---



PACIFIC RIM MINING CORP.

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2007 and 2006

Expressed in US Funds



---

MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

To the Shareholders of Pacific Rim Mining Corp.:

The accompanying consolidated financial statements of the
Company were prepared by management in accordance with accounting principles
generally accepted in Canada, and within the framework of the summary of
significant accounting policies noted in these consolidated financial
statements. Management is responsible for all information in the annual report.
All financial and operating data in the annual report is consistent, where
appropriate, with that contained in the consolidated financial statements.

A system of internal accounting control is maintained in order
to provide reasonable assurance that assets are safeguarded and that
transactions are properly recorded and executed in accordance with managements
authorization. This system includes established policies and procedures, the
selection and training of qualified personnel and an organization providing for
appropriate delegation of authority and, where possible, segregation of
responsibilities.

The Board of Directors discharges its responsibilities for the
consolidated financial statements primarily through activities of its Audit
Committee composed of three directors, none of whom are members of management.
This Committee meets regularly with management to assure that it is performing
its responsibility to maintain financial controls and systems and to approve the
quarterly unaudited and annual audited consolidated financial statements of the
Company. The Audit Committee also meets with the independent auditors to discuss
the scope and the results of their audit and audit report prior to submitting
the consolidated financial statements to the Board of Directors for approval.

The consolidated financial statements have been audited on
behalf of the shareholders by the Companys independent auditors,
PricewaterhouseCoopers LLP, in accordance with Canadian generally accepted
auditing standards. The auditors report outlines the scope of their audit and
their opinion on the consolidated financial statements.

|April Hashimoto       | Thomas C. Shrake     
|----------------------- | -----------------------
|                        |                        
|April Hashimoto         | Thomas C. Shrake       
|Chief Financial Officer | Chief Executive Officer

---

|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM
|-------------------------------------------------------------
|                                                             

To the Shareholders of Pacific Rim Mining Corp.:

We have audited the consolidated balance sheet of Pacific
Rim Mining Corp.(the Company) as at April 30, 2007 and the consolidated
statements of loss and shareholders equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with Canadian generally
accepted auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
April 30, 2007 and the results of its operations and its cash flows for the year
then ended in accordance with Canadian generally accepted accounting principles.

The consolidated balance sheet as at April 30, 2006 and the
consolidated statement of loss and shareholders equity and cash flows for the
years ended April 30, 2006 and 2005 were audited by predecessor auditors who
expressed an opinion without reservation on those statements, before the
restatements as described in note 15, in their report dated June 6, 2006.

We have audited the adjustments arising from the restatement as
described in Note 15 of the April 30, 2007 financial statements and in our
opinion, such adjustment, in all material respects, is appropriate and has been
properly applied.

|                | PricewaterhouseCoopers LLP
|--------------- | ----------------------------
|                |                             
|                |                             
|Vancouver, B.C. | PRICEWATERHOUSECOOPERS LLP  
|July 20, 2007   | CHARTERED ACCOUNTANTS       

Comments by Auditor for U.S. Readers on Canada-U.S Reporting
Difference

In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by conditions and events that cast
substantial doubt on the Companys ability to continue as a going concern, such
as those described in note 1 to the financial statements and when there is a
change in accounting that has a material impact on the comparability of the
Companys financial statements, such as the change described in Note 15 to the
financial statements. Our report to the shareholders dated July 20, 2007 is
expressed in accordance with Canadian reporting standards which do not permit
reference to such events and conditions and accounting changes in the auditors
report when these are adequately disclosed in the financial statements.

|                | PricewaterhouseCoopers LLP
|--------------- | ----------------------------
|                |                             
|                |                             
|Vancouver, B.C. | PRICEWATERHOUSECOOPERS LLP  
|July 20, 2007   | CHARTERED ACCOUNTANTS       

---



|**Report of Independent Registered Public
      Accounting Firm**
|-----------------------------------------------------------------
|                                                                 

**To the Shareholders of Pacific Rim Mining Corp.:**

We have audited the accompanying consolidated balance sheets
  of Pacific Rim Mining Corp. (the “Company”) as at April 30, 2006
  and the related consolidated statements of loss, shareholders' equity, and cash
  flows for each of the years ended April 30, 2006 and 2005. These financial statements
  are the responsibility of the Company's management. Our responsibility is to
  express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Canadian generally
  accepted auditing standards and with the standards of the Public Company Accounting
  Oversight Board (United States). Those standards require that we plan and perform
  the audits to obtain reasonable assurance about whether the financial statements
  are free of material misstatement. The Company is not required to have, nor
  were we engaged to perform an audit of its internal control over financial reporting.
  Our audits included consideration of internal control over financial reporting
  as a basis for designing audit procedures that are appropriate in the circumstances,
  but not for the purpose of expressing an opinion on the effectiveness of the
  Company’s internal control over financial reporting. Accordingly, we express
  no such opinion. An audit also includes 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,
  as well as evaluating the overall financial statement presentation. We believe
  that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  the Company as April 30, 2006, and the results of its operations and its cash
  flows for each of the years ended April 30, 2006, 2005 and 2004, in accordance
  with Canadian generally accepted accounting principles.

**“Staley, Okada & Partners”**

|Vancouver, BC | STALEY, OKADA & PARTNERS
|------------- | ------------------------
|June 6, 2006  | CHARTERED ACCOUNTANTS   
|              |                         



---

|Pacific Rim Mining Corp.     | Statement 1
|---------------------------- | -----------
|Consolidated Balance Sheets  |            
|In thousands of U.S. dollars |            

|                                                          |   |           |   |   | Restated  |  
|--------------------------------------------------------- | - | --------- | - | - | --------- | -
|                                                          |   |           |   |   | (Note 15  | )
|                                                          |   | As at     |   |   | As at     |  
|                                                          |   | April 30, |   |   | April 30, |  
|ASSETS                                                    |   | 2007      |   |   | 2006      |  
|Current Assets                                            |   |           |   |   |           |  
|Cash and cash equivalents                                 | $ | 2,496     |   | $ | 1,757     |  
|Temporary
      investments (Note 4)                      |   | 7,937     |   |   | 14,620    |  
|Bullion (Note 5)                                          |   | 778       |   |   | 533       |  
|Receivables                                               |   | 322       |   |   | 166       |  
|Production inventory                                      |   | 299       |   |   | 278       |  
|                                                          |   | 11,832    |   |   | 17,354    |  
|Property, Plant and Equipment(Note 6)                     |   | 6,271     |   |   | 4,718     |  
|Closure Fund(Note 7)                                      |   | 3,391     |   |   | 3,248     |  
|                                                          | $ | 21,494    |   | $ | 25,320    |  
|                                                          |   |           |   |   |           |  
|                                                          |   |           |   |   |           |  
|LIABILITIES                                               |   |           |   |   |           |  
|Current Liabilities                                       |   |           |   |   |           |  
|Accounts payable
      and accrued liabilities            | $ | 2,285     |   | $ | 882       |  
|Accrued closure costs - current
      portion (Note 9)    |   | 250       |   |   | 159       |  
|                                                          |   | 2,535     |   |   | 1,041     |  
|Accrued Closure Costs(Note 9)                             |   | 2,322     |   |   | 1,624     |  
|                                                          |   | 4,857     |   |   | 2,665     |  
|                                                          |   |           |   |   |           |  
|                                                          |   |           |   |   |           |  
|SHAREHOLDERS
      EQUITY                                |   |           |   |   |           |  
|Share Capital-Statement
      3 (Note 10)                 |   |           |   |   |           |  
|Authorized:                                               |   |           |   |   |           |  
|unlimited common shares without par value                 |   |           |   |   |           |  
|Issued and fully paid:                                    |   |           |   |   |           |  
|109,781,960 (2006  105,590,960) shares
      outstanding |   | 76,765    |   |   | 74,178    |  
|Contributed Surplus- Statement 3                          |   | 1,993     |   |   | 1,181     |  
|Deficit- Statement 3                                      |   | (62,121   | ) |   | (52,704   | )
|                                                          |   | 16,637    |   |   | 22,655    |  
|                                                          | $ | 21,494    |   | $ | 25,320    |  
|Going Concern(Note 1)                                     |   |           |   |   |           |  
|Commitments(Note 13)                                      |   |           |   |   |           |  

APPROVED BY THE BOARD OF DIRECTORS:

Paul B.
Sweeney,
Director

Catherine McLeod-Seltzer,
Director

- See Accompanying Notes -

---

|Pacific Rim Mining Corp.                                         | Statement 2
|---------------------------------------------------------------- | -----------
|Consolidated Statements of Loss                                  |            
|In thousands of U.S. dollars, except for per share
      amounts |            

|                                                       |   |           |   |   | Restated  |   |   | Restated  |  
|------------------------------------------------------ | - | --------- | - | - | --------- | - | - | --------- | -
|                                                       |   |           |   |   | (Note 15  | ) |   | (Note 15  | )
|                                                       |   | Year      |   |   | Year      |   |   | Year      |  
|                                                       |   | Ended     |   |   | Ended     |   |   | Ended     |  
|                                                       |   | April 30, |   |   | April 30, |   |   | April 30, |  
|                                                       |   | 2007      |   |   | 2006      |   |   | 2005      |  
|Revenue                                                |   |           |   |   |           |   |   |           |  
|Sales                                                  | $ | 8,337     |   | $ | 8,024     |   | $ | 11,868    |  
|                                                       |   |           |   |   |           |   |   |           |  
|Cost of Sales                                          |   |           |   |   |           |   |   |           |  
|Operating costs                                        |   | 5,442     |   |   | 4,410     |   |   | 9,019     |  
|Depreciation, depletion and amortization               |   | 140       |   |   | 79        |   |   | 937       |  
|                                                       |   | 5,582     |   |   | 4,489     |   |   | 9,956     |  
|Mine Operating Income (Loss)                           |   | 2,755     |   |   | 3,535     |   |   | 1,912     |  
|                                                       |   |           |   |   |           |   |   |           |  
|Expenses (Income)                                      |   |           |   |   |           |   |   |           |  
|Exploration                                            |   |           |   |   |           |   |   |           |  
|- direct                                               |   | 10,401    |   |   | 6,237     |   |   | 6,351     |  
|- stock-based
      compensation (Note 10)             |   | 263       |   |   | 52        |   |   | 73        |  
|General and administrative                             |   |           |   |   |           |   |   |           |  
|- direct                                               |   | 2,346     |   |   | 1,504     |   |   | 1,149     |  
|- stock-based compensation
      (Note 10)             |   | 705       |   |   | 166       |   |   | 411       |  
|Interest income                                        |   | (642      | ) |   | (251      | ) |   | (120      | )
|Interest expense                                       |   | -         |   |   | -         |   |   | 18        |  
|Unrealized foreign exchange
      loss (gain)          |   | 86        |   |   | (264      | ) |   | (108      | )
|Gain on sale of property, plant and equipment          |   | -         |   |   | (11       | ) |   | (848      | )
|                                                       |   | 13,159    |   |   | 7,433     |   |   | 6,926     |  
|Loss Before Discontinued Operations                    |   | (10,404   | ) |   | (3,898    | ) |   | (5,014    | )
|Discontinued Operations - Recovery of
      Investment |   |           |   |   |           |   |   |           |  
|In Andacollo Mine(Note 1d )                            |   | 1,000     |   |   | 3,349     |   |   | 284       |  
|Loss for the Year Before Taxes                         |   | (9,404    | ) |   | (549      | ) |   | (4,730    | )
|Income Taxes(Note 12)                                  |   | (13       | ) |   | (59       | ) |   | (19       | )
|Loss for the Year                                      | $ | (9,417    | ) | $ | (608      | ) | $ | (4,749    | )
|                                                       |   |           |   |   |           |   |   |           |  
|Loss Per Share before Discontinued
      Operations   |   |           |   |   |           |   |   |           |  
|Basic and Diluted                                      |   | (0.10     | ) |   | (0.05     | ) |   | (0.06     | )
|Loss Per Share after Discontinued
      Operations -   |   |           |   |   |           |   |   |           |  
|Basic and Diluted                                      | $ | (0.09     | ) | $ | (0.01     | ) | $ | (0.06     | )
|                                                       |   |           |   |   |           |   |   |           |  
|                                                       |   |           |   |   |           |   |   |           |  
|Weighted Average Shares Outstanding (thousands)        |   | 106,939   |   |   | 82,528    |   |   | 80,514    |  

- See Accompanying Notes -

---

|Pacific Rim Mining Corp.                              | Statement 3
|----------------------------------------------------- | -----------
|Consolidated Statements of Shareholders'
      Equity |            
|In thousands of U.S. dollars                          |            

Share Capital - Common SharesContributed
      
      
      Accumulated
      
      
      TotalNumber
      
      
      Amount
      
      
      Surplus
      
      
      Deficit
      
      
      EquityBalance - April 30, 2004
      
      80,483,994
      
      $
      57,354
      
      $
      336
      
      $
      (47,347
      )
      $
      10,343Shares issued for cash options exercised
      
      158,200
      
      
      71
      
      
      -
      
      
      -
      
      
      71Stock-based compensation
      
      -
      
      
      -
      
      
      484
      
      
      -
      
      
      484Fair value of optionsexercised
      
      -
      
      
      10
      
      
      (10
      )
      
      -
      
      
      -Loss for the year
      
      -
      
      
      -
      
      
      -
      
      
      (4,634
      )
      
      (4,634
      )Restatement of prior years(Note 15)
      
      -
      
      
      -
      
      
      -
      
      
      (115
      )
      
      (115
      )Balance - April 30, 2005
      
      80,642,194
      
      $
      57,435
      
      $
      810
      
      $
      (52,096
      )
      $
      6,149Shares issued for cash, net
        ofcosts
      
      23,900,000
      
      
      16,361
      
      
      -
      
      
      -
      
      
      16,361Shares issued for cash options exercised
      
      783,766
      
      
      347
      
      
      -
      
      
      -
      
      
      347Shares issued for propertyoption payment
      
      50,000
      
      
      38
      
      
      -
      
      
      -
      
      
      38Shares issued for services(Note 10)
      
      215,000
      
      
      150
      
      
      -
      
      
      -
      
      
      150Warrants issue cost
      
      -
      
      
      (168
      )
      
      168
      
      
      -
      
      
      -Stock-based compensation
      
      -
      
      
      -
      
      
      218
      
      
      -
      
      
      218Fair value of optionsexercised
      
      -
      
      
      15
      
      
      (15
      )
      
      -
      
      
      -Loss for the year
      
      -
      
      
      -
      
      
      -
      
      
      (618
      )
      
      (618
      )Restatement of prior years(Note 15)
      
      -
      
      
      -
      
      
      -
      
      
      10
      
      
      10Balance  April 30, 2006
      
      105,590,960
      
      $
      74,178
      
      $
      1,181
      
      $
      (52,704
      )
      $
      22,655Shares issued for cash options exercised
      
      2,644,000
      
      
      1,208
      
      
      -
      
      
      -
      
      
      1,208Shares issued for cash warrants exercised
      
      1,195,000
      
      
      862
      
      
      -
      
      
      -
      
      
      862Shares issued for services
      
      152,000
      
      
      111
      
      
      -
      
      
      -
      
      
      111Shares issued for propertyoption payment
      
      200,000
      
      
      199
      
      
      -
      
      
      -
      
      
      199Fair value of warrantsexercised
      
      -
      
      
      168
      
      
      (168
      )
      
      -
      
      
      -Fair value of optionsexercised
      
      -
      
      
      39
      
      
      (39
      )
      
      -
      
      
      -Warrants issued for propertyoption payment (Note 10)
      
      -
      
      
      -
      
      
      51
      
      
      -
      
      
      51Stock-based compensation
      
      -
      
      
      -
      
      
      968
      
      
      -
      
      
      968Loss for the year
      
      -
      
      
      -
      
      
      -
      
      
      (9,417
      )
      
      (9,417
      )Balance  April 30, 2007
      
      109,781,960
      
      $
      76,765
      
      $
      1,993
      
      $
      (62,121
      )
      $
      16,637


- See Accompanying Notes -

---

|Pacific Rim Mining Corp.              | Statement 4
|------------------------------------- | -----------
|Consolidated Statements of Cash Flows |            
|In thousands of U.S. dollars          |            

|                                                               |   |           |   |   | Restated  |   |   | Restated  |  
|-------------------------------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
|                                                               |   |           |   |   | (Note 15  | ) |   | (Note 15  | )
|                                                               |   | Year      |   |   | Year      |   |   | Year      |  
|                                                               |   | Ended     |   |   | Ended     |   |   | Ended     |  
|                                                               |   | April 30, |   |   | April 30, |   |   | April 30, |  
|                                                               |   | 2007      |   |   | 2006      |   |   | 2005      |  
|Operating Activities                                           |   |           |   |   |           |   |   |           |  
|Loss for the year                                              | $ | (9,417    | ) | $ | (608      | ) | $ | (4,749    | )
|Adjustment to reconcile loss to cash flow
      provided by    |   |           |   |   |           |   |   |           |  
|operations:                                                    |   |           |   |   |           |   |   |           |  
|                                                               |   |           |   |   |           |   |   |           |  
|Depletion, depreciation and amortization                       |   | 155       |   |   | 98        |   |   | 928       |  
|Accretion and pension costs                                    |   | 10        |   |   | 167       |   |   | 399       |  
|Warrants issued
      for property option payment              |   | 51        |   |   | 38        |   |   | -         |  
|Stock issued for property option
      payment                 |   | 199       |   |   | -         |   |   | -         |  
|Stock issued for
      services                                |   | 111       |   |   | 150       |   |   | -         |  
|Stock based compensation                                       |   | 968       |   |   | 218       |   |   | 484       |  
|Net interest
      earned on closure fund                      |   | (143      | ) |   | (126      | ) |   | (91       | )
|Gain on sale of property, plant
      and equipment            |   | -         |   |   | (11       | ) |   | (848      | )
|Loss on sale of
      supplies inventory                       |   | -         |   |   | -         |   |   | 37        |  
|Write-down of supplies inventory                               |   | -         |   |   | -         |   |   | 165       |  
|                                                               |   | (8,066    | ) |   | (74       | ) |   | (3,675    | )
|Changes in non-cash working capital items:                     |   |           |   |   |           |   |   |           |  
|Accounts payable
      and accrued liabilities                 |   | 1,403     |   |   | (332      | ) |   | (547      | )
|Closure cost expenditures                                      |   | (127      | ) |   | (110      | ) |   | (304      | )
|Loans payable                                                  |   | -         |   |   | -         |   |   | (828      | )
|Inventories                                                    |   | (266      | ) |   | (524      | ) |   | 3,710     |  
|Receivables                                                    |   | (155      | ) |   | (50       | ) |   | 2         |  
|Proceeds of disposition of
      supplies inventory            |   | -         |   |   | -         |   |   | 32        |  
|Cash Flow Used for Operating Activities                        |   | (7,211    | ) |   | (1,090    | ) |   | (1,610    | )
|Investing Activities                                           |   |           |   |   |           |   |   |           |  
|Temporary investment
      redemption                          |   | 6,683     |   |   | (14,262   | ) |   | (358      | )
|Purchases of property, plant and equipment                     |   | (798      | ) |   | (46       | ) |   | (86       | )
|Proceeds of disposition of
      property, plant and equipment |   | -         |   |   | 11        |   |   | 848       |  
|Reclamation sinking fund withdrawals                           |   | -         |   |   | -         |   |   | 108       |  
|Cash Flow Provided By (Used for)
      Investing Activities    |   | 5,885     |   |   | (14,297   | ) |   | 512       |  
|Financing Activities                                           |   |           |   |   |           |   |   |           |  
|Shares issued for cash, net of
      issuance costs            |   | 2,065     |   |   | 16,708    |   |   | 71        |  
|Cash Flow Provided By Financing Activities                     |   | 2,065     |   |   | 16,708    |   |   | 71        |  
|Net Increase (Decrease) in Cash and Cash
      Equivalents     |   | 739       |   |   | 1,321     |   |   | (1,027    | )
|Cash and cash equivalents - Beginning of year                  |   | 1,757     |   |   | 436       |   |   | 1,463     |  
|Cash and Cash Equivalents - End of Year                        | $ | 2,496     |   | $ | 1,757     |   | $ | 436       |  
|                                                               |   |           |   |   |           |   |   |           |  
|Supplementary Schedule of Cash
      Transactions:             |   |           |   |   |           |   |   |           |  
|Interest paid during the period                                | $ | -         |   | $ | -         |   | $ | 25        |  
|Income taxes paid during the period                            | $ | 13        |   | $ | 59        |   | $ | 19        |  

- See Accompanying Notes -

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|1. | Going Concern, Nature of Operations and Basis of
      Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company is involved in the exploration, development
      and operation of gold properties. The Company owns a 49% interest in the
      Denton-Rawhide Mine, located near Fallon, Nevada, U.S.A., a 100% interest
      in certain mineral properties, known as El Dorado, located in El Salvador
      and exploration interests in mineral claims in Argentina.                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company has not yet determined whether any of its
      exploration properties contain mineral deposits that are economically
      recoverable. The recoverability of any amounts capitalized for Mining
      Property Acquisition costs in El Salvador is dependent upon the existence
      of economically recoverable mineral deposits, the ability of the Company
      to obtain the necessary financing to complete the exploration and
      development of is exploration properties, and upon future profitable
      production or proceeds from the disposition of its properties.                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These financial statements are prepared in accordance
      with Canadian generally accepted accounting principles on a going concern
      basis, which presume the realization of assets and discharge of
      liabilities in the normal course of business for the foreseeable future.
      There are conditions and risks that could cast substantial doubt on the
      validity of this assumption.                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | During the year, the Company incurred a loss of $9,417
      and has an accumulated deficit of $62,121. The operations of the Company
      have been funded primarily by its interest in the Denton Rawhide Joint
      Venture and the use of funds raised through a short form prospectus equity
      financing that closed on March 1, 2006. The Companys ability to continue
      operations and exploration activities as a going concern is dependent upon
      its ability to obtain additional funding. While the Company has been
      successful in obtaining its required funding in the past, there is no
      assurance that sufficient funds will be available to the Company in the
      future.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These financial statements do not reflect the adjustments
      to the carrying values of assets and liabilities and the reported expenses
      and balance sheet classifications that would be necessary were the going
      concern assumption to be inappropriate, and these adjustments could be
      material.                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These consolidated financial statements are presented in
      accordance with generally accepted accounting principles (GAAP)
      applicable in Canada and have been reconciled as to significant
      differences in measurement to generally accepted accounting principles
      applicable in the United States as disclosed in Note 17.                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These consolidated financial statements include the
      accounts of the Companys wholly-owned active subsidiaries, Dayton Mining
      (U.S.) Inc., Pacific Rim Exploration Inc., Pacific Rim Cayman, Pacific Rim
      El Salvador S.A. de C.V., Dorado Exploraciones S.A. de C.V., Pac Rim
      Caribe III and its wholly- owned subsidiaries International Pacific Rim
      S.A and Pacific Rim Chile Limitada.                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The 49% joint venture interest in Denton-Rawhide is
      accounted for on the proportionate consolidation
basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

Basis of Presentation- Continued

| | a) | Reporting Currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The United States dollar is the Companys principal
      reporting currency and the currency of measurement for all financial
      transactions reported in these consolidated financial
statements.                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | b) | Comparative Figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Certain of the comparative figures have been reclassified
      to conform to the current years presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | c) | Bullion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Saleable bullion inventory located at gold refiners is
      reported separately from all other inventories held to reflect
      managements view that the bullion reported is closely equivalent to cash,
      immediately available to cover short-term cash requirements.                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | d) | Shut Down and Sale of Andacollo Mine                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The carrying values of the assets and liabilities of the
      Chilean operating subsidiary that owned the Andacollo Mine were written
      off effective December 1, 2000 with a corresponding charge to income to
      reflect permanent closure of this mine and the estimated realizable value
      of capital assets after all liabilities have been liquidated.                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Proceeds from creditor distribution and payments related
      to subsequent sales of the previously written off assets are credited in
      the year received to income as Discontinued Operations - Recovery of
      Investment In Andacollo Mine.                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | On September 21, 2005 the Company entered into an
      agreement to sell 100% of the shares of the Cayman and Chilean
      subsidiaries that owned the Andacollo Mine for a total price of $5,400.
      $3,000 of proceeds received upon signing this agreement has been recorded
      as described above. The first payment of $1,000 against a $2,400
      promissory note was received on September 26, 2006 as scheduled. The
      remaining payment of $1,400 due on September 20, 2007 will be recorded
      when received. The promissory note bears no interest and is secured by a
      charge over the assets sold.

|   |                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Significant Accounting Policies and Accounting
      Changes                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                          
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                          
|   | Cash and cash equivalents includes cash on hand, demand
      deposits, and short term highly liquid investments with a term to maturity
      of three months or less from inception which are readily convertible to
      known amounts of cash and which, in the opinion of management, are subject
      to an insignificant risk of loss in values.
|   |                                                                                                                                                                                                                                                                                                                                                          
|   | Temporary Investments                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                          
|   | Short term investments with a term to maturity from
      inception of greater than three months which are readily convertible to
      known amounts of cash and which, in the opinion of management, are subject
      to insignificant risks of loss in value are classified as temporary
      investments.                                          
|   |                                                                                                                                                                                                                                                                                                                                                          

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|2. | Significant Accounting Policies and Accounting Changes Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Bullion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Gold and silver bullion is valued at the lower of cost and estimated fair market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Production Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Production inventory, comprised of gold in process is valued at the lower of cost and net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Property, Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Property, plant and equipment is stated at cost as at the date of acquisition less accumulated depreciation and accumulated write-downs. Mining property, plant and equipment is depreciated using the unit of production method over
estimated recoverable ounces.                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Reviews are undertaken to evaluate the carrying values of property, plant and equipment when events or changes in circumstances indicate that carrying values may not be recoverable. If it is determined that the estimated net
recoverable amount based on non-discounted cash flows is less than the carrying value, a write-down to the estimated fair value is made by a charge to earnings.                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Exploration Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized. If no mineable ore body is discovered, previously capitalized costs are expensed
in the period the property is abandoned. Expenditures for the development of new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, is capitalized as incurred and amortized on a units of
production basis over estimated recoverable reserves.                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Environmental Expenditures and Closure Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The operations of the Company may in the future be affected by changes in environmental regulations, including those for future removal and site restoration costs. Both the likelihood of new regulations and their overall effect
upon the Company vary greatly and are not predictable. The Company's policy is to meet standards set by relevant legislation by application of technically proven and economically feasible measures.                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Companys share of estimated closure costs associated with the Denton-Rawhide Mine at the time of acquisition was recognized in full as part of the acquisition cost. Increases in estimates of closure liabilities
subsequent to the acquisition of Denton-Rawhide are accounted for in accordance with CICA 3110 Asset Retirement Obligations which conforms in all material respects to FASB (Financial Accounting Standards Board) Statement No. 143
as required under United States GAAP requirements for the reporting of asset retirement obligations.

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|2. | Significant Accounting Policies and Accounting Changes- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Environmental Expenditures and Closure Costs -Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Effective May 1, 2003, the Company elected early
      implementation of CICA 3110, whereby the Company prospectively recognizes
      asset retirement obligations in the period in which they are incurred, if
      a reasonable estimate of fair market value can be made. The asset
      retirement costs are capitalized as part of the carrying amount of the
      long term asset to be amortized over the estimated remaining useful life
      of the asset and the associated liability is accreted over the estimated
      future ounces of gold production until settlement of the obligation. As a
      result of the adoption of this accounting standard, the carrying value of
      the Rawhide Mine and the corresponding asset retirement obligation was
      increased by $500 during the year ended April 30, 2004. During 2007, the
      Company reviewed the accounting implemented under CICA 3110 and determined
      that amendments should be reflected in the accounting applied and as a
      result, re-stated years 2006 and 2005 of the consolidated financial
      statements . (See Note 15)
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company uses the asset and liability method of
      accounting for future income taxes. Under this method, current income
      taxes are recognized for the estimated income taxes payable for the
      current period. Future income tax assets and liabilities are recognized
      for temporary differences between the tax and accounting basis of assets
      and liabilities as well as for the benefit of losses available to be
      carried forward to future years for tax purposes, which are more likely
      than not to be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Share Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company applies the fair value method of accounting
      for all stock options granted. Under this method, stock-based compensation
      on options granted to employees, directors and consultants is recorded as
      an expense over the vesting period of the stock options, based on the
      estimated fair value at the measurement date using the Black-Scholes
      Option Pricing Model.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Revenues from the sale of all precious metal bullion are
      recognized when title to the bullion passes to the buyer, an arrangement
      exists, the price is fixed and determinable, and collection is reasonably
      assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|2. | Significant Accounting Policies and Accounting Changes- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Earnings (Loss) per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Basic earnings (loss) per share is computed by dividing
      income available to common shareholders by the weighted average number of
      common shares outstanding during the period. The computation of diluted
      earnings per share assumes the conversion, exercise or contingent issuance
      of securities only when such conversion, exercise or issuances would have
      a dilutive effect on earnings per share. The dilutive effect of
      outstanding options and warrants and their equivalents is reflected in
      diluted earnings per share by application of the treasury stock
    method.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Derivative Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company may enter into gold forward sales contracts
      to manage its exposure to fluctuations in the market price of gold and to
      establish minimum prices for a portion of its future production. The
      Companys entire forward sales activity is considered normal course sales
      requiring settlements through physical delivery. Gains or losses on these
      contracts are included in sales revenue when product is delivered against
      the contract.                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Companys functional and reporting currency is the
      United States dollar. Transactions denominated in other currencies are
      translated into their United States dollar equivalents at exchange rates
      prevailing at the transaction date. Carrying values of monetary assets and
      liabilities denominated in foreign currencies are adjusted at each balance
      sheet date to reflect exchange rates prevailing at that date.                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Integrated foreign operations are translated into the
      functional currency using the temporal method as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Gains and losses on translation are included in
      determining net income for the period.Use of EstimatesThe preparation of financial statements in conformity
      with Canadian GAAP requires management to make estimates and assumptions
      that affect the reported amounts of assets and liabilities and disclosures
      of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from those estimates.


---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|3. | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Companys financial instruments consist of cash and
      cash equivalents, temporary investments, receivables, closure fund and,
      accounts payable. Unless otherwise noted, it is managements opinion that
      the Company is not exposed to significant interest, currency or credit
      risks arising from the financial instruments. The fair value of these
      financial instruments approximates their carrying value due to their
      short-term maturity or capacity of prompt liquidation.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4. | Temporary Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                         |   | April 30, 2007      |  |   | April 30, 2006 | 
| | ----------------------- | - | ------------------- |  | - | -------------- | 
| | Temporary Investments * | $ | 7,937               |  | $ | 14,620         | 
| |                         |   | February 13, 2008   |  |   |                | 
| | Maturity date           |   | and August 15, 2007 |  |   | April 3, 2007  | 
| | Interest rate per annum |   | 4.43% and 4.62%     |  |   | 3.6 %          | 

|   | * At April 30, 2007, temporary investments are comprised
      of two bankers acceptances guaranteed by large North American banking
      institutions, are callable on demand and pay interest for the period of
      the investment. At April 30, 2006, temporary investments were comprised of
      guaranteed investment certificates, guaranteed by a large North American
      banking institution, were callable on demand and paid interest on all
      amounts invested for more than thirty days.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | Bullion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                                      |   | April
      30, 2007 |  |   | April
      30, 2006 | 
| | ------------------------------------ | - | -------------------- |  | - | -------------------- | 
| |                                      |   | Gold                 |  |   | Silver               | 
| | Ounces at refinery                   |   | 1,192                |  |   | 18,013               | 
| |                                      |   |                      |  |   |                      | 
| | Market value per ounce ($/oz.)       | $ | 678                  |  | $ | 13.40                | 
| | Market value                         | $ | 808                  |  | $ | 241                  | 
| | Total market value                   |   | $ 1,049              |  |   | $ 943                | 
| | Valuation  lower of cost and market |   | $ 778                |  |   | $ 533                | 
| |                                      |   |                      |  |   |                      | 

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|6. | Property, Plant and
Equipment
|-- | -----------------------------

| |                                                       |   |           |   |   | Restated  |  
| | ----------------------------------------------------- | - | --------- | - | - | --------- | -
| |                                                       |   |           |   |   | (Note 15  | )
| |                                                       |   | April 30, |   |   | April 30, |  
| |                                                       |   | 2007      |   |   | 2006      |  
| | Office Equipment and Vehicles                         | $ | 252       |   | $ | 207       |  
| | Accumulated Depreciation                              |   | (175      | ) |   | (190      | )
| |                                                       |   | 77        |   |   | 17        |  
| | Rawhide Mining Facility                               |   | 26,542    |   |   | 25,370    |  
| | Accumulated depreciation and amortization             |   | (25,059   | ) |   | (24,917   | )
| |                                                       |   | 1,483     |   |   | 453       |  
| | Mining Property Acquisition Costs  El
      Salvador |   | 4,711     |   |   | 4,248     |  
| |                                                       | $ | 6,271     |   | $ | 4,718     |  

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. | Closure Fund                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Denton-Rawhide Closure Fund investments of $3,391
      (2006 - $3,248) are held in a trust managed by a Trustee that is a large
      North American banking institution. The trust funds are invested in mutual
      funds composed of U.S. Government guaranteed fixed income securities with
      maturities of one to five years. The fair market value of the funds at
      April 30, 2007 was approximately $3,468 (2006 - $3,276). During the year
      ended April 30, 2007, no funds (2006 - $108) were drawn from the trust to
      pay severances owed to Denton-Rawhide employees due to the cessation of
      mining activities (heap leaching and processing activities have continued)
      and the related reduction of the workforce. These severances paid were
      part of the accrued closure costs. At April 30, 2007, closure trust
      funding is in excess of estimated total closure cost liabilities. The
      Company will not have access to any excess funding of these funds until
      all related closure liabilities are satisfied and reclamation work is
      deemed complete by the Denton-Rawhide joint venture operator. Completion
      date of the reclamation work cannot be reasonably estimated at this
      time.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|8. | Mineral Properties
|-- | ------------------
|   |                   
|   | a)                
|   |                   
|   |                   
|   |                   
|   |                   
|   |                   
|   |                   

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|8. | Mineral Properties- Continued
|-- | -----------------------------
|   |                              
|   | a)                           
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              

Upon TSX approval of the agreement
    100,000 shares plus 100,000 warrants of the
      CompanyAnnual payments
    The greater of:First anniversary
    100,000 shares or $100 in shares of the CompanySecond anniversary
    140,000 shares or $140 in shares of the CompanyThird anniversary
    200,000 shares or $200 in shares of the CompanyFourth anniversary
    300,000 shares or $300 in shares of the CompanyFifth and subsequent anniversaries
    400,000 shares or $400 in shares of the Company


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

Upon TSX approval of the agreement,
50,000 shares were issued on March 8, 2006. Upon TSX approval of the amended
agreement, 100,000 shares and 100,000 warrants of the Company were issued on
November 8, 2006. On February 13, 2007, 100,000 shares were issued pursuant to
the first anniversary payment.

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|8. | Mineral Properties- Continued
|-- | -----------------------------
|   |                              
|   | b)                           
|   |                              
|   |                              

| |                               |   | April 30, |   |   | April 30, |   |  | April 30, |  
| | ----------------------------- | - | --------- | - | - | --------- | - |  | --------- | -
| |                               |   | 2007      |   |   | 2006      |   |  | 2005      |  
| | Current assets                | $ | 1,209     |   | $ | 814       |   |  | 412       |  
| | Property, plant and equipment |   | 1,483     |   |   | 453       |   |  | 229       |  
| | Closure fund                  |   | 3,391     |   |   | 3,248     |   |  | 3,122     |  
| | Current liabilities           |   | (1,003    | ) |   | (431      | ) |  | (672      | )
| | Long-term liabilities         |   | (2,322    | ) |   | (1,624    | ) |  | (1,388    | )
| |                               |   |           |   |   |           |   |  |           |  
| | Net assets                    | $ | 2,758     |   | $ | 2,460     |   |  | 1,703     |  

The condensed statements of operating
income of the Companys 49% interest are as follows:

| |                                     |   |           |   |   | Year
      Ended |   |   |           |  
| | ----------------------------------- | - | --------- | - | - | ---------------- | - | - | --------- | -
| |                                     |   | April 30, |   |   | April 30,        |   |   | April 30, |  
| |                                     |   | 2007      |   |   | 2006             |   |   | 2005      |  
| | Sales                               | $ | 8,337     |   | $ | 8,024            |   | $ | 11,868    |  
| | Gain on sale of property, plant and |   |           |   |   |                  |   |   |           |  
| | equipment                           |   | -         |   |   | -                |   |   | 848       |  
| | Other income (slag sale)            |   | 62        |   |   | -                |   |   | -         |  
| | Costs and expenses                  |   | (5,644    | ) |   | (4,489           | ) |   | (9,956    | )
| |                                     | $ | 2,755     |   | $ | 3,535            |   | $ | 2,760     |  

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|8. | Mineral Properties-
  Continued
|-- | -------------------------------

| | b) | Denton-Rawhide Joint Venture-
    Continued                                               
| | -- | ------------------------------------------------------------------------------------------
| |    |                                                                                           
| |    | The condensed statements of cash flows of the Companys 49% interest
      are as follows:

| |                                   |   |           |   |   | Year
      Ended |   |   |           |  
| | --------------------------------- | - | --------- | - | - | ---------------- | - | - | --------- | -
| |                                   |   | April 30, |   |   | April 30,        |   |   | April 30, |  
| |                                   |   | 2007      |   |   | 2006             |   |   | 2005      |  
| | Cash flows provided by operations | $ | 2,790     |   | $ | 2,862            |   | $ | 6,624     |  
| | Cash flows provided by (used for) |   |           |   |   |                  |   |   |           |  
| | investment activities             |   | (253      | ) |   | (3               | ) |   | 812       |  
| | Cash flows provided by (used for) |   |           |   |   |                  |   |   |           |  
| | financing activities              |   | -         |   |   | -                |   |   | (828      | )
| | Net cash flow                     | $ | 2,537     |   | $ | 2,859            |   | $ | 6,608     |  

| | ii) | By agreement dated October 28, 2004 and subsequently
      amended effective October 1, 2006, between the Company and Kennecott
      Rawhide Mining Company (the Denton-Rawhide joint venture partners 
      Rawhide) and Nevada Resource Recovery Group LLC (NRRG), Rawhide has
      agreed to the transfer of certain properties and assets required for an
      approved landfill business. The landfill will be operated and permitted by
      NRRG, utilizing the existing mine open pits as landfill sites, to dispose
      of permitted non-hazardous municipal wastes. As consideration for certain
      real property, including access and water rights, NRRG will pay $1,500.
      $500 of the amount has been paid into trust to fund additional activities
      needed to close the transaction, including the acquisition of title to
      additional lands within the area of interest to perfect the title of lands
      required for the operation. Should Rawhide complete these items and NRRG
      does not or is not able to complete their undertakings, any unspent
      balance in the trust will be released to Rawhide. The $1,000 balance of
      the consideration is to be paid on the closing date. Upon closing Rawhide
      and NRRG will sign a royalty payment agreement based on tipping fees
      generated by the landfill operation. Additional consideration, still to be
      determined, for certain buildings and other property required for the
      operation, will be paid to Rawhide on closing. The $500 received from NRRG
      has not been reflected in these financial statements as Rawhide has not
      yet removed the conditions for release from escrow. The October 1, 2006
      amendment extended the closing date of the sale of the lands comprising
      the Denton-Rawhide open pits to on or before October, 31, 2007 (formerly
      October 31, 2006).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | Other Exploration Properties                                                                                                                                                                
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                             
| |    | The Company holds exploration rights on mineral claims in
      Argentina which are largely unexplored and undeveloped. Certain of the
      properties have been optioned to third parties.
| |    |                                                                                                                                                                                             

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|9. | Accrued Closure Costs                                                                                                                                                                                                                                                                                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company estimates its share of closure liabilities at
      the Denton-Rawhide Mine to be $3,556 at April 30, 2007 (2006 - $2,708) of
      which $3,306 (2006- $2,549) is long-term and $250 (2006 - $159) is
      current. The closure fund (Note 7), held in trust, is provided as
      security to the mine operator for the Companys portion of estimated
      closure liabilities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Estimated closure liabilities are as
  follows:                                                                                                                                                                                                                                                                                                                                                 

| |                                           |   |                |   |   | Re-stated      |   |  | Re-stated      |  
| | ----------------------------------------- | - | -------------- | - | - | -------------- | - |  | -------------- | -
| |                                           |   |                |   |   | (Note 15       | ) |  | (Note 15       | )
| |                                           |   | April 30, 2007 |   |   | April 30, 2006 |   |  | April 30, 2005 |  
| | Current                                   |   |                |   |   |                |   |  |                |  
| | Pension Liability                         | $ | 115            |   | $ | 105            |   |  | 188            |  
| | Asset retirement obligation
      (ARO) |   | 135            |   |   | 54             |   |  | 42             |  
| |                                           |   | 250            |   |   | 159            |   |  | 230            |  
| | Long-term                                 |   |                |   |   |                |   |  |                |  
| |                                           |   |                |   |   |                |   |  |                |  
| | Pension Liability                         | $ | 115            |   | $ | 174            |   |  | (92            | )
| | Asset retirement obligation               |   | 2,207          |   |   | 1,450          |   |  | 1,480          |  
| |                                           |   | 2,322          |   |   | 1,624          |   |  | 1,388          |  
| |                                           |   |                |   |   |                |   |  |                |  
| | Accretion cost during the
      period    | $ | 60             |   | $ | 91             |   |  | -              |  
| | ARO -change in estimate (Note 16)         |   | 906            |   |   | 91             |   |  | -              |  
| | Pension liability accrual                 |   | 9              |   |   | 59             |   |  | 999            |  
| | Reclamation expenditures during the       |   |                |   |   |                |   |  |                |  
| | period                                    | $ | (127           | ) | $ | (110           | ) |  | (304           | )

During the year the Company recorded
additional reclamation liabilities and post-retirement benefit liabilities
relating to the Rawhide Joint Venture.

The net pension liability above
consisted of projected benefit obligations of $2,047 (2006 - $2,033) and plan
assets of $2,008 (2006 - $1,888). The following assumptions were applied in
arriving at these values:

Discount rate
    5.9% (2006  5.6%)Salary increases
    4.0% (2006  4.1%)Expected return on assets
    7.3% (2006  6.2%)


|    |                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10. | Share Capital                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                 
|    | Common Shares                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company filed a Notice of Alteration of Articles,
      under the new Business Corporations Act (British Columbia) which,
      effective January 20, 2005 altered its authorized share structure from
      1,000,000,000 common shares to an unlimited number of common
  shares.                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                 
|    | Stock and Warrant Issues                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                 
|    | On March 14, 2006 the Company issued 215,000 shares as
      payment for $150 of management services provided by an officer and
      director of the Company in the normal course of operations. The amount of
      the consideration was established and agreed to by the officer and
      director. During 2007, no shares were issued as payment to related
      parties.

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|10. | Share Capital Continued                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                 
|    | Stock and Warrant Issues
  Continued                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                 
|    | On November 08, 2006 and February 13, 2007 200,000 shares
      and 100,000 warrants were issued under the terms of the Cerro Colorado
      exploration agreement dated February 06, 2006 and subsequently amended in
      September 2006 (see Note 8(a)(iv)).
|    |                                                                                                                                                                                                                                                                 
|    | The $38 non cash fair value of these warrants as
      calculated using the Black Scholes Option Pricing Model was charged as
      exploration expenditures.                                                                                                   
|    |                                                                                                                                                                                                                                                                 
|    | The assumptions used to determine the cost in the
      warrants pricing model are summarized below:                                                                                                                                                            

| | Date of warrant grant                       | November 08, 2006
| | ------------------------------------------- | -----------------
| | Average risk free interest rate             | 4.00%            
| | Average expected option life                | 3 years          
| | Stock volatility  based on trading history | 54.138%          
| | Dividend payments during life of option     | none             
| | Total fair value of warrants granted        | $51              

Details of warrants issued, exercised
and outstanding are:

Number of warrants
    Exercise price ($Cdn)
    ExpiryApril 30, 2006
    1,195,000
    0.84
    February 28, 2007Issued
    100,000
    0.81
    November 07, 2009Exercised
    (1,195,000)
    0.84
    February 28, 2007April 30, 2007
    100,000


Stock Options

In April 2002 Dayton Mining Corporation
and Pacific Rim Mining Corporation were amalgamated. The stock options
outstanding at that date were combined, provided that upon surrender,
termination or expiry without exercise the shares would not be available for the
grant of new options.

In October 2002 shareholders approved a
stock option and bonus plan under which, up to 6,000,000 common shares were
reserved for the grant of stock options and up to 367,000 common shares were
reserved for the grant of bonus shares to directors, employees or consultants
(eligible parties).

On August 29, 2006, shareholders
adopted an evergreen incentive stock option plan (2006 Plan) whereby the
maximum number of shares reserved for grant to Eligible Parties under the 2006
Plan is equal to 10% of the number of shares outstanding at the time of the
grant, including all outstanding option granted under the 2002 Plan. The 2006
Plan replaces the 2002 Plan and the Company has discontinued granting any
options under the 2002 Plan. However, any outstanding options granted under the
2002 Plan will continue to be governed by the 2002 Plan.

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|10. | Share Capital -Continued
      Stock Options Continued
|--- | -------------------------------------------------------
|    |                                                        
|    | Current option details are as
follows:                 

|                                            | Number of Options |             |            
|------------------------------------------- | ----------------- | ----------- | -----------
|                                            |                   |             |            
|                                            | Pre-              | October     | August 2006
|                                            | Amalgamation      | 2002 Plan   | Plan       
|                                            | Plans             |             |            
|                                            |                   |             |            
|Options outstanding at April 30,
      2004 | 1,804,380         | 3,210,800   | -          
|Year ended April 30, 2005 - granted         | -                 | 1,330,000   | -          
|- expired/cancelled                         | (65,080)          | -           | -          
|- exercised                                 | (138,200)         | (20,000)    | -          
|                                            |                   |             | -          
|Options outstanding at April 30, 2005       | 1,601,100         | 4,520,800   |            
|                                            |                   |             | -          
|Year ended April 30, 2006 - granted         | -                 | 12,500      |            
|                                            |                   |             | -          
|- expired/cancelled                         | (30,800)          | (93,334)    |            
|                                            |                   |             | -          
|- exercised                                 | (611,300)         | (172,466)   |            
|                                            |                   |             | -          
|Options outstanding at April 30, 2006       | 959,000           | 4,267,500   |            
|                                            |                   |             |            
|Year ended April 30, 2007 - granted         | -                 | 1,000,000   | 1,795,000  
|                                            |                   |             |            
|- exercised                                 | (959,000)         | (1,685,000) | -          
|                                            |                   |             |            
|Options outstanding at April 30, 2007       | -                 | 3,582,500   | 1,795,000  
|                                            |                   |             |            
|Vested as at April 30, 2007                 | -                 | 2,915,834   | 808,333    

The following table summarizes
information about stock options outstanding to directors, employees and
consultants as at April 30, 2007

Exercise Price
    Number
    NumberExpiry Date
    (in
      Cdn $)
    Outstanding
    VestedJuly 23, 2008
    $0.43
    130,000
    130,000October 8, 2008
    $0.85
    1,190,000
    1,190,000February 18, 2010
    $0.75
    1,250,000
    1,250,000January 26, 2008
    $0.93
    12,500
    12,500June 15, 2011
    $0.74
    500,000
    166,667August 27, 2011
    $0.92
    500,000
    166,667August 28, 2011
    $0.92
    1,470,000
    700,000December 03, 2011
    $1.34
    125,000
    41,667February 11, 2012
    $1.32
    200,000
    66,6675,377,500
    3,724,168


---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|10. | Share Capital -Continued                                                                                                                                                    
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                             
|    | Stock Options- Continued                                                                                                                                                    
|    |                                                                                                                                                                             
|    | Stock-based compensation expenses as calculated using the
      Black-Scholes Option Pricing Model are summarized below with the
      assumption used in the pricing model.

| |                                |   | 2007 |  |   | 2006 |  |   | 2005 | 
| | ------------------------------ | - | ---- |  | - | ---- |  | - | ---- | 
| | Administrative
      costs     | $ | 705  |  | $ | 166  |  | $ | 411  | 
| | Exploration costs              |   | 263  |  |   | 52   |  |   | 73   | 
| | Total stock-based compensation | $ | 968  |  | $ | 218  |  | $ | 484  | 

Black-Scholes assumptions for option
grants during year ended April 30, 2007

Options GrantedFebruary
      December
      August
      August
      June 16,12,
        2007
      4, 2006
      29,
        2006
      28,
        2006
      2006Average risk free interest rate
      4.11 %
      3.75%
      4.05%
      4.07%
      4.07%Average expected Option life (years)
      5 years
      4 years
      4 years
      4 years
      4 yearsStock volatility  based on tradinghistory
      76,389%
      76.589%
      77.874%
      77.902%
      79.015%Dividend payments during life of option
      none
      none
      none
      none
      noneTotal fair value of option granted
      $ 145
      $103
      $797
      $273
      $226


For information regarding the fair
value of previously granted options and the assumptions used in calculating the
fair value please refer to the April 30, 2006 annual report.

The Black-Scholes Option Pricing Model
was created for use in estimating the fair value of freely tradable, fully
transferable options. The Companys employee stock options have characteristics
significantly different from those of traded options, and because changes in the
highly subjective input assumptions can materially effect the calculated values,
management believes that the accepted Black-Scholes model does not necessarily
provide a reliable measure of the fair value of the Companys stock option
awards.

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|11. | Gold Forward Sales Contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (Metal prices in U.S. Dollars)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | At April 30, 2007, the Companys gold forward sales
      contract position consisted of 1,000 ounces (2006 - 3,000) for future
      delivery of gold at various dates from May 2007 to June 2007 (2006 - May
      to October 2006) at an average price of US$688 (2006 - US$639) per ounce.
      At April 30, 2006 the Company had a financial exposure to market risks
      related to the settlement of outstanding forward sales as gold spot prices
      were approximately US$678 (2006 - US$652) per ounce at that date. The
      estimated fair value of these contracts at the April 30, 2007 spot prices
      was $10 (2006 - $(39)), which represents the fair value to the Company on
      the balance sheet date if it were to settle these instruments prior to
      their maturity.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The credit risk exposure related to the Companys gold
      forward sales activity is limited to the unrealized gains (losses) on
      outstanding contracts based on current market prices. The Companys gold
      forward sales contract counter parties are large international
      credit-worthy institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|12. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | a)        Tax rate
      reconciliation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | A
      reconciliation between the Companys statutory and effective tax rates is
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                                                |   | 2007   |   |   | 2006  |  
| | -------------------------------------------------------------- | - | ------ | - | - | ----- | -
| | Tax rate                                                       |   | 34.1%  |   |   | 34.4% |  
| | Loss for the year before taxes                                 | $ | 9,404  |   | $ | 549   |  
| | Income tax recovery computed at statutory
      rate           |   | 3,207  |   |   | 189   |  
| | Difference between statutory and foreign tax rates             |   | (975   | ) |   | (600  | )
| | Benefit of tax losses and oher deductions
      not recognized |   | (1,939 | ) |   | 427   |  
| | Stock based compensation                                       |   | (306   | ) |   | (75   | )
| | Income tax expense                                             | $ | (13    | ) | $ | (59   | )

| | b)        The Company
      has various losses and deferred exploration expenditures that are
      available for carry forward to reduce taxable income of future years.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|12. | Income Taxes- continued                                                                          
|--- | -------------------------------------------------------------------------------------------------
|    |                                                                                                  
|    | As at April 30, 2007 the Company has the following tax
      loss carry forwards and deductions::

| | Country       | Category                                         | Amount             |  | Expiry   
| | ------------- | ------------------------------------------------ | ------------------ |  | ---------
| | Argentina     | Operating losses                                 | $      2,551       |  | 2008-2012
| | Canada        | Non-capital losses                               | $     
      9,265 |  | 2008-2027
| |               | Net capital
      losses                         | $    52,815        |  | N/A      
| |               | Mineral expenditures                             | $    10,498        |  | N/A      
| | El Salvador   | Mineral
      expenditures                       | $    28,806        |  | (i)      
| | United States | Operating losses  Regular tax                   | $         619      |  | 2008-2026
| |               | Operating losses
       Alternative minimum tax | $         333      |  | 2008-2026

(i) These expenditures expire when they
are written-off for local accounting purposes. The Company has deferred
write-off of these expenditures for tax purposes on the reasoning that the local
taxing authority, as is common in many jurisdictions, will allow future
deduction of these costs against future taxable revenues that these expenditures
give rise to.

c) Future income tax assets are not
recorded for the above tax loss carry forwards due to complete uncertainty of
their recovery. The tax losses may be subject to audit and adjustment by local
tax authorities as well as other local regulations. Significant components of
the Companys future income tax assets, after applying enacted corporate income
tax rates are as follows:

| |                                                             |   | April 30, 2007 |   |   | April
      30, 2006 |  
| | ----------------------------------------------------------- | - | -------------- | - | - | -------------------- | -
| | Non-capital losses and other deductions                     | $ | 4,370          |   | $ | 6,885                |  
| | Net capital losses                                          |   | 16,373         |   |   | 17,306               |  
| | Property plant and equipment and mineral
      expenditures |   | 9,374          |   |   | 9,854                |  
| | Accrued closure costs                                       |   | 900            |   |   | 948                  |  
| |                                                             |   | 31,017         |   |   | 34,993               |  
| | Less: Valuation allowances                                  |   | (31,017        | ) |   | (34,993              | )
| |                                                             | $ | -              |   | $ | -                    |  

|    |                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|13. | Commitments                                                                                                                                         
|    |                                                                                                                                                     
|    | Operating Leases                                                                                                                                    
|    |                                                                                                                                                     
|    | The Company has entered into operating leases for office
      premises, office equipment and vehicles. Minimum lease payments are as
      follows:

| |                 |   | Office       |  |   | Office    |  |   |          |  |   |       | 
| | --------------- | - | ------------ |  | - | --------- |  | - | -------- |  | - | ----- | 
| |                 |   | Premises (i) |  |   | Equipment |  |   | Vehicles |  |   | Total | 
| | 2008            | $ | 47           |  | $ | 5         |  | $ | 53       |  | $ | 105   | 
| | 2009            |   | -            |  |   | 5         |  |   | 43       |  |   | 48    | 
| | 2010            |   | -            |  |   | 5         |  |   | 10       |  |   | 15    | 
| | 2011            |   |              |  |   | 5         |  |   | 2        |  |   | 7     | 
| | 2012 and beyond |   | -            |  |   | 6         |  |   | -        |  |   | 6     | 
| |                 | $ | 47           |  | $ | 26        |  | $ | 108      |  | $ | 181   | 

| | (i) | In addition to the basic rent, the Company is responsible
      for its proportionate share of property taxes and operating
  costs.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                     

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|14. | Segmented Information  
|--- | -----------------------
|    |                        
|    | Details are as follows:

| |                                          |   |           |   |   | Restated  |   |   | Restated  |  
| | ---------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
| |                                          |   |           |   |   | (Note 15  | ) |   | (Note 15  | )
| |                                          |   | Year      |   |   | Year      |   |   | Year      |  
| |                                          |   | Ended     |   |   | Ended     |   |   | Ended     |  
| |                                          |   | April 30, |   |   | April 30, |   |   | April 30, |  
| |                                          |   | 2007      |   |   | 2006      |   |   | 2005      |  
| | Total Assets                             |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | 9,748     |   | $ | 16,392    |   | $ | 807       |  
| | USA                                      |   | 6,183     |   |   | 4,557     |   |   | 3,626     |  
| | El Salvador                              |   | 5,554     |   |   | 4,347     |   |   | 4,354     |  
| | Argentina                                |   | 9         |   |   | 24        |   |   | 11        |  
| | Chile                                    |   | -         |   |   | -         |   |   | -         |  
| | Total                                    | $ | 21,494    |   | $ | 25,320    |   | $ | 8,798     |  
| | Total Property, Plant and Equipment      |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | 77        |   | $ | 17        |   | $ | 5         |  
| | USA                                      |   | 1,483     |   |   | 453       |   |   | 243       |  
| | El Salvador                              |   | 4,711     |   |   | 4,248     |   |   | 4,234     |  
| | Argentina                                |   | -         |   |   | -         |   |   | -         |  
| | Chile                                    |   | -         |   |   | -         |   |   | -         |  
| | Total                                    | $ | 6,271     |   | $ | 4,718     |   | $ | 4,482     |  
| | Revenue                                  |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | -         |   | $ | -         |   | $ | -         |  
| | USA                                      |   | 8,337     |   |   | 8,024     |   |   | 11,868    |  
| | El Salvador                              |   | -         |   |   | -         |   |   | -         |  
| | Argentina                                |   | -         |   |   | -         |   |   | -         |  
| | Chile                                    |   | -         |   |   | -         |   |   | -         |  
| | Total                                    | $ | 8,337     |   | $ | 8,024     |   | $ | 11,868    |  
| | Depreciation, Depletion and Amortization |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | 13        |   | $ | 6         |   | $ | 4         |  
| | USA                                      |   | 142       |   |   | 92        |   |   | 933       |  
| | El Salvador                              |   | -         |   |   | -         |   |   | -         |  
| | Argentina                                |   | -         |   |   | -         |   |   | -         |  
| | Chile                                    |   | -         |   |   | -         |   |   | -         |  
| | Total                                    | $ | 155       |   | $ | 98        |   | $ | 937       |  
| | Net Income (Loss)                        |   |           |   |   |           |   |   |           |  
| | Canada                                   | $ | (2,182    | ) | $ | (956      | ) | $ | (1,045    | )
| | USA                                      |   | 2,574     |   |   | 3,071     |   |   | 2,237     |  
| | El Salvador                              |   | (10,495   | ) |   | (5,896    | ) |   | (6,047    | )
| | Argentina                                |   | (278      | ) |   | (149      | ) |   | (116      | )
| | Chile                                    |   | 964       |   |   | 3,322     |   |   | 222       |  
| | Total                                    | $ | (9,417    | ) | $ | (608      | ) | $ | (4,749    | )

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|15. | Restatement of Prior Years
|--- | --------------------------

During 2007, the Company undertook a
review of its previously-issued consolidated financial statements for the
accounting treatment for the two components of mine closure costs: reclamation
and pension obligations. Management thereafter determined that amendments should
be reflected in the 2006 and 2005 comparative amounts included in these
financial statements.

The effect of the restatement on the
consolidated financial statements is summarized as:

Consolidated Balance Sheet as at April
      30, 2006
    
    As previously
      reported
    
    Adjustment
    
    As restatedProperty, Plant and Equipment Accrued closure costs 
      current portion Accrued Closure costs Deficit
    $
    4,307 143 1,849 (53,324)
    $
    411 16 (225)620
    $
    4,718 159 1,624
  (52,704)


Consolidated Statements of Loss
    
    As previously
      reported
    
    Adjustment
    
    As restatedLoss for the year ending April 30, 2006 Loss for the
      year ending April 30, 2005 Deficit ending April 30, 2004
    $
    (618)(4,634)(48,072)
    $
    10 (115)725
    $
    (608)(4,749)(47,34)7


|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16. | Change in Estimate  Asset Retirement
      Obligation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | During 2007, the value of the assets and liabilities
      associated with the asset retirement obligations for the Rawhide minesite
      were adjusted to reflect changes in the estimated amounts and timing of
      estimated future costs. The impact of the change in estimate is reflected
      in the current year as an increase to Property, Plant and Equipment and
      corresponding increase to Accrued Closure costs of $906 (2006 -
    $91).                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|17. | United States Generally Accepted Accounting Principles
      (US GAAP)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The effect of the measurement differences between
      Canadian GAAP and US GAAP are summarized below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Under US GAAP, in accordance with FASB Statement No. 115,
      Accounting for Certain Investments in Debt and Equity Securities
      (FAS115), temporary investments held by the Company would be classified
      as available for sale under FAS 115 and would be recorded at market
      value and unrealized gains or losses are excluded from earnings and
      recorded as a separate component of shareholders equity. Declines in fair
      value that are other than temporary are written off. Under Canadian GAAP,
      investments in marketable securities are carried at the lower of cost and
      estimated fair market value.

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|17. | United States Generally Accepted Accounting Principles
      (US GAAP)- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In a recent continuous disclosure review, the SEC
      determined that for US GAAP purposes it is generally not possible to treat
      as equity, warrants whose exercise price is different from the functional
      currency of the entity. The SECs view is that for US GAAP purposes such
      warrants are derivative instruments and should be recorded as liabilities
      and carried at fair value, with changes in fair value recorded in
      earnings. This interpretation does not apply under Canadian GAAP. A recent
      meeting of the FASB included a discussion of an analogous issue and FASB
      is considering whether companies will be allowed to implement a change in
      accounting for this analogous situation in a future year. The Company
      intends to apply the FASB guidance when it is known and its effect can be
      determined.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The significant changes in the consolidated financial
      statements relative to US GAAP are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Statements of Loss(in thousands of US dollars,
      except for per share amounts)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                                                    |   |           |   |   | (As Restated) |   |   | (As Restated) |  
| | -------------------------------------------------- | - | --------- | - | - | ------------- | - | - | ------------- | -
| |                                                    |   | Year      |   |   | Year          |   |   | Year          |  
| |                                                    |   | Ended     |   |   | Ended         |   |   | Ended         |  
| |                                                    |   | April 30, |   |   | April 30,     |   |   | April 30,     |  
| |                                                    |   | 2007      |   |   | 2006          |   |   | 2005          |  
| | Net loss following Canadian GAAP                   | $ | (9,417    | ) | $ | (608          | ) | $ | (4,634        | )
| | Adjustments to create US GAAP                      |   | -         |   |   | -             |   |   | -             |  
| | Net loss following US GAAP                         |   | (9,417    | ) |   | (608          | ) |   | (4,634        | )
| | Temporary investments valuation adjustment         |   | 66        |   |   | 40            |   |   | -             |  
| | Comprehensive loss, following US GAAP              |   | (9,351    | ) |   | (568          | ) |   | (4,634        | )
| | Weighted average number of common shares,          |   |           |   |   |               |   |   |               |  
| | computed under US GAAP
      (thousands of shares) |   | 106,939   |   |   | 82,528        |   |   | 80,514        |  
| | Loss per share, following US GAAP                  | $ | (.09      | ) | $ | (0.01         | ) | $ | (0.06         | )

Deficit and Comprehensive Gain (Loss)(in thousands of US dollars)

| |                                                       |   |                |   |   | (As Restated)        |   |   | (As Restated)        |  
| | ----------------------------------------------------- | - | -------------- | - | - | -------------------- | - | - | -------------------- | -
| |                                                       |   | April 30, 2007 |   |   | April
      30, 2006 |   |   | April
      30, 2005 |  
| |                                                       |   |                |   |   |                      |   |   |                      |  
| | Deficit                                               |   |                |   |   |                      |   |   |                      |  
| | Adjusted deficit, beginning of
      year per US GAAP | $ | (53,314        | ) | $ | (52,746              | ) | $ | (48,112              | )
| | Net loss per US GAAP                                  |   | (9,351         | ) |   | (568                 | ) |   | (4,634               | )
| | Adjusted deficit, end of year
      per US GAAP       | $ | (62,665        | ) | $ | (53,314              | ) | $ | (52,746              | )
| |                                                       |   |                |   |   |                      |   |   |                      |  
| | Accumulated Other Comprehensive Gain                  |   |                |   |   |                      |   |   |                      |  
| | Beginning of year per US GAAP                         | $ | 40             |   | $ | -                    |   | $ | -                    |  
| | Current year other
      comprehensive gain (loss)    |   | 66             |   |   | 40                   |   |   | -                    |  
| | Accumulated other comprehensive gain (loss),          |   |                |   |   |                      |   |   |                      |  
| | end of year per US GAAP                               | $ | 106            |   | $ | 40                   |   | $ | -                    |  

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|17. | United States Generally Accepted Accounting Principles- Continued
|--- | -----------------------------------------------------------------
|    |                                                                  
|    | Balance Sheets(in thousands of US
  dollars)                     

| |                                               |   | April 30, |  |   | April 30, | 
| | --------------------------------------------- | - | --------- |  | - | --------- | 
| |                                               |   | 2007      |  |   | 2006      | 
| | Current assets following Canadian GAAP        | $ | 11,832    |  | $ | 17,354    | 
| | Valuation of temporary investments adjustment |   | 66        |  |   | 40        | 
| | Current assets following US GAAP              | $ | 11,898    |  | $ | 17,394    | 

As the Company delivers gold against
outstanding forward sales contracts, it has determined that there is no impact
from the adoption of Statement of Financial Accounting Standard (SFAS) No.
133, Accounting For Derivative Instruments and Hedging Activities.

Certain of the comparative numbers in
this Canadian to US GAAP reconciliation have been restated to reflect errors in
the previous years presentation arising due to foreign exchange accounting. As
a result of this restatement, loss for the year 2006 and 2005 under US GAAP
decreased by $274 and $108 respectively. Basic and diluted loss per share under
US GAAP for 2006 and 2005 decreased remained unchanged. Deficit under U.S GAAP
for 2006 and 2005 decreased by $396 and $82 respectively. Accumulated
comprehensive gain has decreased by $334 and $110 respectively

Recent U.S. Accounting
Pronouncements

In June 2006, the FASB issued
Accounting for Uncertain Tax Positions  An Interpretation of FASB Statement No.
109, FIN 48, which prescribes a recognition and measurement model for
uncertain tax positions taken or expected to be taken in the Companys tax
returns. FIN 48 provides guidance on recognition, classification, presentation
and disclosure of unrecognized tax benefits. At April 30, 2007, the Company has
not determined the impact of the adoption of FIN 48 its results of operations or
financial position.

In September 2006, the FASB issued SFAS
157, Fair Value Measurements, which defines fair value, establishes a
framework for measuring fair value and expands fair value disclosures. The
standard does not require any new fair value measurements. This standard is
effective for fiscal years beginning after Novemer 15, 2007. At April 30, 2007,
the Company has not determined the impact of the adoption of this standard on
the Companys results of operations or financial position.

---

|Pacific Rim Mining Corp.                  
|------------------------------------------
|Notes to Consolidated Financial Statements
|April 30, 2007, 2006 and 2005             
|In thousands of U.S. dollars              
|                                          
|                                          

|17. | United States Generally Accepted Accounting Principles- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | New Canadian Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In April 2005, the Canadian Accounting Standards Board
      issued new accounting standards dealing with the recognition, measurement
      and disclosure of financial instruments, hedges and comprehensive income,
      together with many consequential changes throughout the CICA Handbook.
      These new standards will affect the companys Canadian GAAP interim and
      annual financial statements beginning in the first quarter of 2007. The
      most significant new standards are as follows:
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | i) Financial Instruments  Recognition and Measurement,
      Section 3855                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | This standard prescribes when a financial asset,
      financial liability, or non-financial derivative is to be recognized on
      the balance sheet and whether fair value or cost-based methods are used to
      measure the amounts. It also specifies how financial instrument gains and
      losses are to be presented. Management is currently finalizing its
      evaluation of the impact of this standard on the Companys Canadian GAAP
      financial statements.                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | ii) Hedges, Section 3865                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | This standard is applicable when a company chooses to
      designate a hedging relationship for accounting purposes. The adoption of
      this standard is not expected to impact the company.                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | iii) Comprehensive Income, Section 1530                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | This standard requires the presentation of a statement of
      comprehensive income and its components. Comprehensive income includes
      both net earnings and other comprehensive income. Other comprehensive
      income for the company will include holding gains and losses on
      investments designated as available for sale.                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

---