30                  |  |  | May 2, 2013      | 
| | 33,164,100               |    |                       |  |  |                  | 

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

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

| | Derivative warrant liability  April 30,
      2011 |   | 1,649  |  
| | --------------------------------------------------- | - | ------ | -
| | Derivative warrants issued                          |   | 657    |  
| | Derivative warrant issuance
      costs             |   | (44    | )
| | Fair
      market value change                      |   | (2,051 | )
| | Derivative warrant
      liability  April 30, 2012 | $ | 210    |  

---

|Pacific Rim Mining Corp.                                        
|----------------------------------------------------------------
|Notes to Consolidated Financial Statements                      
|Years Ended April 30, 2012 and 2011                             
|In thousands of U.S. Dollars, except share and per share amounts

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

| |                                 |  | April 30, 2012  |  |  | April 30, 2011  |  |  | May 1, 2010     | 
| | ------------------------------- |  | --------------- |  |  | --------------- |  |  | --------------- | 
| | Risk-free interest rate         |  | 1.34%           |  |  | 1.67%           |  |  | 1.81%           | 
| | Expected dividend yield         |  | NIL             |  |  | NIL             |  |  | NIL             | 
| | Expected stock price volatility |  | 103%            |  |  | 86%             |  |  | 93%             | 
| | Expected life in
      years    |  | 0.7
      years |  |  | 1.6
      years |  |  | 1.9
      years | 

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

|        |              
|------- | -------------
|**10.** | Share Capital

Common Shares

Authorized: Unlimited number of common
shares

Private Placement Financing

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

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

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

On October 8, 2010, the Company closed
a private placement with the issuance of 19,600,000 units at a price of Cdn$0.17
per unit for gross proceeds of $3,287 (Cdn$3,332). Each Unit is comprised of one
common share and one half of one common share purchase warrant. The Company
allocated $2,872 to the common shares and $415 to the share purchase warrants
based upon the relative fair values. Each warrant will entitle the holder to
acquire one common share of the Company for a period of two years from the
closing date at a price of Cdn$0.30.

The finders were issued a total of
660,000 units. The Company allocated $89 to the common shares and $14 to the
share purchase warrants based upon the relative fair values. The finders were
also issued 660,000 warrants, the warrants having the same terms as the warrants
issued under the units and having a fair value of $32.

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

| |                                 |  | May 3, 2011   |  |  | October 8, 2010 | 
| | ------------------------------- |  | ------------- |  |  | --------------- | 
| | Risk-free interest rate         |  | 1.67%         |  |  | 1.42%           | 
| | Expected dividend yield         |  | NIL           |  |  | NIL             | 
| | Expected stock price volatility |  | 91%           |  |  | 85%             | 
| | Expected life in
      years    |  | 2
      years |  |  | 2
      years   | 

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

Stock Options

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

a) Current options details are as
follows:

| |                                           |  |                   |   |  | Weighted Average | 
| | ----------------------------------------- |  | ----------------- | - |  | ---------------- | 
| |                                           |  |                   |   |  | Exercise Price   | 
| |                                           |  | Number of Options |   |  | (in
      Cdn $) | 
| | Options outstanding at April 30, 2010     |  | 8,133,334         |   |  | $0.58            | 
| | Granted                                   |  | 3,125,000         |   |  | $0.21            | 
| | Forfeited                                 |  | (963,334          | ) |  | $0.70            | 
| | Options outstanding at April 30, 2011     |  | 10,295,000        |   |  | $0.39            | 
| | Granted                                   |  | 3,635,000         |   |  | $0.16            | 
| | Expired                                   |  | (1,130,000        | ) |  | $1.00            | 
| | Options outstanding at April 30, 2012     |  | 12,800,000        |   |  | $0.27            | 
| | Options vested
      as at April 30, 2012 |  | 9,710,002         |   |  | $0.31            | 

b) Stock options outstanding at the end
of April 30, 2012 are as follows:

| |             |  |             |  |  |           |  |  | Remaining        |  |  |                      | 
| | ----------- |  | ----------- |  |  | --------- |  |  | ---------------- |  |  | -------------------- | 
| | Options     |  | Options     |  |  | Price per |  |  | contractual life |  |  |                      | 
| | Outstanding |  | Exercisable |  |  | Share     |  |  | (years)          |  |  | Expiry Date          | 
| |             |  |             |  |  |           |  |  |                  |  |  |                      | 
| | 225,000     |  | 225,000     |  |  | Cdn$0.96  |  |  | 0.33             |  |  | August 27, 2012      | 
| | 975,000     |  | 975,000     |  |  | Cdn$1.17  |  |  | 0.86             |  |  | March 9, 2013        | 
| | 2,555,000   |  | 2,555,000   |  |  | Cdn$0.17  |  |  | 1.67             |  |  | December 29, 2013    | 
| | 225,000     |  | 225,000     |  |  | Cdn$0.21  |  |  | 2.32             |  |  | August 25, 2014      | 
| | 30,000      |  | 30,000      |  |  | Cdn$0.29  |  |  | 2.36             |  |  | September 10, 2014   | 
| | 2,030,000   |  | 2,030,000   |  |  | Cdn$0.21  |  |  | 2.74             |  |  | January 26, 2015     | 
| | 250,000     |  | 250,000     |  |  | Cdn$0.20  |  |  | 3.11             |  |  | June 10, 2015        | 
| | 225,000     |  | 225,000     |  |  | Cdn$0.17  |  |  | 3.32             |  |  | August 25, 2015      | 
| | 2,550,000   |  | 1,700,000   |  |  | Cdn$0.21  |  |  | 3.63             |  |  | December 16, 2015    | 
| | 100,000     |  | -           |  |  | Cdn$0.92  |  |  | 3.73             |  |  | January 23, 2016     | 
| | 225,000     |  | 225,000     |  |  | Cdn$0.19  |  |  | 4.39             |  |  | September 18,2016    | 
| | 3,160,000   |  | 1,053,335   |  |  | Cdn$0.16  |  |  | 4.42             |  |  | September 28,2016    | 
| | 50,000      |  | 16,667      |  |  | Cdn$0.17  |  |  | 4.47             |  |  | October 16, 2016     | 
| | 200,000     |  | 200,000     |  |  | Cdn$0.13  |  |  | 4.91             |  |  | March
      26, 2017 | 
| | 12,800,000  |  | 9,710,002   |  |  |           |  |  | 3.02             |  |  |                      | 

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

c) Fair value of stock options granted

The 3,635,000 options granted during
the year ended April 30, 2012 have been allocated a total fair value of $418
with a weighted average fair value of $0.11. The allocation of fair value was
estimated using the Black-Scholes option pricing model, with the following
weighted average assumptions:

| |                                 |  | 2012          |  |  | 2011          | 
| | ------------------------------- |  | ------------- |  |  | ------------- | 
| | Risk-free interest rate         |  | 1.28% - 1.48% |  |  | 2.24% - 2.29% | 
| | Expected dividend yield         |  | NIL           |  |  | NIL           | 
| | Expected stock price volatility |  | 102% - 105%   |  |  | 96% - 99%     | 
| | Expected life in years          |  | 4.3  5 years |  |  | 4  5 years   | 

The total stock-based compensation
recognized during the year ended April 30, 2012 was $454 (2011 - $335) with the
offsetting entry to contributed surplus.

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

|        |                           
|------- | --------------------------
|**11.** | Related Party Transactions

Balances and transactions between the
Company and its subsidiaries have been eliminated on consolidation and are not
disclosed in this note. Details of the transactions between the Company and
other related parties are disclosed below.

Trading transactions

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

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

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

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

Amounts due to related parties are
unsecured, non-interest bearing and due on demand. Accounts payable at April 30,
2012 included $10 (April 30, 2011 - $8; May 1, 2010 - $7) which were due to a
company which the Chief Financial Officer is a partner.

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

Compensation of key management
personnel

The remuneration of the directors,
chief executive officer, , chief financial officer and vice president of
exploration (collectively, the key management personnel) during the years ended
April 30, 2012 and 2011 were as follows:

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

| | (i)  | Share-based compensation represents the expense for the
      years ended April 30, 2012 and 2011, translated at the average foreign
      exchange rate for the period.      
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) | Key management personnel were not paid post-employment
      benefits, termination benefits, or other long-term benefits during the
      years ended April 30, 2012 and 2011.

|    |             
|--- | ------------
|12. | Income Taxes

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

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

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

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

| |                                                            |   | April 30, |  |   | April 30, |  |   | May 1, | 
| | ---------------------------------------------------------- | - | --------- |  | - | --------- |  | - | ------ | 
| |                                                            |   | 2012      |  |   | 2011      |  |   | 2010   | 
| | Unrecognized deferred income tax assets:                   |   |           |  |   |           |  |   |        | 
| | Non-capital losses                                         | $ | 8,016     |  | $ | 8,499     |  | $ | 7,376  | 
| | Net capital
      losses                                   |   | 14,822    |  |   | 15,453    |  |   | 14,571 | 
| | Mineral
      properties and property, plant and equipment |   | 817       |  |   | 702       |  |   | 705    | 
| | Share issue costs and other                                |   | 136       |  |   | 123       |  |   | 207    | 
| | Total unrecognized
      deferred income tax assets        | $ | 23,791    |  | $ | 24,777    |  | $ | 22,859 | 

The Canadian federal and provincial
statutory tax rate decreased to 26 % due to legislative changes.

The Company has various losses and
deferred exploration expenditures that are available for carry forward to reduce
taxable income of future years. As at April 30, 2012, the Company has the
following tax loss carry forwards and deductions, with respect to its Canadian
and US operations and expire as follows:

| | Non-capital losses, expiring |   |        |  |   | United | 
| | ---------------------------- | - | ------ |  | - | ------ | 
| | as follows:                  |   | Canada |  |   | States | 
| | 2014                         | $ | 1,527  |  | $ | -      | 
| | 2015                         |   | 1,401  |  |   | -      | 
| | 2017                         |   | -      |  |   | 664    | 
| | 2019                         |   | -      |  |   | 24     | 
| | 2020                         |   | -      |  |   | 269    | 
| | 2021                         |   | -      |  |   | 612    | 
| | 2022                         |   | -      |  |   | 719    | 
| | 2023                         |   | -      |  |   | 684    | 
| | 2024                         |   | -      |  |   | 808    | 
| | 2025                         |   | -      |  |   | 970    | 
| | 2026                         |   | 1,614  |  |   | 313    | 
| | 2027                         |   | 1,976  |  |   | 271    | 
| | 2028                         |   | 3,192  |  |   | 536    | 
| | 2029                         |   | 3,888  |  |   | 549    | 
| | 2030                         |   | 3,186  |  |   | 645    | 
| | 2031                         |   | 2,397  |  |   | 602    | 
| | 2032                         |   | 1,076  |  |   | 769    | 
| |                              | $ | 20,257 |  | $ | 8,435  | 

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

| |                 |   | As at
    April 30, 2012 | 
| | --------------- | - | ------------------------ | 
| |                 |   | Local                    | 
| |                 |   | currency                 | 
| | Canadian dollar | $ | 20,022                   | 
| | US dollar       |   | 8,435                    | 
| |                 | $ | 28,457                   | 

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

|    |            
|--- | -----------
|13. | Commitments

| | a) | The Company has entered into an office space operating
      lease agreement, commencing February 1, 2008 to January 30, 2013. The
      minimum monthly lease payments are $3 (Cdn$3).
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                        
| | b) | The Company has entered into an office space operating
      lease agreement, commencing April 1, 2012 to December 31, 2014. The
      minimum monthly lease payments are $2 (Cdn$2).  

|    |                     
|--- | --------------------
|14. | Contingent Liability

On October 28 2008, the Company sold
its 49% interest in the Denton Rawhide mine and its interest in the agreement
with the Nevada Resource Recovery Group LLC (NRRG) to Kennecott Rawhide Mining
Company. Pursuant to the terms of the sale agreement, the Company is responsible
for its proportionate share of reclamation and environmental closure costs
exceeding $7 million related to the Denton Rawhide mine. The Company has not
accrued any closure costs for amounts greater than $7 million as at April 30,
2012. The Company estimates total reclamation and environmental closure costs to
be $4.9 million. The Company believes the contingent liability relating to the
reclamation and environmental closure costs exceeding $7 million is not
probable. Therefore no amount has been recorded as a liability for these costs.

|    |                      
|--- | ---------------------
|15. | Segmented Information

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

| | Total Assets |   | April
      30, 2012 |  |   | April
      30, 2011 |  |   | May
      1, 2010 | 
| | ------------ | - | -------------------- |  | - | -------------------- |  | - | ----------------- | 
| | Canada       | $ | 1,114                |  | $ | 1,069                |  | $ | 1,186             | 
| | USA          |   | 138                  |  |   | 22                   |  |   | 98                | 
| | El Salvador  |   | 5,690                |  |   | 5,590                |  |   | 5,643             | 
| | Total        | $ | 6,942                |  | $ | 6,681                |  | $ | 6,927             | 

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

| | Equipment and Leaseholds |   | April
      30, 2012 |  |   | April
      30, 2011 |  |   | May
      1, 2010 | 
| | ------------------------ | - | -------------------- |  | - | -------------------- |  | - | ----------------- | 
| | Canada                   | $ | 3                    |  | $ | 8                    |  | $ | 16                | 
| | USA                      |   | 23                   |  |   | -                    |  |   | 1                 | 
| | El
      Salvador        |   | -                    |  |   | -                    |  |   | 21                | 
| | Total                    | $ | 26                   |  | $ | 8                    |  | $ | 38                | 

| |                   |  |  |  |   | Year Ended April 30, |  
| | ----------------- |  |  |  | - | -------------------- | -
| | Net Income (Loss) |  |  |  |   | 2012                 |  
| | Canada            |  |  |  | $ | 941                  |  
| | USA               |  |  |  |   | (1,402               | )
| | El Salvador       |  |  |  |   | (1,362               | )
| | Other             |  |  |  |   | (11                  | )
| | Total             |  |  |  | $ | (1,834               | )

|    |                                                                
|--- | ---------------------------------------------------------------
|16. | Transition to International Financial
      Reporting Standards

IFRS 1 First-time Adoption of
International Financial Reporting Standards sets forth guidance for the initial
adoption of IFRS. Under IFRS 1 the standards are applied retrospectively at the
transitional statement of financial position date with all adjustments to assets
and liabilities taken to retained earnings unless certain exemptions are
applied. The Company has applied the following exemptions to its opening
statement of financial position dated May 1, 2010:

IFRS 3 - Business Combinations

IFRS 1 indicates that a first-time
adopter may elect not to apply IFRS 3 Business Combinations retrospectively to
business combinations that occurred before the date of transition to IFRS. The
Company has taken advantage of this election and will apply IFRS 3 to business
combinations that occur on or after May 1, 2010.

IFRS 2 - Share-based Payments

IFRS 1 permits, but does not require
first-time adopters to apply IFRS 2 Share-based Payments to equity instruments
that were granted on or before November 7, 2002, or equity instruments that were
granted subsequent to November 7, 2002 that had vested by the transition date.
The Company has elected to apply IFRS 2 only to awards granted after November 7,
2002 that vest after May 1, 2010.

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

| | Reconciliation of assets, liabilities,
equity as at May 1, 2010 and April 30, 2011 and net loss for year ended April
30, 2011, from those reported under Canadian GAAP is as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                      
| |                                                                                                                                                                                      
| | Total Assets under Canadian GAAP and IFRS                                                                                                                                            
| |                                                                                                                                                                                      
| | Total Liabilities Under Canadian
      GAAP                                                                                                                                          
| | Adjustments                                                                                                                                                                          
| | Deferred
      income tax recorded on acquisition of an asset (see note b)                                                                                                           
| | Derivative Liability (see note a)                                                                                                                                                    
| | Total Liabilities Under IFRS                                                                                                                                                         
| |                                                                                                                                                                                      
| |                                                                                                                                                                                      
| | Total Equity Under Canadian GAAP                                                                                                                                                     
| | Adjustments                                                                                                                                                                          
| | Deferred income tax recorded
      on acquisition of an asset (see note b)                                                                                                           
| | Derivative liability (see note a)                                                                                                                                                    
| | Total Equity
      Under IFRS                                                                                                                                                        

| |                                                                 |   | For the Year    |  
| | --------------------------------------------------------------- | - | --------------- | -
| |                                                                 |   | Ended April 30, |  
| |                                                                 |   | 2011            |  
| | Total Net Loss and Comprehensive Loss
      Under Canadian GAAP | $ | 4,002           |  
| | Adjustment                                                      |   |                 |  
| | Derivative liability (see note a)                               |   | (232            | )
| | Total Net Loss
      and Comprehensive Loss Under IFRS          | $ | 3,770           |  

a) Derivative Liability

Under Canadian GAAP warrants are
accounted for at their carrying value within shareholders equity. Under IFRS,
these warrants that have an exercise price denominated in a currency other than
the Companys functional currency meet the definition of a derivative liability
and are recorded as a financial liability and are marked-to-market each period.
The warrants issued in January 2010 and October 2010 private placement have an
exercise price denominated in Canadian dollars, which is not the Companys
functional currency. As a result, the warrants do not to meet the definition of
an equity instrument and will be recorded at fair value as a derivative
liability, with the difference between the fair value and the carrying value,
upon transition, being recognized in equity. Subsequent changes in the fair
value of the warrants will be recognized as gains or losses in the Statement of
Income (Loss) and Comprehensive Income (Loss) until they are fully exercised.

On transition to IFRS, as at May 1,
2010, the Company recorded a reclassification adjustment to record the warrant
liability, net of derivative issuance costs of $1,482, decreased the contributed
surplus by $2,324 and decreased the deficit at transition by $842.

During the year ended April 30, 2011,
the Company recorded a gain of 248 resulting from the re- measurement to fair
value of this derivative liability and also reclassified issuance costs of $17
relating to these warrants to the statement of loss and comprehensive loss from
equity.

As at April 30, 2011, the Company
recorded a reclassification adjustment to record the warrant liability of $1,649
and decreased the contributed surplus by $2,722 and decreased the deficit by
$1,073.

---

|Pacific Rim Mining Corp.                                              
|----------------------------------------------------------------------
|Notes to Consolidated Financial Statements                            
|Years Ended April 30, 2012 and 2011                                   
|In thousands of
      U.S. Dollars, except share and per share amounts

b) Taxes

Under IFRS, temporary differences
resulting from the initial recognition of assets or liabilities that do not
affect accounting or taxable profit do not result in a deferred tax asset or
liability. As of the date of transition, the Company has therefore derecognized
the impact of future income tax liabilities which had previously been recognized
on the asset acquisition of the El Dorado project.

As at May 1, 2010, there was a
decrease in the deferred tax liability from $1,046 to $Nil, a decrease of $1,046
and a corresponding decrease in the deficit.

There are no material differences
between the cash flow statements presented under IFRS and Canadian GAAP.

---