RUBICON
      MINERALS CORPORATION





Consolidated
      Financial Statements





(Stated
      in Canadian Dollars)





December
      31, 2008


and


December
      31, 2007

















RUBICON
      MINERALS CORPORATION





MANAGEMENT’S
      RESPONSIBILITY FOR FINANCIAL REPORTING





Management
      of Rubicon Minerals Corporation is responsible for the integrity and fair
      presentation of the financial information contained in this annual report which
      has been approved by the board of directors. Where appropriate, the financial
      information, including financial statements, reflects amounts based on the
      best
      estimates and judgments of management. The financial statements have been
      prepared in accordance with accounting principles generally accepted in Canada
      and reconciled to accounting principles generally accepted in the United States
      as set out in note 21. Financial information presented elsewhere in the annual
      report is consistent with that disclosed in the financial
      statements.





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting.  Any system of internal control over financial
      reporting, no matter how well designed, has inherent limitations. Therefore,
      even those systems determined to be effective can provide only reasonable
      assurance with respect to financial statement preparation and
      presentation.





Management
      has a process in place to evaluate internal control over financial reporting
      based on the criteria established, by the Committee of Sponsoring Organizations
      of the Treadway Commission (COSO), in Internal Control - Integrated Framework.
      Based on that evaluation, management has concluded that internal control over
      financial reporting was effective as of December 31, 2008. De Visser Gray LLP,
      an independent registered public accounting firm of Chartered Accountants,
      appointed by the shareholders, have performed an audit on the effectiveness
      of
      our internal controls over financial reporting, as of December 31, 2008 and
      their report is attached.





The
      Board
      of Directors oversees management’s responsibility for financial reporting and
      internal control systems through an Audit Committee, which is composed entirely
      of independent directors. The Audit Committee meets periodically with management
      and the independent auditors to review the scope and results of the annual
      audit
      and to review the financial statements and related financial reporting and
      internal control matters before the financial statements are approved by the
      Board of Directors and submitted to the shareholders.





De
      Visser
      Gray LLP have audited our financial statements in accordance with generally
      accepted auditing standards in Canada and the Public Company Accounting
      Oversight Board (United States), and have expressed their opinion in the
      auditor’s report.











“David
                Adamson”
            
            “Robert
                Lewis”David
                Adamson
            
            Robert
                LewisPresident
            
            Chief
                Financial Officer















































Suite
      1540 – 800 West Pender Street, Vancouver  BC  V6C
      2V6


Tel:
      604.623.3333   Toll free:
      1.866.365.4706   Fax:  604.623.3355   E-mail:
      rubicon@rubiconminerals.com


www.rubiconminerals.com


D
      E  V I S S E R  G R A Y  L L P


CHARTERED
      ACCOUNTANTS


401
      - 905 West Pender Street


Vancouver,
      BC Canada


V6C
      1L6


REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To
      the
      Shareholders of Rubicon Minerals Corporation





We
      have
      audited the consolidated balance sheets of Rubicon Minerals Corporation (“the
      Company”) as at December 31, 2008 and 2007, and the consolidated statements of
      operations and deficit, comprehensive loss and cash flows for each of the years
      in the three-year period ended December 31, 2008. We have also audited the
      Company’s internal control over financial reporting as of December 31, 2008
      based on the criteria established in the Internal Control-Integrated Framework
      issued by the Committee of Sponsoring Organizations of the Treadway Commission
      (COSO). The Company’s management is responsible for these financial statements,
      for maintaining effective internal control over financial reporting, and for
      its
      assessment of the effectiveness of internal control over financial reporting.
      Our responsibility is to express an opinion on these financial statements and
      an
      opinion on the Company’s internal control over financial reporting based on our
      audits.





We
      conducted our audits in accordance with generally accepted auditing standards
      in
      Canada and the standards of the Public Company Accounting Oversight Board
      (United States). Those standards require that we plan and perform the audit
      to
      obtain reasonable assurance about whether the financial statements are free
      of
      material misstatement and whether effective internal control over financial
      reporting was maintained in all material respects. Our audits of the financial
      statements included examining, on a test basis, evidence supporting the amounts
      and disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, and evaluating the overall
      financial statement presentation. Our audit of internal control over financial
      reporting included obtaining an understanding of internal control over financial
      reporting, assessing the risk that a material weakness exists, and testing
      and
      evaluating the design and operating effectiveness of internal control based
      on
      the assessed risk. Our audits also included performing such other procedures
      as
      we considered necessary in the circumstances. We believe that our audits provide
      a reasonable basis for our opinions.





A
      company’s internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company’s internal control over
      financial reporting includes those policies and procedures that (1) pertain
      to
      the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company; (2)
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the company are
      being made only in accordance with authorizations of management and directors
      of
      the company; and (3) provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use, or disposition of the company’s
      assets that could have a material effect on the financial
      statements.





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





In
      our
      opinion, these consolidated financial statements present fairly, in all material
      respects, the financial position of the Company as at December 31, 2008 and
      2007
      and the results of its operations and cash flows for each of the years in the
      three year period ended December 31, 2008 in accordance with Canadian generally
      accepted accounting principles. Also, in our opinion, the Company maintained,
      in
      all material respects, effective internal control over financial reporting
      as of
      December 31, 2008, based on the criteria established in the Internal
      Control-Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission (COSO).





“De
      Visser Gray LLP”





CHARTERED
      ACCOUNTANTS





Vancouver,
      British Columbia


March
      26,
      2009








RUBICON
      MINERALS CORPORATION


Consolidated
      Balance Sheets


(Stated
      in Canadian
      Dollars)





As
                at December 312008
            
            
            2007AssetsCurrent
                assetsCash
                and cash equivalents
            
            $
            18,753,749
            
            
            $
            14,791,309Temporary
                investments (note 8)
            
            
            4,011,587
            
            
            
            15,082,513Marketable
                securities (note 9)
            
            
            73,380
            
            
            
            -Amounts
                receivable
            
            
            193,461
            
            
            
            1,708,000Prepaid
                expenses and supplier advances
            
            
            109,757
            
            
            
            43,49823,141,934
            
            
            
            31,625,320Investment
                in companies
                spun-off(notes 3 and 10)
            
            
            153,400
            
            
            
            439,629Equipment
                (note
                11)
            
            
            177,115
            
            
            
            157,786Other
                investments (note
                12)
            
            
            499,561
            
            
            
            2,637,877Mineral
                property costs
                (note 13) (Schedule)
            
            
            82,862,073
            
            
            
            66,157,058$
            106,834,083
            
            
            $
            101,017,670LiabilitiesCurrent
                liabilitiesAccounts
                payable and accrued liabilities
            
            $
            793,393
            
            
            $
            811,130Corporate
                income tax payable
            
            
            22,603
            
            
            
            74,000815,996
            
            
            
            885,130Future
                income taxes
                (note 16)
            
            
            14,773,269
            
            
            
            14,774,288Shareholders’
                equityShare
                capital (note 14(a))
            
            
            109,912,429
            
            
            
            103,572,229Contributed
                surplus (note 14(d))
            
            
            4,012,933
            
            
            
            3,082,261Deficit
            
            
            (21,351,403
            )
            
            
            (21,845,844
            )Accumulated
                other comprehensive income (note 15)
            
            
            (1,329,141
            )
            
            
            549,60691,244,818
            
            
            
            85,358,252$
            106,834,083
            
            
            $
            101,017,670See
                accompanying notes to the consolidated financial
                statements





Commitments
                (Note 18)Subsequent
                events (Note 20)





Approved
                by the Board of Directors:“David
                Adamson”
            
            “John
                R. Brodie”David
                Adamson, Director
            
            John
                R. Brodie, FCA, Director





RUBICON
      MINERALS CORPORATION


Consolidated
      Statements of Operations and Deficit


(Stated
      in Canadian Dollars)




For
                the years ended December 312008
            
            
            2007
            
            
            2006ExpensesAmortization
            
            $
            70,391
            
            
            $
            52,304
            
            
            $
            21,442Consulting
            
            
            74,259
            
            
            
            85,569
            
            
            
            95,346General
                mineral exploration
            
            
            232,932
            
            
            
            189,027
            
            
            
            236,278Investor
                relations
            
            
            630,626
            
            
            
            397,115
            
            
            
            592,141Office
            
            
            174,387
            
            
            
            270,288
            
            
            
            197,252Part
                XII.6 tax on flow-through
            
            
            159,279
            
            
            
            -
            
            
            
            23,999Professional
                fees
            
            
            200,085
            
            
            
            353,126
            
            
            
            281,364Rent
            
            
            81,308
            
            
            
            54,586
            
            
            
            81,207Re-organization
                costs
            
            
            -
            
            
            
            64,691
            
            
            
            925,439Salaries
            
            
            944,150
            
            
            
            1,032,130
            
            
            
            784,731Stock-based
                compensation (note 14(b))
            
            
            659,806
            
            
            
            576,605
            
            
            
            220,964Transfer
                agent and regulatory filing fees
            
            
            121,161
            
            
            
            130,141
            
            
            
            103,383Travel
                and accommodation
            
            
            138,534
            
            
            
            122,457
            
            
            
            41,000Write-off
                of mineral property costs
            
            
            -
            
            
            
            224,696
            
            
            
            258,823Loss
                before other items
            
            
            (3,486,918
            )
            
            
            (3,552,735
            )
            
            
            (3,863,369
            )Interest
                and other income
            
            
            732,798
            
            
            
            941,330
            
            
            
            355,300Option
                and administration fees received in excess of property
                costs
            
            
            578,664
            
            
            
            317,801
            
            
            
            448,998Gain
                (loss) on sale of investments
            
            
            (222,491
            )
            
            
            7,822
            
            
            
            128,880Other
                (losses) and gains
            
            
            (357,343
            )
            
            
            128,779
            
            
            
            142,223Loss
                on disposal of equipment
            
            
            (4,475
            )
            
            
            -
            
            
            
            (3,226
            )Loss
                on equity investment
            
            
            -
            
            
            
            (75,938
            )
            
            
            (1,338,877
            )Current
                income tax expense
            
            
            (22,603
            )
            
            
            (7,000
            )
            
            
            (152,000
            )Future
                income tax recovery (note 14(a)(4))
            
            
            3,276,809
            
            
            
            23,560
            
            
            
            477,400Allocation
                of subsidiary’s loss to minority interest
            
            
            -
            
            
            
            -
            
            
            
            16,751Net
                income (loss) for the year
            
            
            494,441
            
            
            
            (2,216,381
            )
            
            
            (3,787,920
            )Deficit,
                beginning of the year
            
            
            (21,845,844
            )
            
            
            (19,629,463
            )
            
            
            (15,841,543
            )Deficit,
                end of the year
            
            $
            (21,351,403
            )
            
            $
            (21,845,844
            )
            
            $
            (19,629,463
            )Net
                income (loss) per common share
            
            $
            0.00
            
            
            $
            (0.02
            )
            
            $
            (0.05
            )Fully
                diluted income (loss) per common share
            
            $
            0.00
            
            
            $
            (0.02
            )
            
            $
            (0.05
            )Weighted
                average number of common shares outstanding
            
            
            148,878,778
            
            
            
            118,158,856
            
            
            
            73,500,891Fully
                diluted weighted average number of common shares
                outstanding*
            
            
            150,421,393
            
            
            
            118,158,856
            
            
            
            73,500,891


*
                The exercise of options and warrants, in the years ended December
                31, 2007
                and 2006, would have been anti-dilutive and so have been excluded
                from the
                calculation of fully diluted common shares in those years.


See
      accompanying notes to the
      consolidated financial statements


RUBICON
      MINERALS
      CORPORATION


Consolidated
      Statements of Comprehensive Loss


(Stated
      in Canadian Dollars)





For
                the years ended December 312008
            
            
            2007
            
            
            2006Net
                income (loss) for the year
            
            $
            494,441
            
            
            $
            (2,216,381
            )
            
            $
            (3,787,920
            )Other
                comprehensive income (loss) in the yearFair
                value adjustment to available for sale financial
                instruments:Temporary
                investments
            
            
            25,021
            
            
            
            (19,852
            )
            
            
            -Other
                investments
            
            
            (2,069,085
            )
            
            
            792,327
            
            
            
            -Less
                realized (gains) and losses on other investments reclassified to
                net
                income
            
            
            222,491
            
            
            
            (7,822
            )
            
            
            -Less
                impairment losses on other investments reclassified to net
                income
            
            
            281,647
            
            
            
            -
            
            
            
            -(1,564,947
            )
            
            
            784,505Investment
                in companies spun-off
            
            
            (338,821
            )
            
            
            (423,600
            )
            
            
            -Other
                comprehensive income (loss) in the year
            
            
            (1,878,747
            )
            
            
            341,053
            
            
            
            -Comprehensive
                income (loss) for the year
            
            
            (1,384,306
            )
            
            
            (1,875,328
            )
            
            
            (3,787,920
            )Adjustment
                to accumulated other comprehensive income on adoption of new
                standard
            
            
            -
            
            
            
            208,553
            
            
            
            -Accumulated
                comprehensive loss, beginning of the year
            
            
            (21,296,238
            )
            
            
            (19,629,463
            )
            
            
            (15,841,543
            )Accumulated
                comprehensive loss, end of the year
            
            $
            (22,680,544
            )
            
            $
            (21,296,238
            )
            
            $
            (19,629,463
            )


See
      accompanying notes to the consolidated financial statements


RUBICON
      MINERALS CORPORATION


Consolidated
      Statements of Cash Flows


(Stated
      in Canadian Dollars)




For
                the years ended December 312008
            
            
            2007
            
            
            2006Cash
                Provided by (Used for):Operating
                ActivitiesNet
                income (loss) for the year
            
            $
            494,441
            
            
            $
            (2,216,381
            )
            
            $
            (3,787,920
            )Adjustment
                for items which do not involve cash:Amortization
            
            
            70,391
            
            
            
            52,304
            
            
            
            21,442Stock-based
                compensation in administration
            
            
            659,806
            
            
            
            576,605
            
            
            
            220,964Write-off
                of mineral property costs
            
            
            -
            
            
            
            224,696
            
            
            
            258,823(Gain)
                loss on sale of investments
            
            
            222,491
            
            
            
            (176,201
            )
            
            
            (271,103
            )Other
                gains and losses
            
            
            342,788
            
            
            
            -
            
            
            
            -Loss
                on equity investment
            
            
            -
            
            
            
            75,938
            
            
            
            1,338,877Settlement
                gains and non-cash expenses
            
            
            -
            
            
            
            -
            
            
            
            3,226Interest
                and other income
            
            
            43,458
            
            
            
            135,318
            
            
            
            35,318Future
                income tax recovery
            
            
            (3,276,809
            )
            
            
            (23,560
            )
            
            
            (477,400
            )Allocation
                of subsidiary’s loss to minority interest
            
            
            -
            
            
            
            -
            
            
            
            (16,751
            )(1,443,434
            )
            
            
            (1,351,281
            )
            
            
            (2,674,524
            )Changes
                in non-cash working capital components:Prepaid
                expenses
            
            
            (66,259
            )
            
            
            (14,750
            )
            
            
            (9,665
            )Amounts
                receivable
            
            
            454,865
            
            
            
            (157,694
            )
            
            
            (293,247
            )Accounts
                payable and accrued liabilities
            
            
            (147,039
            )
            
            
            66,749
            
            
            
            (499,095
            )Income
                taxes payable
            
            
            (51,397
            )
            
            
            (78,000
            )
            
            
            152,000(1,253,264
            )
            
            
            (1,534,976
            )
            
            
            (3,324,531
            )Investing
                Activities*Temporary
                investments
            
            
            11,052,489
            
            
            
            (11,218,285
            )
            
            
            (4,019,398
            )Deferred
                property costs
            
            
            (16,893,521
            )
            
            
            (11,415,083
            )
            
            
            (3,661,518
            )Recovery
                of property costs incurred
            
            
            1,392,438
            
            
            
            2,844,874
            
            
            
            2,430,434Management
                and administration fees received
            
            
            7,193
            
            
            
            163,789
            
            
            
            164,117Purchase
                of investments and equipment
            
            
            (94,195
            )
            
            
            (144,830
            )
            
            
            (953,437
            )Proceeds
                of disposal of equipment
            
            
            -
            
            
            
            -
            
            
            
            3,750Proceeds
                on sales of investments
            
            
            193,060
            
            
            
            1,659,211
            
            
            
            755,758(4,342,536
            )
            
            
            (18,110,324
            )
            
            
            (5,280,294
            )Financing
                Activities*Common

                shares issued and subscriptions received
            
            
            10,298,529
            
            
            
            27,737,051
            
            
            
            13,904,766Share
                issue costs
            
            
            (740,289
            )
            
            
            (534,122
            )
            
            
            (876,764
            )9,558,240
            
            
            
            27,202,929
            
            
            
            13,028,002Increase
                in cash and cash equivalents
            
            
            3,962,440
            
            
            
            7,557,629
            
            
            
            4,423,177Cash
                and cash equivalents, beginning of the year
            
            
            14,791,309
            
            
            
            7,233,680
            
            
            
            2,810,503Cash
                and cash equivalents, end of the year
            
            $
            18,753,749
            
            
            $
            14,791,309
            
            
            $
            7,233,680




During
      2008, the Company received $732,452 (2007 – $794,476) in interest and paid $879
      (2007 - $744) in interest.




*Supplemental
      Disclosure of Non-Cash Investing and Financing Activities – Refer to Note
      19.


See
      accompanying notes to the consolidated financial statements


RUBICON
      MINERALS
      CORPORATION


Consolidated
      Statements of Mineral Property Costs


(Stated
      in Canadian Dollars)





Balance
                December 31 2006
            
            
            Gross
                Expenditures 2007
            
            
            Write-off,
                Recovery or Sold 2007
            
            
            Balance
                December 31 2007
            
            
            Gross
                Expenditures 2008
            
            
            Recovery
              2008
            
            
            Balance
                December 31 2008CANADAONTARIORED
                LAKE MINING DIVISIONPhoenix
                Gold ProjectAcquisition
                and option payments
            
            $
            3,651,540
            
            
            $
            75,000
            
            
            $
            -
            
            
            $
            3,726,540
            
            
            $
            328,744
            
            
            $
            -
            
            
            $
            4,055,284Exploration
                costs:Geological
                and geochemical
            
            
            1,644,349
            
            
            
            187,437
            
            
            
            -
            
            
            
            1,831,786
            
            
            
            333,167
            
            
            
            -
            
            
            
            2,164,953Drilling
            
            
            6,003,586
            
            
            
            2,514,748
            
            
            
            -
            
            
            
            8,518,334
            
            
            
            10,795,895
            
            
            
            -
            
            
            
            19,314,229Geophysical
            
            
            101,147
            
            
            
            -
            
            
            
            -
            
            
            
            101,147
            
            
            
            355,115
            
            
            
            -
            
            
            
            456,262Travel
                and accommodation
            
            
            193,588
            
            
            
            14,917
            
            
            
            -
            
            
            
            208,505
            
            
            
            96,635
            
            
            
            -
            
            
            
            305,140Other
            
            
            32,056
            
            
            
            60,846
            
            
            
            -
            
            
            
            92,902
            
            
            
            16,833
            
            
            
            -
            
            
            
            109,735Underground
                Permitting
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            734,849
            
            
            
            -
            
            
            
            734,84911,626,266
            
            
            
            2,852,948
            
            
            
            -
            
            
            
            14,479,214
            
            
            
            12,661,238
            
            
            
            -
            
            
            
            27,140,452Other
                Red Lake PropertiesAcquisition
                and option payments
            
            
            534,361
            
            
            
            66,000
            
            
            
            (121,750
            )
            
            
            478,611
            
            
            
            26,716
            
            
            
            (21,149
            )
            
            
            484,178Exploration
                costs:Geological
                and geochemical
            
            
            1,184,316
            
            
            
            235,667
            
            
            
            (138,097
            )
            
            
            1,281,886
            
            
            
            109,308
            
            
            
            (49,061
            )
            
            
            1,342,133Drilling
            
            
            666,811
            
            
            
            1,857,096
            
            
            
            (1,807,559
            )
            
            
            716,348
            
            
            
            1,367,662
            
            
            
            (280,635
            )
            
            
            1,803,375Geophysical
            
            
            280,310
            
            
            
            -
            
            
            
            (10,506
            )
            
            
            269,804
            
            
            
            64,421
            
            
            
            -
            
            
            
            334,225Travel
                and accommodation
            
            
            91,519
            
            
            
            17,650
            
            
            
            (8,003
            )
            
            
            101,166
            
            
            
            21,109
            
            
            
            (300
            )
            
            
            121,975Other
            
            
            40,895
            
            
            
            13,962
            
            
            
            (2,153
            )
            
            
            52,704
            
            
            
            15,096
            
            
            
            -
            
            
            
            67,800Administration
                fees (earned)
            
            
            (525,810
            )
            
            
            -
            
            
            
            (116,410
            )
            
            
            (642,220
            )
            
            
            -
            
            
            
            (5,860
            )
            
            
            (648,080
            )2,272,402
            
            
            
            2,190,375
            
            
            
            (2,204,478
            )
            
            
            2,258,299
            
            
            
            1,604,312
            
            
            
            (357,005
            )
            
            
            3,505,606McCuaig
                JV ProjectAcquisition
                and option payments
            
            
            119,890
            
            
            
            6,000
            
            
            
            -
            
            
            
            125,890
            
            
            
            -
            
            
            
            -
            
            
            
            125,890Exploration
                costs:Geological
                and geochemical
            
            
            451,042
            
            
            
            85,394
            
            
            
            (5,115
            )
            
            
            531,321
            
            
            
            -
            
            
            
            -
            
            
            
            531,321Drilling
            
            
            1,146,232
            
            
            
            1,873,932
            
            
            
            (746,104
            )
            
            
            2,274,060
            
            
            
            28,318
            
            
            
            (15,564
            )
            
            
            2,286,814Geophysical
            
            
            27,425
            
            
            
            -
            
            
            
            -
            
            
            
            27,425
            
            
            
            -
            
            
            
            -
            
            
            
            27,425Travel
                and accommodation
            
            
            32,192
            
            
            
            6,028
            
            
            
            (2,411
            )
            
            
            35,809
            
            
            
            -
            
            
            
            -
            
            
            
            35,809Other
            
            
            2,000
            
            
            
            -
            
            
            
            -
            
            
            
            2,000
            
            
            
            6,000
            
            
            
            -
            
            
            
            8,000Administration
                fees (earned)
            
            
            (27,635
            )
            
            
            -
            
            
            
            (47,379
            )
            
            
            (75,014
            )
            
            
            -
            
            
            
            (1,331
            )
            
            
            (76,345
            )1,751,146
            
            
            
            1,971,354
            
            
            
            (801,009
            )
            
            
            2,921,491
            
            
            
            34,318
            
            
            
            (16,895
            )
            
            
            2,938,914English
                Royalty DivisionAcquisition
                and option payments
            
            
            -
            
            
            
            481,142
            
            
            
            (481,142
            )
            
            
            -
            
            
            
            153,847
            
            
            
            (153,847
            )
            
            
            -Exploration
                costs:Geological
                and geochemical
            
            
            53,238
            
            
            
            3,370
            
            
            
            (56,608
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Travel
                and accommodation
            
            
            9,119
            
            
            
            -
            
            
            
            (9,119
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Other
            
            
            107
            
            
            
            14,293
            
            
            
            (14,400
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -62,464
            
            
            
            498,805
            
            
            
            (561,269
            )
            
            
            -
            
            
            
            153,847
            
            
            
            (153,847
            )
            
            
            -


See
      accompanying notes to the consolidated financial statements


RUBICON
      MINERALS CORPORATION


Consolidated
      Statements of Mineral Property Costs


(Stated
      in Canadian Dollars)





Balance
                December 31 2006
            
            
            Gross
                Expenditures 2007
            
            
            Write-off,
                Recovery or Sold 2007
            
            
            Balance
                December 31 2007
            
            
            Gross
                Expenditures 2008
            
            
            Recovery
              2008
            
            
            Balance
                December 31 2008UNITED
                STATES OF AMERICAALASKAAlaska
                Properties (McEwen Acquisition)Acquisition
                and option payments
            
            $
            -
            
            
            $
            37,200,284
            
            
            $
            -
            
            
            $
            37,200,284
            
            
            $
            -
            
            
            $
            -
            
            
            $
            37,200,284Exploration
                costsGeological
                and geochemical
            
            
            -
            
            
            
            777,287
            
            
            
            -
            
            
            
            777,287
            
            
            
            1,037,621
            
            
            
            -
            
            
            
            1,814,908Drilling
            
            
            -
            
            
            
            1,800,184
            
            
            
            
            
            
            
            1,800,184
            
            
            
            571,325
            
            
            
            -
            
            
            
            2,371,509Travel
                and accommodation
            
            
            -
            
            
            
            8,320
            
            
            
            -
            
            
            
            8,320
            
            
            
            17,910
            
            
            
            -
            
            
            
            26,230Other
            
            
            -
            
            
            
            423,960
            
            
            
            -
            
            
            
            423,960
            
            
            
            401,295
            
            
            
            -
            
            
            
            825,255-
            
            
            
            40,210,035
            
            
            
            -
            
            
            
            40,210,035
            
            
            
            2,028,151
            
            
            
            -
            
            
            
            42,238,186NEVADANevada
                Properties (McEwen Acquisition)Acquisition
                and option payments
            
            
            -
            
            
            
            6,176,343
            
            
            
            -
            
            
            
            6,176,343
            
            
            
            1,192
            
            
            
            -
            
            
            
            6,177,535Exploration
                costsGeological
                and geochemical
            
            
            -
            
            
            
            79,449
            
            
            
            -
            
            
            
            79,449
            
            
            
            217,528
            
            
            
            -
            
            
            
            296,977Geophysics
            
            
            -
            
            
            
            31,809
            
            
            
            -
            
            
            
            31,809
            
            
            
            530,849
            
            
            
            -
            
            
            
            562,658Other
            
            
            -
            
            
            
            418
            
            
            
            -
            
            
            
            418
            
            
            
            1,327
            
            
            
            -
            
            
            
            1,745-
            
            
            
            6,288,019
            
            
            
            -
            
            
            
            6,288,019
            
            
            
            750,896
            
            
            
            -
            
            
            
            7,038,915Mineral
                Property Costs
            
            $
            15,712,278
            
            
            $
            54,011,536
            
            
            $
            (3,566,756
            )
            
            $
            66,157,058
            
            
            $
            17,232,762
            
            
            $
            (527,747
            )
            
            $
            82,862,073





Mineral
      Property Costs Written-off


The
      composition of the write-off figures by property classification is as
      follows:





2006
            
            
            2007
            
            
            2008Other
                Red Lake Properties
            
            $
            -
            
            
            $
            224,696
            
            
            $
            -Avalon
                Trend Properties
            
            
            259,210
            
            
            
            -
            
            
            
            -Golden
                Promise Trend Properties
            
            
            6
            
            
            
            -
            
            
            
            -Other
                Newfoundland Properties
            
            
            (393
            )
            
            
            -
            
            
            
            -Total
                costs written-off
            
            
            258,823
            
            
            
            224,696
            
            
            
            -Costs
                recovered through Toquima plan of arrangement
            
            
            1,672,479
            
            
            
            -
            
            
            
            -Costs
                transferred to Paragon Minerals pursuant to the Plan of
                Arrangement
            
            
            6,979,705
            
            
            
            -
            
            
            
            -Aggregate
                cost recoveries and administration fees received
            
            
            3,084,118
            
            
            
            3,342,060
            
            
            
            527,747Total
                write-offs and recoveries
            
            $
            11,995,125
            
            
            $
            3,566,756
            
            
            $
            527,747


See
      accompanying notes to the consolidated financial statements





1.
            NATURE
                AND CONTINUANCE OF OPERATIONS





The
      Company is incorporated in British Columbia, Canada and has been primarily
      involved in the acquisition and exploration of mineral property interests in
      Canada and the United States.  At the date of these financial
      statements, the Company has not been able to identify a known body of commercial
      grade ore on any of its properties.  The ability of the Company to
      recover the costs it has incurred to date on these properties is dependent
      upon
      the Company being able to identify a commercial ore body, to finance its
      exploration and development costs and to resolve any environmental, regulatory,
      or other constraints which may hinder the successful development of the
      property.  The Company is in the development stage with no source of
      operating revenue and is dependent upon equity financing to maintain its current
      operations.





2.
            MCEWEN
                PROPERTY ACQUISITION AND FINANCING





On
      May
      18th, 2007 the Company closed the McEwen acquisition and financing with Robert
      McEwen (“McEwen”), Evanachan Limited, Lexam Explorations Inc. and McEwen Capital
      Corp. (companies controlled by McEwen) pursuant to which the Company acquired
      two property groups totaling approximately 535,000 acres in Alaska and from
      Lexam Explorations Inc., a 225,000 acre property in the northeastern part of
      Nevada, extending into Utah. The purchase price totaled $28 million consisting
      of 40 million common shares of the Company at a deemed price of $0.70 per share.
      In addition, McEwen made a private placement in the Company for $10 million
      and
      arranged a further $5 million private placement by other persons for total
      proceeds of $15 million. The placements totaled 21.4 million units consisting
      of
      one common share and one half of one share purchase warrant, exercisable for
      two
      years at $1.50 per whole warrant. McEwen and the associated companies, will
      have
      a right of first refusal on all future equity or debt financings as long as,
      together, they control greater than 10% of the issued and outstanding capital
      of
      the Company.  Refer also to notes 13 and 14.





3.
            RE-ORGANIZATION





On
      December 8, 2006, the Company completed a corporate restructuring by way of
      a
      Plan of Arrangement (“POA”), which had the result of dividing its existing
      assets into three separate public companies. Following the corporate
      restructuring, the Company continues to hold its Ontario properties in the
      Red
      Lake area while its Newfoundland properties were distributed into a new public
      company called Paragon Minerals Corporation (“Paragon”) which trades on the TSX
      Venture Exchange.  Each Rubicon shareholder received one Paragon
      common share for every six Rubicon common shares held on December 19th,
      2006.  The Company transferred its approximately 39.6% shareholdings
      in Africo Resources Ltd. into a new TSX-listed company, which adopted the name
      Africo Resources Ltd. (“New Africo”).  New Africo controlled an option
      to acquire a 75% interest in a copper-cobalt resource located in the Democratic
      Republic of Congo.  Under the POA, all other holders of Africo shares
      exchanged their shares for New Africo common shares on a 1:1 basis, while each
      Rubicon shareholder received 0.0925 of a New Africo common share for each
      Rubicon common share held on December 19th, 2006.  Pursuant to the
      POA, the rights of pre-existing Rubicon option and warrant holders were
      maintained through agreements with the new companies to settle with their own
      shares their pro-rata portions of these instruments at a pro-rata share of
      the
      original exercise price. In the case of New Africo, any exercise proceeds are
      to
      be returned to Rubicon and Rubicon also has the right to exercise any of the
      warrants or options which expire, for a period of 30 days after the expiry
      date.  As New Africo must remit all such proceeds to Rubicon, the
      exercise price to Rubicon is effectively nil in respect to these warrants and
      options.





As
      no
      substantive ownership change occurred on transferring the assets, the transfers
      were recorded at their carrying values in the accounts of the Company, with
      the
      warrant and option rights and related compensation incurred pursuant to the
      terms of the POA recorded at current fair values, summarized as
      follows:





$Newfoundland
                Properties transferred to Paragon
            
            
            (6,979,704
            )Office
                equipment transferred to Paragon
            
            
            (15,952
            )Adjusted
                cost of Africo Resources (BC) Ltd. shares transferred to New
                Africo
            
            
            (5,807,438
            )Net
                residual fair value of options/warrants transferred
            
            
            2,205,667Net
                reduction to share capital on POA
            
            
            (10,597,427
            )


3.
            RE-ORGANIZATION(continued)





The
      adjustment of rights of warrant and option holders created certain rights and
      obligations in Rubicon which were initially valued at fair values at the POA
      date, and then adjusted to fair value at December 31, 2006, as
      follows:





$Shares
                receivable from Africo at fair value, net of option/warrant
                liabilities
            
            
            2,047,097Fair
                value of Paragon options/warrants net of option/warrant
                liabilities
            
            
            100,836Net
                investment of Rubicon at December 31, 2006
            
            
            2,147,933Africo
                and Paragon shares and related cash proceeds realized in
                2007
            
            
            (1,284,704
            )Adjustment
                to fair value of net investment at December 31, 2007
            
            
            (423,600
            )Net
                investment of Rubicon at December 31, 2007
            
            
            439,629Africo
                and Paragon shares and related cash proceeds realized in
                2008
            
            
            52,592Adjustment
                to fair value of net investment at December 31, 2008
            
            
            (338,821
            )Net
                investment of Rubicon at December 31, 2008
            
            
            153,400








4.
            SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES





Basis
      of Accounting and Consolidation





These
      consolidated financial statements are prepared in accordance with generally
      accepted accounting principles (“GAAP”) in Canada.As described in note
      21,
      these principles differ in certain respects from principles and practices
      generally accepted in the United States (“US”) and requirements promulgated by
      the Securities and Exchange Commission.  Summarized below are those
      policies considered particularly significant to the Company. References to
      the
      Company included herein are inclusive of the accounts of the parent company
      and
      its 100% owned subsidiaries, 1304850 Ontario Inc., 0691403 BC Ltd., Rubicon
      Alaska Holdings Inc., Rubicon Alaska Corp., Rubicon Minerals Nevada Inc. and
      Rubicon Nevada Corp.  The investment in Constantine Metal Resources
      Ltd. was accounted for on the equity basis until July 2007 when it ceased to
      qualify as an equity accounted investment. All inter-company balances have
      been
      eliminated.





Use
      of Estimates





The
      preparation of financial statements in conformity with Canadian generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      the
      disclosure of any contingent assets and liabilities as at the date of the
      financial statements, as well as the reported amounts of revenues earned and
      expenses incurred during the period.  Actual results could differ from
      those estimates.





The
      Company’s investments in marketable securities are items that, due to expected
      market volume and price fluctuations, may yield net realizable values that
      are
      materially different from their current book values at any point in
      time.    Other items involving substantial measurement
      uncertainty are the carrying costs of mineral property interests and the
      determination of stock-based compensation.





Cash
      and Cash Equivalents





Cash
      and
      cash equivalents are comprised of cash and short-term notes and bank deposits
      with an original maturity of three months or less.





Marketable
      Securities





Marketable
      securities include the Company’s investments in shares of public companies for
      which there is no intention to hold for periods of longer than one
      year.  These investments have been categorized as available for sale
      financial instruments and as such are carried at fair
      value.  Adjustments to fair value are recorded in other comprehensive
      income


4.
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES(continued)





unless
      there is a loss in value that is other than temporary, in which case the
      adjustment to fair value is included in income and not reversed on future fair
      value changes.





Investments





The
      Company’s investments in shares receivable of Africo and other public company
      shares and have been categorized as available for sale financial instruments
      and
      as such are carried at fair value. These investments are considered non-current
      assets as the Company intends to hold them for a period of greater than one
      year.  Adjustments to fair value are recorded in


other
      comprehensive income unless there is a loss in value that is other than
      temporary, in which case the adjustment to fair value is included in income
      and
      not reversed on future fair value changes.





The
      Company’s investments in Paragon options/warrants, as well as vested option and
      warrant liabilities have been categorized as held-for-trading and as such are
      recorded at fair value with adjustments to fair value being recorded in
      income.





Equipment





Equipment
      is recorded and amortized over their estimated useful economic lives using
      the
      declining balance method at annual rates of 20% for field equipment and office
      furniture and equipment, 30% for computer equipment, 50% for software and
      straight line over the remaining period of the lease plus one renewal period
      for
      leasehold improvements.





Mineral
      Property Costs





Acquisition,
      option payments and direct exploration costs are deferred until the properties
      are placed into production, sold or abandoned, at which time theses deferred
      costs will either be amortized on a unit-of-production basis, charged to
      operations if sold, or written-off.





Mineral
      property cost includes any cash consideration and advance royalties paid, and
      the fair market value of shares issued, if any, on the acquisition of mineral
      property interests.  Properties acquired under option agreements,
      whereby payments are made at the sole discretion of the Company, are recorded
      in
      the accounts when the payments are made.  The recorded amounts of
      property claim acquisition, option payments and direct exploration costs
      represent actual expenditures incurred and are not intended to reflect present
      or future values.





The
      Company reviews capitalized costs on its property interests on a periodic and
      annual basis for impairment in value based upon current exploration results
      and
      upon management’s assessment of the future probability of profitable revenues
      from the property or from the sale of the property.  Management’s
      assessment of the property’s estimated current fair market value may also be
      based upon a review of other property transactions that have occurred in the
      same geographic area as that of the property under review.





Administration
      and management fees earned, which generally range from 8% to 10% of the
      allowable expenditures associated with exploration on certain properties, are
      offset against the historical costs deferred on those
      properties.  Administrative costs are expensed as
      incurred.





Asset
      Retirement Obligations





The
      fair
      value of a liability for an asset retirement obligation is recognized on a
      discounted cash flow basis when a reasonable estimate of the fair value of
      the
      obligation can be made.  The asset retirement obligation is recorded
      as a liability with a corresponding increase to the carrying amount of the
      related long-lived asset.  Subsequently, the asset retirement cost is
      allocated to expense using a systematic and rational method and is adjusted
      to
      reflect period-to-period changes in the liability resulting from the passage
      of
      time and from revisions to either expected payment dates or the amounts
      comprising


4.
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES(continued)





the
      original estimate of the obligation.  As at December 31, 2008, the
      Company does not have any significant asset retirement
      obligations.  Subsequent to the year end, the Company filed a closure
      plan with the government of Ontario which created closure obligations on the
      Phoenix property, see note 20.





Foreign
      Currency Translation





The
      Canadian dollar is the functional currency of all of the Company’s operations
      which are classified as integrated for foreign currency translation purposes,
      and under this method translation gains or losses are included in the
      determination of net income or loss. Monetary assets and liabilities have been
      translated into Canadian dollars at the exchange rate in effect at balance
      sheet
      date.  Non-Monetary assets, liabilities, revenues and expenses have
      been translated into Canadian dollars at the rate of exchange prevailing on
      the
      respective dates.





Comprehensive
      Income





Comprehensive
      income is the change in equity (net assets) of an enterprise during a reporting
      period from transactions and other events and circumstances from non-owner
      sources. It includes all changes in equity during a period except those
      resulting from investments by owners and distributions to owners. The statement
      of comprehensive income or loss includes unrealized gains and losses for
      classifications of financial instruments, that do not require such gains and
      losses to be included in net income.





Financial
      Instruments





The
      Company’s financial instruments consist of cash, short term investments, amounts
      receivable, investments in shares of public companies, accounts payable and
      accrued liabilities and the assets and liabilities associated with options
      and
      warrants that are based on shares of companies other than Rubicon.





Cash
      equivalents, temporary investments, investments in shares of public companies
      and shares receivable of companies other than Rubicon have been classified
      as
      available-for-sale and are re-valued to market at each period
      end.  Unrealized gains and losses on re-valuation are recorded to
      other comprehensive income.  Upon realization, gains and losses are
      transferred to income.





Amounts
      receivable, are classified as loans and receivables and are carried at amortized
      cost.  Accounts payable and accrued liabilities are classified as
      other liabilities and are carried at amortized cost. These instruments have
      fair
      values which approximate their cost due to their short-term nature.





The
      Company’s investments in Paragon options, as well as vested option liabilities
      have been categorized as held-for-trading and as such are re-valued to fair
      value at each period end with all gains and losses on re-valuation recorded
      in
      income.





Equity
      accounted investments are not considered to be financial
      instruments.





Share
      Capital





Common
      shares issued for non-monetary consideration are recorded at the fair market
      value based upon the lower of the trading price of the Company’s shares on the
      Toronto Stock Exchange on the date of the agreement to issue the shares and
      the
      date of share issuance.





Stock-based
      Compensation





All
      stock
      and stock option based awards made to employees and consultants are recognized
      in these consolidated financial statements and measured using a fair value
      based
      method.





4.
            SUMMARY
                OF SIGNIFICANT
                ACCOUNTING POLICIES(continued)





Consideration
      received on the exercise of stock options and compensation options and warrants
      is recorded as share capital.  The related contributed surplus
      originally recognized when the options or warrants were earned, is transferred
      to share capital.





Income
      Taxes





The
      Company accounts for tax consequences of the differences in the carrying amounts
      of assets and liabilities and their tax bases using tax rates expected to apply
      when these temporary differences are expected to be settled.  When the
      future realization of income tax assets does not meet the test of being more
      likely than not to occur, a valuation allowance in the amount of the potential
      future benefit is taken and no net asset is recognized.  The Company
      has taken a valuation allowance against all such potential tax
      assets.





Flow-through
      Shares





The
      Company follows the guidance of the CICA provided in Abstract #146 issued by
      its
      Emerging Issues Committee, which is effective for all flow-through share
      transactions initiated after March 19, 2004. Canadian tax legislation permits
      a
      company to issue securities referred to as flow-through shares whereby the
      investor may claim the tax deductions arising from the related resource
      expenditures. When resource expenditures are renounced to the investors and
      the
      Company has








reasonable
      assurance that the expenditures will be completed, a future income tax liability
      is recognized and shareholders’ equity is reduced.





If
      the
      Company has sufficient unused tax loss carry-forwards to offset all or part
      of
      this future income tax liability and no future income tax assets have been
      previously recognized for these carry-forwards, a portion, of such unrecognized
      losses, is recorded as income up to the amount of the future income tax
      liability that was previously recognized on the renounced
      expenditures





Loss
      per share





Loss
      per
      share has been calculated using the weighted-average number of common shares
      outstanding during each year.  Diluted loss per share is not presented
      as it is anti-dilutive to the loss per share figures.





5.
            CHANGES
                IN ACCOUNTING POLICIES





Capital
      Disclosures





Effective
      January 1, 2008, the Company adopted new CICA Handbook section 1535 which
      requires disclosure of an entity’s objectives, policies and processes for
      managing capital, quantitative data about what the entity regards as capital
      and
      whether the entity has complied with any capital requirements and, if it has
      not
      complied, the consequences of such non-compliance (see note 6).





Financial
      Instruments - Disclosure and Presentation





Effective
      January 1, 2008, the Company adopted new CICA Handbook sections 3862 and 3863
      which replace CICA Handbook Section 3861, Financial Instruments -
      Disclosure
      and Presentation.These standards increase the disclosures currently
      required, which will enable users to evaluate the significance of financial
      instruments for an entity’s financial position and performance, including
      disclosures about fair value. In addition, disclosure is required of qualitative
      and quantitative information about exposure to risks arising from financial
      instruments, including specified minimum disclosures about credit risk,
      liquidity risk and market risk. The quantitative disclosures must provide
      information about the extent to which the entity is exposed to risk, based
      on
      information provided internally to the entity’s key management
      personnel.


5.
            CHANGES
                IN
                ACCOUNTING POLICIES(continued)





Canadian
      Pronouncements affecting Future Accounting Policies





The
      following pronouncements recently issued by the Canadian Institute of Chartered
      Accountants (“CICA”) will likely impact the Company’s future accounting
      policies:





(a)
      Goodwill and intangible assets





In
      February 2008, the CICA issued Section 3064, Goodwill and Intangible
      Assets, which replaces Section 3062,


Goodwill
      and Other Intangible
      Assets. This new standard provides guidance on the recognition,
      measurement, presentation and disclosure of goodwill and intangible assets.
      This
      standard is effective for fiscal years beginning January 1, 2009 with
      retrospective application.





(b)                 
      International Financial Reporting Standards (“IFRS”)





In
      February 2008 the Canadian Accounting Standards Board announced 2011 as the
      changeover date for publicly-listed companies to use IFRS, replacing Canadian
      generally accepted accounting principles. The specific implementation is set
      for
      interim and annual financial statements relating to fiscal years beginning
      on or
      after January 1, 2011. The Company has commenced planning, training and analysis
      required for conversion but has not yet determined the effects of
      conversion.





6.
            CAPITAL
                MANAGEMENT





The
      Company’s objectives for the management of capital are to safeguard the
      Company’s ability to continue as a going concern including the preservation of
      capital and to achieve reasonable returns on invested cash after satisfying
      the
      objective of preserving capital.





The
      Company considers its cash and short term investments to be its manageable
      capital.  The Company’s policy is to maintain sufficient cash and
      investment balances to cover operating and exploration costs over a reasonable
      future period, generally two years.  The Company accesses capital
      markets as necessary and may also acquire additional funds where advantageous
      circumstances arise.





Excess
      cash investments are restricted to securities issued by the federal or
      provincial governments of Canada.  The Company currently has no
      externally imposed capital requirements.





7.
            FINANCIAL
                INSTRUMENTS





The
      Company’s financial instruments carrying amounts by categories are as
      follows:





2008
            
            
            2007Available
                for sale
              at
                fair value
            
            
            Held
                for trading
              at
                fair value
            
            
            Loans
                and receivables/ other financial liabilities
              at
                amortized cost
            
            
            Available
                for sale
              at
                fair value
            
            
            Held
                for trading
              at
                fair value
            
            
            Loans
                and receivables/ other financial liabilities
              at
                amortized costFinancial
                assetsCash
            
            $
            18,753,749
            
            
            $
            -
            
            
            $
            -
            
            
            $
            14,791,309
            
            
            $
            -
            
            
            $
            -Temporary
                Investments
            
            
            4,011,587
            
            
            
            -
            
            
            
            -
            
            
            
            15,082,513
            
            
            
            
            
            
            
            -Marketable
                Securities
            
            
            73,380
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Amounts
                receivable
            
            
            -
            
            
            
            -
            
            
            
            193,461
            
            
            
            -
            
            
            
            -
            
            
            
            1,708,000Investment
                in companies spun-off – share rights
            
            
            153,400
            
            
            
            -
            
            
            
            -
            
            
            
            418,345
            
            
            
            -
            
            
            
            -Investment
                in companies spun-off – option/warrant rights
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            21,284
            
            
            
            -Other
                investments
            
            
            499,561
            
            
            
            -
            
            
            
            -
            
            
            
            2,637,877
            
            
            
            -
            
            
            
            -$
            23,491,677
            
            
            $
            -
            
            
            $
            193,461
            
            
            $
            32,930,044
            
            
            $
            21,284
            
            
            $
            1,708,000Financial
                liabilities
            
            
            
            
            
            
            -Accounts
                payable and accrued liabilities
            
            $
            -
            
            
            $
            -
            
            
            $
            793,393
            
            
            $
            -
            
            
            $
            -
            
            
            $
            811,130$
            -
            
            
            $
            -
            
            
            $
            793,393
            
            
            $
            -
            
            
            $
            -
            
            
            $
            811,130





Financial
      instrument risks





The
      Company’s financial instruments are exposed to the following risks:





Credit
      Risk





The
      Company’s primary exposure to credit risk is the risk of non-payment of cash
      equivalent and short-term investments amounting to $22.8 million at December
      31,
      2008, in Canadian provincial and federal government treasury
      bills.  As the Company’s policy is to limit excess cash investments to
      Canadian federal and provincial government instruments, the credit risk is
      considered by management to be negligible.





The
      Company’s credit risk exposure from amounts receivable at December 31, 2008,
      amounted to $193,463.  This balance includes amounts due and accrued
      from the Canadian government of $169,637 for GST refunds and from joint venture
      partners for exploration managed by the Company on the Company’s joint-ventured
      properties, in the amount of $17,400.  The Company has the right to
      request cash advances for all such work where the partners are considered a
      credit risk.





Liquidity
      Risk





The
      Company’s only liquidity risk from financial instruments is its need to meet
      operating accounts payable requirements.  The Company maintains
      sufficient cash balances to meet these needs.





7.
            FINANCIAL
                INSTRUMENTS(continued)





Foreign
      Exchange Risk





The
      Company’s only foreign exchange risk from financial instruments is its exposure
      to US Dollar exchange rate changes on accounts payable arising from US
      exploration expenditures in Alaska and Nevada.  Due to the short term
      nature of these liabilities, the risk is not considered material by management
      and no hedging is considered necessary.  A reasonably possible change
      in US exchange rates, during the period would have had no material effect on
      net
      income or other comprehensive income.





Interest
      Rate Risk





The
      Company is exposed to interest rate risk on its cash equivalent and temporary
      investments.  The majority of these investments are in discounted
      instruments with pre-determined fixed yields.  Interest rate movements
      will affect the fair value of these instruments so the Company manages maturity
      dates of these instruments to match cash flow needs, enabling realization at
      no
      loss in almost all cases.  Unrealized gains and losses are reported in
      other comprehensive income.





A
      difference in interest rates of 2.0%, on the December 31, 2008 balance of cash
      investments, over a year period, would result in a change to net income of
      approximately $446,000.





Price
      Risk





The
      Company is exposed to price risk on its portfolio of junior mining company
      shares which include significant investments in shares received from the spin
      out of assets previously held by the Company.  Due to the volatility
      of this class of shares, the risk of value change is significant.  The
      Company’s policy to manage this risk is to liquidate sufficient shareholdings to
      cover cost outlays as soon as possible, market conditions permitting and
      thereafter liquidate the balance when market conditions are
      favourable.  Unrealized gains and losses are reported in other
      comprehensive income.


5.





The
      Company’s “Investment in Companies Spun Off” largely consists of the right to
      receive the proceeds on exercise of Africo Resources Ltd. options granted to
      Rubicon personnel at the December 2006 plan of arrangement. Where these options
      expire or are forfeited, Rubicon will receive the underlying Africo shares
      at no
      cost.  As such, this investment is exposed to the same price risk as
      an investment in Africo shares would.  However, the maximum value to
      be received per option is the exercise price.  No early liquidation of
      this asset is possible.  Unrealized gains and losses on the Africo
      share value portion are reported in other comprehensive income.





Management
      considers the historical volatility of shares held to be an indicator of a
      reasonably possible change in value.  If the market prices for all
      shares held by the Company and the Africo shares underlying the Africo share
      rights, as described above, at period end, had increased or decreased by the
      weighted average volatility of 97% annually, then there would have been an
      increase or decrease in other comprehensive income of approximately
      $702,000.





8.
            TEMPORARY
                INVESTMENTS





Temporary
      investments consist of one treasury bill of the Ontario government maturing
      on
      February 23, 2009 with an aggregate carrying value and market value of
      $4,011,587 at December 31, 2008 ($15,082,513 – December 31, 2007) and effective
      interest rate of 1.693%   Market value is determined from broker
      quotations.





9.
            MARKETABLE
                SECURITIES





Marketable
      securities consist of investments in public company shares and had a carrying
      value and fair value of $73,380 at year end.  Market values were based
      on quoted prices in an active market.  These investments were
      reclassified to marketable securities from other investments at year end upon
      the Company’s determination that there was no longer an intention to hold for
      the long term.





10.
            INVESTMENTS
                IN COMPANIES SPUN OFF





Investment
      in companies spun off consists of the net value of rights and obligations
      outstanding from options and warrants issued or revised under the December
      2006
      plan of arrangement.  The December 31, 2008 carrying value and fair
      value of $153,400 is entirely attributable to the right to receive the proceeds
      from any exercise of Africo options or the underlying Africo shares where
      options expire or are forfeited unexercised.





11.
            EQUIPMENT





December
                31 2008
            
            
            
            
            
            
            
            
            December
                31
                2007Accumulated
            
            
            Net
                Book
            
            
            
            
            
            Accumulated
            
            
            Net
                BookCost
            
            
            Amortization
            
            
            Value
            
            
            Cost
            
            
            Amortization
            
            
            ValueComputer
                equipment
            
            $
            137,425
            
            
            $
            66,002
            
            
            $
            71,423
            
            
            $
            76,771
            
            
            $
            49,266
            
            
            $
            27,505Field
                Equipment
            
            
            8,876
            
            
            
            888
            
            
            
            7,988
            
            
            
            129,877
            
            
            
            68,035
            
            
            
            61,842Furniture
                and
                fixtures
            
            
            105,736
            
            
            
            57,664
            
            
            
            48,072
            
            
            
            12,291
            
            
            
            1,844
            
            
            
            10,447Leasehold
                Improvements
            
            
            12,291
            
            
            
            5,531
            
            
            
            6,760
            
            
            
            -
            
            
            
            -
            
            
            
            -Software
            
            
            113,294
            
            
            
            70,422
            
            
            
            42,872
            
            
            
            96,944
            
            
            
            38,952
            
            
            
            57,992$
            377,622
            
            
            $
            200,507
            
            
            $
            177,115
            
            
            $
            315,883
            
            
            $
            158,097
            
            
            $
            157,786





12.
            OTHER
                INVESTMENTS





Other
      investments are comprised of shares in public companies with aggregate carrying
      and market values of $499,561 (December 31, 2007 -
      $2,637,877).  Market values were based on quoted prices in an active
      market.  These shares were received as payments pursuant to mineral
      property option agreements and pursuant to prior year spin-out
      transactions.





During
      2008, $281,647 of unrealized losses on certain of these investments were
      transferred from other comprehensive income to income, under the caption “other
      losses and gains”, as the Company considers the declines in value to be an
      impairment that is other than temporary.





At
      year
      end, the Company changed its intention to no longer hold certain of the
      investments for the long term and reclassified investments with fair value
      of
      $73,380 to marketable securities.





13.
            MINERAL
                PROPERTY INTERESTS





The
      following is a summary of the Company’s principal property interests, segregated
      by geographical location.  It is not a comprehensive listing of all
      past or present property interests.





CANADA


ONTARIO


RED
      LAKE MINING DIVISION





Phoenix
      Gold Project





Pursuant
      to the terms of two separate agreements in 2002, the Company acquired an
      aggregate of 16 patented claims, 25 licences of occupation, and one mineral
      lease.





Water
      Claims Agreement





The
      Company holds a 100% interest in the “Water Claims” portion of the Phoenix Gold
      Project (25 licences of occupation and one mineral lease).  These
      claims are subject to a NSR royalty of 2%, for which advance royalties of
      US$50,000 are due annually (to a maximum of US$1,000,000 prior to commercial
      production).





13.
            MINERAL
                PROPERTY INTERESTS(continued)





The
      Company has the option to acquire a 0.5% NSR royalty for US$675,000 at any
      time.  Upon a positive production decision the Company would be
      required to make an additional advance royalty payment of US$675,000, which
      would be deductible from commercial production royalties as well as amounts
      paid
      pursuant to the maximum US$1,000,000 in advance royalty payments described
      above.





Land
      Claims Agreement





The
      Company holds a 100% interest in the “Land Claims” portion of the Phoenix Gold
      Project (16 patented claims). These claims are subject to a sliding NSR royalty
      of 2-3%, for which advance royalties of Cdn$75,000 are due annually (to a
      maximum of Cdn$1,500,000 prior to commercial production).  The Company
      has the option to acquire a 0.5% NSR royalty for Cdn$1,000,000 at any
      time.  Upon a positive production decision the Company would be
      required to make an additional advance royalty payment of Cdn$1,000,000, which
      would be deductible from commercial production royalties as well as amounts
      paid
      pursuant to the maximum Cdn$1,500,000 in advance royalty payments described
      above.





Other
      Red Lake Properties





Sidace
      Lake and Red Lake North Properties





The
      Sidace Lake and Red Lake North Properties are comprised of 45 unpatented claims
      (319 units) in the Black Bear Lake, Coli Lake and Sobeski Lake
      areas.  The Sidace Lake area claims are subject to a sliding scale NSR
      of 2.0% to 2.5% depending on the price of gold.





Option
      Agreement with Solitaire Minerals Corporation (“Solitaire”)





During
      2006, the Company optioned a 55% interest in 45 unpatented mining claims (319
      units) (staked claims, and portions of the Coli Lake Agreement, Red Lake East
      Agreement and East Bay Agreement) in the Black Bear Lake, Coli Lake and Sobeski
      lake areas known as the Red Lake North Project to Solitaire.  Under
      the terms of the letter agreement dated April 18, 2006 (effective date of the
      Agreement is May 1, 2006), Solitaire must incur $2,500,000 over 4 years, make
      an
      initial cash payment of $5,000 (completed) and issue to the Company 50,000
      shares of Solitaire (completed) to earn a 55% interest in the
      property.  The claims are subject to a sliding scale NSR ranging from
      1.75% to 2.5% depending on the price of gold.





Adams
      Lake Property





The
      Company holds a 100% interest in 34 unpatented claims (224 units) in the Balmer
      and Bateman townships.  The property is subject to a sliding scale NSR
      of 1.75% to 2.0% depending on the price of gold.





DMC
      Properties





Meunier
      Property





The
      Company holds a 100% interest in 118 unpatented claims (222 units). The property
      is subject to NSR royalty of 2.5% on 38 claims (the Company can purchase a
      1.5%
      NSR royalty for $1.5 million), a 2% NSR royalty on 54 claims (the Company can
      purchase a 1% NSR royalty for $1.0 million), and a 1% NSR royalty on 27
      claims.  Annual advance royalty payments of $25,000 are due by April
      15th of each year.





Red
      Lake West Property





The
      Company holds a 100% interest in 16 unpatented claims (90 units) in Dome and
      McDonough townships. The property is subject to a sliding scale NSR royalty
      of
      1.75% to 2.0% depending on the price of gold.





13.
            MINERAL
                PROPERTY INTERESTS(continued)





Red
      Lake East Property





The
      Company holds a 100% interest in 95 unpatented claims (454 units) in the
      McDonough, Balmer and Bateman townships.  The property is subject to a
      sliding scale NSR royalty of 1.75% to 2.0% depending on the price of
      gold.





DMC
      Option





During
      2005, the Company signed a letter agreement with Agnico-Eagle Mines Ltd.
      (“Agnico-Eagle”) whereby Agnico-Eagle had the right to earn a 51% interest in
      the DMC properties totaling 130 clams.  During 2008, Agnico-Eagle
      terminated its option with the Company.





Slate
      Bay Property





The
      Company holds a 100% interest in 28 unpatented claims (146 units) located in
      the
      McDonough and Dome townships. The property is subject to a sliding scale NSR
      royalty of 1.75% to 2.0% depending on the price of gold.





Humlin
      Property





The
      Company holds a 100% interest in 19 unpatented mining claims (216 units) located
      in Fairlie Township. The property is subject to a sliding scale NSR of 1.75%
      to
      2.0% depending on the price of gold.





Humlin
      Option





During
      2006, the Company optioned a 55% interest the Humlin Project to
      Solitaire.  During 2008, Solitaire terminated its option with the
      Company.





Hammell
      Lake Property





The
      Company holds a 100% interest in the three unpatented mining claims





East
      Bay - Herbert Option





The
      Company holds a 100% interest in 23 unpatented claims claim (42 units) located
      in the Bateman and Blackbear townships.    The property is
      subject to a 2% NSR royalty, of which the Company may purchase 50% for $1.0
      million.





East
      Bay - Seargeant Property





The
      Company holds a 100% interest in 2 unpatented claims (2 units) located in the
      Blackbear township.  The property is subject to a 2% NSR royalty of
      which the Company may purchase 50% for $750,000.





McCuaig
      JV Property





The
      Company holds a 60% interest in 3 unpatented claims (10 units) in Dome
      Township.  The property is subject to a 1% NSR royalty. The Company
      may, with its joint venture partner, purchase 50% of the NSR royalty for
      $200,000 and also retains a right of first refusal on the remaining NSR
      royalty.





West
      End Red Lake Properties





Pipestone
      North Property





The
      Company holds a 50% interest in the 4 unpatented mining claims (15
      units).





13.
            MINERAL
                PROPERTY INTERESTS(continued)





Pipestone
      East Property





The
      Company holds a 100% interest in 5 unpatented mining claims (5
      units).





Pipestone
      South Property





The
      Company holds a 100% interest in 15 unpatented mining claims (59 units).





Wolf
      Bay Property





The
      Company holds a 50% interest in 18 unpatented mining claims (103
      units).





Option
      Agreement with Halo Resources Ltd. (“Halo”)





During
      2008, the Company optioned a 60% interest in 23 unpatented mining claims (87
      units) in the Red Lake Area to Halo.  Under the terms of the letter
      agreement, Halo must incur $1 million of exploration expenditures on the
      property over 4 years and make options payment to the Company amounting to
      $120,000 over 4 years.  Halo would then have the right to earn an
      additional 15% by funding a bankable feasibility study.





West
      End Red Lake Option





During
      2002, the Company granted Redstar Resources Ltd. (“Redstar”) an option to earn a
      70% interest in the West End Red Lake.  Redstar terminated its option
      with the Company during 2007.





Manitou
      Property





During
      2007, the Company returned the Manitou property to the vendor and wrote off
      costs of $231,831 incurred to that time.





English
      Royalty Division (“ERD”)





The
      Company holds ownership or royalty interests in 60 properties (2007 – 63, 2006 –
49) designated as the English Royalty Division.  These properties
      included in the ERD are not explored by the Company but are held for the purpose
      of earning option and possible royalty income and deriving potential increases
      in value from successful exploration by optionees.  The Company
      continues to add properties to the ERD with new option agreements and drop
      properties that it is unable to option after reasonable efforts.





During
      2008, the Company recorded cash and share receipts (before costs) of $712,523
      (2007 – $885,500; 2006 – 377,321) from ERD options.  As the Company
      has now recovered all costs of acquisition and maintenance of these properties
      they are carried at $nil.





ALASKA,
      USA





Alaska
      Properties





Pursuant
      to the McEwen Agreement which closed on May 18, 2007, the Company acquired
      100%
      of the outstanding shares of McEwen Capital Corp. (renamed Rubicon Alaska
      Holdings Inc. and hereinafter referred to as “RAH Inc.”). The results of RAH
      Inc.’s operations have been included in the consolidated financial statements
      since February 24, 2007, the date of the Letter of Intent and the date the
      Company commenced financing the operations of the acquisition.  The
      aggregate purchase price was $22 million consisting of 31,428,571 common shares
      of the Company at a deemed price of $0.70 per share.  The share value
      was determined based on the average closing price of the Company’s shares on the
      TSX on the





13.
            MINERAL
                PROPERTY INTERESTS(continued)





5
      days
      prior to date of the Letter of Intent.  In addition, the Company
      incurred $426,387 in acquisition costs which were capitalized with the
      purchase.





The
      following table summarizes the assets acquired and liabilities assumed on the
      date of the acquisition:





Mineral
                properties
            
            $
            37,155,461Future
                income tax liability
            
            
            (14,729,074
            )Total
                cost
            
            $
            22,426,387Consisting
                of:Common
                shares issued at $0.70
            
            $
            22,000,000Other
                acquisition costs
            
            
            426,387Total
                cost
            
            $
            22,426,387





The
      sole
      assets of RAH Inc. consisted of two mineral claim groups in the Goodpaster
      Mining District of Alaska.  At the date of the acquisition, RAH Inc.
      had tax deductible mineral pools of only approximately $1.2 million and
      therefore the Company recorded a future tax liability of $14,729,074 inherent
      in
      the purchase.





The
      two
      claim groups are further described as follows:





New
      Horizon Claims





Pursuant
      to the McEwen Agreement, the Company acquired a 100% interest in the New Horizon
      Claims covering approximately 330,000 acres in the Goodpaster Mining District
      of
      Alaska.  These claims had been previously acquired by RAH Inc. through
      staking.  During 2008, the area held was reduced to 195,280
      acres.





Rimfire
      Option
      Properties





Pursuant
      to the McEwen Agreement, the Company acquired an option granted by Rimfire
      Minerals Corporation (“Rimfire”) to acquire up to a 70% interest, subject to
      underlying royalties, in certain mineral claims, covering approximately 185,520
      acres, in the Goodpaster Mining District of Alaska.  Pursuant to the
      terms of this option agreement, the Company can earn a 60% interest in the
      property by expending US$4.8 million on the property over a five and half year
      period as follows (including expenditures made prior to the
      acquisition):





(a)  US
      $750,000 before November 27, 2007 (incurred);


(b)                 
      an aggregate of US $1,500,000 on or before November 27, 2008
      (incurred);


(c)                 
      an aggregate of US $2,250,000 on or before November 27,
      2009;


(d)                 
      an aggregate of US $3,000,000 on or before November 27,
      2010;


(e)                 
      an aggregate of US $3,800,000 on or before November 27, 2011;
      and


(f)                 
      an aggregate of US $4,800,000 on or before November 27,
      2012.





The
      Company may earn a further 10% interest by completing a feasibility study and
      at
      Rimfire’s election, may obtain an additional 5% interest by providing a project
      financing loan repayable from Rimfire’s cash flows from production.





All
      commitments under the McEwen agreement for exploration expenditures on the
      Alaska properties were completed in the year.  As further described at
      note 18 there are no further commitments under this agreement.





13
            MINERAL
                PROPERTY INTERESTS(continued)





NEVADA-UTAH,
      USA





Nevada
–
      Utah Properties





Pursuant
      to the McEwen Agreement, the Company acquired mineral rights on an approximate
      225,000 acre land package, predominantly in Elko County, Nevada and extending
      into Box Elder County Utah for 8,571,429 common shares of the Company, valued
      at
      $0.70 per share for total consideration of $6 million.  In addition
      the Company incurred $106,182 of acquisition costs which were capitalized with
      the acquisition.  The majority of the mineral rights are 100% owned
      subject to certain royalty interests.





All
      commitments under the McEwen agreement for exploration expenditures on the
      Nevada properties were completed in the year – see note 17.





14.
            SHARE
                CAPITAL





a)  Authorized
      share capital consists of unlimited common shares without par
      value.





2008
            
            
            2007
            
            
            2006Number
                of Shares
            
            
            $
            
            
            
            Number
                of Shares
            
            
            $
            
            
            
            Number
                of Shares
            
            
            $Balance,
                beginning of year
            
            
            147,871,501
            
            
            
            103,572,229
            
            
            
            76,810,525
            
            
            
            47,991,901
            
            
            
            66,179,524
            
            
            
            45,610,692Private
                placements(1),(2),(5)
            
            
            8,166,670
            
            
            
            9,460,640
            
            
            
            26,265,462
            
            
            
            24,165,197
            
            
            
            7,640,560
            
            
            
            10,431,265Mineral
                properties
            
            
            -
            
            
            
            -
            
            
            
            40,000,000
            
            
            
            28,000,000
            
            
            
            101,000
            
            
            
            130,720Stock
                options exercised
                (3)
            
            
            113,700
            
            
            
            155,349
            
            
            
            1,547,374
            
            
            
            1,476,765
            
            
            
            760,628
            
            
            
            1,114,599Warrants
                exercised
            
            
            -
            
            
            
            -
            
            
            
            3,152,792
            
            
            
            1,451,905
            
            
            
            2,128,813
            
            
            
            1,779,452Spin-off
                of companies
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (10,597,427
            )Flow-through
                renunciation(4)
            
            
            -
            
            
            
            (3,275,789
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (477,400
            )Agent
                Commissions
            
            
            -
            
            
            
            -
            
            
            
            393,262
            
            
            
            700,006
            
            
            
            -
            
            
            
            -Shares
                returned
            
            
            -
            
            
            
            -
            
            
            
            (297,914
            )
            
            
            (213,545
            )
            
            
            -
            
            
            
            -Balance,
                end of year
            
            
            156,151,871
            
            
            
            109,912,429
            
            
            
            147,871,501
            
            
            
            103,572,229
            
            
            
            76,810,525
            
            
            
            47,991,901





(1)
            4,870,370
                (2007 - 4,651,200) shares were issued under flow-through share purchase
                agreements.


(2)
            Proceeds
                are net of share issue costs of $740,289 (2007 -
                $1,234,128).


(3)
            Inclusive
                of the original $57,750 (2007 - $377,399) fair value of these options
                re-allocated from contributed surplus to share capital on
                exercise.


(4)
            On
                February 28, 2008 the
                Company renounced$10.4 million in exploration expenditures to flow-through share investors
                and recorded the tax effect as a $3,275,789 reduction in share
                capital and increase in future tax liability.   The Company
                offset the increase in its future tax liability against previously
                unrecognized future tax assets, resulting in a recovery of future
                income
                tax  of $3,275,789.


(5)
            On
                November 18, 2008 the Company closed a $10,200,930 private placement
                financing and issued 4,870,370 flow-through shares at $1.35 per share
                and
                3,296,300 common shares at $1.10 per
                share.


(6)
            See
                note 20 for details of the March 5, 2009 financing subsequent to
                the year
                end





b)  Stock
      Options





The
      Corporation has an incentive stock option plan authorizing the Company to issue
      up to 8.5% of the number of issued and outstanding shares as incentive stock
      options to directors, officers, employees and consultants of the Company (up
      to
      13,272,909 options at December 31, 2008).  No specific vesting terms
      are required.  The term of each grant shall be no greater than 10
      years from the date of grant.  The option price shall be no less than
      the fair market value of the Company’s shares on the date of the
      grant.


14.
            SHARE
                CAPITAL (continued)





The
      following is a summary of the changes in the Company’s outstanding stock
      options.





2008
            
            
            2007
            
            
            2006Number
                of Shares
            
            
            Weighted
                Average Exercise Price
            
            
            Number
                of
              Shares
            
            
            Weighted
                Average Exercise Price
            
            
            Number
                of
              Shares
            
            
            Weighted
                Average Exercise Price$
            
            
            
            
            
            
            $
            
            
            
            $Balance
                at beginning of year
            
            
            3,328,250
            
            
            
            0.87
            
            
            
            3,798,748
            
            
            
            0.73
            
            
            
            4,815,000
            
            
            
            1.10Granted
            
            
            1,617,500
            
            
            
            1.03
            
            
            
            1,260,000
            
            
            
            1.09
            
            
            
            40,000
            
            
            
            1.70Exercised
            
            
            (113,700
            )
            
            
            0.86
            
            
            
            (1,547,374
            )
            
            
            0.71
            
            
            
            (760,628
            )
            
            
            1.07Expired/Cancelled
            
            
            (98,750
            )
            
            
            1.10
            
            
            
            (183,124
            )
            
            
            0.86
            
            
            
            (295,624
            )
            
            
            1.22Outstanding
                at end of year (1)
            
            
            4,733,300
            
            
            
            0.93
            
            
            
            3,328,250
            
            
            
            0.87
            
            
            
            3,798,748
            
            
            
            0.73Exercisable
                at end of year
            
            
            3,965,800
            
            
            
            0.91
            
            
            
            2,600,750
            
            
            
            0.77
            
            
            
            3,232,606
            
            
            
            0.72





(1)
            At
                December 31, 2008, the weighted-average remaining contractual life
                of
                stock options outstanding is 2.60 years (2007 year end –
                2.91).





The
      fair
      value of stock options included in the expense figures, has been estimated
      using
      the Black-Scholes Option Pricing Model based on the following weighted average
      assumptions:





2008
            2007
            2006Risk-free
                interest rate (%)
            3.67%
            4.13%
            4.27%Expected
                life (years)
            5
                years
            5
                years
            5
                yearsExpected
                volatility (%)
            64%
            64%
            50%Expected
                dividend yield (%)
            0%
            0%
            0%





The
      weighted average grant-date fair value of options granted during 2008 was $0.59
      (2007 - $0.63).





Option
      pricing models require the input of highly subjective assumptions, particularly
      as to the expected price volatility of the stock.  Changes in these
      assumptions can materially affect the fair value estimate and therefore it
      is
      management’s view


that
      the
      existing models do not necessarily provide a single reliable measure of the
      fair
      value of the Company’s stock option grants.





14.
            SHARE
                CAPITAL(continued)





c)  Summary
      of stock options and warrants outstanding:





December
                31, 2008Type
                of Issue
            
            Number
                Outstanding
            
            
            Weighted
                Average Price
            
            
            
            
            
            Weighted
                Average LifeStock
                Options
            
            
            
            
            
            
            
            $
            
            
            
            Years100,000
            
            
            
            0.44
            
            
            
            
            
            
            
            1.67150,000
            
            
            
            0.48
            
            
            
            
            
            
            
            1.70200,000
            
            
            
            0.56
            
            
            
            
            
            
            
            1.95795,000
            
            
            
            0.74
            
            
            
            
            
            
            
            3.0420,000
            
            
            
            0.76
            
            
            
            
            
            
            
            4.811,278,300
            
            
            
            0.77
            
            
            
            
            
            
            
            1.03130,000
            
            
            
            0.79
            
            
            
            
            
            
            
            1.00180,000
            
            
            
            0.96
            
            
            
            
            
            
            
            0.071,490,000
            
            
            
            1.04
            
            
            
            
            
            
            
            4.1025,000
            
            
            
            1.31
            
            
            
            
            
            
            
            4.4220,000
            
            
            
            1.46
            
            
            
            
            
            
            
            4.3695,000
            
            
            
            1.68
            
            
            
            
            
            
            
            3.67150,000
            
            
            
            1.90
            
            
            
            
            
            
            
            3.50100,000
            
            
            
            2.55
            
            
            
            
            
            
            
            3.29Total
                Stock Options
            
            
            4,733,300
            
            
            
            1.10
            
            
            
            
            
            
            
            2.60








December
                31, 2008Type
                of Issue
            
            Number
                Outstanding
            
            
            Weighted
                Average Price
            
            
            
            
            
            Weighted
                Average LifeWarrants
                (1)
            
            
            
            
            
            
            
            $
            
            
            
            YearsTotal
                Warrants
            
            
            10,714,271
            
            
            
            1.50
            
            
            
            
            
            
            
            0.38


(1)
      There were no exercises or new issues of warrants since the 10,714,271
      outstanding warrants were issued in 2007.





d)      
      Summary of changes in contributed surplus:





2008
            
            
            2007
            
            
            2006Balance
                at beginning of year
            
            $
            3,082,261
            
            
            $
            2,547,075
            
            
            $
            2,623,780Stock-based
                compensation – administration
            
            
            761,890
            
            
            
            576,606
            
            
            
            220,964Stock-based
                compensation – mineral property costs
            
            
            209,941
            
            
            
            335,979
            
            
            
            22,062Stock-based
                compensation - options granted by Africo/Paragon
            
            
            16,591
            
            
            
            -
            
            
            
            (22,417
            )Fair
                value of stock options allocated to shares issued on
                exercise
            
            
            (57,750
            )
            
            
            (377,399
            )
            
            
            (297,314
            )Balance
                at end of year
            
            $
            4,012,933
            
            
            $
            3,082,261
            
            
            $
            2,547,075





15.
            ACCUMULATED
                OTHER COMPREHENSIVE INCOME





2008
            
            
            2007Accumulated
                other comprehensive income, January 1
            
            $
            549,606
            
            
            $
            -Adjustments
                to opening balance on first adoption:Unrealized
                gains on investments in public company shares
            
            
            -
            
            
            
            208,553Accumulated
                other comprehensive income, January 1, adjusted
            
            
            549,606
            
            
            
            208,553Other
                comprehensive income (loss) for the year
            
            
            (1,878,747
            )
            
            
            341,053Accumulated
                other comprehensive income (loss), December 31
            
            $
            (1,329,141
            )
            
            $
            549,606Components
                of accumulated other comprehensive income (loss), December
                31Unrealized
                gains (losses) on temporary investments
            
            $
            5,169
            
            
            $
            (19,852
            )Unrealized
                gains (losses) on other investments  (public company
                shares)
            
            
            (571,890
            )
            
            
            993,058Unrealized
                losses on investment in companies spun-off
            
            
            (762,420
            )
            
            
            (423,600
            )$
            (1,329,141
            )
            
            $
            549,606





16.
            INCOME
                TAXES





Current
      income tax payable in the amount of $22,603 (2007 - $74,000) represents an
      estimated current liability of the Company’s wholly-owned subsidiary, 1304850
      Ontario Inc.





A
      reconciliation of income taxes at statutory rates is as follows:





2008
            
            
            2007
            
            
            2006$
            
            
            
            $
            
            
            
            $Net
                loss for the year, before taxes
            
            
            (2,759,765
            )
            
            
            (2,232,941
            )
            
            
            (4,113,320
            )Expected
                income tax recovery
            
            
            (841,728
            )
            
            
            (761,879
            )
            
            
            (1,292,438
            )Net
                adjustment for current, deductible and non-deductible
                amounts
            
            
            47,922
            
            
            
            196,737
            
            
            
            146,055(Recognized)
                and unrecognized benefit of future tax assets
            
            
            (2,460,400
            )
            
            
            548,582
            
            
            
            820,983Income
                tax recoveries, net
            
            
            (3,254,206
            )
            
            
            (16,560
            )
            
            
            (325,400
            )





The
      significant components of the Company’s future income tax assets are as
      follows:





2008
            
            
            
            
            
            2007$
            
            
            
            $Future
                income tax (liabilities) assets:Net
                mineral property carrying
                amounts in excess of tax pools
            
            
            (19,591,071
            )
            
            
            
            
            
            
            (16,123,332
            )Equipment
                and intangible tax
                pools in excess of carrying value
            
            
            338,020
            
            
            
            
            
            
            
            36,467Investment
                tax base in excess of cost
            
            
            210,080
            
            
            
            
            
            
            
            -Share
                issue pool
            
            
            387,853
            
            
            
            
            
            
            
            -Tax
                loss
                carry-forwards
            
            
            4,346,019
            
            
            
            
            
            
            
            3,785,271(14,309,099
            )
            
            
            
            
            
            
            (12,301,594
            )Valuation
                allowance
            
            
            (464,170
            )
            
            
            
            
            
            
            (2,472,694
            )Net
                future tax
                liabilities
            
            
            (14,773,269
            )
            
            
            
            
            
            
            (14,774,288
            )








16.  INCOME
                TAXES(Continued)





The
      Company has non-capital losses of approximately $13.3 million (2007 - $12
      million, 2006 - $11 million), which are available to reduce future taxable
      income and which expire between 2009 and 2028.  Subject to certain
      restrictions the Company also has mineral property expenditures of approximately
      $30.0 million (2007 – $11 million, 2006 - $11 million) available to reduce
      taxable income in future years.





17.
            RELATED
                PARTY TRANSACTIONS





For
      the
      twelve months ended December 31, 2008, the Company paid legal fees to a law
      firm, of which a partner is a director of the Company, aggregating to $198,442
      (2007 - $913,422; 2006 - $850,890 ).  The fees are recorded within
      professional expenses, McEwen financing costs, mineral property acquisition
      costs, investments and share issue costs in these financial statements. As
      at
      December 31, 2008, this law firm is owed $19,500 (2007 - $nil; 2006 -
      $10,000).  All these transactions were recorded at their fair value
      amounts and were incurred in the normal course of business.





Paragon
      Minerals Corporation (“Paragon”) is the spin-off company that acquired Rubicon’s
      Newfoundland mineral properties under the December 2006 plan of
      arrangement.  Paragon has one common director, shared offices and
      office expenses with Rubicon up to June 2008 and shared the CFO and office
      support staff.  In addition, the CEO of Paragon provided management
      services to Rubicon on a part time basis up until December 31,
      2007.  On June 12, 2008, the Rubicon CFO ceased providing CFO services
      to Paragon and from that date Paragon ceased to be a related party of the
      Company.   As at December 31, 2008, Paragon owed the Company $nil
      (2007 - $69,475).  All transactions were recorded at their fair value
      amounts and were incurred in the normal course of business.





18.
            COMMITMENTS





a)
            Pursuant
                to the McEwen agreement of May 2007, the Company became committed
                to spend
                $5 million on exploration on its Red Lake properties by May 18, 2008
                (increased to $5.5 million during 2008), $5 million on its Alaska
                properties by May 18, 2009 (decreased to $4.5 million during 2008)
                and
                $500,000 on its Nevada properties by May 18, 2008.   All
                exploration commitments from the McEwen agreement were completed
                during
                2008 and there are no future commitments outstanding from that
                agreement.





b)
            At
                December 31, 2008, the Company has $144,295 (December 31, 2007 -
                $284,095)
                in remaining lease payments for the use of its Vancouver office to
                September, 2010.





c)
            At
                December 31, 2008, the Company is committed to incur $5,730,041 (December
                31, 2007 – $9,984,996) in eligible exploration expenditures in order to
                complete obligations entered into pursuant to flow-through share
                purchase
                agreements.





d)
            The
                Company is required to make certain cash payments and incur exploration
                costs to maintain its mineral properties in good
                standing.  These payments and costs are at the Company’s
                discretion and are based upon available financial resources and the
                exploration merits of the mineral properties which are evaluated
                on a
                periodic basis.





19.
            SUPPLEMENTAL
                DISCLOSURE OF NON-CASH INVESTING AND FINANCING
                ACTIVITIES





During
      the twelve months ended December 31, 2008, the Company received common shares
      of
      other companies valued at $183,340 (2007 - $11,722) pursuant to the terms of
      property and joint venture agreements.  The Company has excluded from
      its investing cash flows $267,830 (2007 - $814,882) in accounts payable relating
      to mineral property costs.  Other non-cash investments included
      $209,940 (2007 - $89,688) recorded in property expenditures for stock based
      compensation awarded to personnel working on mineral properties.


19.
            SUPPLEMENTAL
                DISCLOSURE OF
                NON-CASH INVESTING AND FINANCING ACTIVITIES(Continued)





2008
            
            
            2007
            
            
            2006During
                the year, the Company paid and received interest as
                follows:Interest
                received
            
            $
            689,250
            
            
            $
            794,476
            
            
            $
            274,742Interest
                paid
            
            $
            22,351
            
            
            $
            744
            
            
            $
            10,949





20.
            SUBSEQUENT
                EVENTS





On
      January 2, 2009, the Company granted 2,585,000 incentive stock options to
      employees, directors and contractors at an exercise price equal to the market
      value on issue of $1.31 with an expiry term of 5 years.





On
      February 27, 2009, the Ontario Ministry of Northern Development and Mines
      accepted for filing the Company’s closure plan on its Phoenix
      project.  Upon filing, the Company became obligated to rehabilitate
      the Phoenix project site upon closure of the project at an independently
      estimated cost of $493,000.  A cash bond in the same amount was posted
      upon acceptance.





On
      March
      5, 2009, the Company closed a private placement of 25,000,000 common shares
      at
      an issue price of $1.60 per common share for gross proceeds of
      $40,000,000.  A cash commission of 5.5% of gross proceeds was paid to
      the underwriters.





Subsequent
      to the year end, 234,500 incentive stock options were exercised for proceeds
      of
      $232,855 and 89,286 warrants were exercised for proceeds of
      $133,929.





21.
            DIFFERENCES
                BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
                PRINCIPLES (GAAP)





These
      financial statements have been prepared in accordance with Canadian generally
      accepted accounting principles (“Canadian GAAP”). Material variations in the
      accounting principles, practices and methods used in preparing these financial
      statements from principles, practices and methods accepted in the United States
      ("U.S. GAAP"), and that impact financial statement line items, are described
      below.





a)
            Mineral
                property interests and deferred exploration
                costs





Under
      Canadian GAAP, costs to maintain property rights (including property options)
      and related exploration costs incurred on those properties may be deferred
      and
      subsequently carried at cost prior to a Company having obtained the necessary
      data to complete a positive feasibility study, including the preparation of
      a
      cash flow projection in respect to the recoverability of those costs.
      Accordingly, while the Company’s projects remain at a pre-feasibility stage of
      development, management has elected under Canadian GAAP to defer all maintenance
      and exploration costs incurred on them until a property is abandoned, sold,
      or
      upon management determining there to be an impairment in value. Under U.S.
      GAAP,
      prior to the point in time that a positive feasibility report has been completed
      in respect to a property, such costs must be expensed as incurred.







21.
                DIFFERENCES BETWEEN
                CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
                (GAAP)(continued)





b)
            Flow-through
                shares





Under
      Canadian income tax legislation, the Company is permitted to issue shares
      whereby the Company agrees to incur qualifying expenditures (as defined under
      the Canadian Income Tax Act) and renounce the related income tax deductions
      to
      the investors. Under Canadian GAAP, flow-through shares are accounted for as
      part of the issuance of capital stock at the price paid for the shares, net
      of
      any future income tax liability (“FIT”). Under US GAAP, SFAS 109, “Accounting
      for Income Taxes” (SFAS109), the proceeds should be allocated between the
      offering of the shares and the sale of tax benefits when the shares are offered.
      The allocation is made based on the difference between the quoted price of
      the
      shares and the amount the investor pays for the flow-through shares. A liability
      is recognized initially for the premium paid by the investors.





For
      US
      GAAP purposes, the difference between the future income tax liability on
      renunciation and the premium is recorded as a future income tax expense. For
      US
      GAAP purposes the Company does not have temporary differences as a result of
      the requirement that all such costs related to mineral properties
      generally be expensed as described in (a) above;  therefore all future
      income taxes related to renouncements for Canadian GAAP are reversed through
      the
      statements of operations for US GAAP purposes.





The
      reconciling items disclosed herein are in respect to both the recognition of
      the
      tax benefit sale under U.S. GAAP and to the reversal of the required Canadian
      GAAP treatment of flow-through share issuances and renunciations.





c)
            Investment
                in companies spun-off





Under
      US
      GAAP certain elements of the warrants and options spun off pursuant to the
      POA
      transaction described in Note 2 would be accounted for differently from their
      treatment in these financial statements.  Specifically the Company
      would generally be required to present all assets acquired and liabilities
      assumed at their gross amounts, with no right of offset.  A
      significant liability would be recorded in respect to obligations related to
      transferred share purchase warrants, an amount included in equity under Canadian
      GAAP.  This liability was extinguished during 2007 as all warrants
      were exercised. Further, the Company would also record certain items in
      Operations and Other Comprehensive Income under US GAAP relating to certain
      fair
      value adjustments required to be made at December 31, 2006.





d)
            Other
                investments





Since
      January 1, 2007, there has been no difference in accounting for changes in
      value
      of other investments which consists of the shares of public companies. Under
      both, the Companies application of CICA Standard 3855 and US SFAS 115, these
      investments, held by the Company, are considered to be “available for sale
      securities” and are required to be reported at fair value, with any unrealized
      holding gains and losses included in current Other Comprehensive Income, a
      component of Shareholders’ Equity.  Prior to January 1, 2007, under
      Canadian GAAP, no write-down to market values was required if an investment
      was
      considered by management to be held for the long-term, unless there had been
      an
      other-than-temporary decline in the value of that investment.










21.
            DIFFERENCES
                BETWEEN CANADIAN
                AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
                (continued)





The
      impact of these differences in
      respect to these financial statements is quantified below as they apply to
      financial statement line items





Balance
                Sheets
            Note
                reference
            
            2008
            
            
            2007
            
            
            2006$
            
            
            
            $
            
            
            
            $Investments
                - companies spun off -
                Canadian GAAP
            
            
            
            153,400
            
            
            
            439,629
            
            
            
            2,147,933Net
                fair value and related
                adjustments
            (c)
            
            
            -
            
            
            
            118,675
            
            
            
            1,212,538Investmentincompanies
                spun off - US
                GAAP
            
            
            
            153,400
            
            
            
            558,304
            
            
            
            3,360,471Other
                investments  -
                Canadian GAAP
            
            
            
            499,561
            
            
            
            2,637,877
            
            
            
            1,435,227Mark-to-market
                adjustment
            (d)
            
            
            -
            
            
            
            -
            
            
            
            512,998Other
                investments - US
                GAAP
            
            
            
            499,561
            
            
            
            2,637,877
            
            
            
            1,948,225Mineralproperty
                costs - Canadian
                GAAP
            
            
            
            82,862,073
            
            
            
            66,157,058
            
            
            
            15,712,278Mineralproperty
                costs expensed under US
                GAAP
            (a)
            
            
            (39,485,446
            )
            
            
            (22,780,431
            )
            
            
            (15,712,278
            )Mineralproperty
                costs - US
                GAAP
            
            
            
            43,376,627
            
            
            
            43,376,627
            
            
            
            -Other
                liabilities - Canadian
                GAAP
            
            
            
            -
            
            
            
            -
            
            
            
            -Aggregate
                liabilities assumed on
                spin-off transaction
            (c)
            
            
            13,753
            
            
            
            270,619
            
            
            
            3,157,297Other
                liabilities - US
                GAAP
            
            
            
            13,753
            
            
            
            270,619
            
            
            
            3,157,297Flow-through
                share tax liability –
                Canadian GAAP
            
            
            
            -
            
            
            
            -
            
            
            
            -Future
                tax related to premium on
                flow-through financing
            (b)
            
            
            1,217,593
            
            
            
            1,789,652
            
            
            
            -Flow-through
                share tax liability –
                US GAAP
            
            
            
            1,217,593
            
            
            
            1,789,652
            
            
            
            -Share
                capital - Canadian
                GAAP
            
            
            
            109,912,429
            
            
            
            103,572,229
            
            
            
            47,991,901Previous
                years’ amounts included in income under US GAAP
            
            
            
            -
            
            
            
            -
            
            
            
            (102,158
            )Deferred
                tax benefit included in income under US GAAP
            (d)
            
            
            -
            
            
            
            -
            
            
            
            -Adjustment
                to reverse entry
                forspin-offof Paragon
                assets
            (a)
            
            
            6,979,704
            
            
            
            6,979,704
            
            
            
            6,979,704Adjustment
                to reclassify spin-off
                amounts as liabilities
            (c)
            
            
            -
            
            
            
            -
            
            
            
            (2,290,988
            )Future
                tax related to premium on
                flow-through financing
            (b)
            
            
            (1,217,593
            )
            
            
            (1,789,652
            )Adjustment
                to reinstate Canadian
                GAAP FIT recovery to share capital
            (b)
            
            
            (3,275,789
            )
            
            
            -
            
            
            
            477,400Share
                capital – US
                GAAP
            
            
            
            112,398,751
            
            
            
            108,762,281
            
            
            
            53,055,859Contributed
                surplus - Canadian
                GAAP
            
            
            
            4,012,933
            
            
            
            3,082,261
            
            
            
            2,547,075Adjustment
                to reclassify a
                spin-off related amount
            (c)
            
            
            -
            
            
            
            -
            
            
            
            (309
            )Contributed
                surplus - US
                GAAP
            
            
            
            4,012,933
            
            
            
            3,082,261
            
            
            
            2,546,766


21.
            DIFFERENCES
                BETWEEN CANADIAN
                AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
                (GAAP)(continued)





Balance
                Sheets(continued)
            Note
              reference
            
            2008
            
            
            2007
            
            
            2006$
            
            
            
            $
            
            
            
            $Opening
                deficit - Canadian
                GAAP
            
            
            
            21,845,844
            
            
            
            19,629,463
            
            
            
            15,841,543Net
                historical adjustments
                - US
                GAAP
            (a)
            
            
            30,030,757
            
            
            
            23,016,331
            
            
            
            22,859,486Opening
                deficit - US
                GAAP
            
            
            
            51,876,601
            
            
            
            42,645,794
            
            
            
            38,701,029Accumulated
                other comprehensive
                income – CanadianGAAP
            
            
            
            (1,329,141
            )
            
            
            549,606
            
            
            
            -Adjustment
                to reflect net fair
                value measurements ateach year
                end.
            (c),
                (d)
            
            
            -
            
            
            
            (89,373
            )
            
            
            307,977Accumulated
                other comprehensive
                income - US GAAP
            
            
            
            (1,329,141
            )
            
            
            460,233
            
            
            
            307,977





Operations
                Statements
            Note
              reference
            
            2008
            
            
            2007
            
            
            2006$
            
            
            
            $
            
            
            
            $Other
                miscellaneous income -
                Canadian GAAP
            
            
            
            132,798
            
            
            
            941,330
            
            
            
            355,300Adjustment
                to fair value certain
                spin-off related items
            (c)
            
            
            -
            
            
            
            -
            
            
            
            498,427Other
                miscellaneous income - US
                GAAP
            
            
            
            132,798
            
            
            
            941,330
            
            
            
            853,727FIT
                recovery - Canadian
                GAAP
            
            
            
            3,066,702
            
            
            
            23,560
            
            
            
            477,400Adjustment
                to reinstate Canadian
                FIT recovery to share capital
            (b)
            
            
            (3,275,789
            )
            
            
            -
            
            
            
            (477,400
            )FIT
                (expensed) recovery under US
                GAAP
            
            
            
            (209,087
            )
            
            
            23,560
            
            
            
            -Stock-based
                compensation expense -
                Canadian GAAP
            
            
            
            659,806
            
            
            
            576,605
            
            
            
            220,964Adjustment
                to fair value certain
                spin-off related items
            (c)
            
            
            (256,869
            )
            
            
            151,944
            
            
            
            (53,132
            )Stock-based
                compensation expense -
                US GAAP
            
            
            
            402,937
            
            
            
            728,549
            
            
            
            167,832Mineral
                property costs written off
                - Canadian GAAP
            
            
            
            -
            
            
            
            224,695
            
            
            
            258,823Under
                US GAAP such expenses not
                initially capitalized
            (a)
            
            
            -
            
            
            
            (224,695
            )
            
            
            (258,823
            )Mineral
                property costs written off
                under US GAAP
            
            
            
            -
            
            
            
            -
            
            
            
            -Gain
                on disposition of Toquima
                under Canadian GAAP
            
            
            
            -
            
            
            
            -
            
            
            
            142,223Amount
                considered a cost recovery
                under US GAAP
            (a)
            
            
            -
            
            
            
            -
            
            
            
            (142,223
            )Gain
                on disposition of Toquima
                under US GAAP
            
            
            
            -
            
            
            
            -
            
            
            
            -Mineral
                property costs expensed -
                Canadian GAAP
            
            
            
            232,932
            
            
            
            189,027
            
            
            
            236,278Under
                Canadian GAAP policy such
                costs initially deferred
            (a)
            
            
            16,705,015
            
            
            
            7,068,153
            
            
            
            (153,062
            )Net
                mineral property costs
                expensed  – US GAAP
            
            
            
            16,937,947
            
            
            
            7,257,180
            
            
            
            83,216


21.
            DIFFERENCES
                BETWEEN CANADIAN
                AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)(continued)





The
      following is comparative disclosure of the application of US GAAP as described
      above to certain other line items in these consolidated financial
      statements:





2008
            
            
            2007
            
            
            2006Canadian
                GAAP
            
            
            US
                GAAP
            
            
            Canadian
                GAAP
            
            
            US
                GAAP
            
            
            Canadian
                GAAP
            
            
            US
                GAAP$
            
            
            
            $
            
            
            
            $
            
            
            
            $
            
            
            
            $
            
            
            
            $Total
                assets
            
            
            106,834,083
            
            
            
            67,348,637
            
            
            
            101,017,670
            
            
            
            78,355,914
            
            
            
            31,885,579
            
            
            
            17,898,837Total
                liabilities
            
            
            15,589,265
            
            
            
            16,820,611
            
            
            
            15,659,418
            
            
            
            17,719,689
            
            
            
            976,066
            
            
            
            4,133,363Total
                shareholders’ equity
            
            
            91,244,818
            
            
            
            50,528,027
            
            
            
            85,358,252
            
            
            
            60,636,225
            
            
            
            30,909,513
            
            
            
            13,765,474Net
                income (loss)
            
            
            494,441
            
            
            
            12,677,916
            
            
            
            (2,216,381
            )
            
            
            (9,022,756
            )
            
            
            (3,787,920
            )
            
            
            (3,444,099
            )Income
                (loss) per share
            
            
            0.00
            
            
            
            (.09
            )
            
            
            (0.02
            )
            
            
            (0.08
            )
            
            
            (0.05
            )
            
            
            (0.05
            )Net
                cash flows to operating activities
            
            
            1,253,264
            
            
            
            17,958,278
            
            
            
            1,534,976
            
            
            
            8,603,129
            
            
            
            3,324,531
            
            
            
            4,391,498Net
                cash flows to investing activities
            
            
            4,342,536
            
            
            
            12,362,478
            
            
            
            18,110,324
            
            
            
            11,042,170
            
            
            
            5,280,294
            
            
            
            1,618,776Net
                cash flows from financing activities
            
            
            9,558,240
            
            
            
            9,558,240
            
            
            
            27,202,929
            
            
            
            27,202,929
            
            
            
            13,028,002
            
            
            
            10,433,451