UN1TED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 20-F/A-1 Amendment No. 1 (Mark One)   ̈ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934  OR  þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2005  OR   ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR   ̈SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report..  For the transition period from ______________ to_______________  Commission file 0-31100  Rimfire Minerals Corporation (Exact name of Registrant as specified in its charter)  Not Applicable (Translation of Registrants name into English)  British Columbia (Jurisdiction of incorporation or organization)  Suite 1350  650 West Georgia Street, Vancouver, British Columbia, Canada, V6B 4N9 (Address of principal executive offices)  Securities registered or to be registered pursuant to Section 12(b) of the Act.  NONE.  Title of each class Name of each exchange on which registered   1  Securities registered or to be registered pursuant to Section 12(g) of the Act.  Common Shares without par value (Title of Class)  Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act.  Not Applicable (Title of Class) Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.17,855,220  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ̈YesþNo If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  ̈YesþNo Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þYes ̈No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filer  ̈ Accelerated filer ̈ Non-accelerated filer þ  Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP  ̈International Financial Reporting Standards as issued by the International Accounting Standards Board  ̈Otherþ  If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. þItem l7 ̈Item l8  If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ̈YesþNo   2  (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)  Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  ̈Yes ̈No    3    EXPLANATORY NOTE  This Amendment No. 1 to the Registrants Annual Report on Form 20-F for the fiscal year ended January 31, 2008 is filed in response to comments from the Commissions Staff of the Division of Corporation Finance with respect to the Registrants disclosures under Item 3 (Key Information), Item 17 (Financial Statements) and Item 19 (Exhibits). Pursuant to Rule 12b-15 under the Exchange Act, this Amendment No. 1 sets forth the complete text of the above-referenced Items and all amendments thereto, and includes new certifications pursuant to Rules 13a-14(a) and 15d-14(a) and Rules 13a-14(b) and 15d-14(b) under the Exchange Act.  Other than as expressly set forth above, this Amendment No. 1 does not, and does not purport to, amend, update or restate the information in any Item of the Registrants Annual Report on Form 20-F for the fiscal year ended January 31, 2005, or reflect any events that have occurred after the Form 20-F was filed on May 25, 2005.      4     FORWARD-LOOKING STATEMENTS   This Report contains forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Certain statements in this Report constitute forward looking statements. These forward looking statements are not guarantees of Rimfires future operational or financial performance and are subject to risks and uncertainties. When used in this Annual Report, the words estimate, intend, expect, anticipate and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of this Annual Report. These statements are subject to risks and uncertainties that could cause results to differ materially from those contemplated in such forward-looking statements. Actual operational and financial results may differ materially from Rimfires expectations contained in the forward looking statements as a result of various factors, many of which are beyond the control of the Company. These factors include, but are not limited to, the need for additional financing to fully execute the Companys business plan, the risk factors as set forth in more detail in Item 3 - Key Information - Risk Factors,adverse technical factors associated with exploration and development of Rimfires properties, changes in Canadian or U.S. tax or other laws or regulations, and material changes in capital expenditures.    5   TABLE OF CONTENTSPART IPageITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not amended8ITEM 2OFFER STATISTICS AND EXPECTED TIMETABLE
Not amended8ITEM 3KEY INFORMATION8ITEM 4INFORMATION ON THE CORPORATION
Not amended16ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Not amended16ITEM 6DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Not amended16ITEM 7MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Not amended16ITEM 8FINANCIAL INFORMATION17ITEM 9THE OFFERING AND LISTING
Not amended17ITEM 10ADDITIONAL INFORMATION
Not amended17ITEM 11QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not amended17ITEM 12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not amended17   6   PART IIPageITEM 13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not amended17ITEM 14MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not amended17ITEM 15CONTROLS AND PROCEDURES181ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT
Not amended18ITEM 16BCODE OF ETHICS
Not amended18ITEM 16CPRINCIPAL ACCOUNTANT FEES AND SERVICES
Not amended18ITEM 16DEXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not amended18ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not amended18  PART IIIITEM 17

ITEM 18FINANCIAL STATEMENTS

FINANCIAL STATEMENTS18

18ITEM 19EXHIBITS
Not amended19     7  PART I     ITEM 1    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not Applicable.     ITEM 2    OFFER STATISTICS AND EXPECTED TIMETABLE Not Applicable.   ITEM 3    KEY INFORMATION CURRENCY AND EXCHANGE RATES  All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated. The following tables set forth:  (i) the average rates of exchange for each of the Corporations fiscal years ending January 31, for the Canadian dollar, expressed in U.S. dollars, calculated by using the average of the exchange rates on the last day of each month during the period. (ii) the high and low exchange rate for each month during the previous six months, in each case based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York.  Fiscal Year ended 
January 31st20052004200320022001Average Rate During Period$ 0.7763$ 0.7305$ 0.6392$ 0.6414$0.6710  April
2005March 2005February 2005January 2005December 2004November 2004High Rate$0.8233$0.8322$0.8134$ 0.8346$ 0.8435$ 0.8493Low Rate$0.7957$0.8024$0.7961$ 0.8050$ 0.8064$ 0.8155  On April 30, 2005, the noon buying rate in New York City for cable transfer in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York was $0.7957 US = $1.00 CDN.  SELECTED FINANCIAL DATA  The selected consolidated financial information set out below has been obtained from financial statements which reflect the Corporation's operations in the mineral exploration business.    8  The following table summarizes information pertaining to operations of the Corporation for the last five fiscal years.  Year
Ended
2005 ($)Year
Ended
2004 ($)Year
Ended
2003 ($)
(restated)Year
Ended
2002 ($)
(restated)Year
Ended
2001 ($)Mineral Property Revenue$   414,338$   223,626$   158,224$   45,016$   12,000Loss from Operations(1,601,214)(980,325)(491,779)(713,850)(580,111)Net Loss(1,495,680)(901,405)(507,303)(716,895)(606,111)Per Share(0.09)(0.07)(0.04)(0.08)(0.08)Current Assets3,064,5641,132,4701,088,282436,761488,935Mineral Property InterestsNILNILNILNILNILOther Assets88,46144,16331,17517,29819,069Total Assets3,153,0251,176,6331,119,457454,059508,004Current Liabilities219,98561,01846,66353,25524,852Long-Term Liabilities35,363NILNILNILNILShareholders Equity2,897,6771,115,6151,072,794400,804483,152Shares Outstanding
(number of shares)17,855,22013,615,62112,334,6219,453,2887,936,288  The Corporations financial statements have been prepared in accordance with accounting principles generally accepted in Canada. On January 31, 2004, the Corporation adopted the new accounting recommendations of the Canadian Institute of Chartered Accountants on accounting for share-based compensation of employees and non-employees during the year. These recommendations established the following standards for the measurement, recognition and disclosure of compensation and other costs arising from the issue of share purchase options and other share-based payments to employees and non-employees. When options to purchase shares are issued to employees or directors, the fair value of the options on the date of the grant are recognized as compensation expense, with a corresponding increase in contributed surplus, over the period during which the related options vest. When options to purchase shares are issued to non-employees in return for goods and services, the fair value of the options issued are recognized as an expense, with a corresponding increase in contributed surplus, in the period in which the goods or services are received or are expected to be received. The consideration received on the exercise of share options is credited to share capital. The Corporation accounted for these recommendations on the retroactive basis, and accordingly increased share-based compensation expense by $245,280, and $10,240 for the years ended January 31, 2002 and 2003 and deficit and contributed surplus by $245,280 at January 31, 2002 and $255,520 at January 31, 2003.  On January 31, 2002 the Corporation elected to adopt a different method of accounting for its mineral property interests. The Corporation accounts for its mineral property interests whereby all acquisition and exploration costs are charged to expense as incurred and all property sales and option proceeds received are credited to income. When the existence of a mineral reserve on a property has been established, future acquisition, exploration and development costs will be capitalized for that property. After commercial production on the property commences, the net capitalized costs will be charged to future operations using the unit of production method based on estimated recoverable reserves on the property. The Corporation had previously accounted for its mineral property interests whereby costs   9  relative to the acquisition, exploration and development of these interests were capitalized by property. All sales and option proceeds received were first credited against the costs of the related property, with any excess credited to earnings. No gains or losses were recognized on the partial sale or dispositions of properties except in circumstances which result in significant dispositions of reserves. Once commercial production had commenced, these net costs were to be charged to future operations using the unit-of-production method based on estimated recoverable reserves by property. The net costs related to abandoned properties were charged to earnings.  Except as disclosed in Note 10 of the financial statements, the financial statements conform in all material respects with U.S. GAAP.  The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards (SFAS) No. 109 Accounting for Income Taxes which related to the Corporations issuance of flow-through shares. The amount received by the Corporation on the issuance of flow-through shares in excess of the fair value of common shares is required to be credited to liabilities and included in operations in the period in which the Corporation renounces the qualified expenditures. Under Canadian income tax legislation, the company is permitted to issue shares whereby the company agrees to incur qualifying expenditures and renounce the related income tax deductions to the investors. The Corporation has accounted for the issue of flow-through shares by reducing shareholders equity and recognizing a future income tax liability for the amount of tax credits renounced to the investors, in accordance with Canadian GAAP.  As the Company has no identifiable mineral reserves from which to determine potential future cash flows, all acquisition costs and exploration costs of mineral property interests have been expensed as incurred for Canadian GAAP purposes. Emerging Issues Task Force (EITF) Abstract 04-2 requires acquisition costs of mineral property interests to be recorded as tangible assets, and the aggregate carrying amount reported as a separate component of property, plant and equipment. Statement of Financial Accounting Standard (SFAS) 144, and EITF 04-3 also require these assets to be tested for recoverability whenever events or changes in circumstances indicate the carrying value may not be recoverable. Accordingly, for U.S. GAAP purposes, acquisition costs of mineral property interests would be recorded as tangible assets when incurred.  The weighted average number of shares outstanding used in the calculation of earnings per share under Canadian GAAP includes shares held in escrow. These shares are excluded in the calculation under U.S. GAAP. This has the effect of increasing the loss per share in previous years when the number of shares held in escrow was more substantial. There was no effect in each of the last two years.  The following table shows the effect of these differences on the summary financial information:    10   Year
Ended
2005Year
Ended
2004Year
Ended
2003
(restated)Year
Ended
2002
(restated)Year
Ended
2001Loss from Operations$(1,560,189)$(980,325)$(491,779)$(713,850)$(580,111)Net Loss(1,454,655)(901,405)(507,303)(716,895)(606,111)Loss Per Share(0.08)(0.07)(0.05)(0.09)(0.09)Mineral Property Interests41,025----Total Assets3,194,0501,176,6331,119,457454,059508,004Shareholders Equity2,938,7021,115,6151,072,794400,804483,152   CAPITALIZATION AND INDEBTEDNESS  Not Applicable.  REASONS FOR THE OFFER AND USE OF PROCEEDS  Not Applicable.  RISK FACTORS  The Corporation is engaged in the business of preliminary or early stage mineral exploration and mine development. The Corporation holds no interests in any producing mines or commercial ore deposits. The Corporation is subject to many of the material risks customarily encountered by early stage exploration and mine development companies. Additional risks are included which are specific to the operations and business plan of the Corporation. Specific Corporate Risks  Employment Contracts/Reliance Upon Officers  The Corporation is largely dependent upon the personal efforts and abilities of its corporate officers. The loss or unavailability to the Corporation of these individuals may have a materially adverse effect upon the Corporation's business. Investors will be relying on management's judgment with respect to the operation of the Corporation. The Corporation does not presently have "key person" life insurance on the lives of any of its officers. (See Item 6 "Directors, Senior Management and Employees").  The Corporation has not entered into an employment contract with any of its executive officers. The services of David A. Caulfield, President and Chief Executive Officer and Dorothy Miller, Chief Financial Officer, are provided to the Corporation pursuant to a March 1, 2005 management agreement with Equity Engineering Ltd. (See Item 6 "Directors, Senior Management and Employees").    11  Conflict of Interest  Certain of the directors of the Corporation are also directors and officers of other corporations engaged in the business of mineral exploration and mine development. It is possible that a conflict of interest may arise between their duties as a director of the Corporation and their duties as a director or officer of other corporations. All such conflicts of interest must be disclosed by a director under British Columbia corporate law and a director must act in the best interest of both corporations. A director in such a conflict of interest position must abstain from voting on all resolutions with respect to one of the two competing corporations. (See Item 6: Certain Affiliations)  Legal Proceedings Against Foreign Directors  The Corporation is incorporated under the laws of the Province of British Columbia, Canada, and all of the Corporations five directors and all of its officers are residents of Canada. Consequently, it may be difficult for United States investors to effect service of process within the United States upon the Corporation or upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgements of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended. Furthermore, it may be difficult for investors to enforce judgments of the U.S. courts based on civil liability provisions of the U.S. federal securities laws in a Canadian court against the Corporation or any of the Corporations non-U.S. resident executive officers or directors. There is substantial doubt whether an original lawsuit could be brought successfully in Canada against any of such persons or the Corporation predicated solely upon such civil liabilities.  Shareholder Dilution  The Corporation raises working capital funds primarily through the sale of its common shares from treasury. An investors proportional interest in the Corporation will decrease over time as additional common shares are issued.  Classification as a Passive Foreign Investment Company   The Corporation believes it is a Passive Foreign Investment Company (PFIC), as that term is defined in Section 1297 of the Internal Revenue Code of 1986, as amended, and believes it will continue to be a PFIC for the coming fiscal year. Consequently, this classification may result in adverse tax consequences for U.S. holders of the Corporations shares. For an explanation of these effects on taxation, see Item 10, Taxation. U.S. shareholders and prospective holders of the Corporations shares are also encouraged to consult their own tax advisers.    12  Classification of the Common Stock as Penny Stock  In October 1990, Congress enacted the "Penny Stock Reform Act of 1990." "Penny Stock" is generally any equity security other than a security (a) that is registered or approved for registration and traded on a national securities exchange or an equity security for which quotation information is disseminated by The National Association of Securities Dealers Automated Quotation ("NASDAQ") System on a real-time basis pursuant to an effective transaction reporting plan, or which has been authorized or approved for authorization upon notice of issuance for quotation in the NASDAQ System, (b) that is issued by an investment company registered under the Investment Company Act of 1940, (c) that is a put or call option issued by Options Clearing Corporation, (d) that has a price of five dollars (US) or more, or (e) whose issuer has net tangible assets in excess of $2,000,000(US), if the issuer has been in continuous operation for at least three years, or $5,000,000(US) if the issuer has been in continuous operation for less than three years, or average revenue of at least $6,000,000(US) for the last three years.  The Corporations Common Shares are presently considered penny stock under these criteria. Therefore, the Common Shares are subject to Rules 15g-2 through 15g-9 (the "Penny Stock Rules") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Penny Stock Rules impose additional reporting, disclosure and sales practice requirements on brokers and dealers before they can recommend the Common Shares for purchase by their customers, and require that such brokers and dealers must make a special suitability determination of each purchaser and must have received the purchaser's written consent to the transaction prior to the sale. Consequently, the Penny Stock Rules may affect the ability of brokers and dealers to sell the Common Shares and may affect the ability of purchasers to sell any of the Shares acquired hereby in the secondary markets.  So long as the Common Shares are within the definition of "Penny Stock" as defined in Rule 3a51-1 of the Exchange Act, the Penny Stock Rules will continue to be applicable to the Common Shares. Unless and until the price per share of Common Shares is equal to or greater than $5.00(US), the Common Shares will be subject to substantial additional risk disclosures and document and information delivery requirements on the part of brokers and dealers effecting transactions in the Common Shares. Such additional risk disclosures and document and information delivery requirements on the part of such brokers and dealers may have an adverse effect on the market for and/or valuation of the Common Shares.  General Exploration and Mining Risks  Stage of Development  The Corporation has no production revenue. It does not have an operating history upon which investors may rely. Moreover, the Corporation has no commercially viable properties at this time.  Capital Expenditures; Need for Future Financing  The Corporation has limited financial resources. Sufficient funding for future exploration and development of its properties or to fulfill its obligations under current agreements may not be available when and as required. Failure to obtain such future financing will result in delay or indefinite postponement of further exploration and development of its projects. Failure to obtain such future financing will also result in default under certain of the current agreements and the Corporation will forfeit its interest in such properties. The Corporations accumulated deficit as at January 31, 2005 was $5,496,837.   13     14  Commercial development of any of the Corporations properties will only occur if sufficient quantities of minerals with a sufficient average grade are discovered. If a mineral discovery is made, substantial financial resources will be required to establish ore reserves, develop metallurgical processes to extract metal from the ore and develop mining and processing facilities at a given site. If the Corporation is unable to finance such development on its own, it will be required sell all or a portion of its interest in such property to one or more parties capable of financing such development.  Operating Risks  The exploration and, if warranted, development of mining properties is a high-risk industry. Presently, none of the Corporations properties have a known body of commercial ore. Unusual or unexpected formations, formation pressures, fires, power outages, labor disruptions, flooding, explorations, cave-ins, landslides, and the inability to obtain adequate machinery, equipment or labor are all risks involved in the operation of mines and the conduct of exploration programs.  Volatility in Mineral Prices  The cost of developing gold and other mineral properties is affected by the cost of operations, variations in ore grade, fluctuations in metal markets and the cost of processing equipment. Government regulations regarding prices, taxes, royalties, allowable production, importing and exporting of minerals, land use, land tenure and environmental protection also affect economic viability.  The Corporation cannot control the marketability of the minerals it discovers. Metal prices have fluctuated widely in recent years, and are affected by numerous factors beyond the Corporations control. International economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and worldwide production levels all may affect metal prices.  The trading price of mineral exploration and mining companies is largely influenced by international metal prices. As the Corporation raises funds through the sale of its common shares, a significant decrease in the price of precious and base metals will adversely affect the Corporations ability to fund its operations.  Forfeiture of Mineral Claims  The Corporation holds an interest in a number of exploration properties with respect to which certain cash payments, exploration expenditures and share issuances are required to maintain the Corporations interests in such properties. For those of the Corporations properties acquired through the staking of 
claims, a failure by the Corporation to incur exploration expenditures or make cash payments to the appropriate government agency in lieu of exploration expenditures will result in the forfeiture of the title to the mining claims back to the State of Alaska, the Yukon Territory or the Province of British Columbia, as the case may be. Once forfeited, the areas previously covered by the claims will be available for staking by other parties.  For those of the Corporations properties held under option agreement, if the Corporation does not fulfill its obligations under the terms of any such option agreement, such agreement will terminate and title to the property will revert to the grantor of the original option.    15  Competition  The mineral industry is very competitive. The Corporation must compete with other companies possessing superior financial resources and technical facilities. This competition is not only for the acquisition of mining interests, but also for retention of the services of qualified employees.  No Assurance of Titles  The Corporations mineral property interests may be subject to prior unregistered agreements, transfers or native land claims and title may be affected by undetected defects. Substance and continuity of title may also be affected by political instability and the vagaries of law as they exist and are applied in foreign jurisdictions. Surveys have not been carried out on all of the Corporations mineral properties and therefore, in accordance with the laws of the jurisdiction in which such properties are situated, their existence and area could be in doubt.  General Operating Risks  Permits and Licenses  The operations of the Corporation require licenses and permits from various governmental authorities. The Corporation may not be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects. All properties are presently without any known body of commercial ore.  The Corporations RDN, Thorn, Williams Gold, Adam, Kizmet, and Tide Properties are located in British Columbia, Canada. The RDN Property consists of 11 mineral claims comprising 7,820 hectares. The Thorn Property consists of 18 mineral claims comprising 14,824 hectares. The Williams Gold Property consists of 6 mineral claims comprising 5,158 hectares. The Adam Property consists of 2 mineral claims comprising 1,822 hectares. The Kizmet Property consists of 51 mineral claims comprising 27,938 hectares. The Tide Property consists of 6 mineral claims comprising 4,149 hectares. All of these mineral claims are governed by the Mineral Tenure Act and the Mines Act (British Columbia) and are subject to a required assessment work or cash in lieu of $4.00  per hectare in each of the first 3 years and $8.00 in the fourth and subsequent years after their location dates. As the Corporation has paid all required assessments and filing fees, valid title to the mineral claims is recorded in the name of the Corporation or the Optionee of each property with the Ministry of Energy and Mines in British Columbia.  The Corporations Fer and Simpson Properties are located in Yukon Territory, Canada. The Fer Property consists of 118 claims while the Simpson Property consists of 42 claims. All of these mineral claims are governed by the Quartz Mining Act and are subject to a required assessment work or cash in lieu of $100 each year. As the Corporation has paid all required assessments and filing fees, valid title to the mineral claims is recorded in the name of the Corporation.    16  The Corporations Goodpaster Properties (Beverly, Bou, Boundary, Eagle, ER-Ogo-Fire, Scot and SE Surf) are located in the state of Alaska, United States. The properties consist of 812 state mining claims totaling 50,120 acres. The mineral claims are subject to a required assessment or cash in lieu of $2.50 (US) per acre per year. The annual claim rental fees of $25-$100 (US) per claim, depending on size and location date, are due in November. As the Corporation has paid all required assessments and filing fees, valid title to the mining claims is recorded in the name of Rimfire Alaska with the Alaska Department of Natural Resources. There is currently no mining activity or commercial production from any of the Corporations British Columbia, Yukon or Alaska mineral properties.  Share Price Fluctuations, Price Volatility  Securities markets in Canada have experienced a high level of price and volume volatility in recent years, with many resource companies experiencing wide price fluctuations not necessarily related to operating performance or underlying asset values of such companies. The Corporations Common Shares traded between between $0.35 and $0.84 during 2002, between $0.51 and $1.25 in 2003, between $0.76 and $1.80 during 2004, and between $1.13 and $1.37 during the first quarter of fiscal 2005. It is probable that the Corporations share price and volume will continue to fluctuate materially.  Environmental Regulations  All phases of the Corporations operations are subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation is evolving in a manner which means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. Future changes in environmental regulation, if any, may adversely affect the Corporations operations.   ITEM 4    INFORMATION ON THE CORPORATION  Not Amended  ITEM 5    OPERATING AND FINANCIAL REVIEW AND PROSPECTS  Not Amended  ITEM 6   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  Not Amended  ITEM 7    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  Not Amended    17  ITEM 8    FINANCIAL INFORMATION  CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION  The following financial statements are attached and incorporated herein:  Description of Statement

Consolidated Balance Sheets for the fiscal years ended January 31, 2005 and 2004
Consolidated Statements of Operations, Consolidated Statements of Cash Flows,
Consolidated Statements of Shareholders Equity, and
Consolidated Statements of Mineral Property Expenditures
all for the fiscal years ended January 31, 2005, 2004, and 2003
Notes to Consolidated Financial Statements  SIGNIFICANT CHANGES  There have been no significant changes since year-end.  ITEM 9    THE OFFERING AND LISTING  Not Amended   ITEM 10    ADDITIONAL INFORMATION  Not Amended  ITEM 11    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK  Not Amended   ITEM 12    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES  Not Applicable.    PART II  ITEM 13    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES  None  ITEM 14    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS  Not Applicable.    18  ITEM 15    CONTROLS AND PROCEDURES  Not Amended   ITEM 16A    AUDIT COMMITTEE FINANCIAL EXPERT  Not Amended  ITEM 16B    CODE OF ETHICS  Not Amended  ITEM 16C    PRINCIPAL ACCOUNTANT FEES AND SERVICES  Not Amended  ITEM 16D    EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES  Not applicable  ITEM 16E    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS  Not applicable    PART III     ITEM 17    FINANCIAL STATEMENTS  The following financial statements are attached and incorporated herein:  Description of Statement

Consolidated Balance Sheets for the fiscal years ended January 31, 2005 and 2004
Consolidated Statements of Operations, Consolidated Statements of Cash Flows,
Consolidated Statements of Shareholders Equity, and
Consolidated Statements of Mineral Property Expenditures
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended January 31, 2005
Schedule II  Valuation Allowance  ITEM 18   FINANCIAL STATEMENTS  See Item 17       19  ITEM 19    EXHIBITS  Exhibit NumberDescriptionPage1.8Articles of Incorporation effective August 5, 200424.21Agreement of Purchase and Sale between Lorne Warren, John Mirko and Rimfire Minerals Corporation dated June 25, 200234.22Property Option Agreement between Rimfire Minerals Corporation and Plutonic Capital Corporation dated October 28, 200234.23Property Option Agreement between Rimfire Minerals Corporation and Stikine Gold Corporation dated December 18, 200234.24Option Agreement amendment between Rimfire Minerals Corporation and Stikine Gold Corporation dated March 26, 200334.25Addendum to Mining Joint Venture Agreement between Homestake Canada Inc. and Rimfire Minerals Corporation dated May 23, 200234.26Property Option Amendment between Plutonic Capital Corp. and Rimfire Minerals Corporation dated July 25, 200334.27Property Option Amendment between Plutonic Capital Corp. and Rimfire Minerals Corporation dated October 20, 200334.28Property Option Amendment Agreement between Plutonic Capital Inc., Serengeti Resources Inc. and Rimfire Minerals Corporation dated November 20, 200334.29Yukon Targeted Exploration Initiative Agreement between Newmont Mining Corporation and Rimfire Minerals Corporation dated November 14, 200334.30Management Contract between Equity Engineering Ltd. and Rimfire Minerals Corporation dated December 1, 200334.31Amendment to Exploration, Development and Mine Operating Agreement between AngloGold (USA) Exploration Inc. and Rimfire Alaska, Ltd.  Eagle Project, Goodpaster Mining District dated December 17, 200334.32Amendment to Exploration, Development and Mine Operating Agreement between AngloGold (USA) Exploration Inc. and Rimfire Alaska, Ltd.  ER-Ogo-Fire Project, Goodpaster Mining District dated December 17, 200334.33Option Agreement between Northgate Minerals Corporation and Rimfire Minerals Corporation dated March 29, 200424.34Exploration, Development and Mine Operating Agreement between AngloGold (USA) Exploration Inc. and Rimfire Alaska, Ltd.  Beverly Project, Goodpaster Mining District dated June 14, 200434.35Registrar and Transfer Agent Agreement between Pacific Corporate Trust Company and Rimfire Minerals Corporation dated September 1, 200424.36Amendment to Option Agreement between Rimfire Minerals Corporation, Plutonic Capital  and Serengeti Resources Inc. dated September 9, 200524.37Amendment to RDN Property Option Agreement dated November 19, 20042   20   4.38Agreement between Newmont Capital Limited and Rimfire Minerals Corporation dated January 5, 2005 regarding Walker Lane24.39Memorandum of Understanding between Barrick Gold Corporation and Rimfire Minerals Corporation28.1List of Subsidiary Companies of Rimfire Minerals Corporation411.1Corporate Governance Policy adopted November 20, 2002211.2Code of Ethics  Board of Directors dated January 31, 2003211.3Code of Ethics  Chief Executive Officer dated January 31, 2003211.4Code of Ethics  Chief Financial Officer dated February 28, 2003211.5Incentive Stock Option Plan331.1Certification by Chief Executive Officer131.2Certification by Chief Financial Officer132.1Certification by Chief Executive Officer132.2Certification by Chief Financial Officer1  1 Filed as exhibits in connection with this document 2 Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated May 25, 2005 3 Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated July 26, 2004. 4 Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated July 7, 2003.    21  SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.   RIMFIRE MINERALS CORPORATION   By:Jason S. WeberJason S. WeberPresident & Director  Date: April 3, 2009           RIMFIRE MINERALS CORPORATION  Consolidated Financial Statements Years Ended January 31, 2005, 2004 and 2003                MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING  The accompanying consolidated financial statements of Rimfire Minerals Corporation and all information in this annual report are the responsibility of management. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and where appropriate include managements best estimates and judgments. Management has reviewed the financial information presented throughout this report and has ensured it is consistent with the consolidated financial statements.  Management maintains a system of internal control designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, and that financial information is timely and reliable.  The Board of Directors is responsible for ensuring that management fulfils its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out this responsibility principally through its Audit Committee.  The Board of Directors appoints the Audit Committee, and all of its members are non-management directors. The Audit Committee meets periodically with management and the shareholders auditors to review internal controls, audit results, accounting principles and related matters. The Board of Directors approves the consolidated financial statements on recommendation from the Audit Committee.  Hay and Watson, an independent firm of Chartered Accountants, was appointed by the shareholders at the last annual meeting to examine the consolidated financial statements and provide an independent professional opinion.     Jason S. Weber Dorothy Miller   Jason S. Weber, P.Geo Dorothy G. Miller President & Chief Executive Officer Chief Financial Officer   24  [rfmannual20fa12005002.gif]   REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS  To the Shareholders of Rimfire Minerals Corporation  We have audited the consolidated balance sheets of Rimfire Minerals Corporation (the Company) as at January 31, 2005 and 2004 and the consolidated statements of operations, of comprehensive loss, of shareholders equity, of mineral property expenditures and of cash flows for each of the years in the three year period ended January 31, 2005 (all expressed in Canadian dollars). 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 Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform 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 January 31, 2005 and 2004 and the results of its operations and its cash flows for each of the years in the three year period ended January 31, 2005 in accordance with Canadian generally accepted accounting principles.  Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. The effect of the application of United States generally accepted accounting principles is summarized in Note 10 to the consolidated financial statements.  Our previous report dated March 14, 2005 has been withdrawn and the consolidated financial statements have been revised for a reclassification of investment income on the statements of operations and statements of cash flows, enhanced segmented disclosures, and disclosure of differences between generally accepted accounting principles in Canada and the United States relating to mineral property acquisition costs.  For further explanation of the revisions, see Note 2 in the Notes to the Consolidated Financial Statements.  Hay & Watson  Independent Registered Chartered Accountants Vancouver, Canada March 14, 2005, except as to Notes 2 and 10 which are as of October 30, 2008    25  [rfmannual20fa12005004.gif]  Comment by Independent Registered Chartered Accountants on Canada  United States of America Reporting Difference  The standards of the Public Company Oversight Board (United States) for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when there are changes in accounting principles that have a material effect on the comparability of the Companys financial statements, such as the changes described in Note 2 to the consolidated financial statements. Our report to the shareholders dated March 14, 2005, except as to Notes 2, 9 and 10 which are as of October 30, 2008, is expressed in accordance with Canadian reporting standards which do not require a reference to such a change in accounting principles in the report of the independent registered chartered accountants when the change is properly accounted for and adequately disclosed in the financial statements.  Hay & Watson  Independent Registered Chartered Accountants Vancouver, Canada    26   RIMFIRE MINERALS CORPORATIONConsolidated Statement of OperationsYears Ended January 31(Expressed in Canadian Dollars)200520042003Mineral Property Operations(Restated)RevenueOption proceeds$  358,630$    191,792$      139,580Project management fees55,70831,83418,644414,338223,626158,224ExpensesAcquisition costs217,38598,200149,303Exploration expenditures1,105,733320,743223,972Reclamation obligations35,363--Exploration expenditure reimbursements(145,641)--Exploration tax credits(122,227)(62,131)(57,655)1,090,613356,812315,620Loss from mineral property operations(676,275)(133,186)(157,396)Other OperationsRevenueOther3,274323450ExpensesAccounting and legal27,38921,53542,744Depreciation17,3447,7615,628Foreign exchange losses4,71332,0285,596Investor services147,787106,18852,991Management services92,82071,76757,354Office98,95043,09932,612Rent39,17236,58234,642Salaries and support services163,50385,15267,984Share-based compensation292,149411,20812,800Travel and entertainment44,38632,14222,482928,213847,462334,833Loss from other operations(924,939)(847,139)(334,383)Loss before investment transactions(1,601,214)(980,325)(491,779Gain (loss) on marketable securities35,81954,842(24,100)Interest income69,71524,0788,576Net Loss$  (1,495,680)$  (901,405)$  (507,303)Basic and Diluted Loss Per Share$           (0.09)$        (0.07)$        (0.04)Weighted average number of shares outstanding17,231,84013,311,46211,370,966     27   RIMFIRE MINERALS CORPORATIONConsolidated Balance SheetsJanuary 31(Expressed in Canadian Dollars)200520042003ASSETS(Restated)CurrentCash$2,724,083$917,914$916,042Marketable securities (Note 3)139,870107,50040,900Accounts receivable193,72692,093121,055Prepaid expenses6,88514,96310,2853,064,5641,132,4701,088,282Office and Computer Equipment, less accumulateddepreciation of $47,076 (2004 - $29,732)44,06123,96318,075Project Reclamation Deposits(Note 4)44,40020,20013,100Mineral Property Interests(Note 5)---$3,153,025$1,176,633$1,119,457LIABILITIESCurrentAccounts payable and accruals$88,811$28,308$22,604Payable to related party (Note 7)33,36832,71024,059Exploration funding deposits97,806--219,98561,01846,663Reclamation obligation (Note 11)35,363--255,34861,01846,663SHAREHOLDERS EQUITYShare Capital(Note 6)7,467,9874,447,4843,914,466Contributed Surplus (Notes 2 and 6 )926,527669,288258,080Deficit(5,496,837)(4,001,157)(3,099,752)2,897,6771,115,6151,072,794$3,153,025$1,176,633$1,119,457APPROVED BY THE BOARDDavid A. CaulfieldDirectorHenry J. AwmackDirector   28   RIMFIRE MINERALS CORPORATIONConsolidated Statements of Cash FlowsYears Ended January 31(Expressed in Canadian Dollars)200520042003Cash Flows Used for Operating ActivitiesMineral property operationsPaid for acquisition costs$    (208,635)$    (80,700)$    (70,553)Paid for exploration costs(1,086,025)(320,743)(224,917)Exploration reimbursements received143,804--Exploration tax credits and grants received62,15718,74552,246Exploration funding (paid) received97,806--Project management fees received58,06147,3463,981Reclamation deposits (paid) received(24,200)(7,100)(13,100)Option proceeds received295,130117,792107,580Other operationsPaid for supplies and services(597,035)(367,721)(407,062)Received from related party6588,6513,784Other revenue received757323450(1,257,522)(583,407)(547,591)Cash Flows Used for Investing ActivitiesInterest revenue received67,33221,1687,727Proceeds from sale of marketable securities66,95862,242-Purchase of office and computer equipment(37,442)(13,649)(6,405)96,84869,7611,322Cash Flows From Financing ActivitiesCommon shares issued for cash3,208,200516,5001,139,583Share issue costs(241,357)(982)(51,840)2,966,843515,5181,087,743Increase in Cash and Cash Equivalents1,806,1691,872541,474Cash and Cash Equivalents,
Beginning of Year917,914916,042374,568Cash and Cash Equivalents, End of Year$    2,724,083$   917,914$   916,042Supplemental Information on Non-Cash TransactionsMineral property interest acquisition costs(8,750)(17,500)(78,750)Shares issued for acquisition ofmineral property interests8,75017,50078,750Marketable securities received(63,500)(74,000)(32,000)Mineral property interest option proceeds63,50074,00032,000Write down of marketable securities--24,100Reduction in carrying value of marketablesecurities--(24,100)Share-based compensation expense(292,149)(411,208)(12,800)Contributed surplus292,149411,20812,800   29   RIMFIRE MINERALS CORPORATIONConsolidated Statement of Changes in Shareholders EquityYears Ended January 31(Expressed in Canadian Dollars)200520042003Common Shares (Note 6)(Restated)Balance, beginning of year$4,447,484$3,914,466$2,747,973Issued forPrivate placement2,659,200-440,000Private placement (flow-through)--102,000Share-purchase warrants506,500509,500591,333Employee stock options77,4107,0006,250Mineral properties8,75017,50078,750MDRU membership10,000--Share issue costs(241,357)(982)(51,840)Balance, end of year7,467,9874,447,4843,914,466DeficitBalance, beginning of yearPreviously reported4,001,1572,844,2322,347,169Prior years share-based compensation (Note 2 )255,520245,280Restated4,001,1573,099,7522,592,449Loss for the year1,495,680901,405507,303Balance, end of year5,496,8374,001,1573,099,752Contributed SurplusBalance, beginning of year669,288258,080245,280Share-based compensation292,149424,00821,550Options exercised(34,910)(12,800)(8,750)Balance, end of year926,527669,288258,080Shareholders Equity$2,897,677$1,115,615$1,072,794


RIMFIRE MINERALS CORPORATIONConsolidated Statements of Mineral Property ExpendituresYears Ended January 31(Expressed in Canadian Dollars)FerKizmetRDNSimpsonThornTideWilliams GoldAlaskaOtherTotalCumulative net expenditures, January 31, 2002$   87,417$            -$ 839,885$            -$  328,558$   32,002$  93,605$  18,374$  94,143$  1,493,984Acquisition Costs--3,4947,93437,1113,83589,4732,1925,264149,303Exploration Expenditures4,801-5,96034,9773,7412,2795,21228,520138,484223,974Exploration Tax Credits--(1,159)(15,000)(669)(285)(884)-(39,659)(57,656)Option Proceeds--(50,000)-(47,000)(2,000)(10,000)(30,580)-(139,580)Net expenditures, year ended January 31, 20034,801-(41,705)27,911(6,817)3,82983,801132104,089176,041Acquisition Costs51722,830-54030,9572,36921,25017,2632,47498,200Exploration Expenditures810,9757,41069,09111,8538023,64448,685168,275320,743Exploration Tax Credits--(1,889)(30,242)----(30,000)(62,131)Option Proceeds----(41,000)(61,000)(50,000)(39,792)-(191,792)Net expenditures, year ended January 31, 200452533,8055,52139,3891,810(57,829)(25,106)26,156140,749165,020Acquisition Costs3,4405,242--150,0001,84228,75024,1523,959217,385Exploration Expenditures4,619176,5175,4254,655450,46117,6776,25556,227383,8971,105,733Exploration Tax Credits-(30,243)(552)-(87,818)(2,751)(350)-(513)(122,227)Joint Venture Reimbursement-----(1,427)--(144,214)(145,641)Reclamation Obligation--17,102-11,0823,1794,000--35,363Option Proceeds--(25,000)-(182,000)(56,500)-(95,130)-(358,630)Net expenditures, year ended January 31, 20058,059151,516(3,025)4,655341,725(37,980)38,655(14,751)243,129731,983Cumulative net expenditures, January 31, 2005100,802185,321800,67671,955665,276(59,978)190,95529,911582,1102,567,028Less write-downs and abandonments-------(6,290)(289,790)(296,080)Net mineral property costs, January 31, 2005$     100,802$    185,321$    800,676$     71,955$  665,276$   (59,978)$  190,955$    23,621$  292,230$    2,270,948   30


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)     1. SIGNIFICANT ACCOUNTING POLICIES  The accompanying Management Discussion and Analysis forms an integral part of the annual report on the Companys financial condition. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada, which conform in all material respects with accounting principles generally accepted in the United States of America, except as described in Note 10 to the consolidated financial statements, and which include the following significant policies:  Operations and Basis of Consolidation  The company was incorporated on May 7, 1991 as Bull Pine Explorations Ltd. and commenced mineral exploration operations in Canada in 1991. The company changed its name to Rimfire Minerals Corporation on November 4, 1997. One of the companys wholly-owned subsidiary companies, Rimfire Alaska, Ltd., which was incorporated on August 19, 1998, conducts exploration of mineral properties located in the State of Alaska. A second wholly-owned subsidiary company, Rimfire Nevada Ltd., which was incorporated on January 4, 2005, conducts exploration of mineral properties located in the State of Nevada.  These consolidated financial statements include the accounts of the company and its wholly-owned United States subsidiaries, Rimfire Alaska, Ltd. and Rimfire Nevada Ltd. (collectively the Company).  Marketable Securities  Marketable securities are recorded at cost and are written down to market value when declines in value are significant and permanent.  Office and Computer Equipment  Office and computer equipment is recorded at cost. Depreciation is recorded at annual rates considered adequate to amortize the cost of the assets over their estimated useful lives as follows:  Computer software100%Computer equipment (prior to March 23, 2004)30%Computer equipment (after March 23, 2004)45%Office equipment and furniture20%


31


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)     1. SIGNIFICANT ACCOUNTING POLICIES (continued)  Mineral Property Interests  The Companys mineral property interests are composed of mineral properties owned by the Company and rights to ownership of mineral properties, which the Company can earn through cash or share payments, incurring exploration expenditures and combinations thereof. The Companys property ownership and rights to property ownership are described in Note 5.  The Company accounts for its mineral property interests whereby all acquisition and exploration costs are charged to expense as incurred and all property sales and option proceeds received are credited to income. When the existence of a mineral reserve on a property has been established, future acquisition, exploration and development costs will be capitalized for that property. After commercial production on the property commences, the net capitalized costs will be charged to future operations using the unit of production method based on estimated recoverable reserves on the property. The amounts shown for mineral property expenditures and related costs do not necessarily represent present or future recoverable values. The recoverability of these amounts is dependent upon the confirmation of economically recoverable reserves, the ability of the Company to obtain the necessary financing to successfully complete their development and to meet the requirements, from time to time, of lenders who are providing this financing and upon future profitable production.  Mineral Property Reclamation Obligations  The company may have an obligation to complete reclamation work on mineral property interests where exploration activities have occurred in the past and may occur in future years under the Companys guidance. Reclamation work is normally completed at the end of each seasons exploration program; however, for on-going projects where it is anticipated that future programs will require the same infrastructure, some remedial work is not undertaken until the completion of all exploration programs.  An estimate has been made of the cost for a third party to undertake this reclamation obligation for all active projects. A reclamation obligation expense has been calculated as the present value of the cost if it were to be undertaken during the year of tenure expiry or in 2008, whichever comes first. When the existence of a mineral reserve on a property has been established, future reclamation obligation costs will be capitalized for that property. After commercial production on the property commences, the net capitalized costs will be charged to future operations using the unit of production method based on estimated recoverable reserves on the property


32


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)     1. SIGNIFICANT ACCOUNTING POLICIES (continued)  Share-Based Compensation  The Company issues options to purchase shares under the terms described in Notes 2 and 6. When options to purchase shares are issued to employees or directors, the fair value of the options on the date of the grant is recognized as compensation expense, with a corresponding increase in contributed surplus, over the period during which the related options vest. When options to purchase shares are issued to non-employees in return for goods and services, the fair value of the options issued is recognized as an expense, with a corresponding increase in contributed surplus, in the period in which the goods or services are received or are expected to be received.  The consideration received on the exercise of share options is credited to share capital.  Income Taxes  The Company follows the liability method of accounting for income taxes. Using this method, income tax liabilities and assets are recognized for the estimated tax consequences attributable to differences between the amounts reported in the financial statements of the Company and their respective tax bases, using enacted income tax rates. The effect of a change in income tax rates on future tax liabilities and assets is recognized in income in the period in which the change occurs. A future income tax asset is recorded when the probability of the realization is more likely than not.  Foreign Currency Translation  Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using historical rates. Revenue and expense items are translated at exchange rates prevailing at the time of the transaction. Foreign exchange gains and losses are included in the determination of income.  Loss per Share  The basic loss per share is calculated on the basis of the weighted average number of common shares of the Company that were outstanding in each reporting period. The diluted loss per share, which is disclosed only if dilutive, includes the potential dilution from share purchase options, calculated using the treasury stock method, in the weighted average number of shares.


33


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)     1. SIGNIFICANT ACCOUNTING POLICIES (continued)  Exploration Tax Credits  The company will receive refundable exploration tax credits from the Province of British Columbia equal to 20% of qualifying exploration expenditures incurred on properties located in British Columbia. The company records these exploration tax credits as it incurs the related exploration expenditures. Flow-through mining expenditures will first be applied against any outstanding renounced expenditure then used to determine the exploration tax credits to which the company may be entitled.  Use of Estimates  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.   2. ACCOUNTING CHANGES  The Company adopted the new accounting recommendations of the Canadian Institute of Chartered Accountants on accounting for share-based compensation of employees and non-employees during the 2004 fiscal year. These recommendations established the standards described in Notes 1 and 6 for the measurement, recognition and disclosure of compensation and other costs arising from the issue of share purchase options and other share-based payments to employees and non-employees. The Company accounted for these recommendations on the retroactive basis, and accordingly increased share-based compensation expense by $10,240 for the year ended January 31, 2003 and deficit and contributed surplus by $255,520 at January 31, 2003.  The Company has reclassified certain items in the Consolidated Statements of Operations, Consolidated Statements of Cash Flows and Note 10 (regarding differences between generally accepted accounting principles in Canada and the United States). The reclassification has no effect on net loss, net loss per share, accumulated deficit or increase in cash and cash equivalents. A summary of the changes to the financial statements is provided in the following table:


34


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    2. ACCOUNTING CHANGES (continued)  Consolidated Statements of Operations  Mineral property operations200520042003RevenueAs originally presented358,630191,792139,580Reclassification of project management fees55,70831,83418,644Revised414,318223,626158,224  Loss from mineral property operationsAs originally presented(731,983)(165,020)(176,040)Reclassification of project management fees55,70831,83418,644Revised(676,275)(133,186)(157,396)  Other OperationsRevenueAs originally presented128,69756,23527,670Reclassification of project management fees(55,708)(31,834)(18,644)Reclassification of interest received(69,715)(24,078)(8,576)Revised3,274323450  Loss from other operationsAs originally presented(799,516)(791,227)(307,163)Reclassification of project management fees(55,708)(31,834)(18,644)Reclassification of interest received(69,715)(24,078)(8,576)Revised(924,939)(847,139)(334,383)  Loss before the undernoted  (revised)Loss before the undernoted(1,601,214)(980,325)(491,779)Reclassified interest income69,71524,0788,576


35


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    2. ACCOUNTING CHANGES (continued)  Consolidated Statements of Cash Flows  200520042003Cash Flows Used for Operating ActivitiesAs originally presented(1,165,990)(555,139)(526,764)Reclassified interest received(67,332)(21,168)(7,727)Reclassified project deposits(24,200)(7,100)(13,100)Revised(1,257,522)(583,407)(547,591)Cash Flows Used for Investing ActivitiesAs originally presented5,31641,493(19,505)Reclassified interest received67,33221,1687,727Reclassified project deposits24,2007,10013,100Revised96,84869,7611,322  3. MARKETABLE SECURITIES  20052004CANGOLD Ltd.  250,000 shares 
  (2004 -150,000 shares)$  80,000$  48,000Hyder Gold Inc.  150,000 shares18,00018,000Plutonic Capital Inc.  125,000 shares 
  (2004- 150,000 shares)27,50033,000Serengeti Resources Inc.  175,000 shares31,500-Stikine Gold Corp.(2004 - 100,000 shares)-25,000Western Keltic Mines Inc. 89,500 shares
  (2004 -  100,000 shares)23,27026,000180,270150,000Less previous write-down to estimated market value(40,400)(42,500)$  139,870$   107,500  Fair market value of the marketable securities on January 31, 2005 was approximately $271,405 (2004 - $185,500).


36


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    4. PROJECT DEPOSITS  Project deposits represent term deposits in favour of regulatory authorities held as site restoration deposits. The amount of the bond is determined at the time the exploration program is planned and a notice of work is submitted to the regulatory authority. If work is more extensive than previously planned, the amount of the bond is increased. The following schedule shows reclamation deposits for each project  ProjectDate of DepositAmountTideAugust 13, 2002$       3,500Thorn*June 13, 20029,600September 2, 20037,100RDNApril 13, 200410,800April 21, 20049,400Williams GoldJune 7, 20044,000TOTAL$    44,400  * All deposits for the Thorn property were released on February 7, 2005 when the new operator of the property deposited satisfactory security with the regulatory authorities.


37


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS  Expenditures on mineral property interests during the years ended January 31 were:  20052004Acquisition Costs$217,385$98,200Exploration CostsAircraft and helicopter261,87139,204Camp58,84615,177Chemical analysis52,83225,033Drafting13,1488,981Drilling and trenching87,046-Equipment rental16,2284,975Freight12,341722Geological and engineering354,662142,869Maps and reproductions17,3415,529Materials30,2492,501Project management97,44326,607Recording and filing67,72036,389Travel36,00612,7561,105,733320,743Exploration tax credits and grants(122,227)(62,131)Joint venture reimbursement(145,641)-Reclamation obligation35,363-873,228258,612Option Proceeds(358,630)(191,792)Cumulative Net Expenditures, 
Beginning of Year1,835,0451,670,025Cumulative Net Expenditures, End of Year2,567,0281,835,045Property write-down and abandonment(296,080)(193,421)Net Mineral Property Costs From Inception$2,270,948$1,641,624  The analysis of these expenditures by property or interest is reported in the Statements of Mineral Property Expenditures.


38


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  The Companys mineral property interest commitments are:  Thorn Property, British Columbia  On March 1, 2000 the Company entered into an agreement with Kohima Pacific Gold Corp. (Kohima) to earn a 100% interest in the Thorn mineral property, subject to a 3.5% net smelter return. The Company will earn its interest on completion of the following:  Cash payments of: · $15,000 upon signing (paid) · $15,000 on December 1, 2000 (paid) · $10,000 on March 1, 2001 (paid) · $15,000 on March 1, 2002 (paid) · $25,000 on March 1, 2003(paid) · $50,000 on March 1, 2004 (paid) · $100,000 on March 1, 2005 (paid)  Exploration expenditures of $50,000 by March 1, 2001 (completed)  Share issues of: · 50,000 common shares upon signing (issued) · 50,000 common shares on March 1, 2001 (issued) · 25,000 common shares on September 1, 2001 (issued) · 25,000 common shares on March 1, 2002 (issued) · 25,000 common shares on September 1, 2002 (issued) · 25,000 common shares on March 1, 2003(issued)  The Company will issue an additional 200,000 shares upon commencement of commercial production from the property. The Company can purchase 2% of Kohimas underlying net smelter return for $3,000,000.  On March 1, 2002, the Company granted CANGOLD Limited (CANGOLD) an option to earn a 51% interest in the Thorn property on completion of the following:  Exploration expenditures of at least · $300,000 on or before March 1, 2003 (completed) · an aggregate of $700,000 on or before March 1, 2004 (completed) · an additional $500,000 on or before March 1, 2005 (completed)


39


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  Cash payments to the Company of: · $15,000 on regulatory approval of the agreement (received) · $25,000 on or before March 1, 2003 (received) · $50,000 on or before March 1, 2004 (received) · $100,000 on or before March 1, 2005 (received)  Issuing to the Company: · 100,000 common shares on regulatory approval (received) · 50,000 common shares on or before March 1, 2003 (received) · 50,000 common shares of CANGOLD on or before March 1, 2004 (received) · 50,000 common shares of CANGOLD on or before March 1, 2005 (received)  In September 2004, CANGOLD completed the requirements to earn a 51% interest in the Thorn Property. The Company and CANGOLD have entered into a formal joint venture agreement for further development of the property. CANGOLD is currently operator for this project.  RDN Property, British Columbia On July 31, 1997, the Company acquired a one-third interest in the RDN mineral claims from Equity Engineering Ltd. (Note 7) for a price of $150,000. The Company also acquired the remaining two-thirds interest in the RDN mineral claims, subject to a 1.34% net smelter return royalty, by completing the exploration expenditure and share issue requirements in an option agreement dated July 31, 1997, as amended on October 8, 1998. The Company may purchase one-half of the net smelter royalty for $666,666.  The Company signed an option agreement, effective March 29, 2004, with Northgate Minerals Corporation (Northgate) which provides that Northgate can earn a 51% interest in the RDN Property on completion of the following:  Exploration expenditures of: · not less than $1,000,000 before December 31, 2004 (completed) · not less than an aggregate of $2,000,000 on or before December 31, 2005 
(as revised November 19, 2004) · not less than an aggregate of $3,500,000 on or before December 31, 2006
(as revised November 19, 2004) · not less than an aggregate of $5,000,000 on or before December 31, 2007
(as revised November 19, 2004)


40


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  Cash payments of: · $25,000 upon closing of the agreement (received) · $40,000 on or before March 1, 2005 (received subsequent to year-end) · $60,000 on or before March 1, 2006 · $75,000 on or before March 1, 2007  Rimfire will be project operator until Northgate has earned its 51% interest. Northgate may earn an additional 9% by completing a feasibility study and funding all expenditures up to completion of the feasibility study.  Williams Gold Property, British Columbia  On May 17, 2001 the Company entered into an option to earn a 100% interest in the property, subject to a 2.5% net smelter return. On June 25, 2002, the Company subsequently acquired half of the interest and the net smelter return in the Williams Gold Property pursuant to another agreement by issuing 75,000 common shares. The Company earned the remaining 50% interest on completion of the following:  Cash payments of: · $10,000 upon signing (paid) · $15,000 on May 1, 2002 (paid) · $12,500 on May 1, 2003 (paid) · $20,000 on May 1, 2004 (paid)  Share issues of: · 25,000 common shares upon signing (issued) · 25,000 common shares on December 31, 2001 (issued) · 25,000 common shares on December 31, 2002 (issued) · 25,000 common shares on December 31, 2003 (issued) · 25,000 common shares on December 31, 2004 (issued)  The Company will issue an additional 50,000 common shares upon commencement of commercial production from the property. The Company can purchase 0.75% of the net smelter return for $1,000,000. Advance Royalty payments of $5,000 per year, commencing in December 2005, are payable to the underlying vendor.  On December 18, 2002, the Company granted Stikine Gold Corporation (Stikine) an option to earn a 70% interest in the property on completion of exploration expenditures and cash and share payments. Stikine terminated this agreement on April 30, 2004.


41


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  Tide Property, British Columbia  On July 10, 2001 the Company purchased the Tide mineral property from Newmont Canada Limited for $10 and an agreement to give Newmont Canada Limited a three year right of first refusal to re-acquire the property if the Company decides to assign, transfer for dispose of its interest to a third party, and a 1.5% net smelter royalty in the event the property becomes commercially feasible to mine.  On October 28, 2002, and amended on July 25, 2003, October 20, 2003 and November 20, 2003, the Company granted Plutonic Capital Corp. (Plutonic) an option to earn a 51% interest in the property on completion of a combination of cash and share payments and exploration expenditures. In consideration of an extension, dated October 20, 2003, Plutonic issued an additional 100,000 common shares to the company. In an option amendment agreement dated November 20, 2003, Plutonic assigned the agreement to Serengeti Resources Inc. (Serengeti). As compensation for this amendment, Serengeti issued 100,000 shares to the Company Serengeti will assume the following obligations from the original and amended agreements with Plutonic:  Cash payments to the Company of: · $2,000 upon signing of the agreement (received) · $13,000 upon regulatory approval (received) · $15,000 on or before July 24, 2003 (received) · $25,000 on or before December 31, 2004  (as amended September 9, 2004-received) · $35,000 on or before December 31, 2005  (as amended September 9, 2004) · $40,000 on or before December 31, 2006  (as amended September 9, 2004)  Issue to the Company or pay: · 50,000 common shares or $20,000 on or before August 15, 2003 (received) · 50,000 common shares or $35,000 on or before July 24, 2004
 plus 25,000 common shares of Serengeti (received) · 50,000 common shares or $60,000 on or before December 31, 2005
(as amended September 9, 2004) plus 25,000 common shares of Serengeti · 50,000 common shares or $85,000 on or before December 31, 2006 
(as amended September 9, 2004) plus 25,000 common shares of Serengeti  Fund expenditures of at least: · $185,000 on or before June 30, 2004 (completed) · an additional $250,000 on or before December 31, 2004 (completed) · an additional $400,000 on or before December 31, 2005 · an additional $600,000 on or before December 31, 2006


42


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  The Company will be operator for the exploration programs until Serengetis interest has vested. In November additional claims were staked which were converted to two claims totalling 1,184 hectares. These Wave claims will be jointly explored with the Tide property but do not form part of the property agreement.  Kizmet Property, British Columbia  In April 2003, the Company acquired the Kizmet (formerly Sutlahine) Property by staking 4 claims comprising 80 units. Twenty-eight additional claims were staked in October 2003. An additional 12 claims totalling 219 units were staked in May 2004. The mineral claims have been converted to 28 claims totalling 18,675 hectares. A regional sampling, prospecting and mapping program was conducted during the late summer of 2004 to fulfill the assessment work requirement to keep these claims in good standing until December 2006. On January 12, 2005 the Company used the new on-line map-staking process to acquire 23 claims totalling 9,263 hectares.  On January 25, 2005 The Company signed a memorandum of understanding with Barrick Gold Corporation (Barrick) to jointly explore the Kizmet claims. Barrick will contribute 169 claims totalling 67,865 hectares while Rimfire will contribute 51 claims totalling 27,939 hectares. The companies will establish a 50:50 joint venture upon completion of a formal option agreement. Upon signing, Barrick will pay the Company $75,000 Canadian Dollars.  Barrick can increase their interest to an aggregate 80% upon completion of the following:  · to 65% upon completion of aggregate exploration expenditures of $1,200,000 (USD) over a period of three years from the date of the formal agreement; · to 75% upon funding exploration expenditures of not less than $500,000 (USD) per year through to a production decision; and · at the Companys election, to 80% upon assisting the Company with project financing.  Adam Property, British Columbia  In April 2002 the Company acquired the Adam Property by staking 3 claims comprising 60 units. These claims have been converted to 2 claims totalling 1,823 hectares. The Company conducted a sampling and mapping program during August 2002 to fulfill the assessment work requirement to keep these claims in good standing until April 2007.


43


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  FER Property, Yukon  Under an agreement with Boliden Limited (Boliden) dated July 1, 1998, as amended October 28, 1999, and October 11, 2000, the Company has earned a 51% interest in the claims. The exploration expenditures required to earn an 85% interest were not completed. Bolidens interest in the property has been sold to Breakwater Resources Ltd. (Breakwater).The Company and Breakwater will enter into a joint venture for the further development of the claims. If either partys interest subsequently decreases to below 7.5%, that partys interest will be automatically converted to a net smelter royalty return interest of 2%.  Simpson Property, Yukon  In January and April 2003 the Company acquired the Simpson Property by staking 38 claims in Watson Lake Mining District. There are no additional costs associated with maintaining these claims in good standing until December 2005. Four additional claims, comprising the Simpson Extension, were staked in August 2003.  ER-Ogo-Fire Property, Alaska  Pursuant to the terms of an agreement dated August 30, 2001 with Engineer Mining Corp., the Company, through Rimfire Alaska, Ltd., acquired a 100% interest in the ER property.  On January 30, 2002 the Company, through Rimfire Alaska, Ltd., signed an exploration, development and mine operating agreement with AngloGold (U.S.A) Exploration Inc. (AngloGold) whereby AngloGold can earn a 50% interest in the ER-Ogo-Fire property on completion of the following:  Exploration expenditures of:  · no less than minimum state claim assessment requirements plus claim fees required in 2002 on or before January 30, 2003 (completed) · an additional $50,000 USD by January 30, 2004(completed) · an additional $75,000 USD by January 30, 2005, (completed) and · the difference between all earn-in exploration expenses and $400,000 USD in total by January 30, 2006 (completed)  Cash payments of: · $5,000 USD upon signing (received) · $5,000 USD on January 30, 2003 (received) · $15,000 USD on January 30, 2004(received) · $25,000 USD on January 30, 2005 (received) · $50,000 USD on January 30, 2006


44


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  An amendment, effective December 17th, 2003, included the Jazz claims (staked by the Company) and the Zappa claims (staked by AngloGold) in the agreement. AngloGold has also elected to increase its interest in the property to 70% by incurring an additional $500,000 USD in exploration expenditures.  Eagle Property, Alaska  On January 30, 2002 the Company, through Rimfire Alaska, Ltd., signed an exploration, development and mine operating agreement with AngloGold whereby AngloGold can earn a 50% interest in the Eagle property on completion of the following:  Exploration expenditures of:  · no less than minimum state claim assessment requirements plus claim fees required in 2002 on or before January 30, 2003 (completed) · an additional $50,000 USD by January 30, 2004 (completed) · an additional $75,000 USD by January 30, 2005 (completed), and · the difference between all earn-in exploration expenses and $400,000 USD in total by January 30, 2006 (completed)   Cash payments to the Company of: · $5,000 USD upon signing (received) · $5,000 USD on January 30, 2003 (received) · $15,000 USD on January 30, 2004(received) · $25,000 USD on January 30, 2005 (received) · $50,000 USD on January 30, 2006  An amendment, effective December 17th, 2003, included the Sand claims (staked by the Company) and the EX claims (staked by AngloGold) in the agreement.  AngloGold has elected to increase its interest in the property to 70% by incurring an additional $500,000 USD in exploration expenditures.  Beverly, Boundary and SE Surf properties, Alaska  The Company, through Rimfire Alaska Inc., held a 30% joint venture interest in the California and Surf properties, which included separate claim blocks now called Beverly, Boundary and SE Surf. The joint venture partner, Western Keltic Mines Inc., held the remaining 70% interest in the properties.


45


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  In August 2003, Western Keltic Mines Inc. sold its 70% interest in these claims to the Company, subject to a 1.75% NSR (of which 1% may be bought for $1,000,000), for the following payments:  · $25,000, or 50,000 common shares at the election of the Company, upon completion of $1,500,000 exploration expenditures subsequent to the agreement, · $50,000, or 50,000 common shares at the election of the Company, upon completion of an aggregate $3,000,000 exploration expenditures subsequent to the agreement, · 100,000 shares upon obtaining a positive feasibility study for placing any part of the property into commercial production.  Additional staking in March 2004 added 42 claims to the Boundary property and 16 claims to the SE Surf property.  The Company, through Rimfire Alaska, Ltd., signed an exploration, development and mine operating agreement with AngloGold (U.S.A) Exploration Inc. (AngloGold), dated June 22, 2004, whereby AngloGold can earn a 50% interest in the Beverly property on completion of the following:  Exploration expenditures of:  · $50,000 USD on or before February 28, 2005 · an additional $100,000 USD on or before February 28, 2006 · an additional $350,000 USD on or before February 28, 2007, and · the difference between all earn-in exploration expenses and $1,000,000 USD in total on or before February 28, 2008  Cash payments to the Company of: · $25,000 USD upon signing (received) · $20,000 USD on or before February 28, 2005 · $30,000 USD on or before February 28, 2006 · $50,000 USD on or before February 28, 2007 · $75,000 USD on or before February 28, 2008  AngloGold shall be solely responsible for the payment due to Keltic following exploration expenditures of $1,500,000 (Canadian funds). This agreement was terminated in November 2004.


46


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    5. MINERAL PROPERTY INTERESTS (continued)  Scot claims, Alaska  In August 2003, the Company staked 39 claims in the Goodpaster District of Alaska, adjacent to current projects. Wildfires in the area prevented exploration of these claims during the summer of 2004, therefore cash in lieu of labour has been paid to keep the claims in good standing.  Yukon Targeted Exploration Initiative  In December 2003, the Company signed an agreement with Newmont Canada Limited (Newmont) to focus on grass-roots exploration within a defined area in the Yukon. Phase I costs will be shared equally between the Company and Newmont, of which the Companys portion will be a maximum of $20,000. Phase II fieldwork was undertaken in July with expenditures shared equally between the parties.  Walker Lane Project  In January 2005, the Company signed an agreement with Newmont Capital Limited (Newmont) targeting a defined project area of in Nevadas Walker Lane Mineral Belt. The Company has committed to making $300,000 USD in expenditures within the project area during the term of the two year agreement. Rimfire may, at its discretion, acquire one or more properties within the project area boundaries in which to conduct further exploration work. On Rimfires acquisition of any property interest, Newmont will be granted a Net Smelter Return Royalty of 2.0% to 3.0% on a sliding scale based on the price of gold. Newmont will have a one-time right to enter a 50:50 Joint Venture upon Rimfire expenditures of $300,000 USD on an acquired property. When this right is exercised, Newmont will relinquish the Net Smelter Return Royalty, manage the Joint Venture, and solely fund the next $1,000,000 USD in exploration to earn its 50% interest.


47


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    6. SHARE CAPITAL  Authorized: unlimited common shares without par value (as amended June 18, 2004)  Issued and fully paid Number of SharesAmountJanuary 31, 20017,936,288$2,358,706Issued for cashCommon shares, net of share issue costs of $40,7641,242,000286,036Flow-through common shares, net of share issuecosts of $519150,00059,481Issued for mineral property interests125,00043,750January 31, 20029,453,2882,747,973Issued for cashCommon shares, net of share issue costs of $49,6612,561,333987,923Flow-through common shares, net of share issuecosts of $1,869170,000100,131Issued for mineral property interests, net of share issuecosts of $311150,00078,439January 31, 200312,334,6213,914,466Issued for cashCommon shares, net of share issue costs of $8411,231,000515,659Issued for mineral property interests, net of share issuecosts of $14150,00017,359January 31, 200413,615,6214,447,484Issued for cashCommon shares, net of share issue costs of   $241,0904,206,9073,002,020Issued for MDRU membership, net of share issuecosts of $1227,6929,878Issued for mineral property interests, net of share issuecosts of $14525,0008,605January 31, 200517,855,220$7,467,987


48


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    6. SHARE CAPITAL (continued)  The Company issues share purchase options to directors, officers, and employees of the Company and persons who provide ongoing services to the Company under an incentive stock option plan. Under the plan, the Company has reserved 1,771,253 shares for the issue of share purchase options.  The exercise price of share purchase options will be no less than the closing price of the shares on the business day immediately preceding the date on which the option is granted less the discount permitted by the TSX Venture Exchange.  Options will expire no later than five years from the grant date, except that they will expire within thirty days when the holder is no longer qualified to hold the option (other than for cause, when the option will expire immediately).  The following options and warrants to purchase common shares are outstanding at the date of these financial statements:  OptionsNumber of SharesPrice Per ShareExpiry DateGrant DateBalance, beginning of yearGranted during the yearExercised during yearBalance, end of yearExercisable at the end of the yearExercise priceFair valueDirector450,000--450,000450,000$0.25$0.3502-Mar-0602-Mar-01Officer150,000-150,000150,000$0.25$0.3502-Mar-0602-Mar-01Employee100,00050,000-50,00050,0000.250.3502-Mar-0602-Mar-01Employee50,000-50,000--0.600.3509-Jan-0509-Jan-03Director75,000-75,00075,0000.600.6215-Jan-0815-Jan-03Director235,000-30,000205,000205,0000.950.7218-Dec-0818-Dec-03Employee50,000--50,00050,0000.950.7218-Dec-0818-Dec-03Officer200,000--200,000200,0000.950.7218-Dec-0818-Dec-03Consultant-60,000-60,00060,0000.950.7626-Mar-0626-Mar-04Employee-150,000-150,00075,0000.960.4918-June-0918-June-04Director-95,000-95,00072,5001.211.0509-Dec-0909-Dec-04Officers-55,000-55,00055,0001.211.0509-Dec-0909-Dec-04Employee-105,000-105,00072,5001.211.0509-Dec-0909-Dec-041,310,000465,000130,0001,645,0001,515,000


49


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    6. SHARE CAPITAL (continued)  WarrantsNumber ofIssue PriceSharesPer ShareExpiry DateGrant DateBroker Warrants213,667$0.9012-Sep-0512-Mar-04Share Purchase Warrant1,058,334$1.1512-Sep-0512-Mar-04430,120$1.1523-Sep-0523-Mar-04  The Company determines the fair value of the options granted during a year for the purposes of determining share-based compensation expense using a generally accepted option pricing model, such as the Black-Scholes model. The following assumptions were used in valuing the options granted during the year:  Volatility100 - 150%Risk-free interest rate2.01 - 2.82%Expected life2 to 5 yearsExpected dividend yield-  7. RELATED PARTY TRANSACTIONS   The Companys mineral property evaluation and exploration projects are managed by Equity Engineering Ltd. (Equity), a company indirectly owned and operated by officers and significant shareholders of the Company.  Balances payable to Equity for fees and reimbursement of costs incurred on behalf of the Company have been separately disclosed as Payable to Related Party. Fees charged to the Company by Equity are on the same basis as those charged by Equity to unrelated third parties.  During the year ended January 31, 2005, the Company paid Equity $431,996 for geological consulting services and $203,098 for providing general corporate and administrative services composed of $14,457 for insurance, $3,711 for investor services, $96,462 for management services, $12,026 for office, $39,172 for rent and $37,270 for support services.  It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and Equity will be remunerated for such services at standard commercial rates.


50


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    8. INCOME TAXES  The Company has incurred losses for income tax purposes of $ 2,228,190 which can be carried forward to reduce taxable income in future years.  If unused, these losses will expire as follows:  2006$     33,9502007260,1952008297,8532009322,0572010349,6432011412,7592012551,733$ 2,228,190   The Company has other deductions of $1,822,000 which, subject to certain restrictions, can be used to reduce taxable incomes in future years.  The potential benefits of these losses and deductions have not been recognized in these consolidated financial statements.  9. FINANCIAL INSTRUMENTS  The carrying values of cash, marketable securities, accounts receivable and accounts payable on the balance sheet approximate their fair values.   10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES  These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) which, with respect to the Company, differ in certain respects from United States generally accepted accounting principles (U.S. GAAP). The significant differences between US GAAP and Canadian GAAP are as follows:   (a) Stock-based compensation  The Financial Accounting Standards Board in the U.S. has issued Statement of Financial Accounting Standards No. 123 Accounting for Stock-Based Compensation. As permitted by the statement, the Company has elected to measure stock-based compensation costs for employees using the fair value based method of accounting. The Company has determined that this accounting policy does not result in a Canadian/U.S. GAAP difference.  10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (b) Flow-through shares  Under Canadian income tax legislation, the Company is permitted to issue shares whereby the Company agrees to incur qualifying expenditures and renounce the related income tax deductions to the investors. The Company has accounted for the issue of flow-through shares by reducing shareholders equity and recognizing a future income tax liability for the amount of tax credits renounced to the investors, in accordance with Canadian GAAP.  For U.S. GAAP, the amount received by the Company on the issuance of flow-through shares in excess of the fair value of common shares is required to be credited to liabilities and included in operations in the period in which the Company renounces the expenditures.   (c) Acquisition costs of mineral property interests (restated)  The Company's accounting policy under Canadian GAAP is to expense the acquisition of mineral properties as incurred until there are identifiable reserves on a property, when they will be capitalized and amortized over production from the property. Mineral property acquisition costs are capitalized under US GAAP, unless there is evidence that they are impaired and not recoverable, when they are written off.  Note 10 (c) and (f) have been restated to identify a difference between accounting for mineral property acquisition costs under Canadian GAAP and US GAAP. The Company had previously interpreted US GAAP to consider the lack of identifiable reserves as sufficient evidence to impair and write off the carrying value of the mineral property acquisition costs. However, the Company has reconsidered the requirements of Emerging Issues Task Force (EITF) Abstract 04-2 and has concluded that the lack of reserves is not conclusive evidence of impairment under US GAAP. The Company has therefore amended this note to identify the accounting for these costs as a difference between Canadian and US GAAP.  EITF-04-3 is effective for fiscal periods ending after April 30, 2004. Therefore there is a difference for the fiscal year ended January 31, 2005 though not for the prior periods presented.


51


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (d) Earnings per share  The weighted average number of shares outstanding used in the calculation of earnings per share under Canadian GAAP includes shares held in escrow. These shares are excluded in the calculation under U.S. GAAP.  (e) Statements of cash flows  Both CICA Handbook Section 1540 and SFAS 95 recommend use of the direct method of presenting statements of cash flows. However, SFAS 95 also requires that when the direct method of reporting cash flow from operating activities is used, a reconciliation of net income to net cash flow from operating activities shall be provided in a separate schedule. This reconciliation is presented below.   (f) Reconciliation  The effect of the differences between Canadian GAAP and U.S. GAAP on the consolidated financial statements is summarized as follows:  Consolidated Balance Sheets  2005Canadian GAAPAdjustment
(c)U.S. GAAPMineral property interest acquisition costsPreviously reported$                -$               -$                 -Restated (b)-41,02541,025Share capital7,467,987-7,467,987Deficit(5,496,837)41,025(5,455,812)  The deferred tax liability of $100,125 (2003 -$80,125) related to previous issue of flow-through shares is reduced by unrecognized tax losses carried forward from prior years.


52


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  Consolidated Statements of Operations  Previously reported200520042003Net loss under Canadian GAAP$(1,495,680)$    (901,405)$     (507,303)Reversal of acquisition costs (b)41,025--Impairment provision (b)(41,025)--Net loss under U.S. GAAP$(1,495,680)$    (901,405)$     (507,303)Weighted average number of shares 
under Canadian GAAP17,231,84013,311,46211,370,966Escrow shares29,865209,865397,365Weighted average number of shares
under U.S. GAAP17,201,97513,101,59710,973,601Basic and diluted loss per share 
under U.S. GAAP$(0.09)$(0.07)($0.05)  Restated200520042003Net loss under Canadian GAAP$(1,495,680)$    (901,405)$     (507,303)Net mineral property interest acquisition costs (c)41,025--Net loss under U.S. GAAP$(1,454,655)$    (901,405)$     (507,303)Weighted average number of shares 
under Canadian GAAP17,231,84013,311,46211,370,966Escrow shares29,865209,865397,365Weighted average number of shares
under U.S. GAAP17,201,97513,101,59710,973,601Basic and diluted loss per share 
under U.S. GAAP$(0.08)$(0.07)($0.05)


53


RIMFIRE MINERALS CORPORATION  Notes to Consolidated Financial Statements January 31, 2005 (Expressed in Canadian Dollars)    10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  Consolidated Statements of Cash Flows (e) 200520042003Net loss under Canadian GAAP$(1,495,680)$    (901,405)$     (507,303)Adjustments to reconcile net loss to net cash used by operating activitiesDepreciation17,34453,92033,980Foreign exchange losses4,7137,5198,196Reclamation obligations35,363--Share-based compensation292,149411,20812,800Non-cash option proceeds8,75017,50078,750Non-cash mineral property acquisition costs(63,500)(74,000)(32,000)Gain (loss) on sale of marketable securities(35,819)(54,842)24,100Interest income(69,715)(24,078)(8,576)Increase in accounts receivable(101,633)14,607(91,862)Increase in prepaid expenses8,078(4,678)(10,285)Increase in project reclamation deposits(24,200)(7,100)(13,100)Increase in accounts payable / accrued expenses68,822(22,058)(42,291)Increase in exploration funding deposits97,806--Total adjustments238,158317,998(40,288)Net cash used for operating activities$   (1,257,522)$     (583,407)$   (547,591)  11. ENVIRONMENTAL  The Companys mining and exploration activities are subject to various federal, provincial and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. The ultimate amount of reclamation and other future site restoration costs to be incurred for existing mining interests is uncertain.


54


RIMFIRE MINERALS CORPORATION   Management Discussion 
and Analysis    Form 51-102F1 For the year ended January 31, 2005


55


Management Discussion and Analysis RFM-2005   1.1 Date  The information in this form includes financial results for the year ending January 31, 2005 with other information current to April 30, 2005.  1.2 Overall Performance  Rimfire Minerals Corporation is a gold-focused junior mineral explorer listed on the TSX Venture Exchange, trading under the symbol RFM. Rimfire explores for precious and base metals in British Columbia, Yukon Territory, Nevada and Alaska.  2004 Exploration Overview  Goodpaster District, Alaska  AngloGold (U.S.A.) completed a geophysical survey, soil geochemical sampling and three holes totaling 997 m on the ER project. The first phase of work on the Eagle property consisted of the collection of 485 soil samples to expand the previous focused soil grid to its current length of 6 km with lines ranging from 0.7 to 1.8 km in length. On the Eagle, nine holes totaling 2778 m were drilled targeting soil geochemical anomalies that span a distance of 6 km in a NE-SW direction. A deep penetrating magnetic survey was carried out late in the season, but these results were not available until after completion of the drill program. The Beverly Property program consisted of soil sampling along the anomalous portions of lines sampled in 1999 and 2000 by a previous operator. This sampling was conducted to verify previously defined anomalies and very little sampling was done beyond the areas of previous work. With completion of the work this year on the Eagle Property, AngloGold has vested a 70% interest in the property.  British Columbia  Thorn  The Thorn Induced Polarization (IP) geophysical survey was completed by CANGOLD Limited in August and demonstrated a significant correlation between the IP geophysics and known silver-gold mineralization but also identified several new targets in areas of no outcrop. With the completion of this project and by making final share and cash issuances to Rimfire CANGOLD has earned a 51% interest in the property and a joint venture has been formed. By early November, the Thorn drill program was completed consisting of 1810 m in twelve holes targeting the Oban Breccia Zone, massive sulphide veins in the Camp Creek Structural Corridor with five holes targeting IP geophysical anomalies. Drill hole THN04-29 tested part of a 500 m long IP anomaly and intersected 56.1 metres of 1.27 g/t Au, 16.7 g/t Ag, & 0.19% Cu in a new zone dubbed the Talisker Zone. Prospecting prior to the commencement of the drill program resulted in the discovery of a quartz-barite boulder assaying 265 g/t (7.7 oz/t) gold 2 km north of the Camp Creek Structural Corridor in an area of the property that has not seen previous work. Based on these encouraging results, a program of expanded IP geophysics, surface sampling and follow up drilling will be undertaken in 2005.


56


Management Discussion and Analysis RFM-2005   RDN  On the RDN, optioned to Northgate Minerals Corporation, three target areas were tested with 2499 m of drilling in nine holes. Several precious-metal bearing intervals were intersected; however these are interpreted as veins and breccias that are unlikely to have economic significance. The most important result of the program was the discovery of native silver and tetrahedrite at a volcanic/sediment contact in an area (Blind Fault) that has not been previously explored. This discovery, along with discovery of a gold and silver mineralized boulder in a second area (Arctic grid) that has only been superficially explored is very encouraging. On the basis of these discoveries, Northgate has committed to funding the 2005 exploration program.  Tide  Serengeti Resources Inc. drilled 589 m in four reconnaissance holes on the Tide property testing the Arrow, South Pit, High Grade Pit and 36 zones. Gold mineralization was intersected at the 36 Zone, where hole TIDE04-03 averaged 1.00 g/t gold over 129.4 m, including a 39.6 m intersection averaging 1.92 g/t gold. This intersection is significant in that it tested a soil geochemical anomaly measuring 450 x 350 m of greater than 0.5-g/t gold that remains open in all directions. The hole was collared in the middle of the soil anomaly with better than 1.0 g/t gold values and this is reflected in the drill hole where mineralization was found throughout its entire length. Prospecting work undertaken in conjunction with the drilling resulted in the discovery of a high grade vein structure, coined the 52 Zone, in the northeast corner of the property. One of the samples on the southeast end of the structure returned 593 g/t (17 oz/t) gold and 14708 g/t (429 oz/t) silver from a 50 cm quartz-sulphide vein.  Kizmet (formerly Sutlahine)  In 2004, Rimfire conducted a regional reconnaissance prospecting, mapping and sampling program to evaluate properties staked to the northwest of the Thorn property. Geological mapping and age-dating identified a Cretaceous-aged belt of volcanic and associated intrusive rocks distinct in age with coincident strong gold-silver-arsenic geochemical signature. Barrick Gold Corporation staked additional surrounding claims early in January and signed a memorandum of understanding to jointly explore the Kizmet Project as a 50:50 joint venture.  Walker Lane Alliance  Walker Lane exploration alliance with Newmont Mining Corporation targets a defined project area in Nevadas Walker Lane Mineral Belt. The company has access to Newmont's geological, geochemical and geophysical databases for the project area, as well as dedicated technical assistance and the use of Newmont's "neural network" (pattern recognition) target map. Rimfire will be using the neural network technology to help identify specific targets for investigation and acquisition in 2005.


57


Management Discussion and Analysis RFM-2005   Financial Overview for Fiscal Year Ended January 31, 2005  Fundamental changes occurred in 2004 that affected the financial condition of the Company. The Company undertook concurrent brokered and non-brokered private placements early in the year raising net proceeds of $2.4 million. Two full-time staff members were hired, which allowed the Company to focus more resources on management of multiple exploration projects. Additional staff helped ensure more thorough data compilation and examination of results. The expanded scope of exploration undertaken during the year contributed to increased administrative costs to provide adequate support for project expenditures.  Option proceeds are significantly higher than the previous year, primarily due to completion of earn-in and therefore accelerated payments on the Thorn and Alaska properties. Subsequent funding of joint venture exploration on the Thorn property contributed to increased exploration expenditures in 2004. The Newmont Targeted Exploration Initiative and Kizmet projects also added significant exploration expenditures. Total administrative costs increased about 10% reflecting additional management costs, salary expense and marketing initiatives. Salaries did not increase as much as would be expected since time spent in the field was allocated directly to exploration expenditures of individual projects. Salary costs included in projects for the year totaled $80,285 (2003 - $57,002.)  The Companys working capital as of January 31, 2005 was $2,809,216, comprised primarily of term deposits and other forms of cash, compared to $1,071,452 at the end of the previous fiscal year.  1.3 Selected Annual Performance  The selected consolidated financial information set out below has been obtained from financial statements, which reflect the Companys operations in the mineral exploration business.  The following table summarizes information pertaining to operations of the Company for the last three fiscal years ended January 31, 2005. These results have been restated in accordance with the Companys use of the fair value method of accounting for stock option compensation that was adopted January 31, 2004:  200520042003Mineral property revenues$      414,338$      223,626$      158,224Net Income (Loss)(1,495,680)(901,405)(507,303)Per Share(0.09)(0.07)(0.04)Total assets3,153,0251,176,6331,119,457Long-Term Liabilities35,363NILNILCash dividends declaredNILNILNIL


58


Management Discussion and Analysis RFM-2005   The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada, which conform in all material respects with accounting principles generally accepted in the United States of America, except as described in Note 10 to the consolidated financial statements and which include the following significant policies:  · Marketable securities are recorded at cost and are written down to market value when declines in value are significant and permanent. · The Companys mineral property interests are composed of mineral properties owned by the Company and rights to ownership of mineral properties, which the Company can earn through cash or share payments, incurring exploration expenditures and combinations thereof. The Company accounts for its mineral property interests whereby all acquisition and exploration costs are charged to expense as incurred and all property sales and option proceeds received are credited to income. When the existence of a mineral reserve on a property has been established, future acquisition, exploration and development costs will be capitalized for that property. After commercial production on the property commences, the net capitalized costs will be charged to future operations using the unit of production method based on estimated recoverable reserves on the property. · When options to purchase shares are issued to employees or directors, the fair value of the options on the date of the grant is recognized as compensation expense, with a corresponding increase in contributed surplus, over the period during which the related options vest. When options to purchase shares are issued to non-employees in return for goods and services, the fair value of the options issued is recognized as an expense, with a corresponding increase in contributed surplus, in the period in which the goods or services are received or are expected to be received. The consideration received on the exercise of share options is credited to share capital. · The Company follows the liability method of accounting for income taxes. Using this method, income tax liabilities and assets are recognized for the estimated tax consequences attributable to differences between the amounts reported in the financial statements of the Company and their respective tax bases, using enacted income tax rates. The effect of a change in income tax rates on future tax liabilities and assets is recognized in income in the period in which the change occurs. A future income tax asset is recorded when the probability of the realization is more likely than not. · Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using historical rates. Revenue and expense items are translated at exchange rates prevailing at the time of the transaction. Foreign exchange gains and losses are included in the determination of income. · The basic loss per share is calculated on the basis of the weighted average number of common shares of the Company that were outstanding in each reporting period. The diluted loss per share, which is disclosed only if dilutive, includes the potential dilution from share purchase options, calculated using the treasury stock method, in the weighted average number of shares.


59


Management Discussion and Analysis RFM-2005   1.4 Results of Operations  For the year ended January 31, 2005, Rimfire incurred a net loss of $1,495,680 ($0.09 per share) compared to a net loss of $901,405 ($0.07 per share) in the previous year. Revenue improved by $80,777 as interest revenue increased from $24,078 to $69,715 due to increased cash balances and rising market interest rates. Both option proceeds (2004-$358,630, 2003-$191,792) and joint venture management revenue (2004-$55,708, 2003-$31,834) have contributed to improved revenue.  The major changes in general and administrative expenses are for management services, salaries and support. The changes in the contract for David Caulfields services as Chief Executive Officer account for most of the increase in management services while the addition of two full-time staff members and increased utilization of administrative support accounts for the increased salary and support costs.  Office expenses, which include computer services, membership dues, insurance, postage and printing, were significantly higher in 2004. Membership dues included issuing $10,000 in common shares to Mineral Deposit Research Unit in exchange for a five-year membership. Inclusion of this cost in current expenditures more than doubles the normal expenses for memberships (2004-$17,477, 2003-$6,740) Shareholder requests for annual report material tripled. This substantially increased the costs of producing and mailing the annual report and information packages. The cost of insurance increased from $6,400 to $14,450.  Investor services expenses increased for the second year in a row. Part of this increase is related to the need for a strong presence in certain sectors of the US markets. To meet this need, each year the company attended major trade shows in New Orleans, San Francisco, New York and Las Vegas. A strategic marketing program was introduced during the third quarter to increase market awareness of Rimfire. This has shifted the emphasis from trade show participation with accompanying travel and entertainment costs, as well as exhibitor fees, to a targeted marketing strategy which ensures that qualified investors are able to access information about the company. The company expects that the primary emphasis in future years will be the strategic marketing program. The overall costs of investor services will not decrease significantly relative to budget but it is expected that the strategic marketing will be more effective.  Exploration expenditures, excluding those by joint-venture partners, totaled $1,105,733 ($320,743), and property acquisition costs totaled $217,385 ($98,200). These costs were offset by joint venture reimbursements totaling $145,641. The British Columbia Mineral Exploration Tax Credit Program will reimburse the Company for 20% of eligible expenditures. For the fiscal year ended January 31, 2005 this should amount to $122,227 ($62,131.) Option proceeds, consisting of both cash and share payments totaled $358,630 ($191,792).


60


Management Discussion and Analysis RFM-2005   Exploration expenditures included costs of aircraft and helicopter ($261,871), camp and support activities ($58,846), chemical analysis ($52,832), drafting ($13,148), drilling ($87,046), equipment rentals ($16,228), freight ($12,341), materials and supplies ($30,249), maps and reproductions ($17,341) professional geological fees($354,662), program management ($97,443), recording and filing fees ($67,720) and travel ($36,006). Acquisition costs include the costs incurred to stake the Alaska and Kizmet properties, option payments made for the Thorn and Williams Gold properties, and the preparation of legal agreements concerning the Alaska, Fer and Tide Properties. Option proceeds relate to cash and share payments made by partners on the RDN, Thorn, Tide and Alaska properties.  The Company may have an obligation to complete reclamation work on mineral property interests where exploration activities have occurred in the past under the Companys guidance. Reclamation work is normally completed at the end of each seasons exploration program; however, for on-going projects where it is anticipated that future programs will require the same infrastructure, some remedial work is not undertaken until the completion of all exploration programs. An estimate has been made of the cost for a third party to undertake this reclamation obligation for all active projects and the present value of this cost has been included in mineral property expenses. When the work is completed, the expense will be charged against this liability account rather than to the project expenses.  The Corporation is in the exploration stage and its properties are presently without a known body of commercial ore. Its principal mineral properties are the following:  RDN  The RDN Property is located in the Liard Mining Division of British Columbia, approximately 120 kilometres northwest of Stewart, British Columbia. This property, covering approximately 7,800 hectares, is currently optioned to Northgate Minerals Corporation. The RDN property has had a fairly protracted history of exploration; beginning in earnest in the late 1980s and spurred on in the 1990s by the discovery of gold-silver-rich massive sulphide in similar rocks at Eskay Creek, 50 kilometres to the south. The RDN property is largely underlain by Jurassic Hazelton Group stratigraphy similar in age, lithology and geochemistry to the Eskay Creek volcanogenic massive sulphide (VMS) deposit.  Three target areas were tested with 2499 m of drilling in nine holes. Several precious-metal bearing intervals were intersected; however these are interpreted as veins and breccias that are unlikely to have economic significance. The most important result of the program was the discovery of native silver and tetrahedrite at a volcanic/sediment contact in an area (Blind Fault) that has not been previously explored. This discovery, along with discovery of a gold and silver mineralized boulder in a second area (Arctic grid) that has only been superficially explored, is very encouraging. On the basis of these discoveries, Northgate has committed to funding the 2005 exploration program.  The work program was conducted by Equity Engineering Ltd. under the direction of Murray Jones, P.Geo. ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock, soil and silt samples. Whole rock analysis was carried out for selected samples. A technical report covering previous work programs was filed on SEDAR on February 23, 2004.


61


Management Discussion and Analysis RFM-2005   Expenditures by the Company during the fiscal year ended January 31, 2005 were:  Acquisition costs$               -Exploration costsCamp and support317Drafting263Maps and reproduction128Professional fees4,612Travel1055,425Exploration tax credits(552)Reclamation obligation17,102Joint venture payments-21,975Option proceeds(25,000)Cumulative Net ExpendituresBeginning of Year803,701End of Year$ 800,676  Thorn  The Thorn Property is located in the Atlin Mining Division of British Columbia, approximately 120 kilometres northwest of Telegraph Creek. This property, covering 16,000 hectares, is a joint venture with CANGOLD Limited who has acquired a 51% interest in the property. The Thorn high-sulphidation vein system is hosted by feldspar-quartz-biotite-phyric diorite of the Late Cretaceous (ca. 91 Ma) Thorn Stock, which intrudes Upper Triassic Stuhini Group volcanic and sedimentary rocks. These high-sulphidation silver-gold-copper-bearing veins represent the prime exploration targets on the Thorn property. Lesser focus should be placed on the Oban Zone, although potential for additional breccia pipes should be considered.  During the field season of 2004, an IP geophysical survey was completed which demonstrated a significant correlation between the IP geophysics and known silver-gold mineralization but also identified several new targets in areas of no outcrop. A subsequent drill program was completed consisting of 1810 m in 12 holes targeting the Oban Breccia Zone, massive sulphide veins in the Camp Creek Structural Corridor with five holes targeting IP geophysical anomalies. Prospecting prior to the commencement of the drill program resulted in the discovery of a quartz-barite boulder assaying 265 g/t (7.7 oz/t) gold 2 km north of the Camp Creek Structural Corridor in an area of the property that has not seen previous work. Based on these encouraging results, a program of expanded IP geophysics, surface sampling and follow up drilling will be undertaken in 2005.  The drilling and sampling programs were conducted under the direction of Robert Brown, P.Geo. ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock, soil and silt samples. A technical report was filed on SEDAR on May 25th 2005.  Expenditures by the Company during the fiscal year ended January 31, 2005 were:  Acquisition costs$150,000Exploration costsAircraft and helicopter131,710Camp and support25,509Chemical analysis15,072Drafting899Drilling & trenching87,046Equipment rentals7,256Freight6,156Materials and supplies6,768Maps and reproduction566Professional fees102,655Project management52,832Recording and filing fees7,458Travel6,537450,464Exploration tax credits(87,818)Reclamation obligation11,082Joint venture payments-373,728Option proceeds(182,000)Cumulative Net ExpendituresBeginning of Year323,551End of Year$ 665,276


62


Management Discussion and Analysis RFM-2005   Tide  The Tide Property is located in the Skeena Mining Division of British Columbia, approximately 36 kilometres north of Stewart, British Columbia. This property, covering 2,960 hectares, is currently optioned to Serengeti Resources Inc. A second claim group, called the Wave, which covers 1,180 hectares, was jointly staked by the Company and Serengeti Resources. The Tide property lies in the heart of the Early Jurassic Stewart-Unuk-Iskut metallogenic belt, which hosts a number of silver-gold+copper vein and porphyry deposits associated with 193-198 Ma porphyritic intrusives,  Four reconnaissance holes, totaling 589 m were drilled testing the Arrow, South Pit, High Grade Pit and 36 zones. Gold mineralization was intersected at the 36 Zone, where hole TIDE04-03 averaged 1. g/t gold over 129.4 m, including a 39.6 m intersection averaging 1.92 g/t gold. This intersection is significant in that it tested a soil geochemical anomaly measuring 450 x 350 m of greater than 0.5 g/t gold that remains open in all directions. The hole was collared in the middle of the soil anomaly with better than 1.0 g/t gold values and this is reflected in the drill hole where mineralization was found throughout its entire length. Prospecting work undertaken in conjunction with the drilling resulted in the discovery of a high grade vein structure, coined the 52 Zone, in the northeast corner of the property.  The drilling and sampling programs were conducted under the direction of Henry Awmack, P.Eng. ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report was filed on SEDAR on December 23, 2004.  Expenditures by the Company during the fiscal year ended January 31, 2005 were:  Acquisition costs$     1,842Exploration costsCamp and support549Equipment rentals107Materials and supplies62Maps and reproduction29Professional fees15,780Project management503Recording and filing fees400Travel24717,677Exploration tax credits(2,751)Reclamation obligation3,179Joint venture payments(1,427)16,678Option proceeds(56,500)Cumulative Net ExpendituresBeginning of Year(21,998)End of Year$ (59,978)  Williams Gold  The Williams Gold (formerly Bill) Property is located in the Liard Mining Division of British Columbia, approximately 150 kilometres southeast of Dease Lake, British Columbia and 330 kilometres north of Smithers. This property, covering 5,160 hectares, was optioned to Stikine Gold Corporation who relinquished the option April 30, 2004. The Williams Gold property covers two distinct gold-bearing prospects in north-central British Columbia. The T-Bill prospect is a 3 km2 area of carbonate-sericite alteration, highly anomalous gold-arsenic soil geochemistry and gold-bearing quartz-sulphide veining. The Park prospect, located 3 kilometres to the north, is a poorly explained 0.5 km2 gold-copper soil geochemical anomaly centred on a prominent gossan.  No field work was undertaken during the summer of 2004, however some of the core was re-examined with the relevant field notes and data to determine an appropriate exploration strategy to advance the property. A technical report was previously filed on SEDAR on July 30, 2003. The Qualified Person for this property is Mark Baknes, P.Geo.  Expenditures by the Company during the fiscal year ended January 31, 2005 were:  Acquisition costs$     28,750Exploration costsAircraft and helicopter1,609Camp and support36Maps and reproduction16Professional fees4,534Recording and filing fees606,255Exploration tax credits(350)Reclamation obligation4,000Joint venture payments-9,905Option proceeds-Cumulative Net ExpendituresBeginning of Year152,300End of Year$ 190,955  Kizmet Project  The Kizmet Project, formerly called the Sutlahine, is a joint venture with Barrick Gold Corporation. The Company contributed claims totalling 27,939 hectares while Barrick contributed claims covering an area of 67,865 hectares. Rimfire staked the SUTL and LJ claims to the northwest of the Thorn property, based on favourable regional geochemical stream sediment survey data and similar geology to that of the Thorn property  A regional sampling, prospecting and mapping program was conducted during the late summer of 2004 to fulfill the assessment work requirement to keep the original claims in good standing until December 2006. A technical report has not been filed for this work which is preliminary in nature. Geological highlights include discovery of several precious metal rich base metal veins, a zone of precious metal rich silicified sedimentary rock, iron-zinc skarn and sedimentary hosted gold-bearing disseminated sulphide.  Expenditures by the Company during the fiscal year ended January 31, 2005 were:  Acquisition costs$  5,242Exploration costsAircraft and helicopter38,199Camp and support11,441Chemical analysis13,715Drafting3,150Equipment rentals861Freight1,639Materials and supplies3,182Maps and reproduction2,859Professional fees61,936Project management15,738Recording and filing fees20,374Travel3,423176,517Exploration tax credits(30,243)Reclamation obligation-Joint venture payments-146,274Option proceeds-Cumulative Net ExpendituresBeginning of Year33,805End of Year$ 185,321  Alaska Properties  The Alaska Properties, located in the Goodpaster Mining District, Alaska, 65 kilometres northeast of Delta Junction, consist of seven claim groups totaling 50,120 acres. The ER-Ogo-Fire and Eagle claim groups are currently optioned to AngloGold (U.S.A) Exploration Inc. The Beverly, Bou, Boundary, Scot and S.E. Surf groups are wholly owned by Rimfire Alaska, Ltd. Two distinct, but related, target types have emerged on these properties:  (1) high-grade, structurally-related gold-quartz veins, and; (2) lower-grade bulk tonnage sheeted vein systems. Each of the seven claim groups has demonstrated multi-element silt and soil geochemical anomalies and/or gold-bearing rock samples, providing abundant justification to carry out extensive exploration on each of the properties.  AngloGold completed a geophysical survey, soil geochemical sampling and three holes totaling 997 m on the ER project. Drilling further defined a northwest trending vein structure. Two phases of work were completed on the Eagle property; soil sampling to expand the previous focused soil grid and a drill program of nine holes totaling 2778 m. Mineralization intersected during drilling consists of quartz-sulphide vein stockworks containing gold hosted in a granitic stock. A deep penetrating EM survey was carried out late in the season which defined a strong northeast fault zone coincident with anomalous geochemistry.  The Beverly Property program consisted of soil sampling along the anomalous portions of lines sampled in 1999 and 2000 to verify previously defined anomalies and very little sampling was done beyond the areas of previous work. The Company did not complete any work on the other properties due to forest fires in the area. A technical report for the Alaska properties was previously filed on SEDAR on February 23, 2004. The Qualified Person for this property is Mark Baknes, P.Geo.  Expenditures by the Company during the fiscal year ended January 31, 2005 (all amounts in Canadian Dollars) were:


63


Management Discussion and Analysis RFM-2005    Acquisition costs$ 24,152Exploration costsCamp and support723Drafting1,759Equipment rentals701Materials and supplies240Maps and reproduction662Professional fees14,881Project management797Recording and filing fees34,243Travel2,22156,227Exploration tax credits-Reclamation obligation-Joint venture payments-56,227Option proceeds(95,130)Cumulative Net ExpendituresBeginning of Year38,372End of Year$ 23,621  The Companys other mineral property interests are:  • The Adam Property, covering 1,822 hectares, is located in the Skeena Mining Division of British Columbia, approximately 70 kilometres northwest of Stewart. The Company owns 100% of these claims.  • The Fer Property, consisting of 118 claims, is located in the Watson Lake Mining District of Yukon Territory, approximately 20 kilometres west of Tungsten in the Northwest Territories and approximately 200 kilometres north of Watson Lake, Yukon Territory. The Company owns a 51% interest in these claims.  • The Simpson and Simpson Extension Properties, consisting of 42 claims, are located in the Watson Lake Mining District of Yukon Territory, approximately 105 km northwest of Watson Lake, Yukon Territory. The Company owns 100% of these claims.


64


Management Discussion and Analysis RFM-2005   • The Yukon Targeted Exploration Initiative is a joint venture with Newmont Canada Limited focused on grass-roots exploration within a defined area. Costs incurred during 2004 were shared equally between the two companies. No claims have been staked within this defined area.  • Walker Lane exploration alliance with Newmont Mining Corporation targets a defined project area in Nevadas Walker Lane Mineral Belt. No claims have been staked within this defined area.  The following table shows the detailed expenditures for the Companys other properties during the fiscal year. AdamFerSimpsonYukon TargetedOtherAcquisition costs$       -$  3,440$       -$         -$     3,959Exploration costsAircraft and helicopter---90,353-Camp and support-646816,9393,200Chemical analysis---22,9091,136Drafting--1,5604,2131,304Equipment rentals---6,600703Freight---4,336210Materials and supplies---19,400597Maps and reproduction--349,8203,227Professional fees1201441,980110,61037,410Project management--23826,679656Recording and filing fees-4,410775--Travel---8,85414,6191204,6184,655320,71363,062Exploration tax credits----(513)Reclamation obligation-----Joint venture payments---(144,213)-1204,6184,655176,50062,549Option proceeds-----Cumulative Net ExpendituresBeginning of Year60,24392,74367,300-125,412Property write-down or abandonment(102,659)End of Year$60,363$100,802$79,155$176,500$     89,261  The notes accompanying the consolidated financial statements contain additional details regarding option or joint venture agreements for each property.  At present, the Corporation does not intend to undertake any exploration at its own expense on the RDN, Tide, Adam, or Yukon Properties for the 2005 fiscal year. Option agreements in place require other corporations to complete exploration programs on some of these properties.  In the event that joint venture partners are not obtained for the remaining properties, the Corporation may pay the required carrying costs from working capital or allow these claims to be returned to the vendor or be forfeited to the State, Province or Territory as the case may be.  CANGOLD has completed their work commitment on the Thorn property and made the final cash and share payments. CANGOLD has become operator and the Company will have the option to contribute 49% of the expenditures for the project or face dilution of the Companys interest at the rate of 1% reduction for each $50,000 of the proportionate share of the program in which the company does not participate.  1.5 Summary of Quarterly Results  The following table summarizes information regarding the Company's operations on a quarterly basis for the last two fiscal years. These results have been restated in accordance with the Companys use of the fair value method of accounting for stock option compensation that was adopted January 31, 2004:  Quarter
EndedMineral Property RevenueIncome
(loss)Income (loss)
per shareJanuary 31, 2005$    89,691$    (680,298)$    (0.04)October 31, 2004184,254(307,839)(0.02)July 31, 200454,516(299,310)(0.02)April 30, 200485,877(208,233)(0.01)January 31, 200466,120(394,161)(0.03)October 31, 200353,614(130,327)(0.01)July 31, 200336,774(228,793)(0.02)April 30, 200367,118(148,126)(0.01) Expenditures generally exhibit a seasonal variation being lower in the first and last quarters and higher during the second and third quarters of each year. This variation is due to the climate where exploration is taking place, which restricts exploration to the summer months. The reported figures as shown above have some of this seasonality masked by share-based compensation awards.  Reported loss was higher than normal in the first quarter of 2004 because of staking that was undertaken in both Alaska and northern BC. Normal field work would wait for more clement weather but staking can occur while snow covers the ground.  1.6 Liquidity  The Companys working capital as of January 31, 2005 was $2,809,216, comprised primarily of term deposits and other forms of cash, compared to $1,071,452 at the previous fiscal year end. The Company expects that current working capital will be sufficient for the 2005 and 2006 fiscal years.  The Companys issued and outstanding shares stood at 17,855,220 at January 31, 2005. The placements completed during the first quarter and exercise of share purchase warrants represents most of the increase from the 13,615,621 common shares that were issued and outstanding at the previous fiscal year-end. During the year, 465,000 employee stock options were granted and 100,000 options were exercised. 1,712,121 share purchase warrants exercisable before September 2005 were issued as part of the placements.1,180,000 previously granted director and employee options exercisable before December 2008 remain outstanding. If all remaining warrants and options are exercised, a maximum of $2,914,772 will be added to Rimfires treasury, and shares outstanding will total 21,072,341.  At the annual general meeting held June 18, 2004, the shareholders approved an increase in authorized capital to allow an unlimited number of common shares to be issued.  The Companys financial instruments are all fully cashable at any time so there are no restrictions on availability of funds. There are no long-term liabilities. The Companys current obligations include rent on office premises which requires 6-month written notice. The other current obligations are statutory withholding and payroll taxes.  1.7 Capital Resources  The companys primary capital assets are mineral property interests. The company expenses all costs related to mineral properties so they do not appear on the Companys balance sheet as an asset.  None of the property agreements are binding on the Company or on the Companys option partners. If management chooses to continue with exploration the following schedule of payments will be required in the next year:


65


Management Discussion and Analysis RFM-2005    PropertyAmountDate of paymentRDNNilThorn49% of field work - $ 339,750
49% of Assessment & filing - $3,230June 2005
December 15, 2005Williams GoldAssessment & filing - $19,580December 15, 2005KizmetNilTideNilAdamNilFerAssessment & filing - $5,360July 1, 2005Alaska propertiesAnnual labour - $10,150 USD
(approximately $13,200 CAD)
Claim rental - $24,025 USD (approximately $31,250 CAD)
Assessment & filing - $873 USD
(approximately $1,135 CAD)August 31, 2005
November 30, 2005
November 30, 2005SimpsonAssessment & filing - $3,570September 29, 2005Walker LaneProject assessment and exploration
totalling $305,000 (CAD)January 2006  All of these payments can be made from current assets without any requirement to pursue additional financing.  1.8 Off-Balance Sheet Arrangements  The Company does not utilize off-balance sheet arrangements.  1.9 Transactions with Related Parties  The Companys mineral property evaluation and exploration projects are managed by Equity Engineering Ltd. (Equity), a company indirectly owned and operated by officers and directors of the Company. Balances payable to Equity for fees and reimbursement of costs incurred on behalf of the Company have been separately disclosed in the financial statements as Payable to Related Party. Fees charged to the Company by Equity are on the same basis as those charged by Equity to unrelated third parties.


66


Management Discussion and Analysis RFM-2005   During the fiscal year ended January 31, 2005, the company paid Equity $431,996 (2003 - $ 260,926) for geological consulting services, excluding costs paid by joint venture partners, and $203,098 (2003 - $144,087) for providing general corporate and administrative services. General corporate and administrative services provided by Equity during the period consisted of the following: $14,457  insurance (2003 - $6,396) $3,711 - investor services (2003 - $2,200); $96,462- management services (2003 - $66,264); $12,026  office (2003 - $5,702); $39,172  rent (2003 - $36,582); and $37,270 - support services (2003 - $26,943). The increases in these amounts reflect additional office space and services utilized by the increase in Rimfire staff.  It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and Equity will be remunerated for such services at standard commercial rates.  1.10 Fourth Quarter  The Company has an incentive stock option plan for directors and employees. During the fourth quarter, the directors authorized the granting of most of the remaining stock options available under the plan. Since the company has adopted a policy of accounting for share-based compensation at fair market value, this resulted in a significant increase in expense for the fourth quarter. Addition of a second full-time staff member also increased the costs for salaries and support.  Exploration expenses during the fourth quarter were higher than in the previous year because field work, specifically drilling, was carried out in early to mid-November. The second factor increasing exploration expenditures was the completion of earn-in by Cangold and therefore the Companys requirement to fund 49% of the drilling program and associated reports.  Prior to the fourth quarter, reclamation obligations for each property with substantial exploration programs under the direction of the Company were considered to be less than or equal to the project reclamation bonds held in trust by the Company. A change of estimate was used to accrue formal reclamation obligations. An estimate has been made of the cost for a third party to undertake this reclamation obligation for all active projects. A reclamation obligation expense has been calculated as the present value of the cost if it were to be undertaken during the year of tenure expiry or in 2008, whichever comes first. This change resulted in an increase in mineral property costs of $35,363 for the fourth quarter. When the reclamation activities are completed, this liability will be reduced by the actual costs incurred with any variance reported as reclamation obligation expense in that period.  1.11 Proposed Transactions  There are no proposed transactions which will materially affect the Companys performance. The Company has a business plan that includes identifying exploration projects, conducting initial exploration then optioning the project to a partner. Acquisitions and dispositions are an essential and on-going part of this plan.


67


Management Discussion and Analysis RFM-2005   1.12 Critical Accounting Estimates  Not applicable  1.13 Changes in Accounting Policies including Initial Adoption  The Company adopted the new accounting recommendations of the Canadian Institute of Chartered Accountants on accounting for share-based compensation of employees and non-employees as of January 31, 2004. These recommendations established the standards described in Note 2 to the consolidated financial statements for the measurement, recognition and disclosure of compensation and other costs arising from the issue of share purchase options and other share-based payments to employees and non-employees. The Company accounted for these recommendations on the retroactive basis. The alternatives for adoption of this policy included adopting the new policy on a prospective basis accompanied by pro-forma disclosure of the effect of the policy on statements of loss and deficit and the balance sheet if the policy had been adopted retroactively. It was decided that adopting the policy on a retroactive basis would be easier to understand than adopting it on a prospective basis with the pro-forma disclosure.  1.14 Financial Instruments and Other Instruments  The company does not employ a hedging strategy or a foreign exchange protection strategy. The majority of the Companys income and expenses are denominated in Canadian dollars. The income which is received in U.S. Dollars is preserved in a U.S. Dollar account for use in paying U.S. Dollar denominated expenses.  1.15 Other Requirements  The Company has filed an alternative form of Annual Information Form on SEDAR at www.sedar.com. The Company also files technical reports on all material properties, press releases and material change reports on SEDAR. The company is a foreign private issuer as defined by the Securities and Exchange Commission in the United States. As such, the Company files an annual report on Form 20-F and interim reports and other filings on Form 6-K. These reports are available on EDGAR at www.sec.gov/edgar.shtml. Additional information about the company can be accessed at the companys website (www.rimfireminerals.com.)  Additional Disclosure for Venture Issuers without Significant Revenue  Please refer to the Statement of Loss and Deficit and Note 5 in the financial statements regarding the components of general and administrative and exploration costs for the Companys mineral property interests.


68


Management Discussion and Analysis RFM-2005   Disclosure of Outstanding Share Data  Please refer to Note 6 of the financial statements for details of share issues prior to January 31, 2005. As of April 30, 2005 there were 17,859,720 common shares issued and outstanding. In addition, there are 209,167 brokers warrants and 1,488,454 share purchase warrants which can be exercised before September 2005. There are 1,552,500 exerciseable stock options with expiry dates ranging from March 2006 to December 2009.


69