OMB APPROVALOMB Number: 3235-0288
Expires: January 31, 2012
Estimated average burden hours per response.2611.00  UN1TED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  Form 20-F (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, 2009  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)  -1-  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  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. 25,707,251  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   -2-  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  (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      Currency: All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated.    -3-   Glossary of Termsanastomosinga network of branching and rejoining fault surfaces or surface traces, braidedandesitea dark-coloured, fine-grained extrusive rockantimonya chemical element, chemical symbol Sbargillitea compact rock derived from mudstonearsenica chemical element, chemical symbol Asarsenopyritea mineral composed of iron, arsenic and sulfur (FeAsS)Aschemical symbol for arsenicAuchemical symbol for goldBachemical symbol for bariumbaritea mineral composed of barium, sulfur and oxygen (BaSO4)basalta fine-grained extrusive rock with a lower silica content than andesiteBichemical symbol for bismuthbismutha chemical element, chemical symbol Bibismuthinitea mineral composed of bismuth and sulphur (Bi2S3)brecciarock composed of angular broken rock fragments held together by a mineral cement or in a fine-grained matrixcarbonate-muscovitea mixture of calcium, iron and magnesium carbonates and muscovite mica in altered rockschalcedonya cryptocrystalline variety of quartz with lower density and indices of refraction than ordinary quartzchalcopyritea mineral composed of copper, iron and sulfur (CuFeS2)cherta hard, dense or compact sedimentary rock consisting dominantly of interlocking quartz crystals or amorphous silicaclasticcomposed of sedimentary grainsCretaceousfinal period of the Mesozoic era spanning 135 to 65 million years before the presentCuchemical symbol for copperdacitea fine-grained extrusive rock with more potassium and sodium than andesiteenargitea grayish-black mineral, composed of copper, arsenic and sulfur (Cu3AsS4)  -4-   Glossary of TermsEocenethe second epoch of the Tertiary period spanning 58 and 37 million years before presentfeldspara major rock forming silicate mineralfelsicapplied to an igneous rock having abundant light-coloured minerals (quartz, feldspars, muscovite)gossanan iron-bearing weathered product overlying a sulphide depositgranitean igneous rock consisting of quartz and orthoclase with hornblende or biotite as mafic constituentsgranodioritea plutonic igneous rock consisting of quartz, calcic feldspar, and orthoclase with biotite, hornblende or pyroxene as mafic constituentshectare (ha)metric unit of area equal to 10,000 square meters (2.471 acres)hornblendeThe commonest mineral of the amphibole group, usually black, dark green or brownhydrothermala term applied to heated water or fluidInduced Polarization (IP)A method of ground geophysical survey that measures the voltage decay of electrical charge in the Earth following the cessation of an applied current pulse to the Earth.Jurassicsecond period of the Mesozoic era spanning 190 to 135 million years before the presentmaficapplied to an igneous rock having dark-colored minerals (ferromagnesian) containing iron and/or magnesiummarcasitelight yellow or grayish mineral composed of iron and sulfur (FeS2) resembling pyritemesothermalconditions of ore deposition of intermediate temperatures and depthsMesozoicera of geologic time spanning 245 to 66 million years before the presentmineralsa homogeneous naturally occurring chemical substancenet smelter returnthe proceeds received from a smelter or refinery after the deduction of processing, shipping costs and related costsorea mineral or aggregate of minerals which can be mined at a profitmonzoniteplutonic rocks intermediate between syenite and diorite containing approximately equal amounts of alkali feldspar and plagioclaseorthogneissa metamorphic rock derived from gneissPermianthe last period of the Paleozoic era from 286 to 245 million years ago  -5-   Glossary of TermsPIMAPortable infrared mineral analyzer (spectrometer) that can be used for qualitative identification of minerals in the fieldplagioclaseone of a group of triclinic feldsparsplutonic rocksigneous rocks formed below the earths surfaceporphyryan igneous rock of any composition that contains conspicuous crystals in a fine-grained groundmassppmabbreviation for units of measure in parts per millionPrecambrianall geologic time and its corresponding rocks before the beginning of the Paleozoic era ( 570 million years before present)Proterozoicthe more recent of the two great divisions of the Precambrianpyritea mineral composed of iron and sulfur (FeS2)pyroclasticformed by volcanic explosion or aerial expulsion from a volcanic ventpyrrhotitea mineral composed of iron and sulfur (FeS)rhyoliteextrusive igneous rocks with high potassium and silica contentsericitizationa hydrothermal or metamorphic process involving the introduction of, replacement by, or alteration to sericitic muscovitesilicificationthe introduction of or replacement by silicatelluriuma silvery-white to brownishblack mineral, the native semi-metallic element Temineral tenure numbernumber assigned by Provincial, Territorial or State authorities to mineral claimstetrahedritea steel-gray to iron-black isometric mineral composed of copper, antimony and sulfur (Cu112Sb4S13)Triassicthe first period of the Mesozoic era thought to have covered a span of time between 245 and 208 million years before the presenttuffa general term for all consolidated pyroclastic rockstungstena metallic element with the chemical symbol WUTEMUniversity of Toronto Electromagnetic System used to measure variances in ground conductivity which may indicate the presence of mineralized materialVHMSvolcanic-hosted massive sulphide  a style of mineral deposit thought to have been emplaced on ancient seafloorVLF-EMvery low frequency electromagnetic survey used to identify variances in ground conductivity which may indicate the presence of mineralized material  -6-  FORWARD-LOOKING STATEMENTS   This Annual 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 the Corporations expectations contained in the forward looking statements as a result of various factors, many of which are beyond the control of the Corporation. These factors include, but are not limited to, the need for additional financing to fully execute the Corporation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 the Corporations properties, changes in Canadian or U.S. tax or other laws or regulations, and material changes in capital expenditures.    -7-   TABLE OF CONTENTSPART IPageITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS10ITEM 2OFFER STATISTICS AND EXPECTED TIMETABLE10ITEM 3KEY INFORMATION10ITEM 4INFORMATION ON THE CORPORATION19ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS98ITEM 6DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES107ITEM 7MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS119ITEM 8FINANCIAL INFORMATION121ITEM 9THE OFFER AND LISTING121ITEM 10ADDITIONAL INFORMATION123ITEM 11QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK134ITEM 12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES138   -8-   TABLE OF CONTENTSPART IIPageITEM 13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES138ITEM 14MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS138ITEM 15CONTROLS AND PROCEDURES138ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT140ITEM 16BCODE OF ETHICS140ITEM 16CPRINCIPAL ACCOUNTANT FEES AND SERVICES140ITEM 16DEXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES141ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS141ITEM 16FCHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT141ITEM 16GCORPORATE GOVERNANCE142  PART IIIITEM 17FINANCIAL STATEMENTS142ITEM 18FINANCIAL STATEMENTS142ITEM 19EXHIBITS143   -9-  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 Rimfire Minerals Corporations (hereinafter the Corporation) 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 daily exchange rate for each month during the previous six months,  in each case based on the closing exchange rate for U.S. dollars as published on the Bank of Canada website (http://www.bankofcanada.ca/en/rates/exchange-look.html).  Fiscal Year ended 
January 31st20092008200720062005Average Rate During Period$0.9253$0.9536$0.8823$0.8338$ 0.7776  April
 2009March 2009February 2009January 2009December 2008November 2008High Rate$ 0.8382$ 0.8180$    0.8221$   0.8458$    0.8356$    0.8687Low Rate$ 0.7930$ 0.8221$    0.7860$    0.7889$    0.7824$    0.7731  On April 30, 2009, the closing rate as published on the Bank of Canada website was $0.8382 US = $1.00 CDN.   -10-  SELECTED FINANCIAL DATA  The selected consolidated financial information set out below has been obtained from financial statements which reflect the Corporation's operations in the mineral exploration business.  The following table summarizes information pertaining to operations of the Corporation for the last five fiscal years.  Year
Ended
2009Year
Ended
2008
(restated)Year
Ended
2007
(restated)Year
Ended
2006Year
Ended
2005Mineral Property Revenue$   249,587$    341,203$    233,276$    199,777$    414,338Loss from Operations(3,315,990)(4,329,386)(3,091,183)(2,025,514)(1,601,214)Net Loss(2,981,658)(3,270,712)(2,700,977)(1,823,606)(1,495,680)Per Share(0.12)(0.13)(0.13)(0.10)(0.09)Current Assets6,191,5779,082,0865,214,1533,005,2243,064,564Mineral Property InterestsNILNILNILNILNILOther Assets272,669202,290144,43590,26488,461Total Assets6,464,2469,284,3765,358,5883,095,4883,153,025Current Liabilities150,241218,075845,43099,579219,985Long-Term Liabilities46,16753,30868,78235,36335,363Shareholders Equity6,267,8389,012,9934,444,3762,960,5462,897,677Shares Outstanding
(number of shares)25,707,25125,607,25121,751,53919,999,53917,855,220  The Corporations financial statements have been prepared in accordance with accounting principles generally accepted in Canada. Except as disclosed in Note 12 of the financial statements, the financial statements conform in all material respects with U.S. GAAP.  The Corporation adopted the method of accounting for unrecognized prior years tax loss carry forwards described in Emerging Issues Committee Abstract 172 (EIC-172), which was issued by the Canadian Institute of Chartered Accountants (CICA) in August 2008.  EIC-172 requires the tax benefit from the recognition of previously unrecognized tax loss carry forwards, which arise from the recording of unrealized gains on available-for-sale financial assets in other comprehensive income, to be recognized in operations. The transition provisions for EIC-172 require the accounting policy be applied retrospectively, with restatement of prior periods. Accordingly, the Corporation has included $56,910 (2008 - $85,635, 2007 - $14,115) in future income tax recoveries on the statement of operations from previously unrecognized tax loss carry forwards associated with unrealized gains on available-for-sale financial assets.    -11-  The Corporation adopted the accounting recommendations of the CICA for the recognition, measurement and disclosure of financial instruments, hedges and comprehensive income effective for the fiscal year ended January 31, 2007. This required that all non-derivative financial assets be measured at fair value with changes in fair value of available-for-sale marketable securities disclosed in other comprehensive income. Since that was the first year in which this policy has been applied, the opening balance of accumulated other comprehensive income includes the difference between cost and fair value for marketable securities of $94,098 at the end of the previous fiscal year. The transition provisions of these recommendations did not require restatement of previous financial statements. Current unrealized gains or losses for available-for-sale financial assets are recognized in other comprehensive income. When these securities are sold and gains or losses are realized, these gains or losses will be reclassified from other comprehensive income and reported in the Consolidated Statements of Operations.  On February 1, 2008, the Company adopted three new accounting standards described in Section 1535 Capital Disclosures, Section 3862 Financial Instruments  Disclosures and Section 3863 Financial Instruments  Presentation of the CICA Handbook. The requirements of these new standards are:  Capital Disclosures  Section 1535 requires the disclosure of an entitys objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital, whether the entity has complied with any external capital requirements and, if it has not complied, the consequences of such non-compliance.  As a result of the adoption of this standard, additional disclosure on the Companys capital management has been included in Note 10 to the financial statements.  Financial Instruments - Disclosures and Financial Instruments  Presentation  Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments - Disclosure and Presentation, revising its disclosure requirements and carrying forward its presentation requirements. These new sections place increased emphasis on disclosure about the nature and extent of risks arising from financial instruments and how the entity manages those risks.  Section 3862 specifies disclosure which enable users to evaluate the significance of financial instruments for the entitys financial position and performance, the nature and extent of and exposure to risks arising from financial instruments and how the entity manages those risks.  As a result of the adoption of this standard, additional disclosure on these risks has been included in Note 11 to the financial statements.  Section 3863 establishes standards for the presentation and classification of financial instruments and non-financial derivatives. The adoption of this standard did not have any impact on the classification or presentation of the Companys financial instruments.   -12-  Future Accounting Changes  Canada's Accounting Standards Board ratified a strategic plan in 2006 that will result in Canadian GAAP, as used by the Company, evolving and being converged with International Financial Reporting Standards (IFRS) over a transitional period to be completed by 2011. The International Accounting Standards Board also has projects currently under way that should result in new pronouncements which will be included in the convergence process. The Company is conducting a detailed assessment of the requirements of IFRS, with the intention of identifying differences, if any, in accounting policies, selecting the policies which are appropriate for the Company, identifying the appropriate disclosure in financial statements prepared under IFRS and developing an implementation plan to complete the transition to IFRS by February 1, 2011.  The Financial Accounting Standards Board has issued FASB Interpretation Number 48 (FIN48), Accounting for Uncertainty in Income Taxes. Under FIN 48, the Corporation cannot recognize the tax benefit from an uncertain tax position in its financial statements unless the Corporation concludes that it is more likely than not the benefit will be sustained on audit, on the resolution of any related appeals, or in litigation. This judgment is based solely on an analysis of the applicable legal authorities. It may not take into account (i) the probability that the Corporation will not face a tax audit, (ii) if audited, the probability a tax auditor will not challenge the benefit, or (iii) the probability that issues can be traded.  If this more likely than not standard is met, then the tax benefit the Corporation recognizes in its financial statements is the largest amount of the tax benefit that, in the Corporations judgment, is greater than 50% likely of being realized in a settlement with the taxing authorities. This standard was adopted for the fiscal year ending January 31, 2008. FIN 48 requires the Corporation to review all of its prior tax positions that are uncertain as of the first day of the year (February 1, 2007) and apply FIN 48 to each of them. To the extent FIN 48 causes a different accounting treatment, there will be a corresponding adjustment to the Corporations retained earnings, rather than an adjustment to the Corporations current income tax expense and net income. The Corporation has determined that all prior tax positions are more likely than not to be sustained upon audit. The Corporation has unrealized net losses from the current and prior years. It is likely that these losses will not be utilized; therefore the tax benefits associated with sale of flow-through shares have been shown as an income tax recovery. The Corporation has determined that this position is more likely than not to be sustained upon audit.  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 Corporation 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  -13-  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 significant economic slow-down late in 2008 resulted in an impairment loss of $527,266 to be recorded against previously capitalized mineral property acquisition costs for the purposes of US GAAP. Those properties for which the Corporation has no current exploration plans and no joint venture partners were considered to be impaired. The remaining capitalized mineral property acquisition costs relate to properties with on-going exploration plans or joint venture partners who were expected to continue their exploration as of the fiscal year end.  The following table shows the effect of these differences on the summary financial information:  Year
Ended
2009Year
Ended
2008Year
Ended
2007Year
Ended
2006Year
Ended
2005Loss from Operations$(3,672,147)$(4,270,235)$(2,855,014)$(1,867,972)$(1,560,189)Net Loss(3,297,395)(3,505,512)(2,536,328)(1,808,564)(1,454,655)Loss Per Share(0.14)(0.14)(0.12)(0.10)(0.08)Mineral Property Interests213,998493,887434,736198,56741,025Total Assets6,685,0279,778,2635,793,3243,294,0553,194,050Shareholders Equity6,481,8369,506,8804,879,1123,159,1132,938,702   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.   -14-  Specific Corporate Risks  Global Equity Market Reduction  The Corporation finances most of the operations through the sale of common shares. In the current economic climate, financing would have to be carried out at substantially lower price per share than was the case in recent years. This would result in significant dilution for current shareholders. Accordingly the Corporation has put plans in place to conserve cash while continuing to conduct strategic exploration to avoid the requirement to pursue equity financing at current market prices.  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 services of David A. Caulfield, Director, Business Development, are provided to the Corporation pursuant to a January 1, 2008 management agreement with Equity Exploration Consultants Ltd., incorporated herein by reference to Exhibit 4.30 of this Form 20-F. (See Item 6 "Directors, Senior Management and Employees").  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 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 six of the Corporations seven 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 judgments 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.   -15-  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.  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, 2009 was $16,348,595.  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 to 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.   -16-  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 Alaska, Nevada, Yukon Territory, British Columbia or New South Wales, Australia, 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.  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.   -17-  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 Gillis, Grizzly, Jake, Kizmet, Poker Creek, Quesnel Trough, RDN, Thorn, Tide, and Williams Properties are located in British Columbia, Canada. The Gillis Property consists of 14 claims covering 6,182 hectares. The Grizzly Property consists of 8 claims covering 2,652 hectares. The Jake Property consists of 65 claims covering 27,754 hectares. The Kizmet Property consists of 8 mineral claims comprising 5,471 hectares. The Poker Creek Property consists of 12 claims covering 5,035 hectares. The Quesnel Trough Properties consist of 79 claims covering 34,570 hectares. The RDN Property consists of 14 mineral claims comprising 8,576 hectares. The Thorn Property consists of 18 mineral claims comprising 14,689 hectares. The Tide Property consists of 4 mineral claims comprising 2,964 hectares. Williams Property consists of 58 mineral claims comprising 26,136 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 Joint Venture partner of each property with the Ministry of Energy and Mines in British Columbia.  The Corporations Boulevard, Fer, and Wernecke Breccia Properties are located in Yukon Territory, Canada. The Boulevard Property consists of 238 claims, the Fer Property consists of 118 claims and the Wernecke Breccias Property is comprised of 1,926 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 or the Joint Venture partner.  The Corporations Poncho Property is located in Nevada. The property consists of 118 mining claims totaling 2,344 acres. The mineral claims are subject to a Bureau of Land Management claim rental fee of U.S. $125 per claim plus a Nye County renewal fee of U.S. $8.50 per claim plus filing fees. As the Corporation has paid all required claim rental and filing fees, valid title to the mining claims is recorded in the name of Rimfire Nevada Ltd. The Gila24 Property, which was leased from Silverthorn Exploration, Inc., consists of 72 claims covering 1,440 acres. These claims were returned to the vendor effective February 23, 2009.  The Corporations Goodpaster Properties (Bou-Swede, California-Surf, Eagle-Hawk, and ER-Ogo-Fire,) are located in Alaska. The properties consist of 1,664 state mining claims totaling 183,920 acres. The mineral claims are subject to a required assessment or cash in lieu of U.S. $2.50 per acre per year. The annual claim rental fees of U.S. $25-. $100 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.   -18-  The Corporations Lachlan Project is located in the State of New South Wales, Australia. The project consists of four Exploration Licenses comprising 200 units covering 57,536 hectares. The Exploration Licenses are subject to minimum expenditure requirements of A$20,000 plus A$500 per unit per year. The Corporations Springfield Project is located in the State of New South Wales, Australia. The project consists of one Exploration License comprising 24 units covering 6,954 hectares. The Corporations Victoria Goldfields project is located in the State of Victoria, Australia. The project consists of three Exploration Licenses covering 86,679 hectares. Valid title to these tenements remains with the vendor.  There is currently no mining activity or commercial production from any of the Corporations British Columbia, Yukon, Alaska, Nevada or Australia 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 $1.45 and $2.64 during 2006, between $1.08 and $2.34 during 2007, between $0.14 and $1.65 during 2008, and between $0.20 and $0.40 during the first quarter of fiscal 2009. 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, more stringent fines and penalties for non-compliance. Environmental assessments of proposed projects carry a heightened degree of responsibility for the Corporation and its directors, officers and employees. Future changes in environmental regulation, if any, may adversely affect the Corporations operations.   ITEM 4   INFORMATION ON THE CORPORATION  HISTORY AND DEVELOPMENT OF THE CORPORATION  The Corporation was incorporated under the laws of the Province of British Columbia, Canada on May 7, 1991 under the name of Bull Pine Explorations Ltd. The Corporation changed its name to Rimfire Minerals Corporation on November 4, 1997 to better reflect corporate strategies and focus. The Corporation completed the transition process under the Business Corporations Act (British Columbia) in August 2004. At the annual general meeting held in 2004, the shareholders approved the new Articles of Incorporation and increased share capital to authorize an unlimited number of common shares (Common Shares), without par value. There were 25,707,251 Common Shares issued and outstanding as fully paid and non-assessable as of January 31, 2009. The registered and records office of the Corporation is located at Suite 1350, 650 West Georgia Street, Vancouver, British Columbia, V6B 4N9.   -19-  BUSINESS OVERVIEW  The Corporation is a natural resource company engaged in the acquisition and exploration of precious and base metal mineral properties. The Corporation carried out minimal mineral property acquisition and exploration between its incorporation in 1991 and 1993. The Corporation then became inactive and remained so until 1997 when it acquired an interest in the RDN Property, located in British Columbia.  In addition to the RDN Property, the Corporation currently holds interests in the Gillis, Grizzly, Jake, Kizmet, Poker Creek, Quesnel Trough, Thorn, Tide, and Williams Properties in British Columbia, the Boulevard, Fer, and Wernecke Breccia Properties in the Yukon Territory, the Poncho property in Nye County, Nevada and a number of properties in the Goodpaster Mining District of Alaska. The Corporation holds title to five exploration licenses and has an interest in one additional license in New South Wales, Australia. The Corporation has an interest in three exploration licenses in Victoria, Australia. A description of the Corporation's mineral exploration properties is set out below in this Item 4 under the subheading Property, Plants and Equipment.  NONE OF THE MINERAL PROPERTIES IN WHICH THE CORPORATION HOLDS AN INTEREST CONTAIN ANY KNOWN ORE OR MINERAL RESERVES. ALL EXPLORATION PROGRAMS PROPOSED FOR ANY MINERAL PROPERTIES IN WHICH THE CORPORATION HAS AN INTEREST ARE EXPLORATORY IN NATURE.  The Common Shares of the Corporation were listed and posted for trading on the Vancouver Stock Exchange on June 28, 1999 under the trading symbol RFM. On November 29, 1999, the listing was transferred to the TSX Venture Exchange (formerly Canadian Venture Exchange) as part of the merger of the Alberta Stock Exchange and Vancouver Stock Exchange.  The Corporation does not prepare business plans for any of its properties. Business plans are not customarily prepared for mineral exploration programs or properties. As is industry standard, the Corporation will prepare a work program for each of the mineral properties upon which it will carry out exploration work. Although a program is completed within a specified budget, the specific nature and type of exploration work completed may vary from the original work program depending on results obtained during the program.  The Corporation has raised and will continue to raise all but a very minor portion of its future working capital and exploration funds through the sale of its securities from treasury. The Corporation may periodically receive cash payments and securities as property option payments from third parties pursuant to the terms of existing or future option agreements.  The Corporation's long-term goal is to identify high potential mineral properties that have received little if any recent exploration work, enhance their value through initial exploration and market them to joint venture partners. The Corporation plans to maintain significant interests in a number of projects and have joint venture partners raise and spend the money necessary to thoroughly evaluate the potential of such mineral properties.   -20-  Prior to commencing any exploration activities in any of Australia, Alaska, Nevada, Yukon or British Columbia, the Corporation or the party intending to carry out a work program on a mineral property is required to apply to the appropriate Mining Division of the State, Territorial or Provincial government for a number of permits or licenses related to mineral exploration activities. These permits or licenses include nomination of operator, water and surface use permits, occupation permits, fire permits, and timber permits. Prior to being issued the various permits or licenses, the applicant must file a detailed work plan with the applicable government agency. Permits are issued on the basis of the work plan submitted and approved by the governing agency. Additional work on a given mineral property or a significant change in the nature of the work to be completed would require an amendment to the original permit or license.  As part of the permit or licensing requirements, the applicant may be required to post an environmental reclamation bond in respect to the work to be carried out on the mineral property. The amount of such bond is determined by the amount and nature of the work proposed by the applicant. The amount of a bond may also be increased with increased levels of development on the property.  The Corporation has or will make application to the appropriate agencies for permits and licenses relating to those properties upon which the Corporation intends to carry out work during the 2009 exploration season. For those mineral properties in which the Corporation has an interest but is not the operator of the work programs, application for the required permits and licenses and the posting of the reclamation bonds will be made by the party entitled to carry out exploration work on the property. The Corporation believes that it is currently in compliance with all applicable environmental laws and regulations in, Australia, Alaska, Nevada, Yukon Territory and British Columbia.  The Corporation is unaware of any legal proceedings, either threatened or pending, to which the Corporation is or is likely to be a party, or of which any of its properties or assets is or is likely to be the subject, that are material to the business and affairs of the Corporation.  The Corporation currently holds interests in mineral properties located in British Columbia, Yukon Territory, Nevada, Alaska and Australia. None of the mineral properties in which the Corporation holds any interest is currently being operated as a producing mine.  Most of these mineral properties are located in areas that experience significant low temperatures and snowfall in winter, therefore the exploration season is generally limited to the June-October window of more clement weather. Planning for exploration and compilation of reports on completed programs and new project research continues on a year-round basis.  The table below illustrates the Corporations expenditures on exploration activities for the last three fiscal years. The figures below have been prepared in accordance with generally accepted accounting principles (GAAP) in Canada. Except as explained in Note 13 of the Corporations financial statements, the figures below are consistent with U.S. GAAP.   -21-   Year
Ended
2009Year
Ended
2008Year
Ended
2007Exploration Costs$    1,545,338$   2,495,617$   1,538,295Mineral Property Acquisition458,327165,477307,542  Note: All figures shown above are in Canadian Dollars.  The net exploration and acquisition expenses for the period February 1, 2008 to January 31, 2009 were $1,729,969.  The Corporations plan for fiscal 2009 is to obtain joint venture partners to continue exploration of the Kizmet, Poker Creek, Quesnel Trough, Thorn and Williams properties in BC. The Corporation will conduct preliminary exploration on the Victoria Goldfields project in Australia and continue exploration on the Gillis Property in British Columbia. There will be drill programs on one property with a joint venture partner; however, there is no requirement for the Corporation to finance these exploration programs. Under the Wernecke Breccia Property agreement, Fronteer Development Group Inc. (Fronteer) has completed their initial earn-in of $2,000,000 in exploration. The Corporation can choose to participate by paying 20% of the expenditures or can choose dilution of ownership based on initial deemed contributions of $2,000,000 by the Corporation and $8,000,000 by Fronteer. Other option agreements are also close to completing their initial earn-in. If and when the initial earn-in is complete, the Corporation will be required to share exploration expenditures with the joint venture partner on a 49/51, or 40/60 basis depending on the option agreements. (See Item 4: Property Plants and Equipment below).  ORGANIZATIONAL STRUCTURE  The Corporation has three (3) wholly-owned subsidiaries, Rimfire Alaska, Ltd. ("Rimfire Alaska"), which was incorporated under the laws of Alaska on August 19, 1998 for the purpose of holding the Corporation's Alaskan mineral property interests, Rimfire Nevada Ltd. (Rimfire Nevada) which was incorporated under the laws of Nevada on January 4, 2005 for the purpose of holding the Corporation's Nevada mineral property interests and Rimfire Australia Pty Ltd. (Rimfire Australia) which was incorporated under the laws of the State of Victoria, Australia on August 23, 2006 for the purpose of conducting exploration in Australia.  Rimfire Alaska is authorized to issue 100 no par value common shares. The only shareholder of Rimfire Alaska is the Corporation and it holds all issued and outstanding company shares. The registered office of Rimfire Alaska, Ltd. is located at Suite 1350, 650 West Georgia Street, Vancouver, BC V6B 4N9.  Rimfire Nevada is authorized to issue 75,000 no par value common shares. The only shareholder of Rimfire Nevada is the Corporation and it holds all issued and outstanding company shares. The registered office of Rimfire Nevada Ltd. is located at Suite 260, 6121 Lakeside Drive, Reno Nevada 89511.  Rimfire Australia is authorized to issue 10,000 common shares. The only shareholder of Rimfire Australia is the Corporation and it holds all issued and outstanding company shares. The registered office of Rimfire Australia is located at Suite 14, Level 2, 37 Bligh Street, Sydney NSW 2000, Australia.   -22-  INTERCORPORATE RELATIONSHIPS  [rimfireannual20f09final001.jpg]  -23-  [rimfireannual20f09final002.jpg]  -24-  PROPERTY, PLANT AND EQUIPMENT  The Corporation is in the exploration stage and its properties are presently without a known body of commercial ore. Its mineral property interests are the following:  · Gillis Property located in the Nicola Mining Division of British Columbia, approximately 30 kilometers south of Merritt, British Columbia.  · Grizzly Property located in the Liard Mining Division of British Columbia, approximately 120 kilometers northwest of Stewart, British Columbia.  · Jake Property located in the Kamloops Mining Division of British Columbia, approximately 13 kilometers west of Clearwater, British Columbia.  · Kizmet Property located in the Atlin Mining Division of British Columbia, approximately 130 kilometers northwest of Telegraph Creek, British Columbia.  · Poker Creek Property located in the Liard Mining Division of British Columbia, approximately 220 kilometers north-northwest of Stewart, British Columbia.  · Quesnel Trough Project, consisting of 7 properties, is located in the Cariboo Mining Division of British Columbia, from 15 kilometers south of Prince George to 40 kilometers north of Fort St. James, British Columbia  · RDN Property located in the Liard Mining Division of British Columbia, approximately 120 kilometers northwest of Stewart, British Columbia and 50 kilometers north of the Eskay Creek Mine.  · Thorn Property located in the Atlin Mining Division of British Columbia, approximately 120 kilometers northwest of Telegraph Creek, British Columbia.  · Tide Property located in the Skeena Mining Division of British Columbia, approximately 36 kilometers north of Stewart, British Columbia.  · Williams Property located in the Liard Mining Division of British Columbia, approximately 150 kilometers southeast of Dease Lake, British Columbia and 330 kilometers north of Smithers, British Columbia.  · Alaska Properties located in the Goodpaster Mining District, Alaska, 65 kilometers northeast of Delta Junction, Alaska.  · Boulevard Property located in Whitehorse Mining District of Yukon Territory, approximately 135 kilometers south of Dawson City, Yukon.  · Fer Property located in the Watson Lake Mining District of Yukon Territory, approximately 20 kilometers west of Cantung in the Northwest Territories and approximately 200 kilometers north of Watson Lake, Yukon.   -25-  · Wernecke Breccia Property located in the Mayo Mining District of Yukon Territory, approximately 180 kilometers northeast of Mayo, Yukon.  · Poncho Property located in Nye County Nevada approximately 60 kilometers northwest of Tonopah, Nevada.  · Barmedman, Walmer, Gollan, Mt. McDonald and Springfield properties located in the Lachlan Fold Belt, New South Wales Australia.  · Victoria Goldfields properties located in the Stawell Corridor, Victoria, Australia.  At present, the Corporation does not intend to undertake any exploration at its own expense on theAlaska, Boulevard, Fer, Grizzly, Jake, Kizmet, Poker Creek, Poncho, RDN, Thorn, Tide, or Williams, properties for the fiscal year ending January 31, 2010. Option agreements in place require other corporations to complete exploration programs on some of these properties. These are described in more detail in the description of each property in this Item 4 below.  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.  The Corporations head office occupies 2,974 square feet of office space sub-leased under agreement with Nexterra Energy. The Corporation has purchased furnishings, computers and office equipment, and leased a photocopier. The rent, as of April 30, 2009, is $10,617 per month. Telephone and internet access charges are in addition to this amount.  The Corporations principal mineral properties are detailed below.   -26-  Boulevard Property, Whitehorse Mining District, Yukon [rimfireannual20f09final003.jpg]  -27-  [rimfireannual20f09final004.jpg]  Location and Introduction  The Boulevard Property, consisting of 238 claims, is located approximately 135 kilometers south of Dawson City, Yukon. The Boulevard Property is held jointly by Rimfire (50%) and Northgate Minerals (50%), with each company having funded the initial $330,000 in exploration that led to staking of the property. To date, Northgate has funded approximately $1.4 million of the required $1.5 million in exploration expenditures to earn an additional 10% interest (for a total of 60%) in the property.  Property History  Property Acquisition  In December 2005, the Corporation signed a letter of agreement with Northgate to cooperatively generate new exploration properties (the Alliance). The initial phase consisted of data compilation with each company contributing up to $20,000. The second phase of field examination was funded by contributions of $130,000 from each company. A total of claims in the Yukon, now known as the Boulevard Property, were staked on behalf of the Alliance. Upon acquisition of this property, Northgate has an option to earn 60% of the acquired property by funding the first $1.5 million in exploration expenditures. Upon completion of the earn-in, expenditures will be shared pro-rata between the Corporation and Northgate. The Corporation is operator until Northgate completes the funding requirement.  -28-  The following table details the claims that comprise the Boulevard property with legal identification (Mineral Tenure) size, expiry date, and location.  ClaimMineral TenureArea (ha)Expiry DateLocationAVE 1-465316-6531981.0Dec 31, 2013115J/14BLVD 1-9664776-648711,944.0Dec 31, 2017115J/13BLVD 97-20282926-830312,146.5Dec 31, 2013115J/13DRIVE 1-3281284-81315648.0Dec 31, 2013115J/14  Regional Geology  The Boulevard property is located within the Yukon-Tanana terrane in west-central Yukon. Regional-scale geological compilation maps show that the Boulevard claims are underlain by undivided metamorphic rocks of the Nasina sub-terrane that include pre- to late-Devonian rocks of the continental margin (Snowcap Assemblage) superposed by Late Devonian to Early Mississippian rocks derived from a continental arc system (Finlayson Assemblage). This sub-terrane was intruded by a voluminous, northwest-to southeast-trending plutonic suite, referred to as the Dawson Range plutonic belt, which lies immediately to the south of the Boulevard property. This plutonic belt is characterized by coarse-grained, hornblende-biotite granodiorite, with local phases of mafic diorite, gabbro, quartz monzonite and biotite granite. This plutonic belt is dated at 106-99 Ma and therefore belongs to the metallogenically important mid-Cretaceous suite of plutonic rocks in the northern Cordillera associated with intrusion-related base and precious metal deposits.  Property Geology  The geology of the Boulevard claims is dominated by a basement of Devonian-Mississippian schists intruded by a NW-trending elongate Cretaceous granite batholith in the north-eastern sector of the property. The basement schists include a variety of quartz-mica schists (ranging from quartz-rich to biotite-rich to muscovite-rich), chlorite-sericite schists (mafic schists), calcareous schists or marbles and quartzites. Higher metamorphic grade augen gneisses have been noted in places, yet their geological relationship to the more volumetrically abundant schists is unknown. The dominant schistosity is NW-trending and steeply SW-dipping. Schists commonly host isoclinally folded and sheared quartz veins, which are likely associated with progressive regional deformation. The contact between micaceous schists and mafic schist is interpreted from a magnetic break in airborne geophysical data. This contact may be of significance since a gold-arsenic soil geochemical anomaly is coincident with this magnetic break in the SE corner of the property. The Cretaceous intrusive rocks are undeformed and comprise medium to coarse-grained equigranular quartz-plagioclase-alkali feldspar with about 10% biotite. Minor pegmatite (with muscovite and garnet) and aplite occur locally within 100 meters of the pluton margin and within 500 meters of the Toni Tiger molybdenum-tungsten-copper skarn occurrence. These pegmatites contain trace molybdenite, and hence link the emplacement of the Cretaceous granite to the skarn occurrence. The basement schists form a ~2.9 kilometers wide NW-trending belt of rocks between the Cretaceous granite to the NE and a strongly foliated mid-Cretaceous granodiorite to the southwest. The geology of the schist-granodiorite contact and the granodiorite itself has not been examined in detail.  -29-  Mineralization  Gold mineralization is hosted in strongly sericite ± clay altered schist with disseminated pyrite, arsenopyrite and stibnite. Sulphide mineralization is finely disseminated in the wall rock of quartz vein arrays or occurs as massive sulphide veins within the arrays. Mineralization-hosting quartz vein arrays follow regional northwesterly structures along major contacts between lithological packages.  Surface Exploration, Geophysics and Drill Programs  The exploration program was conducted under an Exploration Alliance with Northgate signed in December, 2005. This alliance targeted "Pogo-style" intrusion-related gold deposits in an area fitting the model criteria and possessing placer gold deposits without a known bedrock source. The Boulevard area was selected from a much larger regional compilation and reconnaissance silt sampling program that led to the identification of anomalous gold and pathfinder elements in creeks draining the Boulevard. Detailed soil sampling in 2007 outlined the multi-element geochemical anomaly that was tested by trenching in July 2008. In light of positive trench results Rimfire and Northgate staked additional claims.  Diamond drilling in September 2008 was focused on trenched areas with significant widths of gold mineralization. Additional targets were identified from results of a magnetometer survey and previous soil geochemistry data. A total of 525 meters of core was drilled in seven holes from six different locations. In total, 4.85 line kilometers of IP and 45 line kilometers of magnetometer survey were completed. The soil survey grid was extended southeast from the existing Boulevard grid.  The drilling intersected gold mineralization in five of seven holes. Drilling tested the mineralization in the discovery trench and targets along the apparent strike of this mineralization, within a large multi-element soil geochemical anomaly.  Prior to this drill program, gold mineralization was discovered at the Boulevard in the first of three trenches to investigate portions of a 2.0 kilometer by 0.4 kilometer arsenic-antimony-gold soil geochemical anomaly in an area of sparse outcrop. The discovery trench, TRBV08-01, returned 7.04 grams per tonne gold over 6.0 meters. Three drill holes tested this mineralization at depth, returning 1.0 grams per tonne gold over 1.8 meters in BV08-01, approximately 45 meters down dip from the trench, and 0.9 grams per tonne gold over 18 meters including 1.9 grams per tonne gold over 3.5 meters in BV08-03 approximately 5 meters down dip from the trench.  Two holes tested beneath a second mineralized trench (TRBV08-02, 6.43 grams per tonne gold over 2.0 meters) located 100 meters southeast along trend from TRBV08-01, returned 0.8 grams per tonne gold over 4.2 meters and 0.5 grams per tonne gold over 5.5 meters at approximately 20 and 30 meters down dip respectively. Two additional holes targeted anomalous arsenic-goldantimony geochemistry located 220 meters and 1110 meters along trend from the discovery area. BV08-07 returned 1.0 grams per tonne gold over 3.3 meters in a subtle style of mineralization not observed in previous drill holes or trenches.  Future Exploration Programs  A trenching program has been planned, pending acceptance by Northgate, for 2009 to investigate the remainder of the geochemical anomaly.  The Qualified Person for this property is Jim Lehtinen, P.Geo. of Equity Exploration Consultants Ltd. A technical report was filed on SEDAR on March 3, 2009.  -30-  Gillis Property, Nicola Mining Division  [rimfireannual20f09final005.jpg]  -31-  [rimfireannual20f09final006.jpg]  -32-  Location and Introduction  The Gillis property consists of 14 claims covering 6,182 hectares of rolling upland terrain 30 km southwest of the city of Merritt, British Columbia. Access to the property for the 2008 field season was primarily by a Bell 206 helicopter based out of Merritt. Although the areas where most of the exploration is focused are not road accessible, future road access could be facilitated from gravel forestry roads that circle the property.  Property History  Previous work on the Gillis property was limited to reconnaissance stream sediment and soil geochemical surveys carried out by Almaden Minerals Ltd. investigating regional stream sediment geochemical gold anomalies in 2005-2006. This work had identified anomalous gold-in-silt geochemistry in a number of drainages and very limited follow-up defined anomalous gold soil geochemistry with a few rock samples returning weakly anomalous gold values.  Property Acquisition  The Corporation signed an option agreement effective September 5, 2008 to earn a 100% interest in the Gillis property, subject to a 2% NSR, 1.5% of which can be purchased for $1.5 million. The Corporation is to: make cash payments of 2.5% of mineral exploration expenditures and: · $15,000 within 10 days of the execution of the agreement (paid) · $25,000 on or before September 5, 2009 · $50,000 on or before September 5, 2010 · $75,000 on or before September 5, 2011. fund exploration expenditures of: · not less than $75,000 on or before September 5, 2009 (completed) · an aggregate $125,000 on or before September 5, 2010 (completed) · an aggregate $200,000 on or before September 5, 2011 · an aggregate $300,000 on or before September 5, 2012 issue 250,000 common shares to the vendors within 10 days of announcement of NI 43-101 compliant gold resource of 500,000 oz.  The following table details the claims that comprise the Gillis property with legal identification (Mineral Tenure) size, expiry date, and location.  ClaimMineral TenureArea (ha)Expiry DateLocationGIL1571035499.63December 31, 2014092H085GL2571036499.76December 31, 2014092H085GL3571037457.98December 31, 2014092H086Gil4571039416.55December 31, 2014092H086GL5571040208.25December 31, 2014092H086GIL6590814499.39December 31, 2014092H095GIL7590815499.39December 31, 2014092H095GIL8590816499.38December 31, 2014092H096  -33-   ClaimMineral TenureArea (ha)Expiry DateLocationGIL9590818374.54December 31, 2014092H096GIL10590819499.55December 31, 2014092H086GIL11590820416.33December 31, 2014092H086GIL12590821312.37December 31, 2014092H086GIL13590822499.82December 31, 2014092H085GIL14591741499.48December 31, 2014092H095  Regional Geology  The Gillis property lies within the southern Intermontane Belt of the Canadian Cordillera. Lithologies include successions of Mesozoic to Tertiary volcanic and sedimentary rocks which have been intruded by plutons of various compositions and ages from Late Triassic and/or Jurassic to Miocene. Glacial movement from the last Pleistocene glaciation was generally south-southwest in the Gillis area leaving locally thick deposits of glacial drift and alluvium in all of the major creeks or river valleys.  Areas north and east of the Gillis property, including the northern extent of the Gillis property, are underlain by the Cretaceous Spences Bridge Group rocks. The Cretaceous Spences Bridge Group comprise a broad northwest-southeast trending belt of gently folded volcanics with lesser sediments, having variably oriented and generally shallow to moderate dips. A lower assemblage, called the Pimainus Formation, includes intermediate to locally felsic and mafic flows, and volcaniclastics with some sandstone and shale. A basal conglomerate is also present in many locations. An upper division, known as the Spius Formation, consists primarily of amygdaloidal basaltic andesite lavas with minor pyroclastics and sandstone.  The Spences Bridge Group unconformably overlies older plutonic and volcanic units exposed on the central and southern Gillis claims and in large areas to the west and south of the property. The plutons include dioritic rocks of the Triassic-Jurassic Mount Lytton Complex and granodiorite to granite of the Jurassic-Cretaceous Eagle Plutonic Complex. The older volcanic units consist mainly of mafic to felsic pyroclastics of the Triassic Jurassic Nicola Group. Minor marble and clastic metasediments are also found in the Nicola sequence.  Spences Bridge Group rocks are unconformably overlain by Eocene Princeton/Kamloops Group mafic and felsic volcanics. Small Tertiary intrusions of intermediate composition occur locally in contact with the Eocene and Spences Bridge units.  Steeply dipping normal faults are the major structural feature in the region. The Spius Creek Fault is a probable southern extension of the Lornex (Big Divide) Fault which transects the Guichon Batholith. The Coldwater, Fig and Kingsvale Faults, roughly parallel to the Spius Creek-Lornex Fault, follow the valley of the Coldwater River. It can be postulated that the Spences Bridge Group represents a stratovolcano assemblage deposited and preserved in a subsiding, fault-bounded basin called the Nicoamen structural depression.   -34-  Property Geology  The Nicola Group chlorite schist and the silty limestone units occur predominantly in the central and western portions of the Gillis property. To the south, there is a large intrusion of pink feldspar porphyry which is thought to be analogous to the Late Cretaceous to Early Tertiary Otter suite of intrusions. The Spences Bridge Group underlies the area to the north of the Gillis property including a portion of northern Gillis claims. Structurally, there are a number of northwest-southeast trending faults that cut through the property as well as a myriad of east-west faults that cut just north of the anomalous South soil grid and Nicola Group chlorite schist.  Mineralization  Mineralization is located within quartz veins that are hosted primarily within the Nicola Group chlorite schist and in one case, silty limestone. Structural trends of the schist unit include a dominant fracture set oriented southwest with a vertical to subvertical dip and prominent foliation striking northwest with varying dips. Some veins appear to follow the dominant fracture set, while others are undulating and do not have distinct orientations. At least three types of quartz veining have been encountered, two of which have returned anomalous gold values. One type is found at the Fort showing where limestone hosts milky white quartz veins. The second type of veining is hosted in the Nicola Group chlorite schist and consists of fractured quartz that is more translucent and contains sericite and pyrite within sutures. The third vein type resembles the second vein type with the addition of siderite and calcite veins that cross cut the quartz veins. Although the third vein type can be quite large, measuring up to 2-3 meters wide, samples of these veins have not returned anomalous gold values.  Surface Exploration, Geophysics and Drill Programs  During October 2008, Rimfire Minerals Corporation carried out a mapping, prospecting, and geochemical sampling program on the Gillis property. The sampling work was contracted to RIO Minerals Ltd. who completed 78.425 kilometers of soil lines. A total of 64 rock samples were taken in addition to the 1712 soil samples.  Prospecting and mapping focused on previous soil and silt anomalies located primarily in the western and central portions of the property. Prospecting has led to the discovery of three showings that have anomalous values of gold and silver in combination with other pathfinder elements. The Fort showing is located in one of the western drainages. The SAV area, located two kilometers southeast of the Fort showing, is a cluster of four anomalous gold samples. The third area, the South Side, is highlighted by a few anomalous gold float samples which lie within a multi-element soil anomaly with poor outcrop exposure.  Future Exploration Programs  A small program of mechanical trenching and further prospecting is anticipated in 2009. The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Corporation. A technical report has not been filed on SEDAR.     -35-  RDN and Grizzly Properties, Liard Mining Division  [rimfireannual20f09final007.jpg]  -36-  [rimfireannual20f09final008.jpg]  -37-  Location and Introduction  The RDN/Grizzly Property is located in the Liard Mining Division of British Columbia approximately 120 kilometers northwest of Stewart, British Columbia and 50 kilometers north of the Eskay Creek Mine. The RDN property is comprised of 14 claims, covering approximately 8,576 hectares while the contiguous Grizzly property is comprised of 8 claims covering 2,652 hectares.  Work can be carried out on the RDN/Grizzly Property from mid June to mid September.  Two British Columbia Provincial Government Orders-in-Council, 1589(1972) and 440 (1983) have stated that ground below 580 meters above sea level may be subject to flooding for hydro-electrical development, and although mineral exploration and development may be carried out below this level, compensation will not be payable in the event of flooding. In the event that a commercially exploitable mineral deposit is discovered in those areas subject to the Orders-in-Council, a subsequent decision by the Government of British Columbia to flood the area for water resource or hydro-electric generating purposes will not entitle the title holders to the mineral deposit to any form of compensation. The lands in question lie along More Creek and its tributaries, which affect portions of the RDN 10 and14-17A mineral claims. To date, no significant mineralized areas have been identified in areas subject to the Orders-in-Council.  Property History  Regional exploration in the area was conducted by several mining companies from the 1960's to the early 1980's, which resulted in the discovery of porphyry and vein style mineralization at the nearby Snip, Johnny Mountain and Sulphurets areas. The RDN 1-4 claims were staked by two private individuals (collectively, the Prospectors) and Equity Engineering Ltd. of Vancouver, British Columbia in November 1987. In 1988, a limited prospecting, silt sampling and rock sampling program was completed on the claims.  In October 1989, Noranda Exploration Company ("Noranda") optioned the RDN 1-4 claims, and staked the GOZ claims to the north. Noranda carried out a program of sampling and conducted airborne magnetic and aeromagnetic surveys over the property. In 1990, Noranda and High Frontier Resources, an exploration joint venture partner, carried out geochemical and geophysical surveys and a 15 hole diamond drilling program. This work resulted in the discovery of several gold-bearing quartz chalcopyrite-pyrite veins within felsic tuffs and the definition of a gold soil anomaly designated the Jungle Soil Anomaly.  The program was continued in 1991 with expanded geophysical surveys and the drilling of an additional 15 diamond drill holes. In 1991, Noranda terminated its option on the RDN Property and allowed the GOZ claims to lapse. The GOZ claims were subsequently restaked as the RDN 5-8 and 11-13 claims.  In 1990, Adrian Resources Limited ("Adrian"), Skeena Resources Limited and Noranda carried out a work program in the area of the current RDN 9 and 10 claims. The work consisted of geochemical and geophysical surveys. In 1991, Noranda completed additional geophysical surveying and sampling, and Adrian conducted a work program consisting of detailed geological mapping and sampling.  The RDN Property was optioned to Pathfinder Resources Limited in 1994, and in 1994, 1995 and 1996, Pathfinder carried out work programs which included soil sampling, geological mapping, prospecting, and geophysical surveying.  -38-  Property Acquisition  On July 31, 1997, the Corporation purchased a one-third interest in the RDN Property for $150,000 from Equity Engineering Ltd. On March 6, 2000, the Corporation increased its interest in the RDN Property from a one-third interest to 100% by acquiring a 66.66% interest from Neil Debock and Rocky Saliken pursuant to an option agreement dated as of July 31, 1997 and amended October 8, 1998. The consideration paid to Messrs. Debock and Saliken under the option agreement was an aggregate 133,330 Corporation Common Shares. Messrs. Debock and Saliken have retained a 1.34% net smelter return royalty interest in the RDN Property. The royalty interest may be reduced to a 0.67% net smelter return royalty at any time prior to or after the commencement of commercial mining operations on the property through the payment to Messrs. Debock and Saliken of an aggregate $666,666 ($333,333 to each individual ).  The Corporation signed an option agreement and subsequent amendments, 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:  Fund exploration expenditures of: · not less than an aggregate of $3,000,000 on or before December 31, 2006
(as revised December 2, 2005) (completed) · not less than an aggregate of $5,000,000 (requirement suspended on February 21, 2007 until a later date, to be mutually agreed upon) Cash payments of: · an aggregate of $125,000 on or before March 1, 2006(received) · $75,000 (requirement suspended on February 21, 2007 until a later date, to be mutually agreed upon) The Corporation 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.  On December 14, 2005, The Corporation purchased 100% of the LL property, which is contiguous with the RDN, for $30,000 cash with a net smelter return royalty of 2%. This royalty can be purchased at any time for $2,000,000. The purchase of the LL property was funded 60% by Northgate and 40% by The Corporation.  On February 21, 2007, the Corporation signed an amendment suspending the terms of the option agreement with Northgate until such time as road access to the RDN property is constructed. The Teck Cominco/Novagold partnership developing the Galore Creek deposit is constructing this road to access their project. Much of the road has been completed, but construction has been suspended until such time that a decision to continue the mine construction is made by Teck Cominco. Some of the RDN claims will be split into a separate property to be referred to as the Grizzly Property. The Grizzly Property will be owned 100% by the Corporation and will no longer form part of the RDN Joint Venture Agreement.   -39-  Effective May 1, 2008, the Corporation signed an option agreement with Inmet Mining Corporation (Inmet) which provides that Inmet can earn a 60% interest in the Grizzly Property on completion of the following: Fund exploration expenditures of: · not less than $400,000 before August 31, 2008 (completed) · an additional $400,000 on or before the first anniversary (completed) · an additional $1,000,000 on or before the second anniversary · an additional $1,200,000 on or before the third anniversary · an additional $2,000,000 on or before the fourth anniversary Cash payments of: · $50,000 upon signing of the letter of intent (received) · $50,000 on or before the first anniversary · $50,000 on or before the second anniversary · $50,000 on or before the third anniversary · $50,000 on or before the fourth anniversary This agreement was terminated effective March 1, 2009. The Company retains 100% of the property subject to the underlying NSR.  The following table details the claims that comprise the RDN and Grizzly properties with legal identification (Mineral Tenure) size, expiry date, and location. ClaimMineral TenureArea (ha)Expiry DateLocationRDNKC 1504798316.37December 31, 2016104G017KC 2504799316.213December 31, 2016104G017MOR2501927299.329December 31, 2016104G007RDN 1&2502738670.153December 31, 2016104B097RDN 3&4&135012271111.923December 31, 2016104B097RDN 5&75018321162.807December 31, 2016104G008RDN 6&8501862846.243December 31, 2016104B097RDN 9501812774.248December 31, 2016104G007RDN 10502756457.823December 31, 2016104G007RDN 11&12502758704.855December 31, 2016104G007RDN 14&15502751931.516December 31, 2016104G017RDN 16502752404.486December 31, 2016104G007RDN 17501895457.21December 31, 2016104G007RDN 17A518112123.24December 31, 2016104G007GrizzlyBodgen510806263.362December 31, 2018104G017LL 1501122421.636December 31, 2018104G017LL 2501153351.253December 31, 2018104G017Luc504982104.457December 31, 2018104G017Narby 1504758421.543December 31, 2018104G017RDN 19535726351.13December 31, 2018104G017RDN 20535728421.21December 31, 2018104G017RDN 21535729315.94December 31, 2018104G017  -40-  Regional Geology  The RDN and Grizzly Properties and surrounding area are underlain by mid-Paleozoic and Mesozoic island arc successions which have been covered to the east by clastic sediments of the Bowser Basin.  Property Geology  The properties are underlain by a moderately folded faulted mosaic of Jurassic age Hazelton Group volcanic and sedimentary rocks and co-eval felsic intrusions in the central area, and Triassic age mixed rocks of the Stuhini Group to the east. Permian age sedimentary, volcanic and intrusive rocks are in fault contact with the Hazelton Group rocks on the western side of the RDN Property. The Forrest Kerr Fault is this bounding structure.  Mineralization  A variety of styles of mineralization are present on the RDN Property.  Possible VHMS style mineralization is found at the Marcasite Gossan showing. There, Hazelton Group dacite flows are cut by a sulphidic stockwork of marcasite, pyrite, chalcedony and/or pyrobitumen and/or barite. In addition, several cobbles of very fine grained pyrite with an apparent bedded texture indicative of VHMS style of sulphide deposition were found a few meters downslope from the Marcasite Gossan outcrop. Less than 75 meters upslope is somewhat similar stockwork mineralization, referred to as the Upper Marcasite Gossan. Base metals and silver are elevated at the Upper Marcasite showing, whereas the Lower Marcasite showing has low base and precious metals. This mineralization occurs at a felsic volcanic-argillite-basalt interface in a similar setting to gold-rich VHMS deposits elsewhere in the Hazelton Group. The 1999 drilling confirmed that stratigraphy is conformable and upright in this area. The area underlying the Jungle Soil Anomaly may also host VHMS deposits, as float found in the area includes pyritic chert, rhyolite and silicified argillite. The Jungle soil anomaly is a gold-arsenic-silver-lead geochemical anomaly covering approximately 100 by 450 meters. A third area known as the Blind Fault area may also host VHMS deposits, as native silver and tetrahedrite was discovered at a volcanic/ sediment contact with associated alteration in 2004. A fourth area known as the Arctic Grid area may also host VHMS deposits as surface and drilling work, in 2005 and 2006, has returned weakly elevated zinc, silver and arsenic at the contact between Hazelton Group mudstones and rhyolite flows.  The majority of the remaining mineralized zones on the RDN Property are mesothermal veins and vein systems. The veins are planar and thought to be related to fault structures and brittle failure. They are clearly cross-cutting, and thus younger than parts of the hosting Hazelton Group felsic volcanic rocks. Fragments of these veins are also found in some clastic units of the Hazelton Group, indicating their emplacement to be broadly contemporaneous with deposition of the Hazelton Group.  The Baseline and Main showings are fault-hosted quartz-sulphide breccia veins, up to 8.3 meters wide with high lead-zinc and moderate gold-silver values. The Wedge Zone consists of dozens of quartz-sulphide veins spread over an area of 500 x 2,700 meters.   -41-  Individual veins tend to pinch and swell and are affected by considerable structural dislocation. The Wedge Zone area is marked by a strong lead-zinc-gold-silver-arsenic soil geochemical anomaly. The Boundary Zone veins are copper-gold rich, between 10 and 30 centimeters in width, planar to anastomosing, and consist of semi-massive chalcopyrite and pyrite.  The Grizzly showing area of the RDN is prospective for copper-gold porphyry related mineralization. In 2006, a chip sampling program re-sampled previous trenches and also filled in large areas not previously sampled yielding a 38.0 meter interval of 1.1 grams per tonne gold and 0.74% copper. The exposed dimensions of the Grizzly showing are approximately 350 meters long by 50 to 100 meters wide. Soil sampling by previous workers indicate an area of about 1 square kilometer with highly anomalous copper, gold and molybdenum results. This area is still open to the north, east and southeast and is largely talus covered.  Surface Exploration, Geophysics and Drill Programs  The 2000 UTEM survey showed a series of electromagnetic conductors along the contact between the felsic volcanics and overlying sedimentary rocks, a stratigraphic position thought to be favourable for hosting VHMS mineralization. This was followed by a diamond drill program in 2001 to test the conductors. Thirteen holes, totaling 2256 meters, were drilled in the Wedge Zone and near Sand Lake, Marcasite Gossan and Boundary Zones.  During 2002, Homestake completed drilling of a total of 1072 meters in 9 holes. Eight of these holes were collared in the Jungle Zone geochemical anomaly, which is situated on the NE Downpour Grid. A single hole was located 700 meters northwest of the Jungle Zone Anomaly. No geochemical results of economic significance were returned from this program; however, it is arguable that in all holes the target horizon was not reached. Due to severe technical difficulties encountered in the drilling, that included thick overburden and highly faulted ground, the drill program was halted and work focused on surface exploration. The surface program included mapping in areas where rhyolitic volcanic rocks had been identified in previous programs. In addition, contour soil sampling was carried out in areas that had not previously been sampled.  During 2003, Barrick Gold Corporation completed an exploration program consisting of surface mapping and sampling on areas of the property including the Arctic Grid and Boundary Zone examining Eskay Creek equivalent stratigraphy.  During 2004, Northgate completed 2499 meters 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 was considered encouraging.  During 2005, six drillholes were completed for a total of 1,470 meters in two target areas: Blind Fault and Arctic Grid. Three holes in the Blind Fault area targeted a 300 x 50 meter zone of vein and disseminated silver-lead-zinc mineralization in volcanic and sedimentary rocks where native silver was discovered in 2004. Continuous surface channel sampling in 2005 returned 24.7 meters averaging 24.9 grams per tonne silver with similar grades encountered in the drillholes. Drilling at the Arctic Grid target intersected stratigraphy equivalent in age and geological setting to that hosting the Eskay Creek deposit.  -42-  During 2006, an airborne geophysical survey was conducted over the Arctic Grid and LL areas of the property, and a four hole (1350 meter) drill program on the Arctic Grid target successfully tested the Eskay Creek time equivalent mudstone  rhyolite contact encountering anomalous zinc, arsenic, and silver in hole RDN-06-49. Hole RDN-06-47 intersected a narrow interval of fault-controlled silver mineralization above the prospective horizon. This mineralization is of limited significance and will not be followed up.  In 2008, Inmet Mining Corporation conducted a two-phase exploration program on the Grizzly property. The first phase program consisted of geological mapping, rock chip sampling, an expanded soil geochemical survey and 32 line-kilometer of Induced Polarization (IP) geophysical survey. The geophysical survey was carried out by Scott Geophysics Limited. This first phase program defined drilling targets in the vicinity of the Grizzly Showing and on the Mirko Grid.  The second phase of the program funded by Inmet consisted of 2,128 meters of diamond drilling from 11 holes. Drilling on the Grizzly Showing targeted IP chargeability anomalies coincident with copper-gold-molybdenum soil geochemical anomalies and copper-gold surface showings. A single hole tested the down-dip extent of the Grizzly Showing and two holes were completed to test the inferred strike extent 100 meters to the NE and SW of the showing. These holes intersected numerous zones of potassium feldspar+biotite+ carbonate alteration with trace chalcopyrite disseminations and calcite-chalcopyrite veins in mafic volcanic rocks. Results include 53.73 meters of 0.11% copper and 0.19 grams per tonne gold including 17.38 meters of 0.21% copper and 0.28 grams per tonne gold in GRZ08-11. Drilling confirms that this high-temperature, porphyry-style alteration is spatially associated with syenitic feldspar-porphyry dykes and sills.  Of the five additional holes targeting the Grizzly Showing, two holes were lost due to poor drilling conditions. Two holes targeted coincident IP chargeability anomalies and anomalous copper-gold-molybdenum soil geochemistry contiguous with the Grizzly Showing 200 meters east-northeast of the showing and 350 meters northeast of the showing. These holes intersected moderately to strongly chlorite + sericite ± carbonate ± biotite ± potassium feldspar altered volcanic and intrusive rocks with abundant pyrite disseminations, but yielded no significant results. The pyrite content of these rocks likely explains the targeted chargeability anomalies, yet the coincident copper-gold-molybdenum soil geochemistry remains unexplained.  The final hole in the Grizzly area, located 700 meters to the south, targeted an isolated IP chargeability anomaly and a coincident copper-in-soil geochemical anomaly. This hole intersected trace chalcopyrite in narrow intervals yielding no significant results. The targeted IP chargeability anomaly appears to reflect the presence of graphitic mudstones and volcanic rocks with minor disseminated pyrite.  The Mirko Grid drill program targeted IP chargeability anomalies and coincident molybdenum-in-soil geochemical anomalies in an area of scarce outcrop exposure. Three holes were completed to test two targets. GRZ08-08 and -09 intersected anomalous molybdenum mineralization with an intersection of 94.44 meters that averaged 0.02% molybdenum in GRZ08-09. GRZ08-10 was drilled 400 meters to the north of -08 and -09 on the inferred continuation of the IP anomaly targeted in the latter holes. This hole intersected a broad zone of propylitically-altered volcanic rocks that did not return any significant mineralization.   -43-  The work program was conducted by Equity Exploration Consultants Ltd. under the direction of Henry Awmack, P.Eng., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock samples. A technical report has not been filed on SEDAR.  Future Exploration Programs  No work will be undertaken on the RDN Property in 2009. Inmet decided not to continue with the Grizzly project effective March 1, 2009. The Corporation will seek a joint venture partner to continue the exploration.  Jake Property, Kamloops Mining Division  [rimfireannual20f09final009.jpg]   -44-  [rimfireannual20f09final010.jpg]  -45-  Location and Introduction  The Jake Property, consisting of 65 claims covering 27,754 hectares, is located in Kamloops Mining Division of British Columbia, approximately 13 kilometers west of Clearwater, BC. This project was initiated based on the discovery of significant gold-copper-bismuth mineralization in boulders and sub-crop located along recently constructed logging roads. Gold mineralization was discovered in roadbed exposure and boulders concentrated over a 35 meter section of road cut. The Corporation signed an option agreement to earn a 100% interest in the Jake claims (1,204 hectares.) The surrounding claims were staked to cover geology with potential for orogenic gold mineralization. Access to the property is exceptional due to an extensive array of logging roads permitting access to the entire property.  Property History  The Jake showing was discovered in July of 2005 by prospector Mo Kaufman. Composite samples of gossanous boulders collected by Mr. Kaufman returned high grade results of 27.5 and 15.7 grams per tonne gold. 48% of float samples collected within 2.5 kilometers of the showing also demonstrated anomalous gold values. To our knowledge, there has been no previously documented exploration in the local vicinity of the Jake showing, as boulders and subcrop in this area have only been recently exposed by logging roads. The Clearwater Peak showings are the only recorded mineral occurrences in the local region of the showing. They were discovered by follow-up prospecting of copper-zinc-gold anomalies in a soil survey conducted by Kerr, Dawson and Associates for Pan Ocean Oil Limited in 1972.  Property Acquisition  The Corporation signed an option agreement effective October 29, 2005 to earn a 100% interest in the Jake claims (1,204 hectares), subject to a 4% NSR, half of which can be purchased for US $2 million. The Corporation will make cash payments totaling USD$300,000 and complete an aggregate of $300,000 (Canadian) in exploration expenditures before October 29, 2009. The Corporation will make cash payments of: · USD$10,000 upon signing (paid) · USD$20,000 on or before October 29, 2006 (paid) · USD$25,000 on or before October 29, 2007(paid) · USD$30,000 on or before October 29, 2008 (paid) · USD$30,000 on or before each of the fourth through ninth anniversary dates (a total of USD$180,000) · USD$35,000 on or before October 29, 2015  The Corporation is also to fund exploration expenditures of: · $100,000 (Canadian) on or before October 29, 2007 (completed) · an aggregate of $300,000 (Canadian) on or before October 29, 2009 (completed)   -46-  Effective May 14, 2007, the Corporation signed an option agreement with Island Arc Exploration Corporation (Island Arc) to earn a 51% interest in the property on completion of the following: Cash payments to the Corporation of: · USD$25,000 on or before July 31, 2007 (received) · USD$30,000 on or before July 31, 2008 (received) · USD$30,000 on or before each anniversary date of July 31, 2009 through July 31, 2014 (a total of USD $180,000) · USD$35,000 on or before July 31, 2015 Fund exploration expenditures of: · not less than $300,000 on or before March 31, 2008 (completed) · an aggregate $1,750,000 on or before March 31, 2010 Issue shares of Island Arc to the Corporation: · 100,000 common shares within 15 days of receiving regulatory approval (received) · 100,000 common shares on or before March 31, 2008 (received) · 200,000 common shares on or before March 31, 2009 · 200,000 common shares on or before March 31, 2010 · 250,000 common shares within 10 days of announcement of mineral resource estimate This agreement was terminated effective February 19, 2009. The company will assume the remaining obligations to the underlying vendor.  The following table details the claims that comprise the Jake property with legal identification (Mineral Tenure) size, expiry date, and location.  Claim NameMineral TenureArea (hectares)Expiry DateLocationClearwater Peak[1]50827280.212December 31, 2009092P069CLO 1[2]518670240.691December 31, 2009092P069CLO 2[2]519684200.651December 31, 2009092P069JAKE 1-8521792 - 5217993,831.18December 31, 2009092P069JAKE 9-15521800 - 5218063,369.13December 31, 2009092P069JAKE 16-17521807 - 521808961.942December 31, 2009092P069JAKE 18-19521810 - 521811961.591December 31, 2009092P069JAKE 20521812500.622December 31, 2009092P079JAKE 21521813480.974December 31, 2009092P069JAKE 22-28521814 - 5218203,385.569December 31, 2009092P069JAKE 29521821480.623December 31, 2009092P079JAKE 30-35521822 - 5218272,682.003December 31, 2009092P079JAKE 36521828320.279December 31, 2009092P078JAKE 37521830480.591December 31, 2009092P079JAKE 38-39521831 - 521832823.025December 31, 2009092P069JAKE 40-44521834 - 5218382,410.509December 31, 2009092P059JAKE 45-48521840 - 5218431,729.185December 31, 2009092P059  -47-   Claim NameMineral TenureArea (hectares)Expiry DateLocationJAKE 49521845482.47December 31, 2009092P060JAKE 69-71521866 - 5218681,405.874December 31, 2009092P060JAKE 72-76521869 - 5218741,764.013December 31, 2009092P069JAKE 77521876502.11December 31, 2009082M051JAKE 78521878401.031December 31, 2009092P070JON[2]520106300.879December 31, 2009092P069MELI[2]521756120.325December 31, 2009092P069SID[2]520105100.279December 31, 2009092P069TOM[2]519188240.702December 31, 2009092P069 [1] Clearwater Peak purchased in May 2006 [2] Jake property optioned from M. Kaufman in October 2005  Regional Geology  The Jake property straddles the boundary between the eastern Intermontane Belt to the west and the Omineca Belt to the east. The geology of this area has been the focus of significant mapping and geochronology by the British Columbia Geological Survey. The north-south long axis of the project area follows the Lemieux Creek Fault, which separates the Lemieux Creek Formation of the Quesnel Terrane from the Upper Paleozoic Fennel Formation of the Slide Mountain Terrane to the west. The Lemieux Creek Succession is a sedimentary sequence comprised of phyllites, slates, siltstones, quartzite and calcareous quartzite. The Jake showing occurs within mafic rocks of the Fennel Formation, which is largely composed of pillowed to massive basalt with minor bedded chert and gabbro. To the east, Slide Mountain Terrane is in thrust faulted contact with metamorphic rocks of the Kootenay Terrane. In this region the Quesnel, Slide Mountain and Kootenay Terrane boundaries are all cross-cut by batholithic granite intrusions.  Property Geology  The Jake showing occurs within basaltic to gabbroic boulders and subcrop of the Fennel Formation near an inflection in the northwest-trending portion of the Lemieux Creek Fault. The showing consists of four similar boulders distributed obliquely over a recently built logging road bed and extending for 35 meters. A single 15 centimeter wide quartz cobble with visible gold and bismuthinite was located 250 meters further south of the heavily mineralized boulders.  Mineralization  Mineralization within the boulders is characterized by bull quartz veins with banded and net-textured pyrrhotite ± chalcopyrite ± pyrite ± bismuthinite. Disseminated pyrrhotite (up to 3%) also occurs as blebs in pillow basalts that display hornfelsic textures and secondary epidote and quartz. This style of vein mineralization and a gold-copper-bismuthinite metal association is similar to other Cretaceous-aged gold-quartz vein systems in the area and highlights the potential of this region to host Intrusion-Related Gold deposits analogous to those in the Tintina Gold Belt of the Yukon and Alaska.  -48-  Surface Exploration and Geophysics  The Corporation conducted a limited property examination prior to acquiring the claims. This included channel sampling, mapping and prospecting. The results were sufficiently encouraging to prompt the option agreement and subsequent staking of related claims.  In March 2006, the Corporation undertook an initial ground magnetics and VLF electromagnetic survey to identify targets for additional exploration later in the year. Mechanical trenching was conducted at the original discovery exposing six veins over the length of the 74 meter trench. In July 2006, the Corporation undertook a prospecting and property-wide silt sampling program to follow up on the initial ground work.  Work on the Jake property was carried out in three stages in 2007. A small Induced Polarization /Resistivity (IP/Res) survey (6.1 line kilometers) was executed during June 2007 over a portion of the Jake property. In August/September the Corporation completed 7 trenches for a total of 250 meters of excavator trenching on the Jake Showing and geophysical targets. 117 chip and channel samples were collected in the trenches. Continuous sampling of the trenches was attempted in areas of continuous bedrock exposure. Results from one trench at the Jake Showing include 7.7 grams per tonne gold over 2.8 meters from a series of quartz-pyrrhotite-pyrite-chalcopyrite-bismuthinite veins. Trenching on the flanks of a second IP anomaly (the Jake Offset) located 300 meters north of the Jake Showing and measuring 300 meters in length, exposed narrow mineralized structures that returned 12.5 grams per tonne gold over 0.1 meters. A third chargeability anomaly that lies approximately 225 meters east of the Jake Showing was trenched, uncovering a 1.0 meter wide, north-northwest-oriented fault structure with associated gold-bearing quartz-pyrrhotite-chalcopyrite-arsenopyrite veins. Due to overburden depth, trenching was unable to expose bedrock in the core of the anomalies.  In November, diamond drilling totaling 1,083 meters was completed in the central portion of the Jake property. An eighth hole was lost in overburden and therefore did not reach bedrock. Three holes targeted the Jake Showing, while the remaining four drill holes targeted the Jake Offset and the eastern fault structure. The Jake Showing vein returned 11.34 grams per tonne gold over 1.5 meters beneath the surface trenching result. The vein was intersected a further 11 meters down dip and 15 meters along strike returning 1.54 grams per tonne gold over 0.40 meters and 7.18 grams per tonne gold over 0.10 meters. Drill results from the Jake Offset include 4.64 grams per tonne gold over 0.50 meters, while drilling of the eastern target returned 0.11 grams per tonne gold over 0.20 meters.  The sampling programs were conducted under the direction of Mark Baknes, P.Geo., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) Eco-Tech Laboratory Ltd. of Kamloops and ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. The drilling program was conducted by Equity Exploration Consultants Ltd. under the direction of Henry Awmack, P.Eng. A technical report was filed on SEDAR on April 29, 2008.  During 2008, Island Arc completed a 22 line-kilometer Induced Polarization program to enlarge the coverage of geophysical data extending from the Jake Showing. This program was carried out by Scott Geophysics Limited. The survey identified several new chargeability anomalies that could be analogous to the fault structure hosting the Jake Showing. These anomalies define potential drill targets.   -49-  Future Exploration Programs  Based on the results of the 2008 IP survey, a small program of deep penetrating geochemistry (pH analysis and Mobile Metal Geochemistry) has been proposed for the 2009 field season to test and rank the IP anomalies for future drill testing. The Corporation will seek a joint venture partner to continue this exploration program.  Thorn Property, Atlin Mining Division  [rimfireannual20f09final011.jpg]   -50-  [rimfireannual20f09final012.jpg]  -51-  Location and Introduction  The property consists of 18 mineral claims (14,689 hectares) and is located in the Atlin Mining Division, approximately 120 kilometers northwest of Telegraph Creek. Access is currently by float plane and helicopter, with the nearest road approximately 50 kilometers to the southeast at the Golden Bear mine. The Golden Bear Mine is connected to the Telegraph Creek-Dease Lake connector by 150 kilometers of gravel road. A road could be constructed from the Thorn property to the Golden Bear mine if warranted.  Property History  The earliest known work on the Thorn property was carried out by Kennco Explorations (Western) Limited in 1959 during a regional exploration program. This was followed by three years of seasonal exploration by Julian Mining Corporation (Julian) from 1963-65. Mapping and prospecting work resulted in the discovery of 17 mineral showings of three main types: (i) quartz-pyrite-tetrahedrite-enargite veins, (ii) structurally-controlled chalcopyrite-pyrite-quartz veins and (iii) areas of widespread, low-grade disseminated chalcopyrite. Diamond drilling was carried out (17 holes, 1,204 meters) on three showings.  In 1983, Inland Recovery Group Ltd. (Inland Recovery) acquired the Thorn property from J.R. Woodcock and carried out mapping, soil sampling and VLF-EM surveying near the junction of Camp and La Jaune creeks. The soil grid consisted of an 800-meter base-line trending 060° with perpendicular cross-lines spaced 50 meters apart and sampled at 25 meter intervals. Strong silver-gold-copper-zinc soil geochemical anomalies were revealed along Camp Creek and extending 600 meters westerly from Julians B Zone.  In 1986, Inland Recovery and American Reserve Mining Corp. drilled eight holes (688 meters) from three drill sites within the soil geochemical anomaly extending west from the B Zone. Core was altered and variably mineralized throughout, but only the highest-grade sections were split and analysed.  Kohima Pacific Gold Corp. (Kohima) staked the Stuart 1-3 claims in 1997 and acquired an option on the Checkmate claim. In 1998, Kohima conducted an alteration mineralogy study using a portable infrared spectrometer (PIMA) on select outcrops in Camp Creek, and drill core from three diamond drill holes from the 1986 campaign.  Property Acquisition  By agreement dated March 1, 2000 with Kohima, the Corporation was granted an option to acquire a 100% interest in the Thorn property (four claims). The Corporation exercised the option by making staged cash payments of $230,000 by March 2, 2005, issuing a total of 200,000 shares by March 1, 2003 and incurring exploration expenditures of $50,000 by March 1, 2001. The Corporation subsequently staked an additional seven claims surrounding the initial claim block, but lying within the Kohima area of interest covered by that agreement. A further 19 claims were staked over favourable geochemical targets between April 2003 and May 2004. This total of 30 claims was converted to 21 larger claims in the Mineral Titles Online map-staking initiative. Subsequently three claims were permitted to lapse resulting in 18 active claims. The following table details the claims that comprise the Thorn property with legal identification (Mineral Tenure) size, expiry date, and location.   -52-   ClaimMineral TenureArea (ha)Expiry DateLocationCheckmate/
Stuart 15027411,013.27December 31, 2014104K056Stuart 2&3502743929.37December 31, 2014104K056SUTL 1&35027781,061.93December 31, 2010104K066SUTL 2&45027751,213.63December 31, 2010104K066SUTL 1450958067.42December 31, 2010104K066SUTL 16509581269.82December 31, 2010104K066Thorn 1504172455.77December 31, 2014104K058Thorn 2504173303.84December 31, 2014104K058Thorn 3&4502745928.84December 31, 2014104K057Thorn 5&65012821,351.95December 31, 2014104K057Thorn 7&135027461,282.25December 31, 2014104K056Thorn 8&95027471,299.00December 31, 2014104K057Thorn 10-11502748607.68December 31, 2014104K057Thorn 12502749404.69December 31, 2014104K066Thorn 14&15&165027501,148.12December 31, 2014104K057TUN 1502817591.89December 31, 2010104K056TUN 2&45012611,336.35December 31, 2010104K057TUN 3502821423.08December 31, 2010104K046  The Corporation has earned 100% interest in the property, subject to a net smelter royalty. Kohima has retained a 3.5% net smelter return royalty, of which the Corporation can purchase a 57% interest (being 2% of the 3.5% interest) for $3 million. In addition to the above, the Corporation will issue 200,000 common shares to Kohima upon the commencement of commercial mining operations on the Thorn property.  The Corporation signed an option agreement dated March 1, 2002 with Cangold Limited, formerly First Au Strategies Corporation (Cangold) under which Cangold earned a 51% interest in the property by making staged cash payments totaling $190,000, issuing a total of 250,000 shares to the Corporation and by incurring exploration expenditures of $1.2 million. Effective April 11, 2008, the Corporation signed a purchase agreement to acquire Cangolds interest in the property by making a cash payment of $100,000 and issuing 100,000 shares. In the event a third party partner becomes involved in the exploration and development of the property, the Corporation will pay to Cangold 25% of any cash or share payments received from the third party partner.  -53-  Regional Geology  The area around the Thorn property is underlain by mid-Paleozoic and Triassic island arc successions, Late Triassic and Jurassic sediments of the Whitehorse Trough and bimodal Late Cretaceous to Eocene volcanic and associated intrusive rocks.  Property Geology  The southern and western portions of the Thorn property are underlain by Upper Triassic Stuhini Group mafic volcanic and epiclastic rocks, which are locally overlain by Middle Jurassic coarse clastic rocks of the Takwahoni Formation.  These have been intruded by the Late Cretaceous Thorn Stock, which covers an area of approximately 1,500 x 4,000 meters, elongated northwesterly along La Jaune Creek. The Thorn Stock consists of two distinct phases of feldspar-quartz-biotite porphyry which have been pervasively altered. Chloritization is most extensive, but intense sericitization and/or argillization, accompanied by up to 20% disseminated pyrite, extends for several tens or hundreds of meters away from mineralized fracture systems.  Rhyolitic to andesitic subaerial volcanics are exposed on the north and northeast portions of the property; they are somewhat younger than the Thorn Stock. At the eastern end of the property, these have been intruded by poorly-mapped monzonite and granodiorite stocks and plugs of Late Cretaceous age.  Mineralization  Exploration on the Thorn property is directed at two deposit types: (1) high-sulphidation epithermal mineralization of the El Indio/Lepanto style; and (2) breccia  hosted silver-gold-lead-zinc mineralization discovered in the Oban Zone in 2002. A number of pyrite+enargite+tetrahedrite+quartz veins are hosted by sericitized and argillized feldspar-quartz-biotite porphyry of the Thorn Stock over an area of 1,400 x 2,000 meters. A strong structural control is evident for the veining, much of which trends 070° and dips steeply. Some of the more significant showings include:  · Catto Vein: Discovered in 2000, the recessive Catto Vein consists of massive pyrite, enargite and tetrahedrite in a fault paralleling the nearby contact between the porphyry and Stuhini andesites. Drill hole 86-6 may have intersected the Catto Vein approximately 50 meters along strike.  · Tamdhu Vein:Discovered in 2000, the Tamdhu Vein consists of chalcedonic quartz, pyrite, enargite and tetrahedrite. The vein has been traced for 30 meters on surface and has been intersected in drilling over a strike length of 70 meters in three holes.  · MP Vein:The MP Vein, which may form part of a wider system covered by boulders, consists of massive pyrite and enargite exposed in Camp Creek.   -54-  · Oban Zone:The Oban zone is an extensively altered heterolithic breccia pipe containing significant silver-lead-zinc and gold mineralization. Sulphide minerals in the breccia contrast with the massive sulphide vein mineralogies and include boulangerite (silver-bearing sulphosalt), sphalerite, pyrite and minor arsenopyrite, freibergite (silver-rich tetrahedrite), galena and possibly tellurides.  · Cardhu Vein:The Cardhu Vein is a poorly exposed sulphide/sulphosalt vein near the southwestern contact of the Thorn Stock, south of Spike Creek.  · B Zone:The B Zone is a 1-5 meter wide zone of vuggy silica, chalcedonic veining and quartz breccia with relatively minor pyrite, enargite and tetrahedrite, which has been traced for about 300 meters along strike. Five 1986 drill holes tested the B Zone.  · F Zone:F Zone is a broad zone of intense alteration with quartz-sulphide veining that can be traced for 200 meters.  · I Zone:The I Zone comprises numerous parallel 10-70 centimeter quartz-pyrite-tetrahedrite veins in sericitized porphyry, across a true width of 5-10 meters.  · Glenlivet Zone:The Glenlivet Zone, discovered in 2002, extends southwesterly for 220 meters from the western end of the F Zone and is comprised of sheeted pyrite-enargite veins filling fractures in clay-sericite altered porphyry.  · Talisker Zone:The Talisker Zone, discovered in 2004 by drilling a blind Induced Polarization geophysical anomaly, has been intersected by three drill holes over a 200 meter strike length and consists of disseminated and vein-style high sulphidation mineralization.  · Balvenie Zone: The Balvenie Zone, discovered in 2004, is hosted in strongly sericite altered Thorn Stock and consists of two sets of silica-pyrite-enargite-tetrahedrite veins. The Balvenie Zone was intersected by one drill hole in 2005.  The Stuhini Group mafic volcanics host several gold-bearing quartz+carbonate+chalcopyrite+ arsenopyrite veins within a few hundred meters of the Thorn Stock. Most of these veins are less than 70 centimeters wide and of limited economic significance.  The Outlaw Zone is a poorly understood area of silicification and scattered quartz veining located five kilometers southeast of the main enargite-tetrahedrite showings. The alteration, accompanied by strongly anomalous gold, arsenic and antimony soil geochemistry, covers an area of approximately 400 x 2,000 meters. Four drill holes tested a portion of the Outlaw Zone in 1987, showing the presence of widespread but erratic gold mineralization.   -55-  Surface Exploration, Geophysics and Drill Programs  A seven-hole, 498 meter drill program conducted on behalf of Cangold (formerly First Au Strategies) tested three showings over a 1.2 kilometer trend in 2002. Three shallow holes were collared at the Oban Breccia to test surface mineralization. All three holes intersected weakly mineralized breccia. A total of four holes were drilled to test the I Zone and Tamdhu Zone. All four holes intersected the target structures, confirming the continuity of vein mineralization.  In 2003, work focused on trenching within the Oban soil geochemical anomaly and drill-testing the Oban breccia pipe. 841 meters of trenching exposed approximately 10% outcrop consisting of weakly mineralized breccia pipe. Eight diamond drill holes totaling 876 meters of ATW core were completed. Four holes (TH03-19 to TH0322) intersected significant zones of fine-grained pyrite-sphalerite-boulangerite mineralization occurring as matrix infill between breccia clasts. The high grade intersections define a steeply northwest-dipping mineralized zone with an apparent width of 14-26 meters. Generally lower-grade zones (12-25 meter apparent width) flank this mineralized core.  In 2004, an Induced Polarization (IP) geophysical survey demonstrated a significant correlation between the IP geophysics and known silver-gold mineralization but also identified several new targets in areas of no outcrop. Later in the year, a drill program was completed consisting of 1810 meter in 12 holes targeting the Oban Breccia Zone, massive sulphide veins in the Camp Creek Structural Corridor and IP geophysical anomalies. Drill hole THN04-29 tested part of a 500 meter long IP anomaly and intersected 56.1 meters of 1.27 grams per tonne gold, 16.7 grams per tonne silver and 0.19% copper 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 grams per tonne (7.7 ounces/ton) gold two kilometers north of the Camp Creek Structural Corridor in an area of the property that has not seen previous work.  Highlights of the 2005 exploration program included 17.4 kilometers of IP geophysical surveying and 655.8 meters of drilling in five holes. The 2005 IP helped to further outline and define the Talisker Zone, and located two new anomalies further north: the Balvenie and Cutty Sark Zones. Geological mapping and rock sampling during 2005 focused on the margins of the Thorn Stock and the overlying Windy Table Formation volcanic units as recent age dating of these rocks revealed that they may be affected by mineralizing events at the Thorn.  Two holes were drilled at the Talisker Zone, which has now been extended over a strike length of at least 200 meters with intercepts in both 2005 step out holes including 4.2 meters of 4.44 grams per tonne gold, 407.9 grams per tonne silver and 2.95 % copper in THN05-37. Two holes, which tested the new IP target at the Cutty Sark anomaly, intersected the first occurrences of lithologically controlled alteration on the property. One hole tested the far eastern extent of the Balvenie Zone, another vein system parallel to the Talisker Zone. The drilling and sampling programs were conducted under the direction of Henry Awmack, P.Eng., of Equity Exploration Consultants Limited, a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) 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 12, 2006.   -56-  Cangold Limited was operator for this project and proposed a drill program during 2006. This initial plan was later withdrawn and no work was completed on the project during 2006, 2007 or 2008.  Future Exploration Programs  The next stage of exploration on the Thorn property will be a diamond drill program focused on resource definition at the Talisker Zone and exploration drilling at several other IP geophysical targets identified in 2004 and 2005. The Corporation is seeking a partner to advance exploration on the project. There are currently no plans to conduct exploration on the property in 2009.  Tide Property, Skeena Mining Division  [rimfireannual20f09final013.jpg]   -57-  [rimfireannual20f09final014.jpg]  Location and Introduction  The Tide Property, consists of four claims covering 2,964 hectares and is located approximately 36 kilometers north of Stewart, British Columbia The Tide property covers a group of precious metal-bearing polymetallic mineral occurrences in the Stewart area of northwestern British Columbia. They were discovered in the 1980s through follow-up of highly anomalous silt and soil geochemistry. The following table details the claims that comprise the Tide property with legal identification (Mineral Tenure) size, expiry date, and location.  -58-   Claim NameMineral TenureArea (hectares)Expiry DateLocationBow-1501145269.314December 31, 2016104B030Bow-2&35011851149.882December 31, 2016104B030Bow 4&Arrow5012131060.109December 31, 2016104B030BOW 5503002484.808December 31, 2016104B030  Property History  The East Gold Mine, surrounded on three sides by the Tide property, was first worked in 1926 and produced 46 tonnes of hand-picked ore grading 1,126 grams per tonne gold and 3,106 grams per tonne silver from narrow quartz-sulphide veins.  The first recorded work on the Tide property was done by Northair Mines Ltd., who carried out extensive silt and soil sampling from 1980 to 1986, discovering and blast-trenching several gold-bearing showings, and drilling 455 meters in two holes. Austral Pacific Gold Corporation and Claimstaker Resources Ltd. optioned the Tide property from 1988 to 1990, carrying out extensive mapping and ground geophysical surveys. Claimstaker drilled four holes totaling 120 meters in 1990, but three were abandoned in overburden. The best intersection from the three completed drill holes in 1986 and 1990 assayed 4.11 grams per tonne gold over 0.76 meters.  The Northair claims were allowed to lapse in 1993 and were re-staked by Hemlo Gold Mines Inc. (now Newmont Canada Limited) as the Bow-1 to -4 and Arrow claims, which constitute most of the current Tide property. In 1994, Hemlo carried out property-wide mapping and took soil samples on reconnaissance contour and ridge/spur lines. Detailed soil/talus and chip sampling in 1995 and 1996 were confined to higher elevations at the Northpit, 36, Riptide and Southpit zones.  Property Acquisition  The Corporation purchased the Tide property in August 2001 from Newmont Canada Limited for a total cash expenditure of $10 with an underlying 1.5% net smelter royalty (NSR) in the event the property becomes commercially feasible to mine. This NSR has been transferred to Franco-Nevada Corporation.  On October 28, 2002, and amended on July 25, 2003, October 20, 2003 and November 20, 2003, the Corporation 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 the second extension, dated October 20, 2003, Plutonic issued an additional 100,000 common shares to the Corporation. 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 Corporation Effective October 27, 2006, this agreement was assigned to American Creek Resources Ltd. (American Creek). Upon exercise of the option, Serengeti retains a 1% NSR upon the 51% interest earned by American Creek. American Creek has earned their 51% interest in the property:   -59-  On February 8, 2007, the Corporation signed a letter of agreement with American Creek for a second option whereby American Creek can earn an additional 9% interest by funding a further $3.5 million in exploration on or before December 31, 2010. Their interest can be increased to 65% interest by funding a bankable feasibility study, and, at the Corporations election, to 70% interest by providing 100% of the initial project development financing. American Creek is operator for the project.  Regional Geology  The Stewart mining camp lies along the western margin of the Intermontane tectonic belt, adjacent to the Coast Plutonic Complex. The area is underlain by the Hazelton Group, a Lower to Middle Jurassic island-arc complex, and its coeval stocks, sills and dykes of the Texas Creek Plutonic Suite. The Hazelton Group has been folded into north-northwest trending, doubly plunging syncline/anticline pairs with subvertical axial planes. Faults are abundant at both local and regional scales. Property Geology  The Tide property is largely underlain by andesitic ash tuffs and lapilli tuffs, with lesser argillite, wacke and augite-feldspar porphyritic andesite flows. These form part of the Norian to Pliensbachian Unuk River Formation at the base of the Hazelton Group and have been extensively hornfelsed by thick sills related to the roughly coeval Summit Lake Stock. This stock, centered south of the Tide property and dated at 192.8+2 Ma, is a 2 x 3 kilometers body of fresh, medium- to coarse-grained, equigranular hornblende granodiorite. To the north, it tails off into a 200-1,000 meter wide sill complex, which extends northward through the Tide property. The sill complex is generally feldspar-hornblende+biotite porphyritic, is variably altered and appears related to precious metal-bearing mineralization on the Tide property.  Mineralization  Sulphide mineralization is widespread on the Tide property, with all significant occurrences discovered to date lying in a 1,700 x 3,200 meter area on the eastern flank of Tide Mountain. Mineralization appears to be spatially, and possibly genetically, related to the feldspar-hornblende porphyry sills of the Summit Lake Stock. The zones (Arrow, High-Grade, Brown Bear, 52 and part of the Southpit) within the sill, or proximal to its contacts, appear to be relatively enriched in silver, lead, zinc and antimony; those more distal to it (Northpit, 36, Riptide, Camp and part of the Southpit) are relatively enriched in gold and arsenic.  The distal gold-arsenic zones are dominated by quartz-pyrite-arsenopyrite veining emplaced within westerly-trending, steeply north-dipping fracture zones in hornfelsed volcanic and volcaniclastic rocks; they lie within a 500 meter wide band which parallels the sill complex and lies 100-900 meters west of its contact. The proximal group of mineral occurrences consists of polymetallic quartz-sphalerite-galena-pyrite+tetrahedrite+arsenopyrite veins at several orientations. This group is mainly hosted by sericitized feldspar-hornblende porphyry, but the Southpit veins are located up to 300 meters west of the sill contact. Both the distal and proximal groups contain locally high precious metal contents, including 53.0 grams per tonne gold (distal - Southpit Zone), 105 grams per tonne gold and 598 grams per tonne silver (proximal - Arrow Zone), and 593 grams per tonne gold and 14,708 grams per tonne silver (proximal - 52 Zone). Quartz-sulphide vein float in Eastgold Creek and veining in the East Gold Mine area, 500 meters north of the Tide property, have metal signatures similar to those of the polymetallic proximal mineralization, although the porphyry sills have not been mapped this far north.  -60-  Surface Exploration, Geophysics and Drill Programs  An initial program of mapping and prospecting was carried out in September 2001 from a camp on the road. Mapping and prospecting were carried out at a scale of 1:2,500, with rock samples taken from mineralized and altered outcrops and boulders.  In 2004, the Corporation conducted two phases of exploration: an early summer program of geological mapping, prospecting and soil geochemical sampling infilling areas with poor sample coverage followed by a fall program of diamond drilling consisting of four holes totaling 598 meters and further prospecting.  Four reconnaissance holes, totaling 598 meters, were drilled by Serengeti Resources in late 2004 testing the Arrow, Southpit, High Grade Pit and 36 zones. Significant gold mineralization was intersected at the 36 Zone, where hole TIDE04-03 averaged 1 gram per tonne gold over 129.4 meters including 39.6 meter at 1.93 grams per tonne gold. This intersection is significant in that it tested a soil geochemical anomaly measuring 450 x 350 meters of greater than 0.5-gram per tonne gold that remains open in all directions. The hole was collared in the middle of the soil anomaly which is reflected in the mineralization 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 and the Brown Bear Zone which may be a continuation of the Arrow Zone mineralization.  An airborne magnetics and electromagnetics geophysical survey was flown over the property in the spring of 2005 to aid in drill targeting and identifying structural trends on the property.  The primary focus of the 2005 drilling was to follow up the 2004 drilling discovery of gold mineralization at the 36 Zone. Eight holes totaling 967 meters were drilled, four targeting the 36 Zone and four targeting the 52 Zone. The holes in the 36 Zone had mineralized intervals which extended the zone to the northeast, southwest and in depth. Infill soil geochemical sampling between the 36 Zone and the South Pit soil anomalies to the south showed that the two anomalies are continuous as defined by gold values in excess of 500 ppb (0.5 grams per tonne) gold. This gold-arsenic+/-antimony anomaly is now approximately 500 meters by 2,100 meters in size, with diamond drilling having tested an area of 170 by 350 meters. Favourable results from preliminary metallurgical studies show that this mineralization is amenable to leaching, with gold recoveries averaging 73-81%. Prospecting and trenching were completed at the 52 Zone. The diamond drilling, combined with the surface results, has shown mineralization in this zone to be highly variable in nature.  Exploration on the Tide property continued with a geological mapping, fracture density surveying and channel sampling program completed in September, 2006. The program focused on the 36, Southpit and Northpit Zones.  In 2007, American Creek conducted an exploration program consisting of 1,835 meters of diamond drilling in eight holes to test extensions to the 36 Zone, where drilling in 2004 and 2005 returned broad intervals of gold mineralization (129.4 meters @ 1.00 grams per tonne gold, 121.7 meters @ 0.72 grams per tonne gold), and other bulk tonnage gold targets within the Crest soil anomaly. In addition to drilling, crews completed 318 meters of surface channel sampling (121 samples) and detailed geological mapping on selected drill sections and between drill holes to sample east-west trending mineralized fractures that are the dominant gold-bearing host. This data will better define spatial trends of higher fracture density to be used for drill targeting in future.   -61-  Every hole drilled in the 2007 program returned anomalous gold values over large widths, including Tide07-13, which averaged 0.49 grams per tonne gold over the entire 207 meter length of the hole and Tide07-14 which averaged 0.33 grams per tonne gold over the entire 247 meter length. Highlights include Hole Tide07-13, aimed at testing the southern extents of the 36 Zone, which included two separate intervals of 43.6 meters of 1.0 grams per tonne gold and 22.5 meters of 0.94 grams per tonne gold. Two holes were completed at the Northpit target, located 375 meters east of the 36 Zone, that returned 0.92 grams per tonne gold over 19.0 meters and 1.02 grams per tonne gold over 15.0 meters. One hole at the Riptide target, located 600 meters east of the 36 Zone, returned 0.27 grams per tonne gold over 11.1 meters.  The sampling programs were conducted by Equity Exploration Consultants Ltd. under the direction of Henry J. Awmack, P. Eng., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects) ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report was filed on SEDAR on April 30, 2008. There have been no material changes since that date.  No work was completed on the Tide program during 2008.  Future Exploration Programs  For 2009, American Creek, who is operator, has not proposed a program.   -62-  Wernecke Breccia, Yukon  [rimfireannual20f09final015.jpg]   -63-  [rimfireannual20f09final016.jpg]  -64-  Location and Introduction  The Wernecke Breccia properties, consisting of 1,926 claims, are situated in the Wernecke Mountains, approximately 180 kilometers northeast of Mayo in east-central Yukon Territory. Access to the property is via fixed wing aircraft to Copper Point airstrip and then by helicopter to the property. The property is situated in typical alpine, glaciated terrain, with elevations ranging from 1,065 to 2,165 meters above sea level.  Property History  In January 2006, the Corporation signed an agreement with Fronteer Development Group Inc. (Fronteer) to acquire 700 mineral claims and a proprietary geoscience dataset covering the Wernecke Breccia property from Newmont Exploration Canada Limited (Newmont) and NVI Mining Ltd., a subsidiary of Breakwater Resources Ltd. (NVI).  Fronteer has completed the required $2 million in exploration expenditures. Newmont and NVI retain a total 2% NSR. There is a 7.5% to 15% Net Profits Interest payable to the underlying vendors. Fronteer is operator of the project and has funded 100% of the exploration costs to earn an 80% interest, with the Corporation earning the remaining 20% interest. Effective November 15, 2006, a Joint Venture was formed between Fronteer and the Corporation, and ongoing exploration expenses will be shared pro-rata subject to dilution for non participation. Should either partys interest fall below 5%, their interest will be converted to a 3% Net Profits Interest after payback of capital and elimination of the vendors Net Profits Interest.  The Wernecke Breccias have been explored for copper, uranium and gold in the 1960s, 1970s, and 1980s. However, as iron oxide copper-gold (IOCG) deposits are relatively recently described, early exploration was not able to take advantage of this model. In the mid 1990s, Newmont Exploration Limited made a strong effort to advance the exploration of the Wernecke Breccias for their gold and copper potential, spending a total of U.S.$5.5 million on more than 20 properties. Newmont flew a regional airborne magnetic and radiometric survey and conducted extensive geochemical sampling and geological mapping prior to drilling twelve prospects for a total of 14,600 meters.  Regional Geology  The Wernecke Breccia property is located within a regional-scale belt of iron oxide dominated breccias which host significant copper-gold-cobalt mineralization. These breccias share many of the characteristics of iron oxide copper-gold (IOCG) deposits on a world wide scale. IOCG deposits have the potential to produce high unit value ore due to their multi-element nature and can form very large tonnage deposits, as best exemplified by the Olympic Dam deposit in South Australia. At Olympic Dam, ore is mined for copper, uranium, gold and silver. Several lines of evidence suggest that at the time of formation of the Wernecke Breccias, the Stuart Shelf of South Australia, the geological host terrane of the Olympic Dam deposit, was attached to the Yukon, as part of the Proterozoic super-continent of Rhodinia. The Olympic Dam deposit and the breccias in the Wernecke Mountains have identical ages of approximately 1.59 Ga. Other geological features, such as the intra-cratonic setting and orogenic history, are similar in style and timing between the two regions.   -65-  Surface Exploration, Geophysics and Drill Programs  During 2006, Fronteer completed a $2.8 million exploration program comprised of prospecting, geological mapping, geochemical sampling and a 9,750-line-kilometer airborne gravity geophysical survey. Survey data was combined with surface geochemistry results and proprietary magnetic and radiometric data obtained from Newmont Exploration of Canada Ltd. to select drill targets for 2007 programs. Through the course of the 2006 program, Fronteer evaluated 48 target areas for their potential to host Olympic Dam-style copper-gold-uranium and stand-alone uranium deposits. Surface sample results have been compiled for two target areas; the Thunder Mountain property and Fireweed prospect.  The Thunder Mountain property is a new gold-uranium-copper anomaly. A total of 25 samples were taken over an area of approximately 400 by 550 meters. Copper-bearing breccia was also noted nearby. The Fireweed prospect is a new uranium prospect where 93 boulders of iron oxide-potassium feldspar-silica altered chlorite schist were collected over a 200 by 400 meter area and averaged 0.22% U3O8. Twenty-two samples assayed in excess of 0.14% U3O8.  Fronteer commenced a $6 million exploration program early in 2007. A series of high priority drill targets designed to test iron-oxide-copper-gold systems +/- uranium and stand alone uranium targets were identified, all of which are characterized by coincident geophysical, geological and geochemical anomalies. Many of these targets were newly defined in 2006, while some are historical targets that remain open for expansion and have been reinterpreted in light of new data. The 2007 field program was completed by middle of October. A total of 3,150 soil samples, 112 silt samples, and 906 rock samples were collected amongst the various target areas. A total of 6,538 meters in 28 holes were drilled.  The most encouraging results from the 2007 drilling have been returned from the Hoover Zone. New results, combined with nine historical drill holes completed in the mid-1990s, indicate the Hoover Zone mineralization has the potential to expand along strike to the north and south as well as down dip. Mineralization has been intersected in 11 widely spaced holes and over approximately 500 meters of strike length. Two of the best results include 0.56% copper and 0.11 grams/tonne gold over 89 meters, including 0.82% copper and 0.17 grams/tonne gold over 39 meters in HV07-22 and 0.56% copper and 0.16 grams/tonne gold over 45.5 meters in HV07-27. A narrower higher grade interval in HV07-27 returned 1.84% copper and 0.53 grams/tonne gold over 17.3 meters while a another 16.4 meter interval in hole HV07-21 returned 0.86% copper and 0.22 grams/tonne gold. At the Pagisteel prospect the only hole drilled this year returned a 6.1 meter interval of 2.57% copper and 0.97 grams per tonne gold. The Pagisteel prospect is characterized by a 4-kilometers long trend of anomalous gold and copper soil and rock geochemistry that is largely covered with overburden.  The program was conducted by Equity Exploration Consultants Ltd. under the direction of Jim Lehtinen, P.Geo who is a qualified person under National Instrument 43-101. A technical report was filed on SEDAR on April 29, 2008. There have been no material changes since that date.  Future Exploration Programs  No work is planned for 2009. Fronteer and the Corporation will be seeking joint venture partners to continue exploration of the property.  -66-  Williams Property, Liard Mining Division  [rimfireannual20f09final017.jpg]   -67-  [rimfireannual20f09final018.jpg]  Location and Introduction  The Williams property consists of 58 claims covering 26,136 hectares of mountainous terrain in north-central British Columbia, 330 kilometers north of Smithers. Access to the property is currently by helicopter and float-plane, with the nearest road 75 kilometers to the southeast. The Corporation has acquired a 100% interest in the property subject to a net smelter royalty.  Property History  The two main prospects (T-Bill and GIC) on the Williams property were independently discovered in the early 1980s by Cominco and Du Pont, following up highly anomalous stream geochemistry. These companies joined forces to drill a total of 3,023 meters on the T-Bill prospect in 1983 and 1984 before allowing the property to lie dormant. The Corporation optioned the core of the property in May 2001, and then later staked additional claims.  -68-  Property Acquisition  On May 17, 2001 the Corporation entered into an option agreement with Lorne Warren (Warren) and John Mirko (Mirko) to acquire a 100% interest in the BT claim, subject to a 2.5% net smelter royalty. On June 25, 2002, the Corporation subsequently acquired half of the interest and half of the net smelter royalty in the Williams Property from Mirko by issuing 75,000 common shares. The Corporation has earned the remaining 50% interest by paying the property vendors an aggregate $57,500 and issuing to the property vendors an aggregate 125,000 common shares. The Corporation will issue an additional 50,000 shares upon commencement of commercial production from the property. The Corporation can purchase 0.75% of the net smelter return for $1,000,000. Commencing in December 2005, an advance royalty payment of $5,000 per year is required to maintain the option agreement in good standing. All advance royalty payments have been made.  On July 20, 2006 the Corporation signed an option agreement with Arcus Development Group Inc. (Arcus) for Arcus to earn a 51% interest in the Williams property on completion of cash payments totaling $410,000, share payments totaling 400,000 common shares and exploration expenditures of $2.5 million before December 31, 2009. The option agreement was terminated effective February 25, 2008.  Stikine Gold Corporation, during their tenure as optionor, staked an additional 6 claims, surrounding the original claim block to be included in the agreement. The Corporation has staked additional claims based on results of field work.  The following table details the claims that comprise the Williams property with legal identification (Mineral Tenure) size, expiry date, and location.  Claim NameMineral TenureArea (hectares)Expiry DateLocationBT & BT15027641449.39December 31, 2014094E072BT2&3502770844.804December 31, 2014094E082BT 4514151241.631December 31, 2014094E072BT 5514152103.586December 31, 2014094E072BT 6514153431.419December 31, 2014094E071BT 7514154431.172December 31, 2014094E071BT 8514156431.07December 31, 2014094E082BT 9514162414.052December 31, 2014094E071BT 10514163310.281December 31, 2014094E081BT 11522391413.788November 18, 2014094E081BT 12522392413.667November 18, 2014094E081BT 13522394241.247November 18, 2014094E081BT 14522395431.051November 18, 2014094E081GOS502766829.114December 31, 2014094E072ROK1 &2502768673.359December 31, 2014094E072NORTH 1514157430.824December 31, 2014094E082NORTH 2514158413.384December 31, 2014094E082  -69-   Claim NameMineral TenureArea (hectares)Expiry DateLocationNORTH 3514159430.735December 31, 2014094E082NORTH 4514160430.685December 31, 2014094E082WILL 1&2502774396.407December 31, 2014094E082WILL 3&4502773965.782December 31, 2014094E072WILL 5-18542677-5426905,864.022December 31, 2009094E082WILL 19-37542692-5427108,027.515December 31, 2009094E073WILL 38-40542712-5427141,240.941December 31, 2009094E082WILL 41549158276.0775December 31, 2009094E073  Regional Geology  The Williams property lies near the eastern edge of the Intermontane Belt in a fault mosaic of: Devonian to Permian Asitka Group carbonates and volcano-sedimentary rocks; the Carboniferous to Lower Triassic Cache Creek oceanic assemblage, including the Kutcho Formation; Triassic Stuhini and Takla volcano-sedimentary rocks; Lower Jurassic Toodoggone (subaerial) and undifferentiated Hazelton volcanic rocks and Laberge Group volcanic and epiclastic rocks.  The stratified rocks are intruded by a variety of Late Triassic and Early to Middle Jurassic stocks and batholiths of felsic to ultramafic composition. Most of the Early Jurassic quartz monzonites, granodiorites and quartz diorites are marked by a distinctive magnetic high signature; in particular, this applies to the intrusive immediately northeast of the Williams property. The quartz monzonite stock exposed on the southern part of the Williams property is the exception to this rule; it is characterized by a distinctive magnetic low almost ten kilometers across.  The Pitman Fault is a major E-W fault which passes 30 kilometers north of the Williams property. Alldrick, who traced the Pitman Fault for 300 kilometers, states that there is 3 kilometers of left-lateral movement along it with minimal vertical offset, and that movement occurred during Eocene to Oligocene time. Three of these major E-W faults have been mapped at the northern and southern extremities of the Williams property, one along the Stikine and Chukachida Rivers four kilometers south of the Gos claim and the other two passing through the BT 3 claim, north of the GIC occurrence. A fourth could reasonably be inferred along the valley between the T-Bill and the GIC prospects, downdropping undeformed Upper Triassic Takla Group volcanics to the north against deformed Paleozoic Asitka Group rocks to the south.   -70-  Property Geology  The T-Bill prospect is underlain by penetratively deformed Devono-Permian Asitka Group metavolcanics which have been altered to carbonate-muscovite-quartz schist over an area of 1,200 x 2,300 meters. This alteration is confined to the core of a northeasterly-trending structural dome and is controlled both by foliation and by steep cross-cutting structures. Gold-rich quartz-arsenopyrite veins, locally with visible gold, are broadly co-spatial with the carbonate-muscovite alteration, although they extend into unaltered chlorite schists with only centimeter-scale alteration envelopes. Individual veins generally cut across foliation and are rarely wider than 30 centimeters, although swarms of veinlets are common. Potential for a bulk-mineable target is indicated by broad low-grade intersections. The T-Bill prospect is marked by a strong 2 x 3 kilometer gold-arsenic soil geochemical anomaly whose limits reflect masking by till and talus cover as much as by changes in alteration and mineralization of the underlying bedrock.  The GIC prospect is centered less than two kilometers north of the T-Bill prospects northern edge, across a broad valley which may mark a major east-west fault. The GIC prospect is hosted by undeformed Takla Group volcanics, presumably down-dropped by the east-west fault, which have been hornfelsed, silicified and pyritized by a multiphase intrusion. A 500 x 900 meter, open-ended, gold-copper soil geochemical anomaly encloses two gossans. At the more prominent one, intensely silicified tuff is in contact with crowded feldspar porphyry. A more subtle gossan 500 meters to the southeast was formed from pyritic hornfels.  Mineralization  The Williams property hosts two main styles of alteration and gold-bearing mineralization; orogenic gold and arsenic-bearing veins and disseminations (T-Bill prospect); and porphyry-style copper, gold and molybdenum (GIC prospect). Previous drilling attempted to evaluate the T-Bill mineralization, however, that work was unsuccessful in determining with any certainty the orientation of the veins and associated alteration. In 2003, WG03-10 targeted the T-Bill prospect and intersected 6.92 meters of mineralization plus three other quartz vein zones with visible gold. An oriented core system was employed during the drilling suggesting a northwest  southeast trend to these high grade veins.  Surface Exploration, Geophysics and Drill Programs  An initial program of prospecting, silt and soil geochemistry and core re-examination and sampling was carried out in July 2001. Reconnaissance soil samples were collected along contour or compass lines in areas where previous soil geochemical anomalies had not been closed off, and where gold-bearing silt samples had never been followed up. Core from the 1983 and 1984 diamond drilling is stored at the 2001 campsite. The 1983 core and holes 84-6 to 84-9 were inaccessible, due to collapse of their core racks. The first five 1984 holes could be recovered, but were in poor condition from animal disturbance. They were examined and 14 previously unsampled sections were split for analysis. Rock samples were taken from mineralized and altered rocks during the course of prospecting.  Stikine carried out a 3-D Induced Polarization (IP) geophysical survey in September 2002. The survey was undertaken to define areas of higher chargeability reflecting increased sulphide content and higher resistivity reflecting silicification. The survey defined a large chargeability anomaly, measuring 400 by 300 meters, immediately north of the area tested by the previous drilling. This anomaly is also coincident with a broad 700 by 1,000 meters resistivity anomaly. Contour soil samples from the northwest portion of the chargeability/resistivity anomaly are highly anomalous in gold for over 800 meters.   -71-  In 2003, Stikine conducted an 11-hole (2,855 meter) drill program targeting the 800 by 450 meter resistivity anomaly, returning only anomalous gold values. One hole, WG03-10, targeted the T-Bill prospect and intersected high grade vein mineralization (6.92 meters of 6.0 grams per tonne gold.) Additional gold mineralization was intersected further down the hole.  The 2005 exploration program focused on the GIC prospect. Mapping, prospecting, and soil sampling followed by geophysical surveys outlined a compelling new copper-gold porphyry target. Induced Polarization (IP) surveys at the GIC prospect identified a strong 600 by 1,800 meter chargeability high anomaly coincident with and adjacent to known gold and copper mineralization. A 500 x 1,400 meter, east-west trending copper soil geochemical anomaly, enclosing two discrete 300 x 500 to 750 meter gold soil anomalies lies to the north, partially overlapping the northern edge of the GIC chargeability anomaly. The rest of the geophysical anomaly is masked by glacial till except for an isolated outcrop where a chip sample returned 0.22 % copper and 0.22 grams per tonne gold over 3.73 meters. Several gossans lie within the soil anomaly.  During 2006, Arcus conducted a five-hole (881 meter) program of diamond drilling. The program confirmed that alteration mineralogy and mineralization consistent with porphyry-style hydrothermal systems is present at the GIC. All holes intersected anomalous gold, copper and molybdenum concentrations over broad intervals. Drilling mainly targeted the till-covered southern flank and core of the IP chargeability, which drilling has shown to be a result of strong pyrite mineralization.  An exploration program consisting of reconnaissance mapping, soil and stream sediment sampling to evaluate the additional mineral tenures acquired in 2006 was conducted during August and September 2007. Work covering unexplored jarosite gossans east of the GIC area drilled in 2006, led to the identification of the LN Anomaly, a 450 by 900 meter molybdenum, copper+/-gold-in-soil anomaly. The anomaly, which remains open to the east, is coincident with an airborne magnetic high.  The focus of the 2007 program at the T-Bill was to confirm the orientation of quartz-carbonate-arsenopyrite veins in order to refine targets for subsequent drilling. This program included hand trenching in select areas to expose veining that previous workers had intersected in drilling. Hand trenching of the T-Bill veining confirmed managements interpretation that the vein swarm is steeply dipping with a northwest/southeast strike.  The sampling programs were conducted by Equity Exploration Consultants Ltd. under the direction of Jim Lehtinen, P.Geo, a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report was filed on SEDAR on February 27, 2007. No material changes have occurred since the report was filed.  Future Exploration Programs  No exploration program is planned for the Williams property in 2009. The Corporation is seeking joint venture partners to continue exploration on the property.  The Corporations other British Columbia and Yukon properties include:   -72-  Adam Property, Skeena Mining Division  The Adam Property, covering 1,823 hectares, is approximately 70 kilometers northwest of Stewart, British Columbia. On April 16, 2007 the Corporation sold 100% of these claims to Paget Resources Ltd. for a cash payment of $10,000. The Corporation retains a 2% NSR.  Auddie Property, Omineca Mining Division  The Auddie Property, consisting of two claims (674 hectares) is located in the Quesnel Trough in north-central British Columbia. The Auddie is a grassroots porphyry copper-gold exploration target with access via the Omineca Mining Road, approximately 42 kilometers west of Germanson Landing and 45 kilometers northeast of Takla Landing.  A prospector discovered the Auddie in a 60 meter outcrop exposure on a recently constructed logging road. Chip sampling by the Corporation in October 2006 yielded one interval which assayed 0.16% copper and 0.02 grams per tonne gold over 28 meters. A second interval averaged 0.31% copper and 0.02 grams per tonne gold over 15 meters. These two intervals are separated by a 17 meter gap in sampling where bedrock is obscured by stockpiled, but mineralized, road fill material. Overburden covers outcrop at either end of the mineralized section, and as such, the full extent of this mineralization is unknown. Mineralization is hosted in porphyritic to equigranular monzonite with pervasive potassium feldspar alteration. Chalcopyrite and pyrite mineralization occurs on fractures and in quartz veinlets.  Effective January 29, 2007, the Corporation signed an option agreement to purchase a 100% interest in the Auddie Property subject to a 1% NSR, half of which can be purchased for $1 million. The Corporation is to make cash payments of: · $10,000 within 10 days of the execution of the agreement (paid) · $15,000 on or before January 31, 2008 (paid) · $40,000 on or before January 31, 2009 · $50,000 on or before January 31, 2010. The Corporation completed the required exploration expenditures of $30,000 in 2007. This agreement was terminated effective January 28, 2009 when the property was returned to the vendor.  During 2007, an initial field evaluation consisting of mapping and limited soil sampling was conducted followed by a 6 line-kilometer induced polarization geophysical survey.  Chuchani Property, Liard Mining Division  The Chuchani property, consisting of nine claims (3450 hectares), is located in the Liard Mining Division of British Columbia approximately 148 kilometers north-northwest of Stewart, British Columbia and 64 kilometers north of the Eskay Creek Mine. The Property and surrounding area are underlain by mid-Paleozoic and Mesozoic island arc successions belonging to Stikinia, which have in turn been overlain to the east by clastic sediments of the Bowser Basin. A review of government data files indicates that no previous exploration work has been reported on this property. In 1991, Canadian Caribou Resources conducted a small prospecting and geochemical exploration program off the northwest corner of the property on what was then known as the Quest Property. They identified pyrite and pyrrhotite mineralization associated with Triassic felsic units. A limited program of prospecting and sampling conducted during the fall of 2008 did not produce results worth continued exploration. The claims were permitted to lapse in November 2008.     -73-  Kizmet Property, Atlin Mining Division  The Kizmet property consisting of eight claims (5,471 hectares) is located in northwest British Columbia approximately 90 kilometers south of Atlin, British Columbia. The main target of exploration on this property is epithermal gold-copper-silver-lead-zinc vein and breccia mineralization analogous to that found on the Corporations Thorn property to the south. It is believed that the epithermal mineralization in the district is strongly linked to a newly recognized suite of Cretaceous aged volcanic and plutonic rocks informally referred to as the Windy Table Suite. The Kizmet property was a joint venture with Barrick Gold Corporation (Barrick). The Corporation contributed claims totalling 27,939 hectares to the joint venture while Barrick contributed claims covering an area of 67,865 hectares. In November 2006, Barrick gave notice of termination of the joint venture. The claims have reverted to 100% ownership by the Corporation, subject to a 1% NSR in favour of RGLD Gold Canada, Inc. The Corporation has retained the core group of claims and permitted the outlying claims to lapse.  The property is located on the western flank of the Stikine Terrane, which is locally comprised of the Triassic Stuhini Group (variable marine clastic sedimentary rocks, sub-marine mafic volcanic rocks, and lesser carbonate rocks), overlain by upper Triassic Sinwa Formation limestone and lesser argillite, all of which is overlain by middle Jurassic Laberge Group clastic sedimentary rocks. The aforementioned comprise the basement rocks on the Kizmet property and are intruded by Cretaceous volcano-plutonic complexes that are associated with known gold-silver-copper-lead-zinc showings.  A regional sampling, prospecting and mapping program was conducted during the late summer of 2004. 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. 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 sulphides.  During the summer of 2005, Barrick conducted a prospecting, mapping and stream sediment sampling program that identified several anomalous areas that will require more detailed work. No additional work was completed during 2006 or 2007. A technical report has not been filed on the Kizmet Project.  No exploration program has been planned for 2009. The Corporation intends to seek joint venture partners for some or all of the claims.  Poker Creek, Liard Mining Division  The Poker Creek property, consisting of 12 claims (5,035 hectares), is located approximately 16 kilometers west of the town of Telegraph Creek. The Property and surrounding area are underlain by mid-Paleozoic and Mesozoic island arc successions belonging to Stikinia, which have been intruded by numerous igneous bodies of Triassic and Jurassic age. The claims were staked to cover potential copper gold porphyry mineralization.   -74-  During the period 1989-1991 four short duration reconnaissance prospecting, geochemical and mapping surveys were conducted over what is now the Poker Creek property by two different operators. Work defined Triassic sediments and volcanics of the Stuhini Group intruded by a variety of equigranular to porphyritic intrusions. Work was focused on both porphyry potential and gold-bearing mesothermal vein mineralization. Local areas of mineralization were noted and consist of weakly developed quartz-carbonate gold-silver and base metal-bearing veins with a sometime inferred spatial relation to porphyritic dykes and sills. Some moderately gold and copper anomalous silt sample results were obtained.  In August 2008, a helicopter supported seven day reconnaissance program of soil sampling, prospecting and geological mapping was carried out on the claims. Two soil lines returned highly anomalous results in copper and to a lesser extent gold over a roughly 1 by 1 kilometer area. Adjacent silt sample results indicate an area in excess of three kilometers east to west that is highly anomalous in both copper and gold. The metal signature and local geology of the area indicate potential for porphyry copper-gold-style mineralization.  No exploration program has been planned for 2009. The Corporation intends to seek joint venture partners for some or all of the claims.  Quesnel Trough Project, Cariboo Mining Division  A total of seven properties, covering 34,570 hectares, comprise the Quesnel Trough project and are located from 15 kilometers south of Prince George to 40 kilometers north of Fort St. James. The Corporation owns 100% of these claims. The project is targeting possible porphyry coppergold mineralization based on regional geophysical anomalies. An approximately 2000 line-kilometer helicopter airborne magnetics survey was completed during November 2007.  During 2008, Rimfire completed surface reconnaissance programs over all seven target areas. Alteration consistent with porphyry copper  gold mineralization systems was encountered on three targets including anomalous copper geochemistry in rocks on two of these targets and anomalous copper and gold geochemistry in soil samples from one target area. The remaining geophysical targets all occur beneath till or young basalt cover.  Effective April 21, 2009, Xstrata Canada Corporation signed an option agreement to explore the Quesnel Trough properties. The terms of the agreement grant Xstrata the option to earn a 51% interest in the property by completing a preliminary assessment and spending $3,000,000 by December 31, 2013. In addition, Xstrata must spend no less than $250,000 in each calendar year commencing in 2010. Xstrata may earn an additional 24% (total 75%) by completing a feasibility study and incurring no less than $20 million in feasibility study expenditures which must be completed within the Bump-up period which ends on the tenth anniversary of Xstrata earning its 51% interest.  Xstrata will carry out a surface exploration program consisting of Induced Polarization geophysical surveys and geochemical surveys over all seven target areas in 2009. Xstrata will act as operator and fund the exploration programs.  -75-  Fer Property, Watson Lake Mining District, Yukon  The Fer Property is comprised of a total of 118 contiguous mining claims and covers approximately 2,450 hectares. The Fer Property is located 20 kilometers west of the town of Tungsten in the Northwest Territories, and is approximately 200 kilometers north of Watson Lake, Yukon Territory. The Cantung Highway passes five kilometers northeast of the Fer Property; however the Fer Property is best accessed by helicopter. If warranted, no problems are foreseen in constructing road access to the property from the Cantung Highway.  The Fer Property is underlain by a broadly folded sequence of coarse siliciclastic, calcareous and phyllitic, continental margin sediments of the late Proterozoic to early Cambrian Hyland Group. The nearest intrusion is an elongate, Cretaceous-aged granite body which lies four kilometers southwest of the Fer Property. Hyland Group rocks host gold mineralization in numerous occurrences from the southeastern Yukon to the Dawson City area, covering approximately 750 kilometers within the Tintina Gold Belt.  The Fer Property was originally staked by Westmin Resources Limited in 1996 and was located to cover the strongest cluster of anomalous gold and arsenic results from a regional fine sediment sampling program conducted by Westmin in 1994. The survey was designed to test for Telfer-style, sediment-hosted gold deposits in the Hyland Group sedimentary rocks, and covered approximately 7000 square kilometers, stretching from the B.C.-Yukon border to the headwaters of the Hyland River. There is no record of exploration work on the property prior to this program. Work by the Corporation in 1998 consisted of soil sampling, detailed mapping of the anomalous soil zones and prospecting.  Pursuant to an Option and Joint Venture Agreement dated as of July 1, 1998, with Boliden Westmin (Canada) Limited, ("Boliden") as amended October 11, 2000, the Corporation acquired a 51% interest in the Fer Property. Bolidens interest in the property has been sold to NVI Mining Ltd. Under a letter of agreement dated November 26, 2008 NVI Mining Ltd. has sold their interest to the Corporation subject to an NSR of 2%.  The Corporation does not consider the Fer Property to be a principal property. The Corporation intends to seek a third party to option the property.  Yukon Uranium Project, Yukon  The Yukon Uranium Project, consisting of 400 claims, is located approximately 60 kilometers west-southwest of Dawson City. The claims target anomalous uranium geochemistry in stream sediment and soil samples. The Corporation, which holds a 100% interest in these claims subject to a 1% NSR, has optioned these claims to Longview Capital Partners. The claims were permitted to lapse in July 2008, terminating the option agreement.     -76-  Alaska Properties, Goodpaster Mining District  [rimfireannual20f09final019.jpg]   -77-  [rimfireannual20f09final020.jpg]  Location and Introduction  The Corporation holds an interest in four mineral exploration properties in the Goodpaster Mining District of Alaska, through its wholly-owned subsidiary, Rimfire Alaska, Ltd. The Corporation currently owns 100% of the Bou-Swede, California-Surf, Eagle-Hawk, and ER-Ogo-Fire Properties.  The Corporations Alaska properties lie within east-central Alaska, 65 kilometers northeast of Delta Junction. Access to the properties is by helicopter based out of Delta Junction. Teck Cominco/Sumitomo operates a restricted access road from Delta Junction. Teck Cominco/Sumitomo also maintains an airstrip in the area. This infrastructure has been used to assist with access to the Corporations Alaska properties. A seasonal airstrip is located on the eastern edge of the California/Surf property discussed below.  Property History  There is no documented exploration history for any of the properties previous to the Corporations acquisition through staking. The region was geologically mapped and silt sampled by government entities and by reconnaissance programs conducted by mining company syndicates in the 1970s and 1980s. Only government data was available in the public domain.   -78-  Property Acquisition  In 1998, the Corporation completed a comprehensive compilation of all publicly available data for a large area in east central Alaska, creating an exploration model to identify plutonic-related gold targets. This model provided a basis for the systematic definition and priority ranking of specific geological and geophysical targets in the area.  The Corporation, through Rimfire Alaska, then staked or acquired from arms-length third parties interests in over 1,600 mining claims in the Goodpaster Mining District (the Alaska Properties). The Corporation staked additional claims in August 2003 and March 2004. Property agreements have been amended to include 37 claims staked by AngloGold Ashanti (U.S.A.) Exploration (AngloGold). Late in 2005, data from previous programs and newly published government surveys was re-interpreted and new targets defined. Subsequently, the Corporation staked 842 claims covering 53,695 hectares (132,680 acres). The Corporation now has an interest in 1,664 claims totalling 183,920 acres.  The Corporation signed an option agreement dated February 22, 2007 with with Evanachan Limited, which was subsequently assigned to Rubicon Minerals Corporation (Rubicon) to earn a 60% interest in the Alaska properties. The terms of the agreement provide that Rubicon will fund exploration expenditures of: · USD$750,000 on or before November 27, 2007 (completed) · an aggregate of USD$1,500,000 on or before November 27, 2008 (completed) · an aggregate of USD$2,250,000 o on or before November 27, 2009 · an aggregate of USD$3,000,000 on or before November 27, 2010 · an aggregate of USD$3,800,000 on or before November 27, 2011; and · an aggregate of USD$4,800,000 on or before November 27, 2012  Upon vesting, Rubicon may obtain a further 10% interest in the properties by completing a feasibility study, and at the Corporations election, may obtain an additional 5% interest (for a total of 75%) by providing a project financing loan to be repaid from the Corporations free cash flow upon production.  The specific mining claims in the Goodpaster Mining District in which the Corporation holds an interest are set out in the following table:  ProjectClaimMineral Tenure (ADL)LocationBou - SwedeBou 21-22594583-594584Fairbanks M., T.S. 7S, Range 18EBou 31-32594593-594594Fairbanks M., T.S. 7S, Range 18EBou 41-42594603-594604Fairbanks M., T.S. 7S, Range 18EBou 51-52594613-594614Fairbanks M., T.S. 7S, Range 18EBou 61-62594623-594624Fairbanks M., T.S. 7S, Range 18EBou 71-72594633-594634Fairbanks M., T.S. 7S, Range 18EBou 1-7651861-651867Fairbanks M., T.S. 7S, Range 18ESWD 1-38651938-651975Fairbanks M., T.S. 6S, Range 14E/15ESWD 39-182651976-652119Fairbanks M., T.S. 7S, Range 14E/15ESWD 183-246652120-652183Fairbanks M., T.S. 8S, Range 15E  -79-   ProjectClaimMineral Tenure (ADL)LocationCal-SurfBEV 1-64606861-606923Fairbanks M., T.S. 6S, Range 15E/16EBND 1-95606924-607017Fairbanks M., T.S. 6S, Range 16E/17EBNDN 1-70651868-651937Fairbanks M., T.S. 5S, Range 16E/17ECEN 17-80594779 - 594842Fairbanks M., T.S. 6S, Range 16ECHF 1-2*611000 - 611001Fairbanks M., T.S. 5S, Range 17ECHF 37-38*611036 - 611037Fairbanks M., T.S. 5S, Range 17ECHF 73-74*611072 - 611073Fairbanks M., T.S. 5S, Range 17ECHF 109-110*611108 - 611109Fairbanks M., T.S. 5S, Range 17ECHF 145-146*611144 - 611145Fairbanks M., T.S. 5S, Range 17EHAB 22-30595093  595101Fairbanks M., T.S. 6S, Range 17EHAB 34-43595105  595114Fairbanks M., T.S. 6S, Range 17EHAB 47-56595118 - 595127Fairbanks M., T.S. 6S, Range 17ELCC 14-20595141 - 595147Fairbanks M., T.S. 6S, Range 17ELCC 24-30595151 - 595157Fairbanks M., T.S. 6S, Range 17ELCC 4-10595131 - 595137Fairbanks M., T.S. 6S, Range 17ELH-1-16644745-644760Fairbanks M., T.S. 6S, Range 17EPAR 1-11595382  595392Fairbanks M., T.S. 6S, Range 15E/16EPAR 14-24595395  595405Fairbanks M., T.S. 6S, Range 15E/16EPAR 27-37595408  595418Fairbanks M., T.S. 6S, Range 15E/16EPAR 40-50595421  595431Fairbanks M., T.S. 6S, Range 15E/16EPAR 53-121595434 - 595502Fairbanks M., T.S. 6S, Range 15E/16EPC-1-25644761-644785Fairbanks M., T.S. 6S, Range 16EScot 1-27605472 - 605498Fairbanks M., T.S. 5S, Range 15E/16ESHARP 29-33595531  595535Fairbanks M., T.S. 6S, Range 17ESHARP 43-47595545  595549Fairbanks M., T.S. 6S, Range 17ESHARP 57-61595559  595563Fairbanks M., T.S. 6S, Range 17ESHARP 71-75595573 - 595577Fairbanks M., T.S. 6S, Range 17ESHARP 85-89595587 - 595591Fairbanks M., T.S. 6S, Range 17ESHARP 99-103595601  595605Fairbanks M., T.S. 5S, Range 17ESS-1-42644786 - 644827Fairbanks M., T.S. 5S/6S, Range 17E * Staked by Rubicon and included in the Cal-Surf property.  -80-   ProjectClaimMineral Tenure (ADL)LocationCal-SurfSTER 35-40595663 - 595668Fairbanks M., T.S. 6S, Range 17ESTER 45-50595673 - 595678Fairbanks M., T.S. 6S, Range 17ESTER 55-60595683 - 595688Fairbanks M., T.S. 6S, Range 17ESTER 65-70595693 - 595698Fairbanks M., T.S. 6S, Range 17ESTER 75-80595703 - 595708Fairbanks M., T.S. 6S, Range 17ESTER 85-90595713 - 595718Fairbanks M., T.S. 5S, Range 17EEagle-HawkEagle 1-106579385-579490Fairbanks M., T.S. 7S, Range 11E/12EEX 1-20605507-605526Fairbanks M., T.S. 7S, Range 11E/12EEX21-33641468-641480Fairbanks M., T.S. 7S, Range 11E/12ESAND 1-39605420 - 605458Fairbanks M., T.S. 7S, Range 11E/12EEGLE 1-362652208-652569Fairbanks M., T.S. 7S, Range 11E/12EER-Ogo-FireER 3-12579158-579167Fairbanks M., T.S. 5S, Range 13EER 15-24579170-579179Fairbanks M., T.S. 5S, Range 13EER 27-36579182-579191Fairbanks M., T.S. 5S, Range 13EER 39-48579194-579203Fairbanks M., T.S. 5S, Range 13EER 51-60579206-579215Fairbanks M., T.S. 5S, Range 13EER 63-72579218-579227Fairbanks M., T.S. 5S, Range 13EER 75-84579230-579239Fairbanks M., T.S. 5S, Range 13EER 87-96579242-579251Fairbanks M., T.S. 5S, Range 13EER 99-108579254-579263Fairbanks M., T.S. 5S, Range 13EER 111-120579266-579275Fairbanks M., T.S. 5S, Range 13EFire 4-12579034-579042Fairbanks M., T.S. 5S, Range 13EFire 16-56579046-579086Fairbanks M., T.S. 5S, Range 13EJAZZ 1-13605459-605471Fairbanks M., T.S. 5S, Range 13EOgo 35-39595262-595266Fairbanks M., T.S. 5S, Range 14EOgo 42-76595269-595303Fairbanks M., T.S. 5S, Range 14E/13EOgo 143-154595370-595381Fairbanks M., T.S. 5S, Range 13EZAPPA 1-4605091 - 605094Fairbanks M., T.S. 5S, Range 13E   -81-  Regional Geology  The Alaska properties lie within rocks of the Yukon-Tanana Terrane (YTT), bounded to the north by the Tintina Fault and to the south by the Denali Fault systems. The YTT in east-central Alaska consists of a Precambrian to middle Paleozoic metamorphic sequence of sedimentary and magmatic rocks. Mineralization and plutonic gold deposits in Alaska and Yukon Territory are directly associated and often hosted within Cretaceous aged plutons. In this region, recent evidence indicates that mineralization is associated with Cretaceous-related aged plutons which are characterized by a lower magnetic susceptibility forming linear arrays of magnetic lows. One of these linear arrays, which is associated with gold occurrences in the area, has been termed the Pogo Trend. The northeast structures are thought to have been important in controlling the distribution of Cretaceous intrusions through significant horizontal and vertical displacements. The vertical movements on these northeast structures are important since the style and grade of mineralization in plutonic-gold systems are strongly influenced by depth of formation.  Individual Properties  Mark Baknes, P.Geo, Vice President, Exploration for the Corporation, is the Qualified Person for these projects as required by NI 43-101 (Standards of Disclosure for Mineral Projects). A technical report was filed on SEDAR on May 7, 2008:  California-Surf  The Corporation, through Rimfire Alaska Inc., held a 30% joint venture interest in these properties. The joint venture partner, Western Keltic Mines Alaska Inc. (Western Keltic), held the remaining 70% interest in the properties.  In August 2003, Western Keltic sold its 70% interest in these claims to the Corporation, subject to a 1.75% NSR (of which 1% may be bought for $1,000,000), for the following payments (all payments in Canadian currency): Western Keltics interest in the property has been acquired by Capstone Mining Corporation.  · $25,000, or 50,000 common shares at the election of the Corporation, upon completion of $1,500,000 exploration expenditures subsequent to the agreement, (completed) · $50,000, or 50,000 common shares at the election of the Corporation, 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.  Property Geology and Exploration  The Beverly area lies in the southwest corner of the California-Surf property and consists of the PAR, Cen and PC claims. An exploration, development and mine operating agreement, dated June 22, 2004 was signed with AngloGold which was terminated in November 2004. During this period, AngloGold completed a program of soil sampling along the anomalous portions of lines sampled in 1999 and 2000 to verify previously defined anomalies. Very little sampling was done beyond the areas of previous work.  -82-  The Scot area is comprised of the Scot 1-27 state mining claims and is located along the Pogo trend. It is underlain by undifferentiated paragneiss and orthogneiss which are cut by mid-Cretaceous aged northwest trending dykes. The Shawnee Peak mineral occurrence lies adjacent to the south and is host to gold-bearing quartz veins associated with similar granitic dykes and hosted in orthogneiss.  The SE Surf area lies in the southeast corner of the California-Surf property and consists of the HAB, LCC and LH claims. Three distinct gold soil anomalies are coincident with strong bismuth, arsenic, antimony and weaker silver, molybdenum and tungsten. The three soil anomalies have dimensions of 2.4 kilometers by 0.5 kilometers, 1.2 kilometers by 1.1 kilometers, and 2.2 kilometers by 0.5 kilometers and are oriented in an east-west direction with a weak north-south component. Mineralization has been found in boulders over an area measuring 250 by 200 meters and consists of intensely quartz- and sericite-altered porphyritic granite. Although the anomalous gold in soils has associated high bismuth, no elevated bismuth has been found in rock samples collected to date. This indicates that there may be other styles of gold-bismuth-bearing mineralization that have yet to be found.  The Boundary area is situated toward the northern edge of the California-Surf claim group on the south side of a granitic body. This property is comprised of the SHARP, STER and SS state mining claims. The main gold soil anomaly, measuring 800 by 350 meters, wraps around a prominent ridge. A broader anomaly, defined by bismuth and arsenic with spotty gold, measures 2.5 by 1.5 kilometers and is centered on the main gold anomaly. Four distinct mineralized surface showings of quartz boulders have been discovered within a 1.0 by 1.5 kilometers area that is central to a moderately intense zone of pervasive quartz-sericite alteration. Two mineralization types have been distinguished: 1) shallow-dipping shear-hosted quartz veins; 2) narrow tensional quartz stockwork veins. The shear-hosted veins are variably textured and contain milky white quartz (Type 1), strongly brecciated-sheared quartz (Type 3) and granular quartz with interstitial sericite, feldspar and tourmaline (Type 2).  Drilling during September 2000 (4 holes, 827.1 meters) at the Boundary Property revealed three styles of gold mineralization, and indicated that gold mineralization is more widespread than indicated by surface sampling. The highest gold values are hosted in 1-5 centimeter quartz-pyrite-pyrrhotite veinlets that locally contain visible gold intergrown with bismuthinite. Broader zones of elevated gold values are found in quartz-sericite altered or sheared gneiss locally cut by hairline quartz-pyrite-calcite stringers. Less commonly, quartz-pyrite-bismithunite possibly with arsenopyrite and/or gold veinlets occurs in pegmatitic marginal phases of granitic dykes. The strong gold-bismuth correlation, associated alteration and gold-bearing pegmatitic granite indicate a geological setting not unlike other plutonic gold-type deposits in the region.  In 2001, work consisted of an airborne radiometric and magnetic survey over the California-Surf property, limited auger soil sampling and a 619 meter drill hole in the Boundary area, which was followed by a regional soil sampling program evaluating six geochemical-geophysical target areas.  Late in 2005, data from previous programs and newly published government surveys was re-interpreted and new targets defined. Subsequently, the Corporation staked 842 claims covering 53,695 hectares (132,680 acres).   -83-  The Corporations 2006 field program investigated the claims staked in 2005 as well as high priority targets generated in previous programs. A total of 243 silt, 1,403 soil and 158 rock samples were collected. Anomalous results in soils and silts were obtained in the newly surveyed Boundary North area, which is located approximately 2 kilometers north of the previously referred to Boundary area.  The 2007 exploration program initially consisted of 4 holes drilled on the California-Surf group for a total of 957 meters. A combination of grid and reconnaissance mapping, prospecting and soil sampling was carried out on the California-Surf property. Results obtained in hole CN07-1 included a 7.4 meter quartz vein intersection that averaged 1.2 grams per tonne gold including 2.5 meters averaging 2.2 grams per tonne gold. An extension to the first phase program was conducted in August of 2007 and consisted of three drill holes, for a total of 793 meters, to follow up the result of CN07-1. Significant assay results from a 12.2 meter section of quartz-pyrite stringers returned anomalous levels of gold.  During 2008, Rubicon funded an expanded reconnaissance and drilling exploration program on the Goodpaster properties. This program generated 118 rock samples and 27 pan concentrates during a 60 man-day program conducted between mid-May and late August.  Future Exploration Programs  Rubicon is operator for the 2009 field program. No program has been proposed.  Eagle-Hawk Property  On January 30, 2002, the Corporation signed an exploration, development and mine operating agreement with AngloGold whereby AngloGold can earn a 50% interest in the Eagle property. A December 17, 2003 amendment included the Sand claims (staked by the Corporation) and the EX claims (staked by AngloGold) in the agreement. Effective December 31, 2005, a termination agreement was signed whereby AngloGold relinquished 100% ownership of the claims subject to an NSR of 2%, one-half of which can be purchased for US $1,000.000. In January 2006, the Corporation staked 362 claims (Hawk) near the Eagle property.  Property Geology and Exploration  The Eagle property is comprised of the Eagle 1-106, Sand 1-39 and EX 1-33 state mining claims and is located along the Big Swede magnetic trend. The Eagle property is underlain by mid-Cretaceous aged granitic rocks and older intrusive rocks known as orthogneiss. A magnetic low feature corresponds closely with the granitic body. The Hawk property is comprised of the EGLE 1-362 state mining claims. They surround the Eagle Property to the south and east.  During September 2000, Hyder Gold Inc. completed a five hole, 274.3 meter diamond drilling program on the Eagle property. The aim of the program was to test portions of the gold soil geochemical anomaly. Drill hole EA00-03 encountered weakly porphyritic granite which was consistently cut by quartz, quartz-calcite and, less commonly, quartz-pyrite-arsenopyrite veinlets.   -84-  In 2002 and 2003, AngloGold conducted auger soil surveys as well as tree bark sampling for biogeochemical studies. Both techniques defined areas of anomalous gold-arsenic and bismuth geochemistry. These geochemical results define a 1,500 meter by 3,000 meter gold-arsenic-bismuth-tungsten soil anomaly. Recovery of rock chips from soil sample pits revealed extensive alteration and in some instances quartz-carbonate stringer-style mineralization.  Two phases of work were completed on the Eagle property in 2004; soil sampling to expand the previous focused soil grid to its current length of 6 kilometers with lines ranging from 0.7 to 1.8 kilometers in length, and a drill program of 9 holes totaling 2,778 meters. Mineralization intersected during drilling consists of quarts-sulphide vein stockworks containing gold hosted in a granitic stock. A total of 24 narrow intercepts containing greater than 1 gram per tonne gold were intersected. A deep penetrating EM survey was carried out late in the season which defined a strong northeast fault zone coincident with anomalous geochemistry.  During 2006, the Corporation conducted a regional exploration program on these claims. Of particular significance are anomalous gold in silt results obtained from a continuous area to the east, southeast and south of the granitic body that has thus far been the focus of exploration. This anomalous zone extends 5 kilometers outward from the granitic body forming a 10 kilometer arc. In 2007, a combination of grid and reconnaissance mapping, prospecting and soil sampling was carried out on the Eagle-Hawk property.  Following analysis of previous field program results, the 2008 exploration program was designed to conduct project-scale prospecting and reconnaissance exploration work on areas not previously examined and to conduct prospect-scale mapping, sampling and follow-up drilling on targets not previously drilled. Field work was carried out between mid-May and late August from a helicopter-support base camp near Delta Junction. This program generated 13 rock samples, 67 soil samples and 4 pan concentrate samples during a 39 man-day program.  Future Exploration Programs  Rubicon is operator for the 2009 field program. No program has been proposed.  ER-Ogo-Fire Property  On January 30, 2002, the Corporation signed an exploration, development and mine operating agreement with AngloGold whereby AngloGold could earn a 50% interest in the ER-Ogo-Fire property. A December 17, 2003 amendment included the Jazz claims (staked by the Corporation) and the Zappa claims (staked by AngloGold) in the agreement. Effective December 31, 2005, a termination agreement was signed whereby AngloGold relinquished 100% ownership of the claims subject to an NSR of 2%, one-half of which can be purchased for US $2,000.000.  Property Geology and Exploration  The ER-Ogo-Fire property is comprised of 219 claims covering approximately 4,270 hectares. The ER-Ogo-Fire Property is underlain by gneisses of the Paleozoic Yukon-Tanana Terrane representing strongly metamorphosed sedimentary and igneous rocks. The gneisses are intruded by late Cretaceous aged granitic intrusions which outcrop extensively on the property. Gold-bearing quartz vein material has been sampled on a ridge lying between the two areas of intrusive outcrop.   -85-  Auger soil sampling surveys in 2003 expanded the geochemically anomalous area beyond that outlined by reconnaissance style surveys conducted in 2002. Results of the geochemical survey defined a 1,500 by 300 meter gold-arsenic-bismuth-antimony soil anomaly. Six diamond drill holes totaling 2,161 meters tested four widely spaced areas within the soil anomaly. Drilling intersected widespread quartz-sericite-pyrite alteration enveloping multiple quartz sulphide veins and vein breccias. A total of 32 intercepts of greater than 1 gram per tonne gold were intersected. A ground geophysical survey conducted late in the season appears to outline early granitic phases that are believed to form a prospective host rock for veining.  During 2004, AngloGold completed a NSAMT (Natural Source Audio Frequency Magneto-Telluric) geophysical survey, soil geochemical sampling and three drill holes totaling 997 meters on the ER project. Drilling further defined a northwest trending vein structure that is open to the northwest and downdip. Hole ER04-7, following up on a 0.5 meter intercept that assayed 63 grams per tonne gold in 2003, intersected 4.1 grams per tonne gold over 1.3 meters.  During 2006, the Corporation conducted a regional exploration program on these claims. Soil and silt sampling gave generally spotty anomalous results to the northwest of past drilling., However, a small cluster of anomalous gold in soils were obtained in association with large quartz boulders approximately 3.5 kilometers to the southwest of previous drilling. No work was completed on the ER-Ogo-Fire property during 2007.  During 2008, Rubicon funded an expanded reconnaissance and drilling exploration program which generated 359 rock samples and 9 pan concentrates. One high priority target was subsequently drilled. Three drill holes were completed at the ER target for a total of 335 meters. Two of these holes intersected narrow quartz veins with anomalous concentrations of gold in them. 143 man-days were spent conducting field work on the project during the period mid-May through late-August.  Future Exploration Programs  Rubicon is operator for the 2009 field program. No program has been proposed.  Bou-Swede Property  The Bou group of 19 claims and the Swede group of 246 claims are located along the Pogo Trend. Rimfire Alaska holds a 100% interest in the property with no underlying royalties. Rocks underlying the Bou property are almost exclusively granite. Mineralization on this property consists of quartz veins and mineralized and altered granite has been found in two general areas. At the Thunder showing, quartz vein boulders with gold, arsenic and antimony have been found over a 300 by 300 meter area, along the trace of a northeast trending fault structure. The Cairn showing lies 2 kilometers south of the Thunder and is defined by a gold-bearing quartz vein boulder train measuring 50 by 300 meters that extends along the trace of an east-west structure. Strongly anomalous gold, bismuth, arsenic and antimony soil anomalies extend beyond the current limits of sample coverage. In 2007, a combination of grid and reconnaissance mapping, prospecting and soil sampling was carried out on the Bou-Swede property.   -86-  Following analysis of previous field program results, the 2008 exploration program was designed to conduct project-scale prospecting and reconnaissance exploration work on areas not previously examined and to conduct prospect-scale mapping, sampling and follow-up drilling on targets not previously drilled. Pre-season target identification and prioritization was completed between March 1 and April 15. Field work was carried out between mid-May and late August from a helicopter-support base camp near Delta Junction. This program generated 26 rock samples and 3 pan concentrates during a 14 man-day program.  Future Exploration Programs  Rubicon is operator for the 2009 field program. No program has been proposed.  Australia [rimfireannual20f09final021.jpg]   -87-  Lachlan Fold Belt Properties, New South Wales  Location and Introduction  The Lachlan Fold Belt in New South Wales Australia is richly endowed with a diversity of deposit types that host in excess of 150 million ounces of gold. Significant porphyry copper gold, epithermal gold, volcanogenic massive sulphide (VMS), gold-copper skarn, sediment-hosted disseminated gold and intrusion-related gold deposits are located within the belt.  Property Acquisition  The Corporation holds four exploration licenses covering 57,536 hectares in the Lachlan Fold Belt, New South Wales, Australia. The Corporation originally was granted nine licenses to encompass all available high-priority targets identified in a Neural Network data study conducted by a private company, BWG. BWG granted the Corporation a two-year exclusive right to use the study's target maps and data to acquire licenses and conduct exploration in the 120,000-square-kilometer study area. The Corporation paid a fee for use of the study and upon designation of project areas, the Corporation paid additional fees based on project designation and exploration expenditures. BWG will retain a 2% net smelter royalty in all designated projects. During the two-year license period, the Corporation completed the required eligible exploration expenditures of at least USD$150,000. Some of the licences were evaluated then cancelled when it was determined that the areas did not merit additional exploration.  The BWG study involved the compilation of Landsat, topography, geophysical (gravity, magnetic and radiometric), geochemical, lithological, structural geology and drilling databases. The neural network techniques applied to the databases yielded numerous high-priority targets, including the ones covered by The Corporation's exploration license applications.  Effective October 21, 2008, the Corporation signed an option agreement with Jaguar Minerals Limited (Jaguar) to explore the Springfield gold project in the Lachlan Fold Belt of New South Wales, Australia. The Springfield gold project lies 12 kilometers south-southeast of the historic mining town of Gulgong and 80 kilometers to the northeast of Newcrests Cadia Valley porphyry copper-gold mining complex.  The Corporation can earn a 51% interest in the project by spending A$1,000,000 on exploration over four years. Following this, the parties will either continue exploration together under a joint venture agreement, or Jaguar may elect not to contribute, allowing the Corporation to earn 100% of the project by spending A $5 million in exploration.  The Corporation will issue: · 100,000 common shares upon definition of a Joint Ore Reserves Committee (JORC) compliant gold resource of 500,000 ounces, · 500,000 common shares upon definition of a JORC compliant gold resource of 1,000,000 ounces,  -88-  Should the Corporation receive cash and/or share payments as a result of a subsequent option/joint venture with a third party, Jaguar is entitled to 25% of the proceeds. If the Corporation decides to sell its interest in the project outright prior to earning 100% of the project, Jaguar would receive 40% of all proceeds of any sale. Once the Corporation has exercised the 100% option, Jaguar would receive 15% of all proceeds of any sale.  Effective December 12, 2008, the Corporation signed a Farm-in agreement with Inmet Mining (Australia) Pty. Ltd. to earn a 60% interest in the Barmedman Property on completion of the following:  Cash payments to the Corporation of: · A$50,000 within 5 days of the execution of the agreement (paid) · A$50,000 on or before December 12, 2009 · A$50,000 on or before December 12, 2010 · A$50,000 on or before December 12, 2011 · A$50,000 on or before December 12, 2012 Fund exploration expenditures of: · not less than A$400,000 on or before April 11, 2009 · an additional A$400,000 on or before December 12, 2009 · an additional A$1,000,000 on or before December 12, 2010 · an additional A$1,200,000 on or before December 12, 2011 · an additional A$2,000,000 on or before December 12, 2012  The specific tenements in the State of New South Wales in which the Corporation holds an interest are set out in the following table:  NameExploration LicenceSize (Ha)Expiry DateSpringfield59916,954September 15, 2009Mt. McDonald67786,557May 22, 2009Walmer678124,878May 22, 2009Barmedman678215,074May 22, 2009Gollan687511,027September 13, 2009  Regional Geology  The Eastern Lachlan Fold belt constitutes a subsection of the Tasman Fold Belt, which stretches from the Queensland-New South Wales border across Victoria and into Tasmania. The Neoproterozoic to Triassic orogenic belt preserves accreted arc and back-arc terrains and subduction zones sediments all of which were subjected to extensional and contractional tectonics. Silurian-Devonian post orogenic granitoids intrude the supracrustal rocks. Ordovician and Silurian island arc intermediate to mafic volcanics, sub-volcanics and intrusions of the Macquarie Arc, preserved as fault bound north-south trending belts, contain the bulk of the known copper-gold mineralization in the region. Furthermore, high grade copper-gold porphyry deposits are most closely constrained to distinctive alkalic magmatic suites.   -89-  Exploration  A limited property examination tour was conducted late in 2006.  In early 2008, the Corporation completed reconnaissance exploration programs on 5 of 9 licences in the Lachlan Fold Belt (Barmedman, Walmer, Gollan, Goulburn, and Mt. MacDonald) for a total of $330,000 in exploration. These programs consisted of soil and silt sampling, prospecting and geological mapping. In addition, Induced Polarization (IP) geophysical surveys were completed on the Barmedman and Walmer licences. The Barmedman survey consisted of 26 line-kilometer of dipole-dipole IP with 100 meter a spacing and 400 meter line spacing. The Walmer survey consisted of 10 line-kilometer of dipole-dipole IP with the same survey parameters. Both surveys were performed by Zonge Engineering and Research Organization Limited.  An exploration program was completed on the Springfield property in late September 2008, consisting of geological mapping, rock chip sampling, minor soil sampling and 23 line-kilometer of IP surveys. The IP survey consisted of a dipole-dipole array with 100 meter a spacing and 100 to 400 meter line spacing. The IP survey was performed by Zonge Engineering and Research Organization Limited. The results are currently being compiled. A second program of reverse-circulation or diamond drilling program is being considered depending on the results.  In September 2008, the Corporation completed a diamond drilling program at the Trounce prospect on the Walmer property. This program was targeting geological and geophysical targets identified in the early 2008 reconnaissance exploration program. The Trounce prospect consists of a small outcropping of silicified sediments with quartz - pyrite veining and stockwork. Two of seven grab samples from the showing returned strongly anomalous gold values and the remaining five returned weakly anomalous gold values. On surface, the showing occurs within a subtle, north-south striking topographic high, coincident with anomalous gold soil geochemistry and a 40 meter-wide by 500 meter long induced polarization chargeability and resistivity high. The diamond drilling program consisted of four diamond drill holes totalling 287 meters which returned no significant results. No future work is planned at Trounce.  The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Corporation. A technical report has not been filed for this project.  Future Exploration Programs  A preliminary diamond drilling program on the Barmedman license, consisting of 1,200 meters of drilling in four holes is planned for March-April of 2009. In addition, further geochemical techniques, such as MMI geochemical surveys are being contemplated to investigate the entire exploration license.   -90-  Victoria Goldfields Properties  Location and Introduction  The Stawell Corridor is a 240 kilometer long belt bound by the Congee and Moyston faults and cored by Northgate Australian Ventures Corporation Pty. Ltd.s five million ounce Stawell Gold Mine. Mineralization consists of gold-bearing quartz veins in iron-rich sediments associated with basalt centers. This deposit has been studied extensively, resulting in the identification of large-scale characteristics that can be used in the exploration for similar deposits elsewhere in the district. Geophysical techniques such as gravity and magnetics surveys have proven effective in targeting basalt centers associated with mineralization. These techniques will be important in evaluating the rest of the Stawell Corridor and refining targets for drilling.  Property Acquisition  Effective July 28th 2008, the Corporation entered into a new exploration partnership with Northgate Minerals Corporation, which granted the Corporation an option on its Stawell Corridor gold exploration properties in the State of Victoria, Australia.  The Corporation agreed to conduct exploration to maintain the licenses in good standing for the current year (approximately A$370,000). The Corporation can then elect to conduct further exploration on any or all three of the licenses, earning a 50% interest on each by funding exploration of A$500,000 per license by March 31, 2011 with a minimum expenditure of A$150,000 per property per year. Northgate then has the option on each license to: 1) carry out the next A$1.5 million to earn back a 10% interest (total 60%) and another 10% by reaching a production decision; 2) not participate and allow the Corporation to earn a 100% interest in the property by spending, or causing to have spent, an additional A$2 million over 4 years; or 3) participate in a 50/50 joint venture.  The specific tenements in the State of Victoria in which the Corporation holds an interest are set out in the following table:  NameExploration LicenceSize (Ha)Expiry DateMurtoa394129,475.25December 17, 2010Ararat South469538,151.41April 16, 2011Dundonnel473019,051.89November 18, 2011   -91-  Regional Geology  Interpretation of regional aeromagnetic and gravity imagery indicates that the Moornambool Metamorphic Complex, located along the western margin of the Stawell Zone of the Lachlan Fold Belt, (Vandenberg et al 2000) continues under Murray Basin unconsolidated sediments within the majority of EL3941. The Moornambool Metamorphic Complex is bounded by the Coongee Fault to the east and Moyston Fault to the west, forming a ~20 kilmeter wide corridor (the Stawell Corridor) that hosts the majority of the 6 million ounces of gold endowment in the Ararat and Stawell areas.  The near surface geology of the Victoria Goldfields properties is dominated by unconsolidated Murray Basin sediments in the north, and Tertiary basalt cover rocks in the south. Interpretation of regional aeromagnetic and gravity imagery indicates that the Cambrian Moornambool Metamorphic Complex, located along the western margin of the Stawell Zone of the Lachlan Fold Belt, continues under the Murray Basin sediment and Tertiary basalt cover within the majority of the tenements. The Moornambool Metamorphic Complex is bounded by the Coongee Fault to the east and the Moyston Fault to the west, forming a ~20 kilometer (12.5 mile) wide corridor (the Stawell Corridor) that hosts the majority of the 6 million ounces of gold endowment in the Ararat and Stawell areas. Gold mineralization at Stawell is hosted by a reverse fault system in sulphidic sedimentary rocks on the western margin of a basalt dome. The basalt dome and sulphidic sedimentary rocks have traditionally been detected in the Stawell Corridor using a combination of detailed gravity and magnetic geophysics to see beneath the cover rocks.  Exploration  The Corporation will be exploring three licences, totaling 120 kilometers of the corridor length, representing all ground outside of a buffer around the Stawell Gold Mine. In addition to greenfields opportunities, more advanced targets exist including the 10 kilometer-long Murtoa target, which surrounds the Kewell gold resource. The Kewell resource, which Northgate has opted to exclude from this agreement, is reported to contain a non 43-101 compliant 100,000 ounce resource grading 6 grams per tonne gold defined by 25 drillholes. Additional targets include kilometer-scale gravity anomalies that have been confirmed through drilling to reflect basalt centers at depth, with coincident gold and pathfinder element geochemical anomalies on surface.  The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Corporation. A technical report has not been filed for this project.  Future Exploration Programs  An Induced Polarization (IP) program and gravity geophysical program to be conducted on targets on the Ararat South and Dundonnel licences is planned for early 2009.   -92-  Nevada  Walker Lane Alliance - Poncho Property  [rimfireannual20f09final022.jpg]  -93-   [rimfireannual20f09final023.jpg]  -94-  Location and Introduction  The Corporation holds an interest in one mineral property in Nevada. The Poncho property is located 60 kilometers to the northwest of Tonopah in southwestern Nevada halfway between the cities of Reno and Las Vegas. There is road access to the property.  Property Acquisition  In January 2005, the Corporation signed an agreement with Newmont Capital Limited (Newmont) targeting a defined project area in Nevadas Walker Lane Mineral Belt. The Corporation has committed to making USD$300,000 in expenditures within the project area during the term of the two year agreement. The expenditures were completed in January 2007. The Corporation may, at its discretion, acquire one or more properties within the project area boundaries in which to conduct further exploration work. Upon 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. The Corporation has completed funding USD$300,000 in exploration expenditures on the Poncho property. Newmont has waived their right to enter a 50:50 Joint Venture.  The Corporation had 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.  During the first half of 2005, the Corporation identified potential targets for exploration and conducted limited field examinations. The Corporation staked 118 claims covering 2,344 acres (949 hectares).  On June 16, 2006 the Corporation signed a mining lease agreement with Silverthorn Exploration, Inc. (Silverthorn) to acquire a 100% interest in the Gila 24 Property. The Corporation is to make cash payments of: · USD$10,000 upon signing (paid) · USD$20,000 on or before March 31, 2007 (paid) · USD$20,000 on or before March 31, 2008 (paid) · USD$20,000 on or before each anniversary from March 31, 2009 to March 31, 2010 · USD$50,000 on or before each anniversary from March 31, 2011 to March 31, 2014 · USD$100,000 on or before each anniversary from March 31, 2015 until the option is exercised or the agreement is terminated.  The Corporation has an option to purchase the property, subject to a 2% NSR for a cash payment of · USD$500,000 on or before March 31, 2010 · USD$1,000,000 after March 31, 2010 but on or before March 31, 2014 · USD$5,000,000 after March 31, 2014  The Corporation may purchase 100% of the NSR for · USD$500,000 on or before March 31, 2010 · USD$1,000,000 after March 31, 2010 but on or before March 31, 2014 · USD$2,000,000 after March 31, 2014  This agreement was terminated on February 23rd, 2009 when the Gila 24 property was returned to the vendor.  -95-  The following table details the claims that comprise the Poncho property with legal identification (Mineral Tenure) and location.   ClaimMineral Tenure (ADL)LocationPoncho 1-47640574-640620Nye County, T.S.7N/ 8N, Range 38EPoncho 50-51650460-650461Nye County, T.S.7N/ 8N, Range 38EPoncho 52-120650462-650530Nye County, T.S.7N/ 8N, Range 39E  Regional Geology  The Poncho property is situated within a 700 kilometers long by 300 kilometers wide geological corridor called the Walker Lane Belt (WLB). This belt straddles the California  Nevada border and trends northwestward within western Nevada marking the transition between two contrasting geological provinces; the Basin and Range to the northeast and the massive Sierra Nevada batholith to the west. The WLB is a distinctive structural corridor that is considered the inboard manifestation of the San Andreas Fault system.  The oldest rocks exposed in the central Walker Lane are Middle and Upper Cambrian siliclastic and carbonate rocks. This basement stratigraphy was deformed by both the Mississippian Antler and Triassic Sonoma orogenies. This composite structural package was then intruded by Jurassic to Upper Cretaceous plutons. From approximately 34 million years ago until the present day, the WLB has been the focus of episodic volcanism, including andesite stratovolcanoes, rhyolite flow domes and mafic lava flows. Large-scale structures within the WLB are thought to have partially controlled the localization of volcanism and associated precious metal deposits. The intensity and extensive nature of hydrothermal systems driven by this volcanic-structural regime is marked by over 40 epithermal deposits in the Walker Lane that account for 46.7 million ounces of gold and 436 million ounces of silver in production and resources.  Property Geology  The central portion of the Poncho property is comprised of a window of uplifted Mesozoic limestones, dolomites and siliclastic rocks, flanked by overlying Tertiary volcanic rocks and minor sediments. A series of silica caps, up to 600 meters in diameter, occur at the contact between the Mesozoic sedimentary rocks and the Tertiary volcanic rocks near the intersection of a regional, northwest-trending Walker Lane fault, and smaller, second-order northeast-trending faults. The silica caps are composed of multi-stage hydrothermal breccias with extensive silicification, and are interpreted to represent zones of structurally-focused hydrothermal upwelling. Near the same level as the silica caps are local occurrences of siliceous sinter and travertine deposits, features defining the paleo-surface within epithermal centers. Veins feeding the silica caps exhibit chalcedonic banding, silica after bladed calcite and needle adularia. These textures are evidence for multiple episodes of boiling, which often indicate a favourable environment for gold accumulation.   -96-  Mineralization  Exploration on the Poncho property is targeting low sulphidation gold-silver bearing epithermal veins. The main areas of the current exploration program are in the southwest side of the Poncho property, where a series of silica caps, up to 600 meters in diameter, occur at the contact between the Mesozoic sedimentary rocks and Tertiary volcanic rocks near the intersection of a regional, northwest-trending Walker Lane fault, and smaller, second-order northeast-trending faults. Silica caps are composed of multi-stage hydrothermal breccias with extensive silicifcation, and are interpreted to represent zones of structurally-focused hydrothermal upwelling. At the same elevation as the silica caps are local occurrences of siliceous sinter and travertine deposits, features defining the paleo-surface within epithermal centers. A system of veins, with individual veins measuring several meters wide up to 15 meters wide, trend into the silica caps. These veins exhibit chalcedonic banding, silica after bladed calcite and needle adularia all of which are interpreted as boiling textures that favour gold-silver mineralization.  Surface Exploration, Geophysics and Drill Programs  During 2006, mapping and prospecting programs identified potential drill targets. In early 2007, the Corporation completed a 5200 foot reverse circulation drill program in 7 holes, testing five individual vein targets: Poncho Zone, Main Silica Cap, Silverthorne Zone, Ranchero Zone and the Calcite Zone. All drill holes intersected significant vein zones from 5 to 35 feet wide that display vein in-fill, textures and associated alteration (chlorite, silica, carbonate, pyrite) indicative of multiple veining/brecciation events in the boiling zone of an epithermal system. Marginal gold values of 1 to 2 grams per tonne gold over five to ten foot intervals were returned from the Poncho Zone, Main Silica Cap and Silverthorne Zone. For all drill holes the epithermal pathfinder elements arsenic, mercury and antimony show systematic increases with elevation, particularly a sharp increase at 5,700 elevation above sea level. We interpret this inflection to represent a sharp thermal gradient at the top of the hydrothermal system. Current drilling has only tested 150 to 170 meters below this sharp thermal gradient, whereas potential zones of gold deposition may occur further at depth. The amount of silicification on the Poncho property suggests a significant hydrothermal system, possibly centered on the Main Silica Cap. Deeper drilling of vein structures below the Main Silica Cap is recommended to further test the potential for gold deposition at depth.  A technical report has not been filed for the Nevada Properties. The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Corporation.  Future Exploration Programs  The Corporation will not be completing further work in the Walker Lane under the current Strategic Alliance agreement with Newmont. The Corporation is seeking a Joint Venture partner to advance the Poncho property.   -97-  Estimated Administrative Expenditures  The Corporation expects that total administrative costs to carry out the Corporations proposed exploration and development programs for the period February 1, 2009 to January 31, 2010 will be approximately $1,126,000. The estimated administrative expenses will be financed from existing working capital. The estimated average monthly breakdown is as follows:  ITEMAverage Month12 Month PeriodAccounting & legal$       5,458$           65,500Insurance3,50042,000Investor services1,24814,980Management services10,800129,600Office4,16049,915Marketing and promotion16,046192,550Rent11,060132,720Salaries & support services39,083468,994Travel & entertainment2,49229,900TOTAL$      93,847$    1,126,159  ITEM 5   OPERATING AND FINANCIAL REVIEW AND PROSPECTS  Overview  The Corporation has no producing properties and, consequently, has no current operating income or cash flow from its mineral property exploration and development operations.  The Corporation did not engage, does not currently engage, nor does it expect to engage, in any hedging transactions to protect against fluctuations between Canadian currency and the U.S currency. The Corporations expenses are denominated in Canadian dollars.  The following discussion of the operating results and financial position of the Corporation should be read in conjunction with the Corporations consolidated financial statements (and related notes).   -98-  OPERATING RESULTS  The Corporation has commenced planning for transition of Canadian generally accepted accounting principles (Canadian GAAP) to International Financial Reporting Standards (IFRS) as developed by the International Accounting Standards Board. During the fiscal year ended January 31, 2008, the Corporation undertook a comprehensive review of IFRS and determined which standards will affect financial recording and reporting for the Corporation. It was determined that there will be no material differences between statements prepared under Canadian GAAP and those prepared according to IFRS. The differences are primarily presentation differences for the financial statements and extensive additional disclosure required under IFRS. The final transition date for Canadian GAAP to IFRS is for the fiscal year ended January 31, 2012. The Corporation intends to pursue early adoption as of January 31, 2011. The requirements for early adoption stipulate extensive qualitative and quantitative disclosure of the changes starting with the first interim statements in 2009. The Corporation must also apply to the regulators for permission to pursue early adoption on an exemption basis.  The Corporation adopted accounting recommendations of the Canadian Institute of Chartered Accountants for the recognition and measurement of financial instruments with related disclosure in a Statement of Comprehensive Income for the fiscal year ending January 31, 2007. At each balance sheet date, the Corporations financial instruments are measured at their fair value. Gains and losses are recognized in other comprehensive income for instruments considered to be available for sale and in net income for other instruments. Adoption of this provision requires that interim statements for the fiscal year must show the components of other comprehensive income and the adjustments to reclassify amounts of revenue, expense, gain and loss previously recognized in other comprehensive income to the income statement. The opening balance of accumulated other comprehensive income was adjusted by $94,098 to reflect the excess of fair value of securities over the cost basis used in the balance sheet for the fiscal year ended January 31, 2006.  Year Ended January 31, 2009  For the year ended January 31, 2009 Rimfire incurred a net loss of 2,981,658 ($0.12 per share) compared to a net loss of $3,270,712 ($0.13 per share) in the previous year. Mineral property revenues decreased by 25% from $341,203 to $249,587 while interest revenue decreased by 10% from $270,858 to $245,240. Exploration expenditures decreased by 40% but acquisition costs more than doubled such that total mineral property expenditures ($1,979,556) were only 75% of the previous year ($2,605,888). In the last half of the year, significant efforts were made to limit exploration to strategic initiatives in order to conserve cash. General and administrative expenses were reduced by 20% from the previous year.  The most significant items comprising general and administrative expenses are salaries and share-based compensation expense for incentive stock options granted to directors, officers and employees during the fiscal year. Share-based compensation accounts for 20% of the total expenditures while salaries and support accounts for an additional 35%.  The increase in total administrative expenditures was comprised of increases in accounting and legal fees, rent and salaries. The Securities and Exchange Commission completed a scheduled review of the Corporations filings early in 2008. The costs associated with the response to these comments are reflected in increased legal and audit fees. The Corporation relocated the head office during the second quarter which resulted in an increase in monthly rent payments as well as additional office costs associated with setting up a new location. Salaries and support services increased reflecting the increased number of full-time staff in the Corporation.  -99-  Coupled with the increases were significant decreases in administrative expenditure. Share-based compensation was nearly half the figure in the previous year since lower exercise prices tend to result in lower fair market value assigned to the options. Foreign exchange translations resulted in a gain instead of a loss as the Corporations US dollar accounts were revalued at a higher rate. The Corporation maintains US dollar accounts to make payments denominated in US dollars. When these accounts are adjusted to the prevailing exchange rate at the balance sheet date, the difference is shown as a foreign exchange gain or loss. The US dollar increased from year end rate of $1.0022 Canadian in 2008 to $1.2265 in 2009.  Exploration expenditures, excluding those by joint-venture partners, totaled $1,545,338 ($2,495,617), and property acquisition expenditures totaled $458,327 ($165,477). These costs were offset by exploration reimbursements totaling $9,362 ($38,963). The majority of the exploration expenditures were made on the Lachlan Fold Belt properties in Australia. Another major emphasis was the Gillis Property in British Columbia where expenditures eligible for flow-through renunciation were completed.  Acquisition expenditures are significantly increased with the Corporations purchase of Cangolds 51% interest in the Thorn property and conclusion of two option agreements for Australian projects in the Lachlan Fold Belt and Victoria Goldfields. The Lachlan Fold Belt agreement, which terminated at the end of August, required the Corporation to make cash payments upon designation of project areas.  U.S. generally accepted accounting principles (U.S. GAAP) require that mineral property acquisition costs be capitalized whereas the Corporations policy 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. The significant economic disruption during the last quarter of the fiscal year ended January 31, 2009, created significant downward pressure on commodity prices resulting in lower recoverable value for the Corporations mineral property assets. The value of the properties for which the Corporation has no current exploration plans and no joint venture partners were considered to be impaired. Accordingly, the U.S. GAAP reconciliation records an impairment charge of $527,266 applied against mineral property acquisition costs previously capitalized under U.S. GAAP.  The British Columbia Mineral Exploration Tax Credit Program will reimburse the Corporation for 20% of eligible expenditures in that jurisdiction. For the fiscal year ended January 31, 2009 exploration tax credits are $2,408 ($4,872). The severity of the Mountain Pine Beetle attack has resulted in designation of an area where the tax credit will be 30% rather than the previous 20%. Most of the Corporations active mineral properties fall within the designated zone. Flow though expenditures, which were renounced to investors, are not eligible for these tax credits which reduced the total credit receivable for the current fiscal year. Option proceeds were $103,920 ($148,143) while joint venture management fees were $145,667 ($193,060).  Year Ended January 31, 2008  For the year ended January 31, 2008 The Corporation incurred a net loss of $3,270,712 ($0.13 per share) compared to a net loss of $2,700,977 ($0.13 per share) in the previous year. Mineral property revenues increased by 60% from $416,158 to $685,244 while interest and other revenue doubled from $138,273 to $271,835. However, these revenue increases were offset by increased exploration expenditures of $2,605,888 compared to $1,286,495 in the previous year. General and administrative expenses remained relatively unchanged from the previous year.   -100-  The most significant item comprising general and administrative expenses was share-based compensation expense for incentive stock options granted to directors, officers and employees during the fiscal year. This item accounted for one-third of the total expenditures. The variance from the previous year resulted from the allocation of share-based compensation to mineral property exploration. Total share-based compensation of $1,034,486 was nearly the same as the previous year, but $265,792 of it was allocated to exploration expenditures.  Salaries and support services accounted for 40% of the increase in total expenditures reflecting the increased number of full-time staff in the Corporation. The largest change in a single component of administrative expenditures was investor services, which include dissemination of information to investors, transfer agent services and regulatory fees to maintain a public company. Investor services increased from $41,500 in 2006 to $85,392 in 2007. A second significant change occurred in foreign exchange losses which increased from $7,219 in 2006 to $47,233 in 2007. The Corporation maintains US dollar accounts to make payments denominated in US dollars. When these accounts are adjusted to the prevailing exchange rate at the balance sheet date, the difference is shown as a foreign exchange gain or loss. The US dollar slipped from an average of $1.18 Canadian in 2006 to $1.06 in 2007.  Exploration expenditures, excluding those by joint-venture partners, totaled $2,495,617 ($1,538,295), and property acquisition expenditures totaled $165,477 ($307,542). These costs were offset by exploration reimbursements of $38,963 ($560,058). The majority of the exploration expenditures were made on the Wernecke property which is a joint venture with Fronteer Development Group. The Corporation contributed 20% of the total program cost of approximately $6 million to maintain a 20% ownership interest in the property. Another major emphasis was the Poncho property in Nevada, which was drilled early in the year, and the Lachlan Fold Belt properties in New South Wales, Australia, where the Corporation is currently conducting reconnaissance field work.  The British Columbia Mineral Exploration Tax Credit Program will reimburse the Corporation for 20% of eligible expenditures in that jurisdiction. For the fiscal year ended January 31, 2008 exploration tax credits were $4,872 ($32,702). The severity of the Mountain Pine Beetle attack has resulted in designation of an area where the tax credit will be 30% rather than the previous 20%. Most of the Corporations active mineral properties fall within the designated zone. Flow though expenditures, which were renounced to investors, are not eligible for this tax credit. Option proceeds were $148,143 ($168,500) while joint venture management fees were $193,060 ($64,776).  There are several differences which affected the comparability of current fiscal year exploration expenditures with previous years. The first was the initiation of two option agreements which resulted in increased joint venture management fees, though lower option proceeds. The second factor was the Corporations participation in the Wernecke Breccia Joint Venture which consumed nearly half of the Corporations exploration budget. Another factor was the commencement of exploration in Australias Lachlan Fold Belt and continuing exploration of several new grass-roots projects within British Columbia.   -101-  Year Ended January 31, 2007  For the year ended January 31, 2007, The Corporation incurred a net loss of $2,700,977 ($0.13 per share) compared to a net loss of $1,823,606 ($0.10 per share) in the previous year. Revenue nearly doubled as interest revenue increased from $68,672 to $135,804 and joint venture management fees increased by $28,499 with new option agreements for the Williams property and Northgate Alliance. Option proceeds were nearly the same in both years.  The most significant item comprising general and administrative expenses was share-based compensation expense for incentive stock options granted to directors, officers and employees during the fiscal year. This item accounted for nearly half of the total expenditures and 78% of the increase from the previous year. Other expenditures which increased are office expenses, which includes printing and mailing costs for the annual report and meeting materials, and salaries and support services which reflects the increased number of full-time staff in the Corporation. Accounting and legal expenses also increased primarily as a result of increased regulatory compliance costs.  Exploration expenditures, excluding those by joint-venture partners, totaled $1,538,295 and property acquisition costs totaled $307,542. These costs were offset by joint venture reimbursements of $560,058. The British Columbia Mineral Exploration Tax Credit Program will reimburse the Corporation for 20% of eligible expenditures in that jurisdiction. For the fiscal year ended January 31, 2007, exploration tax credits were $32,702, option proceeds were $168,500, while joint venture management fees were $64,776.  Several factors affected the comparison of fiscal year ended January 31, 2007 exploration expenditures to previous years. The first was the initiation of two option agreements which resulted in increased option proceeds and joint venture reimbursements while reducing the Corporations overall exploration costs. Another factor was the acquisition costs associated with applications for exploration licenses in Australias Lachlan Fold Belt. Exploration work in Nevada, for the Walker Lane Alliance project, and in British Columbia and Yukon, for the Northgate Alliance, increased exploration expenditures for the fiscal year.  LIQUIDITY AND CAPITAL RESOURCES  LIQUIDITY  Year Ended January 31, 2009  The Corporations working capital as of January 31, 2009 was $6,041,336 comprised primarily of cash and term deposits, compared to $8,864,011 at the end of the previous fiscal year. The term deposits and cash are sufficient to complete the planned exploration initiatives for the current fiscal year without a requirement for additional financing. Due to extreme market volatility and uncertainty that all junior exploration companies have experienced recently, the Corporation has taken steps to trim expenditures in non-essential areas and to ensure that exploration continues in a strategic manner to maximize discovery opportunities. The Corporation has cash in highly liquid term deposits which is sufficient to fund operations for at least two to three years, including continued exploration expenditures, and has no need for immediate financing.   -102-  The Corporations number of issued and outstanding shares was 25,707,251 at January 31, 2009. The purchase of the Thorn property completed during the first quarter accounts for the increase from the 25,607,251 common shares that were issued and outstanding at the previous fiscal year-end. During the year, 435,000 employee stock options were granted at a weighted average strike price of $0.47 and 535,000 options expired or were forfeited. 1,820,000 previously granted director and employee options exercisable before December 2012 remain outstanding.  The Corporations financial instruments are all fully cashable at any time so there are no restrictions on availability of funds. There is no long-term debt. The Corporations current obligations include sublease commitments for office space. The lease for head office space expires November 30, 2010. Lease commitments for the remainder of the current fiscal year total $127,487. Other current obligations are statutory withholding and payroll taxes.  Year Ended January 31, 2008  The Corporations working capital as of January 31, 2008 was $8,864,011 comprised primarily of cash, term deposits and short-term investments, compared to $4,368,723 at the end of the previous fiscal year. The short-term investments are intended to take advantage of higher returns available with slightly less liquidity while maintaining the integrity of the principal invested. These investments have maturities ranging from 4 months to one year at rates up to 1% above those available on term deposits. The term deposits and cash are sufficient to complete the planned exploration initiatives for the current fiscal year without a requirement for additional financing.  The Corporations number of issued and outstanding shares was 25,607,251 at January 31, 2008. The July 5, 2007 private placement completed during the second quarter (see paragraph immediately below) represents most of the increase from the 21,751,539 common shares that were issued and outstanding at the previous fiscal year-end. During the year, 635,000 employee stock options were granted at a weighted average strike price of $1.85 and 182,500 options were exercised. 1,720,000 previously granted director and employee options exercisable before January 2012 remain outstanding.  On July 5 2007, the Corporation completed a $6.5 million private placement consisting of flow-through and non-flow-through units. The Corporation issued 600,000 flow-through units at a price of $2.50 for proceeds of $1.5 million and 2,500,000 non flow-through units at a price of $2.00 per unit for proceeds of $5 million. Each flow through unit consisted of one flow-through share and one-half non-transferable share purchase warrant. Each non flow-through unit consisted of one common share and one non-transferable share purchase warrant. Each whole warrant entitled the holder to purchase one common share at a price of $2.75 per share prior to July 5, 2009. There were 139,080 non-transferable Brokers' Warrants issued. Each Broker's Warrant entitles the holder to purchase one common share at a price of $2.00 per share until July 5, 2009. Share issue costs totaled $163,018 for net proceeds of $6,338,982. If all exercisable options and warrants are exercised, a maximum of $10 million will be added to the Corporations treasury, and shares outstanding will total 30,617,543.   -103-  On December 31, 2007, the Corporation renounced the flow-through benefits to investors even though some of the expenditures had not yet been incurred. The flow-through share rules permit the Corporation to renounce expenditures prior to actual expenditure as long as they are incurred before the earlier of the end of the second calendar year or 48 months after the signing of the agreement. The total look-back amount renounced was $304,122. As of January 31, 2008, the Corporation is obligated to spend $291,274 on eligible flow-through expenditures in B.C. before December 31, 2008. The renunciation of flow-through benefits resulted in an income tax recovery on the Consolidated Statement of Operations since the tax losses represented by these benefits are not likely to be realized by the Corporation.  The Corporations financial instruments are all fully cashable at any time so there are no restrictions on availability of funds. There is no long-term debt. The Corporations current obligations include sublease commitments for office space. The lease for head office space expires November 30, 2010. Lease commitments for the remainder of the current fiscal year total $84,937. Other current obligations are statutory withholding and payroll taxes.  Year Ended January 31, 2007  The Corporations working capital as of January 31, 2007 was $4,368,723, comprised primarily of cash, term deposits and short-term investments, compared to $2,905,645 at the end of the previous fiscal year.  The Corporations number of issued and outstanding shares was 21,751,539 at January 31, 2007. The April 13, 2006 private placement completed during the first quarter (see paragraph immediately below) represented most of the increase from the 19,999,539 common shares that were issued and outstanding at the previous fiscal year-end. During the year, 900,000 employee stock options were granted and 175,000 options were exercised. 1,020,000 previously granted director and employee options exercisable before December 2010 remain outstanding.  A private placement was completed on April 13, 2006 with net proceeds of $2.5 million. Share issue costs were $55,243. The private placement consisted of 1,572,000 units at a price of $1.70 per unit with each unit consisting of one common share and one non-transferable share purchase warrant ("Warrant"). Each Warrant entitled the holder to purchase one additional common share at a price of $2.00 per share before April 13, 2007 and $2.25 per share before April 13, 2008. The Warrants contained a provision whereby if, during the term of any unexercised Warrant, the common shares of the Corporation trade on any exchange for a period of 20 consecutive trading days at a price of $2.50 per share or greater in year one or $2.75 per share or greater in year two the Corporation may, at its option and by notice in writing to each holder, require the holder of the Warrant to exercise such Warrant within 30 days, failing which the Warrant will be deemed to have expired. There were 1,572,000 share purchase warrants issued. 140,000 Brokers warrants at an exercise price of $1.70 were issued in conjunction with the placement. The expiry date for all warrants was April 13, 2008. If all remaining options and warrants are exercised, a maximum of $ 5.4 million will be added to the Corporations treasury, and shares outstanding will total 25,036,539.  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. The nature of the Corporations interest in its properties and the financial obligations associated with maintaining such interests are set out for the specific properties under Item 4, in the section entitled Property, Plants and Equipment.   -104-  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 Alaska, Nevada, British Columbia or Yukon Territorial government, as the case may be. Once forfeited, the areas previously covered by the claims will be available for staking by other parties.  In the event that the Corporation does not fulfill its obligations under the terms of any of its option agreements, such agreement or agreements will terminate and title to the property will revert to the grantor of the original option.  CAPITAL RESOURCES  Year Ended January 31, 2009  The Corporations objectives when managing capital are to safeguard the Corporations ability to continue as a going concern in order to pursue the development of its mineral properties. The Corporation considers its capital to be shareholders equity and working capital. The Corporation manages and adjusts its capital structure when changes to the risk characteristics of the underlying assets or changes in economic conditions occur. To maintain or adjust the capital structure, the Corporation may issue new shares or acquire or dispose of mineral property interests.  In order to facilitate the management of its capital requirements, the Corporation prepares annual expenditure budgets which are revised periodically based on the results of its exploration programs, availability of financing and industry conditions. Annual and materially updated budgets are approved by the Board of Directors.  In order to maximize ongoing development efforts, the Corporation does not pay out dividends. The Corporations investment policy is to invest any excess cash in liquid short-term interest-bearing instruments with maturities one year or less. When utilized, these instruments are selected with regard to the expected timing of expenditures from continuing operations.  During the fiscal year ended January 31, 2009, the Corporation used $2,738,928 of its cash resources for operating activities, which included a net loss for the year of $2,981,658. Cash expenditures included mineral property acquisition costs of $353,057 and net exploration costs of $1,369,541, a decrease of $1,067,122 from the previous year. The Corporation increased cash resources by $227,806 from the sale of marketable securities received as mineral property option proceeds. As of January 31, 2009, consolidated cash amounted to $5,921,019, a decrease of $1,683,398 from the beginning of the year.   -105-  Year Ended January 31, 2008  During the fiscal year ended January 31, 2008, the Corporation used $3,398,011 of its cash resources for operating activities, which included a net loss for the year of $3,270,712. Expenditures included net mineral property acquisition and exploration costs of $2,758,798, an increase of $2,153,120 from the previous year. The Corporation increased cash resources by $359,541 from the sale of marketable securities received as mineral property option proceeds. During the fiscal year, the Corporation issued 3,201,212 shares for net proceeds of $6,336,982 in the July 5, 2007 private placement. There were share issue costs of $163,018. An additional 654,500 shares were issued for net proceeds of $1,103,137 pursuant to share purchase warrants and options at prices of $0.60 to $2.00 per share. Share issue costs totaled $813. As of January 31, 2008, consolidated cash amounted to $7,604,417, an increase of $4,653,119 from the beginning of the year. In addition, the Corporation holds $291,274 as cash restricted for flow-through expenditures which will be used for eligible mineral property expenditures in the current fiscal year.  Year Ended January 31, 2007  During the year ended January 31, 2007, the Corporation used $1,248,486 of its cash resources for operating activities, which included a net loss for the year of $2,700,977. Expenditures included net mineral property acquisition and exploration costs of $605,678, a decrease of $488,614 from the previous year. The Corporation increased cash resources by $222,480 from the sale of marketable securities received as mineral property option proceeds. During the year, the Corporation issued 1,572,000 shares for net proceeds of $2,494,756 in the April 13, 2006 private placement. There were share issue costs of $55,243. An additional 180,000 shares were issued for net proceeds of $150,561 pursuant to share purchase warrants and options at prices of $0.25 to $1.70 per share. Share issue costs totaled $140. As of January 31, 2007, consolidated cash amounted to $2,951,298, an increase of $115,271 from the beginning of the year.  RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.  Not Applicable.  TREND INFORMATION  The Corporation does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, the Corporations liquidity either materially increasing or decreasing at present or in the foreseeable future. Material increases or decreases in the Corporations liquidity will be substantially determined by the success or failure of the Corporations exploration programs or the future acquisition of projects.  Current equity market conditions will make it more difficult for the Corporation to generate cash through the sale of shares. Equity financing will be possible but will result in substantial dilution for current shareholders at current market prices for the Corporations shares. At present there are neither plans nor necessity for equity financing.  OFF-BALANCE SHEET ARRANGEMENTS  The Corporation does not utilize off-balance sheet arrangements.  -106-  CONTRACTUAL OBLIGATIONS  Contractual ObligationsPayments due by periodTotalLess than 1 year1-3 years3-5 yearsMore than 5 yearsLong-Term Debt ObligationsNilNilNilNilNilLease Obligations [1]$     219,128$   128,835$     87,794$       2,499NilMineral Property Interests  Option Payments [2]512,382123,632212,50085,00091,250Mineral Property Interests  Filing Fees[2]4,408,269963,3911,426,1571,048,343970,378Other Long-Term LiabilitiesNilNilNilNilNilTotal$5,139,779$1,215,858$1,726,451$1,135,842$1,061,628  [1] Sublease agreement is effective until November 30, 2010. [2] Mineral property interest costs are contingent on retaining an interest in the property. Most agreements are subject to cancellation without penalty. This table does not include fees which other parties are obligated to pay. Filing fees, which include claim rental fees, do not have to be paid if the property is forfeited to the appropriate government authority.    ITEM 6   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  DIRECTORS AND SENIOR MANAGEMENT  Jason S. Weber, P. Geo., President and Chief Executive Officer Port Coquitlam, BC  Jason S. Weber holds a B.Sc. in geology and is a registered professional geoscientist. Mr. Weber was appointed President and Chief Executive Officer on December 1, 2007 after serving as Manager, Corporate Communications for the Corporation since December 1999. Mr. Weber is also a director of Tatlow Investments, which is a private British Columbia corporation.   -107-  Henry J. Awmack, P.Eng., Director Vancouver, BC  Henry J. Awmack holds a B.A. Sc. (Honours) in geological engineering and is a registered professional engineer. Mr. Awmack has been a principal of Equity Exploration Consultants Ltd., a Vancouver, British Columbia based private mineral resource consulting firm, since 1987. Mr. Awmack is also the President of Running Dog Resources Inc. and a director of Antioch Investments Ltd., Misty Creek Ventures Ltd., and Sleeping Dogs Warehouse Ltd., which are private British Columbia corporations. Mr. Awmack is the brother of an officer, Dorothy G. Miller.  Mark E. Baknes, P.Geo, Vice President, Exploration Duncan, BC  Mark E. Baknes holds a B.Sc. and M.Sc. in geology and is a registered professional geoscientist. Mr. Baknes was a geologist with Equity Exploration Consultants Ltd., a Vancouver, British Columbia based private mineral resource consulting firm, from 1993 until 2003, when he commenced working full-time for the Corporation as Vice-President, Exploration. Prior to joining Equity, Mr. Baknes worked as a project geologist with Atna Resources Ltd. and Kennecott Canada Exploration Inc.  David A. Caulfield, P. Geo., Chairman Quadra Island, BC  David A. Caulfield holds a B.Sc. in geology and is a registered professional geoscientist. Mr. Caulfield has been a principal of Equity Exploration Consultants Ltd., a Vancouver, British Columbia based private mineral resource consulting firm, since 1987. Mr. Caulfield is a Director of Geoscience BC, a not-for-profit organization providing public-private partnerships for geoscience activities in British Columbia. Mr. Caulfield is also the President of Attunga Holdings Inc. and a director of Antioch Investments Ltd., which are private British Columbia corporations.  Bipin Ghelani, C.A., Director Richmond, BC  Bipin Ghelani has been a Chartered Accountant since 1972, having completed his education in London England. Mr. Ghelani has managed his own accounting firm since 1988. Prior to that, he held senior positions with several international accounting firms including Deloitte & Touche and PricewaterhouseCoopers. Mr. Ghelani is the chair of the Audit Committee for the Corporation and is considered independent as defined by Multilateral Instrument 52-110 (Audit Committees.)  Alan J. Hutchison, Corporate Secretary North Vancouver, BC  Alan J. Hutchison holds a B.A. and an LL.B. (Bachelors of Laws degree). Mr. Hutchison is a member of the British Columbia Law Society and was called to the British Columbia Bar in 2001. He is currently practicing law in Vancouver as a partner with Fraser Milner Casgrain, LLP (FMC.) FMC currently provides legal services to the Corporation.   -108-  Dorothy G. Miller CGA, Chief Financial Officer North Vancouver, BC  Dorothy Miller holds a Certified General Accountant designation and a Bachelor of Home Economics degree. As of April 2006, Ms. Miller is employed directly by the Corporation. She was previously employed by Equity Exploration Consultants Ltd. from 1999 to 2006 while under contract with the Corporation. Previous administrative experience includes positions with Weldwood of Canada Ltd from 1995-1997, Gibraltar Mines Ltd. (1994) and Clark County School district in Nevada (1991-1994.) Ms. Miller is the spouse of a director, Jack H.L. Miller and the sister of another director, Henry J. Awmack.  Jack H.L. Miller, P.Eng, Director North Vancouver, BC  Jack H.L. Miller holds a B.A.Sc., M.A.Sc. in geological engineering, is a registered professional engineer and is currently Chief Operating Officer for Quadra Mining Ltd. Mr. Miller's experience in the resource industry dates back to 1979. His previous positions include Vice President, Projects and Mine Superintendent for Gibraltar Mines Ltd. (1994-1996), Vice President, Projects for Westmin Resources (1996-1997), Vice President, Operations for Princeton Mining Corp. (1997-1998) and Vice President, Operations for Imperial Metals Corporation (1998-2002.) Mr. Miller is the spouse of an officer, Dorothy G. Miller.  William G. Schur, Director Highland Park, IL  William G. (Bill) Schur A.B. earned an A.B. degree from Dartmouth College in 1972, with a major in Government followed by a J.D. from Cornell University. He was admitted to the Bar in Illinois and the United States District Court for the Northern District of Illinois in 1975 and the United States Court of Appeals for the Seventh Circuit in 1978. He is also a member of the Trial Bar of the United States District Court for the Northern District of Illinois. Mr. Schur currently has a law practice in the city of Chicago. Mr. Schur is a director of The Dalvay Group, Ltd., a family-owned Illinois corporation. He is a member of the Audit Committee for the Corporation.  Mark T. H. Selby, Director Toronto, ON  Mark T.H. Selby holds a B.Comm. (Hons.) degree and is currently Vice President, Business Planning and Market Research for Quadra Mining Ltd. Mr. Selby founded Selby & Co in 2006 to provide consulting advice to mining companies and investors on the outlook base metals and resource equity valuation. His prior positions include Assistant Vice-President, Strategic Planning & Business Development (2005-2007) and Director, Market Research (2001-2004) with Inco Limited and was Principal at Mercer Management Consulting (1994-2001). Mr. Selby is a member of the Audit Committee for the Corporation.   -109-  CERTAIN AFFILIATIONS  Some of the directors of the Corporation are also directors and officers of other corporations. It is possible, therefore, that a conflict may arise between their duties as a director or officer of the Corporation and their duties as a director or officer of such companies. All such conflicts must be disclosed by them in accordance with the Business Corporations Act (British Columbia), and they are required to govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.  The following directors and officers of the Corporation are also directors, officers or promoters of the following corporations:  Name of Director/OfficerCompanyPositionPeriodHenry J. AwmackEquity Exploration Consultants Ltd.Secretary
Director02/02 to 06/06
01/87 to presentDavid A. CaulfieldEquity Exploration Consultants Ltd.
Kaminak Gold CorporationDirector
Member, Advisory Board01/87 to present
12/06 to presentBipin GhelaniGMV Minerals Inc.
Mala Noche Resources Corp.Director
Director05/06 to 11/08
11/07 to 10/08Alan HutchisonCentenario Copper CorporationCorporate Secretary03/04 to 04/09Jack H.L. MillerQuadra Mining Ltd.Chief Operating Officer04/04 to presentMark T.H. SelbyQuadra Mining Ltd.


Castle Gold CorporationVice President, Business Planning and Market Research
Director08/08 to present


04/09 to present  Mark E. Baknes, David A. Caulfield, Dorothy G. Miller and Jason S. Weber each devote 100% of their time to the affairs of the Corporation. Henry J. Awmack, Bipin Ghelani, Jack H.L. Miller, William Schur, and Mark Selby, each allot less than 5% of their time to the Corporations business. Alan J. Hutchison allots less than 5% of his time to the affairs of the Corporation in his capacity as Corporate Secretary.  COMPENSATION  The following tables set forth all annual and long term compensation for services in all capacities to the Corporation and its subsidiaries for the most recently completed fiscal year in respect of each of the individuals who were, as of January 31, 2009, directors and members of its administrative, supervisory or management bodies (collectively the Named Executive Officers) including any individual who would have qualified as a Named Executive Officer but for the fact that individual was not serving as such at the end of the most recently completed financial year.   -110-  Summary Compensation Table  Annual CompensationLong Term CompensationAwardsPayoutsName and Principal PositionFiscal
Year EndSalary
($)Bonus
($)Other Annual Comp
($)Common Shares Under Options\
SARs granted
(#)Restricted Shares or Restricted Share Units ($)LTIP Payout ($)All other Compensation
($)Henry J. Awmack,
Director [1]Jan. 2009NILNIL$5,00015,000NILNILNILMark E. Baknes, Vice PresidentJan. 2009$136,132NILNIL30,000NILNILNILDavid A. Caulfield, Director Business Development [2]Jan. 2009NILNILNIL45,000NILNIL$129,600[2]Bipin Ghelani,
Director [1]Jan. 2009NILNIL$5,00015,000NILNILNILAlan J. Hutchison,
Corporate Secretary [3]Jan. 2009NILNILNIL5,000NILNILNIL[3]Dorothy Miller,
CFOJan. 2009$95,375NILNIL30,000NILNILNILJack H.L. Miller,
Director [1]Jan. 2009NILNIL$5,00015,000NILNILNILP. Gary Paulson,
Director [1,5]Jan. 2009NILNIL$5,00015,000NILNILNILWilliam G. Schur,
Director [6]Jan. 2009NILNILNILNILNILNILNILMark T.H. Selby
Director [6]Jan. 2009NILNILNILNILNILNILNILIan J. Talbot,
Director [1,4]Jan. 2009NILNIL$5,000NILNILNILNILJason S. Weber., President & CEOJan. 2009$135,194NILNIL50,000NILNILNIL   -111-  [1] Non-executive directors were paid an annual directors fee of $5,000. [2] Pursuant to the terms of a Management Agreement effective January 1, 2008, Equity Exploration Consultants Ltd. is paid the sum of $10,800 per month for the services of Mr. Caulfield. Mr. Caulfield is a director and officer of Equity Exploration Consultants Ltd. Refer to "Management and Consulting Contracts". [3] Alan J. Hutchison is a partner with the law firm of Fraser Milner Casgrain LLP and provides ongoing legal services to the Corporation. During the fiscal year ended January 31, 2008, the Corporation paid the firm of Fraser Milner Casgrain LLP $93,644 for legal services and disbursements which constitutes less than one percent of the firms gross billings. [4] Ian J. Talbot resigned as a director of the Corporation on November 11, 2008. [5] Gary Paulson resigned as a director of the Corporation on March 1, 2009. [6] William G. Schur and Mark T.H. Selby were appointed directors of the Corporation on March 1, 2009.   As at January 31, 2009, the Corporation has granted rights to purchase or acquire an aggregate of 2,255,000 Common Shares pursuant to share purchase options, including the options listed below. The closing market price of the Common Shares on April 30, 2009 as traded on the TSX Venture Exchange was $0.31.  Outstanding Director and Officer Stock Options as at January 31, 2009  Name of OptioneesNo. of Common Shares Subject to Option (#)Date of GrantExercise Price
$Expiry DateMarket Value on Date of Grant
$Henry Awmack20,000
15,000
25,000
10,000
10,000
10,000
15,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.20Dec. 9, 2009
Dec. 22, 2010
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
Dec. 19, 20131.21
1.23
1.70
2.04
2.00
1.65
0.20Mark Baknes15,000
10,000
100,000
15,000
15,000
15,000
10,000
20,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
July 16, 2008
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20Dec. 9, 2009
Dec. 22, 2010 
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
July 16, 2013
Dec. 19, 20131.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20David Caulfield45,000
15,000
150,000
25,000
50,000
10,000
10,000
35,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
July 16, 2008
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20Dec. 9, 2009
Dec. 22, 2010 
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
July 16, 2013
Dec. 19, 20131.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20  -112-   Name of OptioneesNo. of Common Shares Subject to Option (#)Date of GrantExercise Price
$Expiry DateMarket Value on Date of Grant
$Bipin Ghelani10,000
10,000
25,000
10,000
10,000
10,000
15,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.90Dec. 9, 2009
Dec. 22, 2010 
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.90Alan Hutchison25,000
5,000
5,000July 16, 2007
Dec. 10, 2007
July 16,20082.00
1.65
0.90July 16, 2012
Dec. 10, 2012
July 16, 20132.00
1.65
0.90Dorothy Miller15,000
10,000
50,000
10,000
15,000
15,000
10,000
20,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
July 16, 2008
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20Dec. 9, 2009
Dec. 22, 2010 
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
July 16, 2013
Dec. 19, 2013$1.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20Jack Miller10,000
10,000
25,000
10,000
10,000
10,000
15,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.20Dec. 9, 2009
Dec. 22, 2010 
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
Dec. 19, 20131.21
1.23
1.70
2.04
2.00
1.65
0.20Gary Paulson10,000
10,000
25,000
10,000
10,000
10,000
15,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.20Dec. 9, 2009
Dec. 22, 2010 
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
Dec. 19, 20131.21
1.23
1.70
2.04
2.00
1.65
0.20Jason Weber65,000
10,000
25,000
10,000
15,000
125,000
15,000
35,000Dec. 9, 2004
Dec. 22, 2005
July 17, 2006
Jan. 11, 2007
July 16, 2007
Dec. 10, 2007
July 16, 2008
Dec. 19, 20081.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20Dec. 9, 2009
Dec. 22, 2010 
July 17, 2011
Jan. 11, 2012
July 16, 2012
Dec. 10, 2012
July 16, 2013
Dec. 19, 20131.21
1.23
1.70
2.04
2.00
1.65
0.90
0.20  -113-   Name of OptioneesNo. of Common Shares Subject to Option (#)Date of GrantExercise Price
$Expiry DateMarket Value on Date of Grant
$Total1,685,000  In addition to the options granted to Directors and Senior Officers of the Corporation, the Corporation issues share purchase options to employees of the Corporation and persons who provide ongoing services to the Corporation under an incentive stock option plan. Under the plan, the Corporation has reserved a total of 2,570,725 shares for the issue of share purchase options. The exercise price of share purchase options is no less than the closing price of the shares on the business day immediately preceding the date on which the option is granted. Options 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). Of the reserved shares, 255,725 remain available for stock option grants. Shareholders must approve the stock option plan at each annual general meeting, at which time the number of shares available for issue increases to a total of 10% of the Corporations issued and outstanding shares as of the record date for the meeting.  As of January 31, 2009, there are six employees who have been granted stock options in the aggregate amount of 860,000 options at exercise prices ranging from $0.20 to $2.04 with expiry dates between June 2009 and December 2013. Individual grants of more than 30,000 options vest over a period of two years.  Defined Benefit or Actuarial Plan Disclosure  The Corporation has no defined benefit or actuarial plans.  Termination of Employment, Changes in Responsibility and Employment Contracts  There are no employment contracts between the Corporation and any Named Executive Officer. The Corporation has no plan or arrangement in respect of compensation received or that may be received by executive officers, including Named Executive Officers, in the financial year ending January 31, 2009, or current fiscal year with the view to compensating such officers in the event of the termination of employment (resignation, retirement, change of control) or in the event of a change in responsibilities following a change of control.  -114-  Management and Consulting Contracts  The Corporation entered into a management agreement effective January 1, 2008 with Equity Exploration Consultants Ltd. (Equity), incorporated herein by reference to Exhibit 4.30 of this Form 20-F, pursuant to which Equity will furnish the services of David A. Caulfield Director, Business Development, for the sum of $10,800 per month. The agreement also provides that the Corporation will pay a proportional share of rent, internet and administrative services provided by Equity employees. The agreement is for a term of one year with provision for a one year extension at the Corporations option, and may be terminated by the Corporation on six months notice. Equity is not at arms length to the Corporation as two of the principals of Equity are David A. Caulfield and Henry J. Awmack, who are directors of the Corporation.  Equity Exploration Consultants Ltd. provides geological consulting services to the Corporation on an individual project basis. On an on-going basis, Equity provides property evaluation services to the Corporation at standard commercial rates. These rates are the same as those charged to unrelated third parties. As exploration projects for a particular property are defined, a specific contract for consulting services related to that project is entered into.  During the fiscal year ended January 31, 2009, there were two such projects: Grizzly property in British Columbia, and Boulevard property in the Yukon.  The Grizzly project represented one type of contract. Equity Exploration Consultants was contracted to provide geological consulting services for both the IP and drilling programs, then costs were passed on to the joint venture partner, Inmet Mining Corporation, for reimbursement. Total costs passed through to Inmet were $1,496,487 The Corporation provided technical assistance at a cost of $21,063.  Equity Exploration Consultants was contracted to provide geological consulting services for the Boulevard drill program in Yukon Territory, with the costs reimbursed by Northgate Minerals. The Corporation conducted the earlier trenching program with the assistance of a different exploration consultant. Total costs passed through to Northgate for the drill program were $991,645. The Corporation provided technical assistance at a cost of $26,426.   Compensation of Directors  The Corporation pays each of the directors, who are not members of management or officers of the Corporation, an annual stipend of $5,000 for their services in their capacity as directors in addition to the unissued treasury shares reserved for the grant of directors and employees stock options. There has been no other arrangement pursuant to which directors were compensated by the Corporation in their capacity as directors during the Corporations financial year ending January 31, 2009.   -115-  Proposed Compensation  The Corporation has determined the amount of compensation to be granted to directors and Named Executive Officers for the 12 months beginning February 1, 2009 as follows:  MonthlyYearlyMark E. Baknes$    10,800$   129,600David A. Caulfield [1]10,800129,600Dorothy Miller7,50090,000Jason Weber11,000132,000  [1] Paid to Equity Exploration Consultants Ltd. pursuant to the terms of management agreement, effective January 1, 2008.  Except as disclosed above, the Corporation has no standard arrangement pursuant to which Named Executive Officers or directors of the Corporation are compensated by the Corporation for their services, except for the granting from time to time of incentive stock options in accordance with policies of the TSX Venture Exchange.  BOARD PRACTICES  The directors of the Corporation are elected by the Corporation shareholders at the Corporations Annual General Meetings. A director of the Corporation holds his respective position until the earlier of his resignation or his replacement at a subsequent Annual General Meeting of the Corporation. The Articles of the Corporation permit appointment of directors so long as the number appointed does not exceed one-third of the number elected by the shareholders at the previous Annual General Meeting.  All corporate matters outside of the ordinary course of business must be approved by the Corporations board of directors. The Corporations audit committee consists of three directors who review the Corporations financial statements prior to such statements being submitted to the entire board of directors for approval. The members of the audit committee are Bipin Ghelani, William G. Schur, and Mark T.H. Selby. The Corporations Compensation committee is comprised of the following independent directors: Bipin Ghelani, William G. Schur, and Mark T.H. Selby. The committee meets on an annual basis to review management performance and compensation. Recommendations from the committee are referred to the entire board of directors at the budget review meeting for approval. The Chief Executive Officer, in consultation with the Chief Financial Officer, determines compensation of staff members who are not executive officers.   -116-  The Audit Committee performs an oversight role for the board by: · Reviewing the appointment of the Chief Financial Officer and any other key financial personnel. · Reviewing, with management and the external auditor, the adequacy and effectiveness of the Corporations systems of internal control and the adequacy and timeliness of its financial reporting processes. · Reviewing the annual audited financial statements, unaudited quarterly financial statements, management discussion and analysis reports and other financial reporting documents prior to filing or distribution, including financial matters required to be reported under applicable legal or regulatory requirements. · Where appropriate and prior to release, reviewing and approving any other news releases that contain significant financial information that has not previously been released to the public. · Reviewing the Corporations financial reporting and accounting standards and principles and significant changes in such standards or principles or in their application. · Recommending to the Board and shareholders the external auditor selected to examine the Corporations accounts and financial statements. · Approving all audit engagement terms and fees and pre-approving all non-audit and assurance services to be performed by the auditor.  EMPLOYEES  The Corporation has ten full-time employees. One of the employees is retained under contract with Equity Exploration Consultants Ltd. See Management and Consulting Contracts above. There are no contracts or collective agreements between the Corporation and any labor union or similar organization.  SHARE OWNERSHIP  The following table sets forth security ownership of each of the directors and officers of the Corporation as at April 30, 2009.   Name,
Municipality of ResidenceNumber of Common Shares of the Corporation beneficially owned or directly/indirectly controlledPercentage of Issued Share CapitalHenry J. Awmack, P.Eng.
Vancouver, B.C.
DirectorCommon Shares: 1,370,151[1]
Options: 105,000[2]
Warrants: 5,000[3]5.33%Mark E. Baknes, P.Geo.
Westholme, B.C.
Vice-President, ExplorationCommon Shares: 589,100[1]
Options: 200,000[2]
Warrants: Nil2.29%David A. Caulfield, P. Geo.
Quadra Island, B.C.
Chairman of the Board, 
DirectorCommon Shares: 748,151[1]
Options: 340,000[2]
Warrants: 25,000[3]2.91%  -117-   Name,
Municipality of ResidenceNumber of Common Shares of the Corporation beneficially owned or directly/indirectly controlledPercentage of Issued Share CapitalBipin Ghelani, C.A.
Richmond, BC.
DirectorCommon Shares: 128,000[1]
Options: 90,000[2]
Warrants: Nil0.50%Alan Hutchison
North Vancouver, BC
Corporate SecretaryCommon Shares: Nil
Options: 35, 000[2]
Warrants: Nil0.0%Dorothy Miller
North Vancouver, B.C.
Chief Financial OfficerCommon Shares: 20,000
Options: 145,000[2]
Warrants: Nil0.08%Jack H.L. Miller, P.Eng.
North Vancouver, B.C.
DirectorCommon Shares: 63,400[1]
Options: 90,000[2]
Warrants: 5,000[3]0.25%William G. Schur
Highland Park, IL
DirectorCommon Shares:10,000 [1]
Options: 75,000[2]
Warrants: Nil0.04%Mark T.H. Selby
Toronto ON
DirectorCommon Shares: Nil [1]
Options: 75,000[2]
Warrants: Nil0.0%Jason S. Weber
Port Coquitlam, BC
President, Chief Executive Officer,
DirectorCommon Shares: 179,500[1]
Options: 300,000[2]
Warrants: 10,000[3]0.70%  [1] Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised, as at April 30, 2009, based upon information furnished by the respective shareholders. [2] Stock Options entitle the holder to purchase Common Shares in the capital of the Corporation at a fixed price for a specific period of time. Stock options do not carry any voting rights. Details of stock options held by the directors and officer of the Corporation are set out under "Options and Other Rights to Purchase Shares - Outstanding Stock Options." [3] Warrants entitle the holder to purchase Common Shares in the capital of the Corporation at a fixed price for a specific period of time. Warrants do not carry any voting rights.  Of the shares beneficially held by David Caulfield, 193,151 are registered in the name of Attunga Holdings Inc., a private British Columbia corporation controlled by David Caulfield. Of the shares beneficially held by Henry Awmack, 73,151 shares are beneficially held by Running Dog Resources Inc, a private British Columbia corporation controlled by Henry Awmack. Of the shares beneficially held by Jason Weber, 20,000 shares are beneficially held by family trusts controlled by Jason Weber. Of the shares beneficially held by William Schur, 10,000 shares are treated for tax purposes as held by The Dalvay Group Ltd., a family-owned corporation controlled by William Schur.   -118-  ITEM 7    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  MAJOR SHAREHOLDERS  The following table sets forth security ownership of those parties owning five percent (5%) or more of the outstanding common shares of the Corporation as at April 30, 2009.  Name,
Municipality of ResidenceNumber of Common Shares of the Corporation beneficially owned or directly/indirectly controlledPercentage of Issued Share CapitalThe Canadian Depository
for Securities Limited 
Toronto, ONCommon Shares: 20,516,84179.81%Depository Trust Company 
New York, NYCommon Shares: 4,653,80418.10%Global Strategic Management Inc.
Annapolis MarylandCommon Shares: 1,428,4505.56%Henry J. Awmack, P.Eng.
Vancouver, B.C.Common Shares: 1,370,151
Options: 105,000
Warrants: 5,0005.33%  The voting rights attached to all shares of the Corporation are equal. No shareholder or group of shareholders holds or is entitled to exercise any preferential voting rights with respect to shares of the Corporation.  The only significant change in ownership over the past three fiscal years is the gradual dilution of Mr. Awmacks holding due to private placements completed by the Corporation. While his actual shareholdings remain almost the same, at January 31, 2008 it represented 5.35% of the outstanding shares of the Corporation and 6.22% at January 31, 2007.  There are no arrangements, known to the Corporation, the operation of which may at a subsequent date result in a change in control of the company.  As of April 30, 2009 there were 23 United States registered holders representing 5,034,600 common shares of the Corporation which equals 19.58% of the Corporations issued and outstanding shares. There were 2 foreign holders representing 10,560 common shares (0.04%).  -119-  RELATED PARTY TRANSACTIONS  As at April 30, 2009, the Corporation was indebted to Equity Exploration Consultants Ltd. and Equity Geoscience, Ltd. (collectively Equity), in the amount of $10,480 for consulting services provided by Equity. Equity is not at arm's length to the Corporation, as two of the principals of Equity are David A. Caulfield and Henry J. Awmack who are directors of the Corporation. The services provided by Equity to the Corporation are provided at rates no less favorable to the Corporation than would be available from unaffiliated third parties providing similar services. It is anticipated that Equity will continue to provide geological consulting services to the Corporation from time to time, and Equity will be remunerated for such services at Equitys standard commercial rates. Fees charged to the Corporation by Equity are on the same basis as those charged by Equity to unrelated third parties.  During the first quarter of 2009, the Corporation paid Equity $5,440 for geological consulting services and $32,412 for providing general corporate and administrative services composed of$32,400for management services, and $12 for office services.  As at January 31, 2009, the Corporation was indebted to Equity, in the amount of $41,133 for project expenses and consulting services provided by Equity to option and/or joint venture projects being operated by the Corporation. During the year ended January 31, 2009, the Corporation paid Equity $$22,209 (2008 - $35,777, 2007 - $736,281) for geological consulting services and $159,094 (2008 - $234,271, 2007 - $235,389) for providing general corporate and administrative services composed of $1,606 (2008 - $6,364, 2007 $6,282) for investor services, $129,918 (2008 - $131,775, 2007 - $129,999) for management services, $2,807 (2008 - $9,412, 2007 - $9,672) for office services, $18,124 (2008 - $67,908, 2007 - $62,336,) for rent and $6,638 (2008 - $18,812, 2007 - $27,100) for support services. The cost of support services has decreased as some personnel have been transferred to the Corporations direct payroll. The Corporation now purchases general liability and property insurance independently from Equity Exploration Consultants Ltd, so this amount is no longer paid to a related party. Rent has been eliminated with the move of the Corporations head office to separate office space.  Two of the directors, David Caulfield and Henry Awmack, each indirectly own 22% of a 7.5 to 15% Net Profits Interest (NPI) in the Wernecke Breccia property (Note 3 to Consolidated Financial Statements  see Item 17). The claims were originally staked and explored by Antioch Investments Ltd. and Equity Exploration Consultants Ltd., in which they hold an interest. When the property was sold to Newmont and NVI Mining Ltd, these companies retained an NPI of varying amounts depending on the claim group.  Except as disclosed above, from the beginning of the fiscal year ending January 31, 2009 up to April 30, 2009, no insider of the Corporation, director or officer, or associate or affiliate of such persons, has or has had any material beneficial interest in any transaction or in any proposed transaction, which has or will materially affect the Corporation. The Corporation has not made any loans (including guarantees of any kind) to or for the benefit of any of the directors, officers, employees or related parties.  INTERESTS OF EXPERTS AND COUNSEL  Not Applicable.  -120-  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, 2009 and 2008
Consolidated Statements of Operations, Consolidated Statements of Cash Flows,
Consolidated Statements of Comprehensive Loss,
Consolidated Statements of Shareholders Equity, and
Consolidated Statements of Mineral Property Expenditures
all for the fiscal years ended January 31, 2009, 2008, and 2007
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended January 31, 2009  There are no legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and those involving any third party, which may have, or have had in the recent past, significant effects on the Corporation's financial position or profitability.  The Corporation has not paid any dividends since its incorporation and does not anticipate the payment of dividends in the foreseeable future. At present, the Corporations policy is to retain earnings, if any, to finance exploration on its properties. The payment of dividends in the future will depend upon, among other factors, the Corporations earnings, capital requirements and operating conditions.  SIGNIFICANT CHANGES  No significant changes have occurred since the date of the annual financial statements included in this annual report on Form 20-F.  ITEM 9   THE OFFER AND LISTING  OFFER AND LISTING DETAILS  The Common Shares of the Corporation are traded in Canada under the stock symbol "RFM" on the TSX Venture Exchange and under the stock symbol "RMFRF" on the OTC Bulletin Board in the United States. The Corporation is not listed for trading on any securities exchange in the United States. The following table sets forth the high and low closing bid prices, in Canadian dollars, and trading volume of the common shares on the TSX Venture Exchange (TSX-V) and the OTC Bulletin Board (OTC-BB) for the period February 1, 2007 to April 30, 2009. All prices are converted to Canadian dollars at the closing rate for the relevant period.   -121-   Most recent 6 monthsHighLowVolumeTSX-VOTC-BBTSX-VOTC-BBTSX-VOTC-BBNovember 1-30, 2008$ 0.23$ 0.25$ 0.14$ 0.133,443,311726,200December 1-31, 20080.250.240.170.161,010,414139,950January 1-31, 20090.300.270.200.231,399,97662,000February 1-28, 20090.400.420.250.28943,52047,000March 1-31, 20090.290.280.200.201,010,912186,368April 1-30, 20090.350.330.230.21473,40477,474  Fiscal 2007HighLowVolumeTSX-VOTC-BBTSX-VOTC-BBTSX-VOTC-BBFirst Quarter$2.34$2.29$1.91$1.891,242,605319,600Second Quarter2.202.261.801.782,058,043643,240Third Quarter2.182.181.421.341,446,169433,350Fourth Quarter2.092.211.081.071,412,652568,790  Fiscal 2008HighLowVolumeTSX-VOTC-BBTSX-VOTC-BBTSX-VOTC-BBFirst Quarter$1.65$1.69$ 1.10$1.101,130,248368,960Second Quarter1.201.190.850.84879,886287,915Third Quarter0.940.700.150.123,141,092337,260Fourth Quarter0.300.270.140.135,853,701928,150  Fiscal 2009HighLowVolumeTSX-VOTC-BBTSX-VOTC-BBTSX-VOTC-BBFirst Quarter$0.400.42$0.200.202,427,836310,842  The following table sets forth the high and low closing bid prices, in Canadian dollars, and trading volume of the common shares on the TSX Venture Exchange and the OTC Bulletin Board for the last five fiscal years. (Expressed in Canadian dollars)  Fiscal Year endingHighLowVolumeTSX-VOTC-BBTSX-VOTC-BBTSX-VOTC-BBJanuary 31, 2009$   1.65$   1.69$    0.14$    0.1211,004,7271,922,285January 31, 20082.342.291.081.076,159,4691,964,980January 31, 20072.642.561.451.507,659,0771,428,881January 31, 20061.902.000.931.007,529,1201,977,335January 31, 20051.802.330.760.765,946,066736,535  -122-  ITEM 10   ADDITIONAL INFORMATION  MEMORANDUM AND ARTICLES OF ASSOCIATION  The Corporation was incorporated under the British Columbia Company Act on May 7, 1991 under the name of Bull Pine Explorations Ltd. (Incorporation Number BC0405623). The Corporation changed its name to Rimfire Minerals Corporation on November 4, 1997.  The Corporation's head office, registered and records office is located at Suite 1350 - 650 West Georgia Street, Vancouver, British Columbia, Canada V6B 4N9.  On March 30, 2004, the British Columbia Company Act was replaced by the Business Corporations Act (British Columbia). There was a two-year transition period during which corporations must make amendments to their articles of incorporation to bring them into compliance with the new statutes. The Corporation has completed the transition process by obtaining shareholder approval of special resolutions adopting new articles of incorporation. The amended articles have been filed with Corporate Registry, effective August 5, 2004 and were filed as an exhibit with the annual report for the fiscal year ended January 31, 2005.  Pursuant to the requirements of the Business Corporations Act (British Columbia), a director of the Corporation must declare any interest in and abstain from voting on any board of directors resolution relating to any matter in which such director has a material interest. In addition, the policies of the TSX Venture Exchange require that all employment, consulting or other compensation agreements between a company and its officers or directors be considered and approved by the disinterested member of the board of directors or a committee of independent directors.  Pursuant to the requirements of the Business Corporations Act (British Columbia), and the Corporations Articles of Incorporation, the board of directors of the Corporation may exercise the general power to borrow on behalf of the Corporation in any manner deemed to be in the best interest of the Corporation and its shareholders. Whether exercising this general borrowing power or otherwise, the directors of the Corporation are under a fiduciary duty at all times to act honestly and in the best interest of the Corporation shareholders.  Pursuant to the requirements of the Business Corporations Act (British Columbia), a person must be not less than 18 years of age to act as a director of a British Columbia company. There are no requirements under the Business Corporations Act (British Columbia), or the Corporations Articles of Incorporation that a director be a shareholder of the Corporation.  The Common Shares are not subject to any future call or assessment and all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the Common Shares. All of the Common Shares rank equally with respect to all benefits which might accrue to the holders including any redemption of shares or the division of corporate assets in the event of liquidation. There are no sinking fund provisions or any provisions discriminatory or advantageous to shareholders controlling a specific number of Common Shares. Subject to the requirements of the Business Corporations Act (British Columbia), the rights or restrictions on any class of shares may be amended by ordinary resolution of the shareholders of the Corporation.   -123-  The Annual General meeting for the Corporation must be held at least once in each calendar year and not more than 15 months after the last annual meeting at such time and place as may be determined by the directors. The Corporation must send notice of the date, time, and location of any meeting to each shareholder entitled to attend the meeting at least 21 days before the meeting. The directors may set a record date for the purpose of determining shareholders entitle to notice of any meeting. The record date must not precede the meeting date by more than two months or fewer than 21 days. The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person invited by the directors is entitled to attend a meeting of the shareholders but that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy-holder entitled to vote at the meeting.  If the meeting of shareholders is to consider special business, the notice must state the general nature of the special business and attach a copy of any document to be ratified. If a copy of the document is not attached, it must be available for inspection by shareholders at the Corporations records office.  There are no limitations on the rights of share ownership including the rights of non-resident or foreign shareholders to hold shares or exercise voting rights for those shares. There is no provision for an ownership threshold above which shareholder ownership must be disclosed to the Corporation.  There is no provision in the Corporations articles of association that would have an effect of delaying, deferring or preventing a change in control of the Corporation and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Corporation. None of the provisions in the Corporations articles of association is significantly different from those applying to all corporations within British Columbia, nor are the conditions imposed by the Corporations articles of association governing changes in share capital more stringent than is required by law.  MATERIAL CONTRACTS  The Corporation entered into a management agreement effective January 1, 2008 with Equity Exploration Consultants Ltd. (Equity) to provide the services of David A. Caulfield as Director, Business Development for the Corporation for the sum of $10,800 per month. The agreement also provides that the Corporation will pay a proportional share of rent, internet and administrative services provided by Equity employees. The agreement is for a term of one year with provision for a one year extension at the Corporations option, and may be terminated by the Corporation on six months notice. The rental portion of the agreement was terminated May 31, 2008 although the remainder of the agreement will remain in force until the end of the term. Equity is not at arms length to the Corporation as two of the principals of Equity are David A. Caulfield and Henry J. Awmack who are directors of the Corporation.  The Corporations ordinary course of business involves contracts to acquire or dispose of mineral property interests. Each of these contracts is detailed in the description of the mineral property interests presented in Item 4 under the subheading Property, Plants and Equipment.   -124-  EXCHANGE CONTROLS  There are no government laws, decrees or regulations in Canada relating to restrictions on the import/export of capital, or affecting the remittance of interest, dividends or other payments to non-residential holders of the Corporations shares. Any such remittances to United States residents, however, may be subject to a 15% tax pursuant to Article X of the reciprocal tax treaty between Canada and the United States. The applicable rate is dependent on the type of entity receiving the dividends. See this Item 10, Taxation subheading, below.  The Investment Canada Act (the Act), which became effective on June 30, 1985, requires a non-Canadian making an investment to acquire control, directly or indirectly, of a Canadian business, to file a notification or an application for review with Investment Canada. An application for review must be filed if the investor is not a citizen or resident of a World Trade Organization member country and the investment is over $50,000,000.00 or, if the investor is a citizen or resident of a World Trade Organization member country and the investment is over $179,000,000.00. For all acquisitions of a Canadian business which does not meet the threshold criteria for filing an application for review, the Act requires the investor to file a notification.  The provisions of the Act are complex, and the above is a limited summary of the main provision of the Act. Any non-Canadian citizen contemplating an investment to acquire control of the Corporation is encouraged to consult professional advisors as to whether and how the Act might apply.  For the purposes of the Act, direct acquisition of control means a purchase of the voting interests of a corporation, partnership, joint venture or trust carrying on a Canadian business, or any purchase of all or substantially all of the assets used in carrying on a Canadian business. An indirect acquisition of control means a purchase of the voting interest of a corporation, partnership, joint venture or trust, whether a Canadian or foreign entity, which controls a corporation, partnership, joint venture or trust company carrying on a Canadian business in Canada.  Except as provided in the Act, there are no limitations under the laws of Canada, the Province of British Columbia or in the charter or any other constituent documents of the Corporation on the right of foreigners to hold and/or vote the shares of the Corporation.  As a result of the Canada - U.S. Free Trade Agreement, the Act was amended in January, 1989 to provide distinct threshold levels for Americans who acquire control of a Canadian business.  A Canadian business is defined in the Act as a business carried on in Canada that has a place of business in Canada, an individual or individuals in Canada who are employed or self-employed in connection with the business, and assets in Canada used in carrying on the business.  An American, as defined in the Act, includes: an individual who is an American national or a lawful permanent resident of the United States; a government or government agency of the United States; an American-controlled entity, corporation or limited partnership; and a corporation, limited partnership or trust which is not controlled in fact through ownership of its voting interests in which two-thirds of its board of directors, general partners or trustees, as the case may be, are any combination of Canadians and Americans.   -125-  The following investments by a non-Canadian are subject to review by Investment Canada:  · all direct acquisitions of control of Canadian businesses with assets of $5 million or more;  · all indirect acquisitions of control of Canadian businesses with assets of $50 million or more, if such assets represent less than 50% of the value of the assets of the entities, the control of which is being acquired; and  · all indirect acquisitions of control of Canadian businesses with assets of $5 million or more, if such assets represent more than 50% of the value of the assets of the entities, the control of which is being acquired.  Review by Investment Canada is required when investments by Americans exceed $150 million for direct acquisitions of control.  The acquisition of certain Canadian businesses is excluded from the higher threshold set out for Americans. These excluded businesses include oil, gas, uranium, financial services (except insurance); transportation services and cultural services (i.e.: the publication, distribution or sale of books, magazines, periodicals [other than printing or typesetting businesses], music in print or machine readable form, radio, television, cable and satellite services; the publications, distributions, sale and exhibitions of film or video recordings or audio or video music recordings). Direct or indirect acquisitions of control of these excluded businesses are reviewable at the $5 million and $50 million thresholds.  A non-Canadian will not implement an investment reviewable under the Act unless the investment has been reviewed and the Minister responsible for Investment Canada is satisfied or is deemed to be satisfied that the investment is likely to be of net benefit to Canada. The factors to be taken into account include:  1. the effect of the investment on the legal and economic activities in Canada, including the effect on employment and resource processing, on the utilization of particular components and services produced in Canada, and on exports from Canada;  2. the degree and significance of participation by Canadians in the Canadian business;  3. the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada;  4. the effect of the investment on competition within an industry or industries in Canada and will such industry or industries be significantly affected by the investment; and  5. the compatibility of the investment with national industrial economic or cultural policies enunciated by the federal government or legislation of the legislature or government of any Province.  If the Minister is not satisfied that the investment is likely to be a net benefit to Canada, the non-Canadian will not implement the investment or, if the investment has been implemented, will divest itself of control of the business that is the subject of the investment.   -126-  A non-Canadian or American making the following investments: (i) an investment to establish a new Canadian business; or, (ii) an investment to acquire control of a Canadian business which investment is not subject to review under the Act; must notify Investment Canada, within prescribed time limits, of such investments.  TAXATION  Canadian Federal Income Tax Consequences  The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of common shares of the Registrant for a shareholder of the Registrant who is not resident in Canada and who is resident in the United States. It is based on the current provisions of the Income Tax Act (Canada) (the Tax Act) and the regulations thereunder. The provisions of the Tax act are subject to income tax treaties to which Canada is a party, including the Canada-United States Income Tax Convention (1980) (the Convention). This discussion is general only and is not a substitute for independent advice from a shareholders own tax advisor. Management of the Corporation considers that the following discussion fairly describes the principal and material Canadian federal income tax consequences applicable to shareholders of the Corporation who are residents of the United States and are not residents of Canada and do not hold, and are deemed not to hold, shares of the Corporation in connection with carrying on a business in Canada (a non-resident).  Generally, dividends paid by Canadian corporations to non-resident shareholders are subject to a withholding tax of 25% of the gross amount of such dividends. However, Article X of the reciprocal tax treaty between Canada and the United States reduced to 15% the withholding tax on the gross amount of dividends paid to residents of the United States. When a U.S. corporation owns at least 10% of the voting stock of the Canadian corporation paying the dividends, the withholding tax rate on the gross amount of dividends is reduced to 5%.  A non-resident who holds shares of the Corporation as capital property will not be subject to tax on capital gains realized on the disposition of such shares unless such shares are taxable Canadian Property within the meaning of the Income Tax Act (Canada), and no relief is afforded under any applicable tax treaty.  The shares of the Corporation would be taxable Canadian property of a non-resident if at any time during the five year period immediately preceding a disposition by the non-resident of such shares (a) not less than 25% of the issued shares of any class of the Corporation belonged to the non-resident, (b) the person with whom the non-resident dealt did not deal at arms length, or (c) to the non-resident and any person with whom the non-resident did not deal at arms length own or are considered to own not less than 25% of the issued shares of any class of the Corporation.  Material United States Federal Income Tax Consequences  The following is a general discussion of the material United States Federal income tax law for U.S. holders that hold such common shares as a capital asset, as defined under United States Federal income tax law and is limited to discussion of U.S. Holders that own less than 10% of the common stock. This discussion does not address all potentially relevant Federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of Federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. See "Item 10 Additional Information - Canadian  -127-  Federal Income Taxation" and "Certain United States Federal Income Tax Consequences".  The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any future legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The following discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Corporation and no opinion or representation with respect to the United States Federal income tax consequences to any such holder or prospective holder is made. The following discussion was not written and is not intended to be used, and cannot be used, by any person for the avoidance of any penalties with respect to taxes that may be imposed on such person. Accordingly, holders and prospective holders of common shares of the Corporation are encouraged to consult their own tax advisors about the Federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Corporation.  U.S. Holders  As used herein, a "U.S. Holder" is a holder of common shares of the Corporation who or which is a citizen or individual resident (or is treated as a citizen or individual resident) of the United States for federal income tax purposes, a corporation or partnership created or organized (or treated as created or organized for federal income tax purposes) in the United States, including only the States and District of Columbia, or under the law of the United States or any State or Territory or any political subdivision thereof, or a trust or estate the income of which is includable in its gross income for federal income tax purposes without regard to its source, if, (i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) one or more United States trustees have the authority to control all substantial decisions of the trust. For purposes of this discussion, a U.S. Holder does not include persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers and Holders who acquired their stock through the exercise of employee stock options or otherwise as compensation.  Distributions on common shares of the Corporation  U.S. Holders, who do not fall under any of the provisions contained within the "Other Consideration for U.S. Holders" section, and receiving dividend distributions (including constructive dividends) with respect to common shares of the Corporation are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions to the extent that the Corporation has current or accumulated earnings and profits, without reduction for any Canadian or other foreign income tax withheld from such distributions. Such Canadian or other foreign tax withheld may be credited, subject to certain limitations, against the U.S. Holder's United States Federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's United States Federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of the Corporation, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.  -128-  Dividends paid on the common shares of the Corporation will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from a qualified 10-percent owned foreign corporation (other than a "passive foreign investment company", as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of such corporation. The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.  Foreign Tax Credit  A U.S. Holder, who does not fall under any of the provisions contained within the "Other Consideration for U.S. Holders" section, and who pays (or has withheld from distributions) Canadian or other foreign income tax with respect to the ownership of common shares of the Corporation may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate shares of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its world-wide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. There are further limitations on the foreign tax credit for certain types of income such as "passive income", "high withholding tax interest", "financial services income", "shipping income", and certain other classifications of income. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and holders and prospective holders of common shares of the Corporation are encouraged to consult their own tax advisors regarding their individual circumstances.  Disposition of common shares of the Corporation  A U.S. Holder, who does not fall under any of the provisions contained within the "Other Consideration for U.S. Holders" section, and will recognize gain or loss upon the sale of common shares of the Corporation equal to the difference, if any, between the amount of cash plus the fair market value of any property received, and the Holder's adjusted tax basis in the common shares of the Corporation. This gain or loss will be a capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder unless the Corporation were to become a controlled foreign corporation. For the effect on the Corporation of becoming a controlled corporation, see "Controlled Foreign Corporation Status" below. Any capital gain will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For non-corporate U.S. Holders, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For corporate U.S. Holders (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.   -129-  Other Considerations for U.S. Holders  In the following circumstances, the above sections of this discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of common shares of the Corporation:  Passive Foreign Investment Company  A U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a passive foreign investment company ("PFIC") is subject to U.S. federal income taxation of that foreign corporation under one of two alternative tax methods at the election of each such U.S. Holder.  Section 1297 of the Code defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (i) 75% or more of its gross income is "passive income," which includes but is not limited to interest, dividends and certain rents and royalties or (ii) the average percentage, by value (or, if the company is a controlled foreign corporation or makes an election, adjusted tax basis), of its assets that produce or are held for the production of "passive income" is 50% or more. The Corporation believes that it is presently a PFIC.  As a PFIC, each U. S. Holders income or gain, with respect to a disposition or deemed disposition of the Corporations shares or a distribution payable on such shares will generally be subject to tax a the highest marginal rates applicable to ordinary income and certain interest charges as discussed below, unless the U.S. Holder has timely made a qualified electing fund election or a mark-to-market election for those shares.  Under one method, a U.S. Holder who elects in a timely manner to treat the Corporation as a Qualified Electing Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be required to currently include in his income for any taxable year in which the Corporation's qualifies as a PFIC his pro-rata share of the Corporation's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the U.S. Holder's taxable year in which (or with which) the Corporation taxable year ends, regardless of whether such amounts are actually distributed. A QEF election also allows the Electing U.S. Holder to (i) generally treat any gain realized on the disposition of his common shares (or deemed to be realized on the pledge of his common shares) as capital gain; (ii) treat his share of the Corporation's net capital gain, if any, as long-term capital gain instead of ordinary income, and (iii) either avoid interest charges resulting from PFIC status altogether (see discussion of interest charge below), or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the Corporation's annual realized net capital gain and ordinary earnings subject, however, to an interest charge.   -130-  The procedure a U.S. Holder must comply with in making a timely QEF election will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which the Corporation is a PFIC. If the U.S. Holder makes a QEF election in such first year, (sometimes referred to as a "Pedigreed QEF Election"), then the U.S. Holder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files its tax return for such first year. If, however, the Corporation qualified as a PFIC in a prior year, then the U.S. Holder may make a retroactive QEF election, provided he has preserved his right to do so under the protective statement regime or he obtains IRS permission.  If a U.S. Holder has not made a QEF Election at any time (a "Non-electing U.S. Holder"), then special taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reason of a pledge) of his common shares and (ii) certain "excess distributions" , by the Corporation. An excess distribution is a current year distribution received by the U.S. Holder on PFIC stock to the extent that the distribution exceeds its ratable portion of 125% of the average amount received by the U.S. Holder during the preceding three years.  A Non-electing U.S. Holder generally would be required to pro-rate all gains realized on the disposition of his common shares and all excess distributions over the entire holding period for the common shares. All gains or excess distributions allocated to prior years of the U.S. Holder (other than years prior to the first taxable year of the Corporation during such U.S. Holder's holding period and beginning after January 1, 1987 for which it was a PFIC) would be taxed at the highest marginal tax rate for each such prior year applicable to ordinary income. The Non-electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-electing non-corporate U.S. Holder must treat this interest charge as "personal interest" which is wholly non-deductible. The balance of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance.  If the Corporation is a PFIC for any taxable year during which a Non-electing U.S. Holder holds common shares, then the Corporation will continue to be treated as a PFIC with respect to such common shares, even if it is no longer by definition a PFIC. A Non-electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such common shares had been sold on the last day of the last taxable year for which it was a PFIC. If the Corporation no longer qualifies as a PFIC in a subsequent year, then normal Code rules and not the PFIC rules will apply with respect to a U.S. Holder who has made a Pedigreed QEF election.  If a U.S. Holder makes a QEF Election that is not a Pedigreed Election (i.e., it is made after the first year during which the Corporation is a PFIC and the U.S. Holder holds shares of the Corporation) (a "Non-Pedigreed Election"), the QEF rules apply prospectively but do not apply to years prior to the year in which the QEF first becomes effective. U.S. Holders are encouraged to consult their tax advisors regarding the specific consequences of making or not making a QEF Election.   -131-  Mark-to-Market Election for PFIC Stock  A U.S. Holder of a PFIC may make a mark-to-market election with respect to the stock of the PFIC if such stock is marketable as defined below. This provision is designed to provide a current inclusion provision for persons that are Non-Electing Holders. Under the election, any excess of the fair market value of the PFIC stock at the close of the tax year over the Holder's adjusted basis in the stock is included in the Holder's income. The Holder may deduct any excess of the adjusted basis of the PFIC stock over its fair market value at the close of the tax year. However, deductions are limited to the net mark-to-market gains on the stock that the Holder included in income in prior tax years, or so called "unreversed inclusions."  For purposes of the election, PFIC stock is marketable if it is regularly traded on (1) a national securities exchange that is registered with the Securities and Exchange Commission (SEC), (2) the national market system established under Section 11A of the Securities Exchange Act of 1934, or (3) an exchange or market that the IRS determines has rules sufficient to ensure that the market price represents legitimate and sound fair market value.  A Holder's adjusted basis of PFIC stock is increased by the income recognized under the mark-to-market election and decreased by the deductions allowed under the election. If a U.S. Holder owns PFIC stock indirectly through a foreign entity, the basis adjustments apply to the basis of the PFIC stock in the hands of the foreign entity for the purpose of applying the PFIC rules to the tax treatment of the U.S. owner. Similar basis adjustments are made to the basis of the property through which the U.S. persons hold the PFIC stock.  Income recognized under the mark-to-market election and gain on the sale of PFIC stock with respect to which an election is made is treated as ordinary income. Deductions allowed under the election and loss on the sale of PFIC with respect to which an election is made, to the extent that the amount of loss does not exceed the net mark-to-market gains previously included, are treated as ordinary losses. The U.S. or foreign source of any income or losses is determined as if the amount were a gain or loss from the sale of stock in the PFIC.  If PFIC stock is owned by a controlled foreign corporation (CFC), the CFC is treated as a U.S. person that may make the mark-to-market election. Amounts includable in the CFC's income under the election are treated as foreign personal holding company income, and deductions are allocable to foreign personal holding company income. A CFC is a foreign corporation in which more than 50% of the voting power of all classes of stock or the total value of the stock is owned, directly or indirectly, by U.S. Holders, each of whom own 10% or more of the total combined voting power.  The rules of Code Section 1291 applicable to nonqualified funds generally do not apply to a U.S. Holder for tax years for which a mark-to-market election is in effect. If Code Section 1291 is applied and a mark-to-market election was in effect for any prior tax year, the U.S. Holder's holding period for the PFIC stock is treated as beginning immediately after the last tax year of the election. However, if a taxpayer makes a mark-to-market election for PFIC stock that is a nonqualified fund after the beginning of a taxpayer's holding period for such stock, a coordination rule applies to ensure that the taxpayer does not avoid the interest charge with respect to amounts attributable to periods before the election.   -132-  The foregoing discussion is based on currently effective provisions of the Code, existing and proposed regulations thereunder, and current administrative rulings and court decisions, all of which are subject to change. Any such change could affect the validity of this discussion. In addition, the implementation of certain aspects of the PFIC rules requires the issuance of regulations which in many instances have not been promulgated and which may have retroactive effect. There can be no assurance that any of these proposals will be enacted or promulgated, and if so, the form they will take or the effect that they may have on this discussion. Accordingly, and due to the complexity of the PFIC rules, U.S. Holders of the Corporation are strongly urged to consult their own tax advisors concerning the impact of these rules on their investment in the Corporation.  Controlled Foreign Company Status  If more than 50% of the voting power of all classes of stock or the total value of the stock of the Corporation is owned, directly or indirectly, by U.S. Holders, each of whom own 10% or more of the total combined voting power of all classes of stock of the Corporation, the Corporation would be treated as a controlled foreign corporation or CFC under Subpart F of the Code. This classification would bring into effect many complex results including the required inclusion by such 10% U.S. Holders in income of their pro rata shares of Subpart F income (as defined by the Code) of the Corporation and the Corporations earnings invested in U.S. property (as defined by the Code). In addition, under Section 1248 of the Code, gain from the sale or exchange of common shares of the Corporation by such a 10% U.S. Holder of Corporation at any time during the five year period ending with the sale or exchange is treated as ordinary dividend income to the extent of earnings and profits of the Corporation attributable to the stock sold or exchanged. Because of the complexity of Subpart F, and because the Corporation may never be a CFC, a more detailed review of these rules is beyond of the scope of this discussion.  Elimination of Overlap between Subpart F Rules and PFIC Provisions  A PFIC that is also a CFC will not be treated as a PFIC with respect to certain 10% U.S. Holders. For the exception to apply, (i) the corporation must be a CFC within the meaning of section 957(a) of the Code and (ii) the U.S. Holder must be subject to the current inclusion rules of Subpart F with respect to such corporation (i.e., the U.S. Holder is a United States Shareholder, see Controlled Foreign Corporation, above). The exception only applies to that portion of a U.S. Holders holding period beginning after December 31, 1997. For that portion of a United States Holder before January 1, 1998, the ordinary PFIC and QEF rules continue to apply.  As a result of this provision, if the Corporation were ever to become a CFC, U.S. Holders who are currently taxed on their pro rata shares of Subpart F income of a PFIC which is also a CFC will not be subject to the PFIC provisions with respect to the same stock if they have previously made a Pedigreed QEF Election. The PFIC provisions will however continue to apply to PFIC/CFC U.S. Holders for any periods in which they are not subject to Subpart F and to U.S. Holders that did not make a Pedigreed QEF Election unless the U.S. Holder elects to recognize gain on the PFIC shares held in the Corporation as if those shares had been sold.  DOCUMENTS ON DISPLAY  All material contracts may be inspected at the Corporations offices, 1350  650 West Georgia Street, Vancouver, British Columbia, during normal business hours.  -133-  SUBSIDIARY INFORMATION  The Corporation has two (2) wholly-owned United States subsidiaries, Rimfire Alaska, Ltd. ("Rimfire Alaska"), which was incorporated under the laws of Alaska (File 64596-D) on August 19, 1998 for the purpose of holding the Corporation's Alaskan mineral property interests, and Rimfire Nevada Ltd. (Rimfire Nevada) which was incorporated under the laws of Nevada (File 105C-05) on January 4, 2005 for the purpose of holding the Corporation's Nevada mineral property interests. The Corporation has one (1) wholly-owned Australian subsidiary, Rimfire Australia Pty. Ltd. which was incorporated under the laws of the State of Victoria, Australia (ACN 121-382-554) on August 23, 2006 for the purpose of conducting exploration in Australia,  Rimfire Alaska is authorized to issue 100 no par value common shares. The only shareholder of Rimfire Alaska is the Corporation and it holds all issued and outstanding company shares.  Rimfire Nevada is authorized to issue 75,000 no par value common shares. The only shareholder of Rimfire Nevada is the Corporation and it holds all issued and outstanding company shares.  Rimfire Australia Pty. Ltd. is authorized to issue 10,000 no par value ordinary shares. The only shareholder of Rimfire Australia is the Corporation and it holds all issued and outstanding company shares.  ITEM 11   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK  The Corporation does not hold any long-term debt, has not entered into any hedging transactions nor has it issued any market risk sensitive counterparty instruments. Furthermore, the Corporation does not hold any derivative instruments, nor does it hold any contracts or agreements containing embedded derivative instruments.  The Corporations financial instruments can be categorized into three main groups:  a) term deposits, Canadian cash and short term investments which are subject to interest rate risk, b) foreign currency cash accounts which are subject to foreign exchange risk, and c) marketable securities which are subject to equity price risk.  Interest rate risk  Term deposits, Canadian cash and short-term investments (category a) represents approximately $5,595,300 of the Corporations total assets of $6,471,029 (or 86% of the total assets). However, all the term deposits and cash (69% of total assets) have fixed interest rates for the near-term (average 150 days to maturity). Therefore the cash flows are known and measurable and do not represent a material risk to the Corporation. All term deposits are cashable at the Corporations option without loss of interest. The short term to maturity and the Corporations intent to hold these instruments to maturity indicates that interest rate risk will not affect the reported fair values of these financial instruments.   -134-  During the fiscal year ended January 31, 2009, interest rates on the Corporations deposits ranged from 2.20% to 4.25%, depending on the principal invested and the term of the investment. During the same period, Canadian T-Bill rates ranged from 0.70% to 3.32% with an average rate of 2.41%.  If interest rates declined or increased as shown below, the Corporations total receipts, consisting of revenue from mineral property operations, gain on marketable securities and interest income, would be affected as follows, based on the fiscal year-end balances:  Effect on total receiptsIncrease/decrease in interest rate20092008-2.00%$(111,906)(17.5%)$(158,540)(16.6%)-1.50%(83,930)(13.2%)(118,905)(12.4%)-1.00%(55,953)(8.8%)(79,270)(8.3%)+0.50%27,9774.4%39,3654.1%+1.00%55,9538.8%79,2708.3%  The foregoing analysis was prepared using year-end balances and average year-end interest rates which do not represent average interest rates for the fiscal year ended January 31, 2009. The increase or decrease in interest income based on changes in interest rates, for the year-end balances, was compared to total receipts for the fiscal year ended January 31, 2009. Actual financial results for the coming fiscal year will vary since the balances of accounts are expected to decline as funds are withdrawn for Corporation expenses.  The difference between the forecast figures for the fiscal year ended January 31, 2009 compared to the same figures for the fiscal year ended January 31, 2008 relates to the decreased cash balances which are subject to interest rate risk. During the fiscal year ended January 31, 2009, the Corporation did not complete any significant transactions which would have increased the cash balances and therefore interest receipts.  Foreign currency exchange risk  Foreign currency cash deposits (category b) represent approximately $321,143 of the Corporations total assets (4.96% of total assets). The Corporation has limited exposure to foreign exchange risk, restricted to payment of current trade accounts payable in US Dollars or Australian Dollars where most of the Corporations cash assets are denominated in Canadian Dollars. The Corporation maintains bank accounts in US and Australian Dollars from payments received in US or Australian Dollars to pay these trade accounts.  During the fiscal year ended January 31, 2009, U.S. Dollar exchange rates varied by up to 10% below the average exchange rate and up to 14% above the average exchange rate. During the same period, Australian dollar exchange rates ranged from a low of 12% below the average exchange rate to a high of 10% above the average exchange rate. The U.S. Dollar exchange rate for January 31, 2009 was 13% above the average exchange rate for the year while the Australian dollar exchange rate for January 31, 2009 was12% below the average exchange rate for the year. If exchange rates fluctuated within a range of 15% above or below the year end closing rates as published by the Bank of Canada, the effect on the Corporations total assets would be less than 2%.   -135-   Effect on total assetsIncrease/decrease in 
foreign exchange rates20092008-20%$(62,132)(1.0%)$(148,036)(1.6%)-10%(31,066)(0.5%)(74,018)(0.8%)-5%(15,533)(0.2%)(37,009)(0.4%)+5%15,5330.2%37,0090.4%+10%31,0660.5%74,0180.8%+20%621321.0%148,0361.6%  The foregoing analysis was prepared using foreign exchange rates in effect as of the balance sheet date, January 31, 2009 (1 USD = C$1.2265, 1 AUD = C$0.7885). A standard escalation factor was applied to the exchange rates to illustrate the effect on total assets reported on the balance sheet of a variation in foreign exchange rates between 20% below and 20% above the rate in effect. The Corporations financial instruments are converted to Canadian dollars from U.S. Dollars or Australian dollars at the closing rate for the balance sheet date as reported on the Bank of Canada website.  The difference between the forecast figures for the fiscal year ended January 31, 2009 compared to the same figures for the fiscal year ended January 31, 2008 relates to the foreign cash balances which are subject to foreign exchange rate risk. During the fiscal year ended January 31, 2009, the Corporation undertook increased mineral property exploration in Australia which required additional funds to be maintained in Australian dollar accounts. This is slightly offset by the conversion of some US dollar accounts to Canadian dollar accounts due to reduction of exploration expenditures in Alaska and Nevada.  Equity price risk  Marketable securities (category c) represent approximately $95,039 of the Corporations total assets of $6,464,246(or 1.0% of the total assets). At the end of each reporting period, the fair values of securities which are traded on a recognized exchange are reported at the bid price on the balance sheet date or the last date on which the shares traded, reduced by an appropriate discount where there are trading restrictions. The resulting unrealized gains or losses are included in the determination of comprehensive income. When gains or losses are realized, the amount is transferred from Other Comprehensive Income to the Statement of Operations.  Most of the marketable securities are junior mineral exploration companies whose shares are relatively volatile. Accordingly the reported value of the Corporations portfolio is subject to variation depending on market conditions. Each company has unique characteristics which determine the value of the shares. These characteristics include the knowledge and experience of management, commodity focus, exploration projects and results and the companys specific financial situation. As a group, share prices will react to global economic changes and variation in commodity prices. Individual share prices are generally more volatile than the value of the portfolio as a whole.   -136-  Since most of the marketable securities trade on the TSX Venture Exchange, the S&P/TSX Venture Composite Index (the Venture Index) is a reasonable proxy for detailed analysis of individual stock performance. During the fiscal year ended January 31, 2009, the Venture Index dropped 66% with the closing value 53% lower than the average Venture Index value. The minimum Venture Index value was 63% lower than the average Venture Index value, while the highest Venture Index value was 51% higher than the average Venture Index value. The aggregate value of the Corporations portfolio decreased 71%. Part of this decrease was the result of selling the highest performing securities during the year. The rest of the decrease can be attributed to the global equity market decline. Forecasts for the coming year are mixed but the expectation is that there will be no further major changes in the sector over the coming fiscal year. The remaining portfolio is expected to perform in a manner similar to the Venture Index. Gains or losses of 30% would be expected to make a difference of less than 4% in the value of the Corporations total assets.  Effect on total assetsIncrease/decrease in 
Venture Index20092008-30%$(28,512)(0.44%)$(146,900)(1.58%)-20%(19,008)(0.29%)(97,934)(1.05%)-10%(9,504)(0.15%)(48,967)(0.53%)+10%9,5040.15%48,9670.53%+20%19,0080.29%97,9341.05%+30%28,5120.44%146,9001.58%  The foregoing analysis was prepared using historical data for the Venture Index as reported by Stockwatch Canada. The fair market value of the portfolio of marketable securities at the end of the fiscal year was adjusted by standard escalation factors to illustrate the effect on total assets of a variation in the Venture Index between 30% above or below the value as of January 31, 2009.  The difference between the forecast figures for the fiscal year ended January 31, 2009 compared to the same figures for the fiscal year ended January 31, 2008 relate to the reduction in the Corporations portfolio of marketable securities. During the fiscal year ended January 31, 2009, the Corporation sold some marketable securities which reduced the overall market value of the portfolio which is subject to equity price risk. The value of remaining marketable securities was significantly impacted by global market price declines which were unexpected and severe. Marketable securities received as property option payments did not offset the value of the marketable securities which were sold or the decline in market price of the remaining securities.  Commodity price risk  The future revenue and profitability of the Corporation will be dependent, to a significant extent, upon prevailing spot market prices for metals. Metal prices are subject to wide fluctuations in response to changes in supply of and demand for metals, market uncertainty and a variety of additional factors that are beyond the control of the Corporation. The Corporations mineral properties are in the exploration phase with no identified mineral resources or reserves. Accordingly the Corporation is not generating any operating revenues and is therefore not subject to any short term volatility in the prices of metals. As the Corporation is in the exploration phase, the above factors have had no material impact on operations or income. No futures or forward contracts have been entered into by the Corporation.   -137-  ITEM 12   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES  Not Applicable.    PART II  ITEM 13   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES  Not Applicable  ITEM 14   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS  Not Applicable.  ITEM 15   CONTROLS AND PROCEDURES a) Disclosure controls and procedures  The Chief Executive Officer and Chief Financial Officer have instituted a system of disclosure controls for the Corporation to ensure proper and complete disclosure of material information. The limited number of employees within the Corporation facilitates access to real time information about developments in the business for the person responsible for drafting disclosure documents. All documents are circulated to responsible members of management and the Board of Directors according to the disclosure time-lines contained within the Corporations disclosure policy. The disclosure controls conform to the Corporations Corporate Governance guidelines which were adopted by the Board of Directors on November 20, 2002.  In November 2006, a comprehensive review of risk factors facing the Corporation was undertaken by management and the Board of Directors. Mitigating controls and procedures were identified wherever possible. New procedures were implemented in a couple of cases where it was evident that controls were not robust enough to ensure appropriate disclosure in a timely manner. Some controls were implemented as a secondary detection mechanism if the initial controls failed to prevent errors from occurring.   After evaluating the effectiveness of the Corporations disclosure controls and procedures as required by paragraph (b) of Exchange Act Rule 13a-15 or 15d-15 , the Chief Executive Officer and Chief Financial Officer of the Corporation have concluded that, as of the end of the period covered by this Annual Report on Form 20-F, the Corporations disclosure controls and procedures were effective to ensure that material information required to be disclosed by the Corporation in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commissions rules and forms, and accumulated and communicated to the Corporations management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.    -138-  b) Managements annual report on internal control over financial reporting  Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Corporation. The Corporations system of internal controls is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP) in Canada. The rapid and continuing change in standards for financial reporting may result in deficiencies in disclosure, particularly with respect to the differences between U.S. GAAP and Canadian GAAP.  Management recognizes that effective internal control over financial reporting may nonetheless not prevent or detect all possible misstatements or frauds. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.  As part of its evaluation of the effectiveness of its internal control over financial reporting as required by paragraph (c) of 17 CFR 240.13a-15 or 240.15d-15, the Corporation utilized the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control  Integrated Framework. Parts of this framework were not appropriate for use by the Corporation as they referred to positions and/or job functions which do not exist in a smaller organization. The Corporation integrated aspects of the second document produced by COSO, Internal Control over Financial Reporting  Guidance for Smaller Public Companies into the initial review. The Corporation annually reviews the final document to ensure that controls are still functioning as described and serving the purposes for which they were designed.  Management has assessed the effectiveness of the Corporations internal control over financial reporting as of the end of the Corporations fiscal year ended January 31, 2009. Based on this evaluation, Management concluded that the Corporations internal control over financial reporting is effective as of the end of the Corporations fiscal year ended January 31, 2009.  This annual report does not include an attestation report of the Corporations registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Corporations registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Corporation to provide only managements report in this annual report.  c) Attestation report of the registered public accounting firm  Not applicable, pursuant to temporary rules of the Securities and Exchange Commission.  d) Changes in internal control over financial reporting  There has been no change in the Corporations internal control over financial reporting that occurred during the period covered by this Form 20-F, that has materially affected or is reasonably likely to materially affect, the Corporations internal control over financial reporting.   -139-  ITEM 16A   AUDIT COMMITTEE FINANCIAL EXPERT The Corporations Board of Directors has determined that Bipin Ghelani fulfills the role of Financial Expert on the Corporations Audit Committee. Mr. Ghelani is "independent" of the Corporation, as that term is defined by Section 803 of the NYSE AMEX Company Guide, in accordance with Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Mr. Ghelani is a Chartered Accountant with over 30 years of experience in financial, accounting and taxation matters. Mr. Ghelani manages his own accounting firm and has held senior positions with several international accounting firms including Deloitte & Touche and PricewaterhouseCoopers.  ITEM 16B   CODE OF ETHICS The Corporation has adopted separate codes of ethics that apply to the Chief Executive Officer, Chief Financial Officer and members of the Board of Directors. All employees are expected to abide by the principle that standards of personal behavior should at all times reflect credit on the Corporation and the mining/exploration industry in general. No amendments or waivers to these policies have been made since their adoption.  The codes of ethics and corporate governance policy were filed on July 7, 2003 as exhibits to the Corporations Form 20-F for the fiscal year ended January 31, 2003. The Corporation will provide copies of these codes of ethics to any person, upon written request to the secretary of the Corporation at its address at 1350 - 650 West Georgia Street, Vancouver, British Columbia, Canada, V6B 4N9.  ITEM 16C   PRINCIPAL ACCOUNTANT FEES AND SERVICES Fiscal Year ended
January 31, 2009Fiscal Year ended 
January 31, 2008Audit Fees$  50,000$   30,225Audit-Related Fees6,7994,275Tax services - Canadian4,7401,500Tax services - US2.3242,200Tax services - Australia1,662-All Other Fees380290Total fees billed$   65,905$   38,490  The Corporations auditors are Hay & Watson, Chartered Accountants. Full-time, permanent employees of the auditor perform all services. The nature of the services provided by Hay & Watson under each of the categories indicated in the table is described below.  Audit Fees  Audit fees were for professional services rendered by Hay & Watson for the audit of the Corporations annual financial statements and services provided in connection with statutory and regulatory filings or engagements.   -140-  Audit-Related Fees  Audit-related fees were for assurance and related services reasonably related to the performance of the audit or review of the annual statements that are not reported under Audit Fees above. This included review of financial statements by an independent consultant as required by generally accepted auditing standards and amendment of filings and responses to comments made by the Securities and Exchange Commission in connection with the Corporations Annual Report on Form 20-F. Registration fees for Canadian Public Accountability Board and Public Company Accounting Oversight Board are included in this category.  Tax Fees  Tax fees were for tax compliance, tax advice and tax planning professional services. These services consisted of: tax compliance including the review of tax returns, and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax, capital tax, goods and services tax, payroll tax and value added tax).  All Other Fees  Fees disclosed in the table above under the item All Other Fees were incurred for services other than the audit fees, audit-related fees and tax fees described above. These services consisted of assistance in the documentation of processes and controls and disbursements made by the auditor on behalf of the Corporation.  Pre-Approval Policies and Procedures  It is within the mandate of the Corporations Audit Committee to approve all audit and non-audit related fees. The Audit Committee has pre-approved specifically identified non-audit related services, including tax compliance and review of tax returns as submitted to the Audit Committee from time to time. The auditors also present the estimate for the annual audit-related services to the Audit Committee for approval prior to undertaking the annual audit of the financial statements.  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    ITEM 16F   CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT Not applicable   -141-  ITEM 16G   CORPORATE GOVERNANCE 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, 2009 and 2008
Consolidated Statements of Operations, Consolidated Statements of Cash Flows,
Consolidated Statements of Comprehensive Loss,
Consolidated Statements of Shareholders Equity, and
Consolidated Statements of Mineral Property Expenditures
all for the fiscal years ended January 31, 2009, 2008, and 2007
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended January 31, 2009
Schedule II  Valuation Allowance  ITEM 18   FINANCIAL STATEMENTS  See Item 17      -142-  ITEM 19   EXHIBITS  Exhibit NumberDescriptionFootnote1.8Articles of Incorporation effective August 5, 2004(3)4.30Management Contract between Equity Exploration Consultants Ltd. and Rimfire Minerals Corporation effective January 1, 2008(5)4.33Option Agreement between Northgate Minerals Corporation and Rimfire Minerals Corporation dated March 29, 2004(3)4.35Registrar and Transfer Agent Agreement between Pacific Corporate Trust Company and Rimfire Minerals Corporation dated September 1, 2004(3)4.36Amendment to Option Agreement between Rimfire Minerals Corporation, Plutonic Capital and Serengeti Resources Inc. dated September 9, 2004(3)4.37Amendment to RDN Property Option Agreement between Northgate Minerals Corporation and Rimfire Minerals Corporation dated November 19, 2004(3)4.38Agreement between Newmont Capital Limited and Rimfire Minerals Corporation dated January 5, 2005 regarding Walker Lane(3)4.39Termination Agreement between AngloGold Ashanti (U.S.A.) Exploration Inc. and Rimfire Alaska, Ltd. effective December 31, 2005 (Eagle Property)(4)4.40Termination Agreement between AngloGold Ashanti (U.S.A.) Exploration Inc. and Rimfire Alaska, Ltd. effective December 31, 2005 (ER Property)(4)8.1List of Subsidiary Companies of Rimfire Minerals Corporation(3)11.1Corporate Governance Policy adopted November 20, 2002(1)11.2Code of Ethics  Board of Directors dated January 31, 2003(1)11.3Code of Ethics  Chief Executive Officer dated January 31, 2003(1)11.4Code of Ethics  Chief Financial Officer dated February 28, 2003(1)11.5Incentive Stock Option Plan(2)12.1Certification by Chief Executive Officer(6)12.2Certification by Chief Financial Officer(6)13.1Certification by Chief Executive Officer(6)13.2Certification by Chief Financial Officer(6)   -143-  (1) Incorporated herein by reference to the exhibits as filed on July 7, 2003 in connection with the Corporations Form 20-F for the fiscal year ended January 31, 2003.  (2) Incorporated herein by reference to the exhibits as filed on July 26, 2004 in connection with the Corporations Form 20-F for the fiscal year ended January 31, 2004.  (3) Incorporated herein by reference to the exhibits as filed on May 25, 2005 in connection with the Corporations Form 20-F. for the fiscal year ended January 31, 2005.  (4) Incorporated herein by reference to the exhibits as filed on May 26, 2006 in connection with the Corporations Form 20-F for the fiscal year ended January 31, 2006.  (5) Incorporated herein by reference to the exhibits as filed on May 20, 2008 in connection with the Corporations Form 20-F for the fiscal year ended January 31, 2008.  (6) Filed as exhibits in connection with this annual report on Form 20-F for the fiscal year ended January 31, 2009.  -144-  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: May 8, 2009   -145-           [rimfireannual20f09final024.jpg]   RIMFIRE MINERALS CORPORATION  Consolidated Financial Statements Years Ended January 31, 2009, 2008 and 2007       [rimfireannual20f09final026.gif]           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 controls 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 independent directors. The Audit Committee meets periodically with management and the shareholders auditors to review the financial statements and reports prepared by management, internal controls, audit results, accounting policies and related matters. The Board of Directors approves the consolidated financial statements on recommendation from the Audit Committee.    Hay and Watson, a firm of Independent Registered Chartered Accountants, was appointed by the shareholders at the last annual meeting to examine the consolidated financial statements and provide the independent professional opinion which follows.     Jason S. Weber Dorothy G. Miller   Jason S. Weber, P.Geo Dorothy G. Miller President & Chief Executive Officer Chief Financial Officer       [rimfireannual20f09final028.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, 2009 and 2008 and the consolidated statements of operations, cash flows, comprehensive income (loss), shareholders equity, and mineral property expenditures for each of the years in the three year period ended January 31, 2009 (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, 2009 and 2008 and the results of its operations and its cash flows for each of the years in the three year period ended January 31, 2009 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 13 to the consolidated financial statements.  Hay & Watson  Independent Registered Chartered Accountants Vancouver, Canada April 2, 2009  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 change described in Note 2 to the consolidated financial statements. Our report to the shareholders dated April 2, 2009 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 April 2, 2009     RIMFIRE MINERALS CORPORATION Consolidated Statements of Operations Years Ended January 31 (Expressed in Canadian Dollars)   200920082007Mineral Property Operations(restated-Note 2)(restated-Note 2)RevenueOption proceeds$     103,920$   148,143$    168,500Project management fees145,667193,06064,776249,587341,203233,276ExpensesAcquisition costs458,327165,477307,542Exploration expenditures1,545,3382,495,6171,538,295Exploration expenditure reimbursements(9,362)(38,963)(560,058)Exploration tax credits(2,408)(4,872)(32,702)Reclamation obligations(12,339)(11,371)33,4181,979,5562,605,8881,286,495Loss from mineral property operations(1,729,969)(2,264,685)(1,053,219)Other OperationsExpensesAccounting and legal145,72160,46561,877Depreciation47,18348,24153,920Foreign exchange (gains) losses(81,762)47,2337,519Investor services41,61585,39241,500Management services124,269144,638117,469Marketing and promotion125,222124,232109,752Office149,729157,845109,665Rent109,35171,32365,454Salaries and support services573,316477,634367,688Share-based compensation286,479768,6941,040,212Travel and entertainment64,89879,00462,9081,586,0212,064,7012,037,964Loss from other operations(1,586,021)(2,064,701)(2,037,964)Loss before investment transactions(3,315,990)(4,329,386)(3,091,183)Gain on marketable securities141,806344,041182,882Interest income245,420270,858135,804Loss before Income Taxes(2,928,764)(3,714,487)(2,772,497)Future Income Tax (Expense) Recovery (Note 9)(52,894)443,77571,520Net Loss$   (2,981,658)$  (3,270,712)$  (2,700,977)Basic and Diluted Loss Per Share$            (0.12)$           (0.13)$           (0.13)Weighted average number of shares outstanding25,686,21324,366,86921,414,928    RIMFIRE MINERALS CORPORATION Consolidated Balance Sheets January 31 (Expressed in Canadian Dollars)   20092008ASSETS(restated-
Note 2)CurrentCash and cash equivalents$   5,921,019$    7,604,417Cash restricted for flow-through expenditures-291,274Short-term investments-322,559Marketable securities95,039522,668Accounts receivable126,682298,604Prepaid expenses48,83742,5646,191,5779,082,086Mineral Property Interests(Note 3)--Lease Deposit21,234-Project Reclamation Deposits(Note 4)128,052139,410Office, Computer, and Field Equipment, less accumulateddepreciation of $156,097 (2008- $119,898)123,38362,880$ 6,464,246$    9,284,376LIABILITIESCurrentAccounts payable and accruals$    109,108$      145,954Payable to related party (Note 5)41,13372,121150,241218,075Mineral Property Reclamation Obligation (Note 7)46,16753,308196,408271,383SHAREHOLDERS EQUITYShare Capital(Note 8)17,833,09817,704,253Contributed Surplus (Note 8)4,671,6614,264,269Deficit(16,259,675)(13,278,017)Accumulated Other Comprehensive Income(Note 2)22,754322,4886,267,8389,012,993$ 6,464,246$    9,284,376 APPROVED BY THE BOARD  David A. Caulfield, Chairman of the Board  Jason S. Weber, President and CEO  The accompanying notes are an integral part of these consolidated financial statements    RIMFIRE MINERALS CORPORATION Consolidated Statements of Cash Flows Years Ended January 31 (Expressed in Canadian Dollars)   200920082007Cash Flows Used for Operating ActivitiesMineral property operationsPaid for acquisition costs$      (353,057)$     (135,916)$     (322,640)Paid for exploration costs(1,369,541)(2,436,663)(1,522,174)Exploration expenditure reimbursements9,362123,080560,058Exploration tax credits32,70214,418-Exploration funding (paid) received-(506,821)506,821Project management fees received146,401194,84063,278Reclamation deposits (paid) received11,358(73,380)(36,021)Option proceeds received92,92061,644145,000Other operationsPaid for supplies and services(1,278,086)(1,219,489)(963,859)Advances from related party(30,987)17,72917,545Other revenue received-8811,795(2,738,928)(3,959,677)(1,550,197)Cash Flows Used for Investing ActivitiesInterest revenue received343,902202,12579,230Proceeds from sale of marketable securities227,806359,541222,481Sale (purchase) of short-term investments325,000935,202(1,210,800)Purchase of office and field equipment(111,063)(32,917)(70,761)Paid for lease deposit(21,234)--Cash restricted for flow-through expenditures291,274(291,274)-1,055,6851,172,677(979,850)Cash Flows From Financing ActivitiesCommon shares issued for cash-7,603,9502,700,701Share issue costs(155)(163,831)(55,383)(155)7,440,1192,645,318(Decrease) Increase in Cash & Cash Equivalents(1,683,398)4,653,119115,271Cash and Cash Equivalents, Beginning of Year7,604,4172,951,2982,836,027Cash and Cash Equivalents, End of Year$    5,921,019$    7,604,417$     2,951,298Cash and Cash Equivalents are Comprised of:Cash in bank$       460,018$       427,772$       223,932Short-term deposits5,461,0017,176,6462,727,366$    5,921,019$    7,604,417$    2,951,298Supplemental Information on Non-Cash TransactionsMineral property acquisition costs$    (129,000)$                  -$                   -Shares issued for mineral property acquisition129,000--Marketable securities received(11,000)(86,500)(23,500)Mineral property interest option proceeds11,00086,50023,500Share-based compensation expense407,3921,034,4861,040,212  The accompanying notes are an integral part of these consolidated financial statements    RIMFIRE MINERALS CORPORATION Consolidated Statements of Comprehensive Income (Loss) Years Ended January 31 (Expressed in Canadian Dollars)   200920082007(restated-
Note 2)(restated-
Note 2)Net Loss$   (2,981,658)$    (3,270,712)$    (2,700,977)Other comprehensive (loss) incomeChanges in fair value of investments(210,822)152,541659,682Realized gains on sale of investments(141,806)(344,041)(182,882)Income taxes arising on changes in fair value of investments (Notes 2 and 9)52,89428,725(71,520)Other comprehensive (loss) income(299,734)(162,775)405,280Comprehensive Loss$   (3,281,392)$    (3,433,487)$    (2,295,697)  The accompanying notes are an integral part of these consolidated financial statements      RIMFIRE MINERALS CORPORATION Consolidated Statements of Shareholders Equity Years Ended January 31 (Expressed in Canadian Dollars)   200920082007Common Shares (Note 8)(restated-
Note 2)(restated
-Note 2)Balance, beginning of year$   17,704,253$   12,120,742$   9,358,013Issued for:Cash - private placement-5,000,0002,550,000Cash - private placement 
(flow-through shares)-1,500,000-Cash  exercise of warrants-939,5008,500Cash  exercise of options-164,450142,200Mineral property interest129,000Fair value assigned to warrants issued 
on private placement-(1,429,905)-Transfer from contributed surplus on the 
exercise of share purchase options-143,660117,512Share issue costs(155)(734,194)(55,483)Balance, end of year17,833,09817,704,25312,120,742Contributed SurplusBalance, beginning of year4,264,2691,845,676922,976Share-based compensation407,3921,034,4861,040,212Fair value assigned to warrants issued on private placement-1,429,905-Agents warrants issued as a commission on private placement-97,862-Transfer to common shares on exercise of share purchase options-(143,660)(117,512)Balance, end of year4,671,6614,264,2691,845,676DeficitBalance, beginning of year(13,334,927)(10,092,940)(7,320,443)Prior year income tax recovery not previously recognized (Note 2)56,91085,63514,115Balance as restated(13,278,017)(10,007,305)(7,306,328)Net loss for the year(2,981,658)(3,270,712)(2,700,977)Balance, end of year(16,259,675)(13,278,017)(10,007,305)Accumulated Other Comprehensive IncomeBalance, beginning of year379,398570,89894,098Prior year income tax recovery not previously recognized (Note 2)(56,910)(85,635)(14,115)Balance as restated322,488485,26379,983Other comprehensive (loss) income(299,734)(162,775)405,280Balance, end of year22,754322,488485,263Shareholders Equity$    6,267,838$    9,012,993$    4,444,376 The accompanying notes are an integral part of these consolidated financial statements    RIMFIRE MINERALS CORPORATION Consolidated Statements of Mineral Property Expenditures Years Ended January 31 (Expressed in Canadian Dollars)   CanadaAlaskaAustraliaNevadaTotalCumulative net expenditures, 
January 31, 2006$3,279,340$329,389$            -$  223,914$3,832,643Acquisition Costs79,81816,297182,36729,060307,542Exploration Expenditures826,874452,21052,982206,2291,538,295Exploration Tax Credits(32,702)---(32,702)Reimbursements(184,772)(375,286)--(560,058)Reclamation Obligations6,088--27,33033,418Net expenditures, year ended 
January 31, 2007695,30693,221235,349262,6191,286,495Acquisition Costs121,00229,939(9,811)24,347165,477Exploration Expenditures2,037,94345,206134,271278,1972,495,617Exploration Tax Credits(4,872)---(4,872)Reimbursements(38,963)---(38,963)Reclamation Obligations(11,371)---(11,371)Net expenditures, year ended 
January 31, 20082,103,73975,145124,460302,5442,605,888Acquisition Costs272,794-164,04121,492458,327Exploration Expenditures664,51094,546739,49946,7831,545,338Exploration Tax Credits(2,408)---(2,408)Reimbursements(9,362)---(9,362)Reclamation Obligations11,100--(23,439)(12,339)Net expenditures, year ended 
January 31, 2009936,63494,546903,54044,8361,979,556Cumulative net expenditures, 
January 31, 20097,015,019592,3011,263,349833,9139,704,582Less write-downs and abandonments(1,193,588)(75,331)(310,493)(190,415)(1,769,827)Less option proceeds(541,143)-(42,920)-(584,063)Net cumulative expenditures 
on active mineral properties charged to operations, from inception to January 31, 2009$5,280,288$   516,970$   909,936$   643,498$7,350,692  The accompanying notes are an integral part of these consolidated financial statements     RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. SIGNIFICANT ACCOUNTING POLICIES   These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada, which, with respect to the Company, conform in all material respects with accounting principles generally accepted in the United States of America, except as described in Note 13 to the consolidated financial statements. These consolidated financial statements reflect the following significant accounting 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. A third wholly-owned subsidiary, Rimfire Australia Pty Ltd. which was incorporated on August 23, 2006, conducts exploration of mineral properties located in Australia.  These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Rimfire Alaska, Ltd., Rimfire Nevada Ltd. and Rimfire Australia Pty Ltd. (individually and collectively referred to as the Company).  These consolidated financial statements have been prepared on the going concern basis. The Company has prepared budgets which indicate that current cash resources are sufficient for operations for at least the next two fiscal years without any additional financing. If the current economic climate persists beyond the current fiscal year, additional measures will be taken to ensure the continued operation of the Company.  Cash and Cash Equivalents  Cash and cash equivalents includes cash and highly-liquid term deposits that are readily convertible to known amounts of cash. As of January 31, 2008, the Company was obligated to spend $291,274 on eligible flow-through expenditures in British Columbia before December 31, 2008. This amount was reported in the balance sheet as cash restricted for flow-through expenditures, and was spent during the current fiscal year as required.  -15-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. SIGNIFICANT ACCOUNTING POLICIES   Comprehensive Income (loss)  Comprehensive income (loss) comprises the Companys net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) represents changes in shareholders equity during a period arising from non-owner sources and, for the Company, principally includes unrealized gains and losses on available for sale financial assets, net of income taxes. The Companys comprehensive income (loss), components of other comprehensive income (loss), and accumulated other comprehensive income (loss) are presented in the Consolidated Statements of Comprehensive Income (Loss) and the Consolidated Statements of Shareholders Equity.  Exploration Tax Credits  The Company may receive refundable exploration tax credits and grants from provincial jurisdictions in Canada equal to a specified rate of qualifying exploration expenditures incurred on properties located within that jurisdiction. The Company records these exploration tax credits or grants as it incurs the related exploration expenditures.  Financial Assets and Financial Liabilities  The Companys financial assets, other than cash and cash equivalents, and financial liabilities are classified as follows: · Accounts receivable are classified as loans and receivables. They are measured at amortized cost. At January 31, 2009 and 2008, the recorded amounts approximate fair value. · Short-term investments include bankers acceptances with maturities of one year or less at the date of acquisition and are classified as held to maturity. Held to maturity assets and liabilities are measured at amortized cost, with amortization of premiums or discounts, losses and impairment included in current period interest income or expense. At January 31, 2009 and 2008, the recorded amounts approximate fair value. · Marketable securities are classified as available for sale. Available for sale assets and liabilities are measured at fair value with unrealized gains and losses recorded in other comprehensive income (loss) until the instrument is either sold or suffers an impairment that is other than temporary.  -16-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. SIGNIFICANT ACCOUNTING POLICIES   · Accounts payable and accruals, payable to related party, and mineral property project deposits are classified as other financial liabilities and are measured at amortized cost. At January 31, 2009 and 2008, the recorded amounts approximate fair value.  Transaction costs directly attributable to the acquisition or issue of a financial asset or financial liability are added to the carrying amount of the financial asset or financial liability, and are amortized to operations using the effective interest rate method.   Flow-Through Shares  The Company has issued flow-through shares to finance some of its exploration activities. These shares were issued for cash in exchange for the Company giving up the tax benefits arising from the exploration expenditures, in accordance with tax legislation.  The Company records these share issues by crediting share capital for the full value of cash consideration received and the related future income tax liabilities are reflected as a share issue cost. These future income tax liabilities are reversed, when appropriate, though the recognition in income of a portion of previously unrecognized future income tax assets or through the reversal of the temporary difference between the carrying amount of the exploration expenditures and their corresponding tax base.  Foreign Currency Translation  The Companys subsidiaries are considered integrated foreign operations.  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 operations.   -17-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. SIGNIFICANT ACCOUNTING POLICIES   Income Taxes  The Company follows the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are recorded based on temporary differences between the carrying amount of balance sheet items and their corresponding tax bases. In addition, the future tax benefits of unused tax losses and other deductions carried forward are recognized, subject to a valuation allowance, to the extent that it is more likely than not that such future benefits will ultimately be realized. Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized.  Loss per Share  The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, such as the outstanding share purchase options and warrants, in the weighted average number of common shares outstanding during the year, if dilutive. For this purpose, the treasury stock method is used for the assumed proceeds upon the exercise of share purchase options and warrants that are used to purchase common shares at the average market price during the year. Common share equivalents (Note 8) have been excluded from the computation of the diluted loss per share for the periods presented as including them would have been anti-dilutive.  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 3. The Company is currently in the exploration stage.   -18-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. SIGNIFICANT ACCOUNTING POLICIES   The Company accounts for its mineral property interests whereby all acquisition and exploration costs are charged to operations as incurred, and all property sales and option proceeds received are credited to operations. The Company expenses the acquisition costs, as there are currently no identifiable mineral reserves on its property interests and, therefore, there is no basis on which to estimate future cash flows for purposes of assessing the recoverability of those costs. 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 a 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.  Mineral Property Reclamation Obligations  The Company recognizes the fair value of a liability for a reclamation obligation on mineral property interests when the obligation is incurred and the fair value can be reasonably estimated. The fair value of the obligation is based on the estimated cash flow required to settle the obligation, discounted using the prime lending rate of the Companys primary financial institution adjusted for the Companys credit rating. The fair value of the obligation is recorded as a liability with the same amount charged to mineral property expenses. The liability is adjusted for accretion expense representing the increase in the fair value of the obligation due to the passage of time. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash-flows are recognized as an increase or a decrease to the carrying amount of the liability and charged to mineral property expenses. When the existence of a mineral reserve on a property has been established, future reclamation obligation costs will be capitalized to that property.   -19-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. SIGNIFICANT ACCOUNTING POLICIES   Office, Computer, and Field Equipment  Office, computer, and field equipment are recorded at cost. Depreciation is provided at annual rates considered sufficient to amortize the cost of the assets over their estimated useful lives as follows:  Computer software100%Computer equipment45%Office equipment and furniture20%Field equipment30%  Share-Based Compensation  The Company issues options to purchase shares under the terms of an incentive plan described in Note 8. When options to purchase shares are issued to employees, officers, 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. The proportion of the share-based compensation attributable to employee activity on each mineral property is charged to exploration expense. 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. When options are exercised, previously recorded compensation expense is reclassified from contributed surplus to share capital to fully reflect the consideration for the shares issued.   -20-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    1. SIGNIFICANT ACCOUNTING POLICIES   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 periods. Actual results could differ from these estimates.  Significant estimates used in these financial statements include, among others, estimates of reclamation expense, recoverability of accounts receivable, calculation of stock based compensation, recoverability of future income tax assets and the fair value of marketable securities.  2. ACCOUNTING CHANGES  The Company adopted the method of accounting for unrecognized prior years tax loss carry forwards described in Emerging Issues Committee Abstract 172 (EIC-172), which was issued by the Canadian Institute of Chartered Accountants (CICA) in August 2008.  EIC-172 requires the tax benefit from the recognition of previously unrecognized tax loss carry forwards, which arise from the recording of unrealized gains on available-for-sale financial assets in other comprehensive income, to be recognized in operations. The transition provisions for EIC-172 require the accounting policy be applied retrospectively, with restatement of prior periods. Accordingly, the Company has included $56,910 (2008 - $85,635, 2007 - $14,115) in future income tax recoveries on the statement of operations from previously unrecognized tax loss carry forwards associated with unrealized gains on available-for-sale financial assets. A summary of the changes to the financial statements is provided in the following tables:  -21-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. ACCOUNTING CHANGES (continued)     Consolidated Statement of Operations20082007Net lossAs originally presented$  (3,241,987)$  (2,772,497)Future income tax recovery (expense) not previously recognized(28,725)71,520Revised$  (3,270,712)$  (2,700,977)  Accumulated Other Comprehensive IncomeAs originally presented$     570,898$        94,098Future income tax recovery not previously recognized(85,635)(14,115)Revised$     485,263$       79,983  On February 1, 2008, the Company adopted three new accounting standards described in Section 1535 Capital Disclosures, Section 3862 Financial Instruments  Disclosures and Section 3863 Financial Instruments  Presentation of the CICA Handbook. The requirements of these new standards are:  Capital Disclosures Section 1535 requires the disclosure of an entitys objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital, whether the entity has complied with any external capital requirements and, if it has not complied, the consequences of such non-compliance.  As a result of the adoption of this standard, additional disclosure on the Companys capital management has been included in Note 10 to the financial statements.  Financial Instruments - Disclosures and Financial Instruments  Presentation Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments - Disclosure and Presentation, revising its disclosure requirements and carrying forward its presentation requirements. These new sections place increased emphasis on disclosure about the nature and extent of risks arising from financial instruments and how the entity manages those risks.  -22-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    2. ACCOUNTING CHANGES (continued)   Section 3862 specifies disclosure which enable users to evaluate the significance of financial instruments for the entitys financial position and performance, the nature and extent of and exposure to risks arising from financial instruments and how the entity manages those risks.  As a result of the adoption of this standard, additional disclosure on these risks has been included in Note 11 to the financial statements.  Section 3863 establishes standards for the presentation and classification of financial instruments and non-financial derivatives. The adoption of this standard did not have any impact on the classification or presentation of the Companys financial instruments.  Future Accounting Changes Canada's Accounting Standards Board ratified a strategic plan in 2006 that will result in Canadian GAAP, as used by the Company, evolving and being converged with International Financial Reporting Standards (IFRS) over a transitional period to be completed by 2011. The International Accounting Standards Board also has projects currently under way that should result in new pronouncements which will be included in the convergence process. The Company is conducting a detailed assessment of the requirements of IFRS, with the intention of identifying differences, if any, in accounting policies, selecting the policies which are appropriate for the Company, identifying the appropriate disclosure in financial statements prepared under IFRS and developing an implementation plan to complete the transition to IFRS by February 1, 2011.   -23-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Detailed expenditures on mineral property interests during the years ended January 31 are included in the table below. Analysis of these expenditures by geographic area is reported in the Statements of Mineral Property Expenditures. 200920082007Acquisition Costs$   458,327$165,477$ 307,542Exploration CostsAircraft and helicopter89,781369,289129,550Camp85,272222,987106,083Chemical analysis99,348147,796130,992Data management and maps17,56831,17428,379Drilling and trenching59,794377,26573,920Geological and engineering773,251949,190526,522Geophysical surveying204,355132,722132,176Materials20,63626,54733,412Penalty related to flow-through expenditures12,474--Project management4,00099,54464,486Reclamation expense14,8631,234645Recording and filing85,12780,092255,627Travel78,86957,77756,5031,545,3382,495,6171,538,295Exploration tax credits(2,408)(4,872)(32,702)Exploration expenditure reimbursements(9,362)(38,963)(560,058)Reclamation obligations(12,339)(11,371)33,4181,521,2292,440,411978,953Total Acquisition and Exploration Costs1,979,5562,605,8881,286,495Option Proceeds(103,920)(148,143)(168,500)Net Expenditures For the Year1,875,6362,457.7451,117,995Cumulative Net Expenditures, 
Beginning of Year7,244,8834,787,1383,669,143Cumulative Net Expenditures, End of Year9,120,5197,244,8834,787,138Property Write-downs and Abandonments(1,769,827)(1,026,362)(662,099)Net Cumulative Expenditures On Active Mineral Properties Charged to Operations From Inception$   7,350,692$  6,218,521$ 4,125,039  -24-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Details of the Companys commitments to earn or acquire its mineral property interests and commitments by partners to option mineral property interests from the Company are included in the Companys Annual Information Form which is filed in conjunction with these financial statements. Summaries of each property agreement are included below.  British Columbia  Auddie Property  Effective January 29, 2007, the Company signed an option agreement to purchase a 100% interest in the Auddie Property subject to a 1% NSR, half of which can be purchased for $1 million. The Company has completed exploration expenditures of $30,000 and was required to make cash payments totalling $115,000 on or before January 31, 2010. This agreement was terminated January 28, 2009 when the property was returned to the vendor.  Gillis Property  The Company signed an option agreement effective September 5, 2008 to earn a 100% interest in the Gillis property, subject to a 2% Net Smelter Return (NSR), 1.5% of which can be purchased for $1.5 million. The Company is required to complete aggregate exploration expenditures of $300,000, make cash payments of 2.5% of mineral exploration expenditures and other cash payments totaling $165,000 on or before September 5, 2012 and issue 250,000 common shares within 10 days of announcing a National Instrument 43-101 compliant gold resource of at least 500,000 ounces.  Grizzly Property  The Company has a 100% interest in this property, subject to the underlying RDN royalties (Note 3), pursuant to an amendment of the RDN Agreement dated February 21, 2007. Effective May 1, 2008, the Company signed an option agreement with Inmet Mining Corporation (Inmet) which provides that Inmet can earn a 60% interest in the property on completion of aggregate exploration expenditures of $5,000,000 and cash payments of $250,000 being made on or before May 1, 2012.  This agreement was terminated subsequent to year-end. The Company retains 100% of the property subject to the underlying NSR.  -26-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Jake Property  The Company signed an option agreement effective October 29, 2005 to earn a 100% interest in the Jake claims, subject to a 4% NSR, half of which can be purchased for USD$2 million. The Company has completed exploration expenditures of $300,000 Canadian and is required to make cash payments totalling USD$ 300,000 on or before October 29, 2015. On May 18, 2006, the Company purchased the Clearwater Peak claim for $12,500, subject to a 1% NSR, half of which can be purchased for $500,000.  Effective May 14, 2007, the Company signed an option agreement with Island Arc Exploration Corporation (Island Arc), which provides that Island Arc can earn a 51% interest in the property on completion of aggregate exploration expenditures of $1,750,000, cash payments to the Company of USD $270,000 and issuing 850,000 common shares of Island Arc to the Company. This agreement was terminated effective February 19, 2009. The Company will assume the remaining obligations to the underlying vendor.  Kizmet Property  The Company holds 100% interest in the Kizmet claims, subject to a 1% NSR payable to RGLD Gold Canada, Inc.  RDN Property  On July 31, 1997, the Company acquired a 100% interest in the RDN mineral claims, subject to a 1.34% NSR. The Company may purchase one-half of the NSR 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 aggregate exploration expenditures of $5,000,000 and cash payments of $200,000. The Company is the project operator until Northgate has earned its 51% interest. Northgate may earn an additional 9% interest by completing a feasibility study and funding all expenditures up to completion of the feasibility study.  On December 14, 2005, the Company (40%) and Northgate (60%) purchased 100% of the LL property, which is contiguous with the RDN property, for $30,000 cash, subject to an NSR of 2%. This royalty can be purchased at any time for $2,000,000.   -27-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   RDN Property (continued)  On February 21, 2007, the Corporation signed an amendment suspending the terms of the Joint Venture Option agreement until such time as road access to the RDN property is constructed. Some of the RDN claims were split into a separate property to be referred to as the Grizzly Property, which is no longer part of the RDN Option Agreement.  Thorn Property  On March 1, 2000, the Company acquired a 100% interest in the Thorn mineral property, subject to a 3.5% NSR. The Company can purchase 2% of the NSR for $3,000,000. The Company is required to issue an additional 200,000 shares upon commencement of commercial production from the property. Cangold Limited (Cangold) subsequently earned a 51% interest in the Thorn property pursuant to an option agreement dated March 2002. Cangold was operator for the project.  Effective April 11, 2008, the Company signed a purchase agreement to acquire Cangolds interest in the property by making a cash payment of $100,000 and issuing 100,000 shares. In the event a third party partner becomes involved in the exploration and development of the property, the Company will pay to Cangold 25% of any cash or share payments received from the third party partner.  Tide Property  On July 10, 2001, the Company purchased the Tide mineral property from Newmont Canada Limited subject to a 1.5% NSR in the event the property becomes commercially feasible to mine. American Creek Resources Ltd. (American Creek) has earned a 51% interest in the property subject to a 1% NSR upon their interest in favour of Serengeti Resources Inc. On February 8, 2007, the Company signed a letter of agreement with American Creek for a second option whereby American Creek can earn an additional 9% interest by funding a further $3.5 million in exploration on or before December 31, 2010; an additional 5% interest by funding a bankable feasibility study, and, at the Companys election, another 5% interest by providing 100% of the initial project development financing.   -28-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Williams Property  On May 17, 2001, the Company acquired a 100% interest in the Williams property, subject to a 1.25% NSR. The Company is required to issue an additional 50,000 common shares upon commencement of commercial production from the property. The Company can purchase 0.75% of the NSR for $1,000,000. Advance royalty payments of $5,000 per year, commencing in December 2005, are payable to the underlying vendor.  Yukon  FER Property  Under an agreement with Boliden Limited (Boliden) dated July 1, 1998, as amended on October 28, 1999 and October 11, 2000, the Company has earned a 51% interest in the claims. Bolidens interest in the property has been sold to NVI Mining Ltd. Under a letter of agreement dated November 26, 2008 NVI Mining Ltd. sold their interest to the Company, subject to a NSR of 2%.  Northgate Exploration Alliance (Boulevard Property)  In December 2005, the Company signed a letter of agreement with Northgate to cooperatively generate new exploration properties (the Alliance). The initial phase consisted of data compilation with each company contributing up to $20,000. The second phase of field examination was funded by contributions of $130,000 from each company. A total of 310 claims in the Yukon, now known as the Boulevard Property, were staked on behalf of the Alliance. Northgate has an option to earn 60% of the acquired property by funding the first $1.5 million in exploration expenditures. Upon completion of the earn-in, expenditures will be shared pro-rata between the Company and Northgate. The Company is operator until Northgate completes the funding requirement.   -29-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Wernecke Breccia Property  In January 2006, the Company signed an agreement with Fronteer Development Group Inc. (Fronteer) to acquire 700 mineral claims and a proprietary geoscience dataset covering a large region of the northern Yukon known as the Wernecke Breccias, from Newmont Exploration Canada Limited and NVI Mining Ltd., a subsidiary of Breakwater Resources Ltd. Fronteer is the operator of the project and funded 100% of the required $2 million in exploration expenditures to earn an 80% interest, with the Company earning the remaining 20% interest. Newmont and NVI retain a total 2% NSR. There is a 7.5% to 15% Net Profits Interest (NPI) payable to the underlying vendors. A Joint Venture has been formed between Fronteer and the Company, and ongoing exploration expenses will be shared pro-rata subject to dilution for non-participation. Should either partys interest fall below 5%, their interest will be converted to a 3% NPI after payback of capital.  Alaska  Goodpaster Properties  On February 22, 2007, the Company signed an option agreement with Evanachan Limited, which was subsequently transferred to McEwen Capital Corporation. The agreement was subsequently assigned to Rubicon Minerals Corporation (Rubicon). The agreement encompasses the following four Goodpaster properties. The terms of the agreement provide that Rubicon will fund a total of USD$4.8 million in exploration expenditures over 6 years to earn a 60% interest in the properties, including a $230,000 reimbursement of the Companys 2006 exploration expenditures. Upon vesting, Rubicon may acquire a further 10% interest in the properties by completing a feasibility study, and, at the Companys election, may acquire an additional 5% interest (for a total of 75%) by providing a project financing loan to be repaid from the Companys free cash flow upon production.  Bou-Swede property  The Company holds a 100% interest in 265 claims staked in December 2005.   -30-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Goodpaster Properties (continued)  California-Surf property  The Company held a 30% joint venture interest in the California and Surf properties, which included several claim blocks. The joint venture partner, Western Keltic Mines Inc. (Western Keltic), held the remaining 70% interest in the properties. In August 2003, Western Keltic 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 upon funding of an aggregate of $1,500,000 of exploration expenditures subsequent to August 2003 (paid), · $50,000, or at the election of the Company, the issue of 50,000 common shares upon funding of an aggregate $3,000,000 of exploration expenditures subsequent to August 2003, · 100,000 common shares upon obtaining a positive feasibility study for placing any part of the property into commercial production.  Eagle Property  Pursuant to the terms of an agreement dated December 31, 2005 with AngloGold Ashanti (U.S.A) Exploration Inc. ( AngloGold Ashanti),, the Company acquired a 100% interest in the property subject to an NSR of 2%, one-half of which can be purchased for USD$1,000,000.  ER-Ogo-Fire Property  Pursuant to the terms of an agreement dated December 31, 2005 with AngloGold Ashanti, the Company acquired a 100% interest in the property, subject to an NSR of 2%, one-half of which can be purchased for USD$2,000,000.   -31-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Australia  Lachlan Fold Belt Project  In September 2006, the Company signed an agreement with BWG whereby the Company was granted the exclusive licence and right to use the Data Mining Study of the Lachlan Fold Belt report for a period of two years. The Company paid a fee for use of the Study and upon designation of project areas, the Company paid additional fees based on project designation and exploration expenditures. BWG will retain a 2% NSR in all designated projects. The Company has completed the required eligible aggregate exploration expenditures of at least USD$150,000 for the target areas.  Barmedman Property  Effective December 12, 2008, the Company signed a farm-in agreement with Inmet Mining (Australia) Pty. Ltd. (Inmet Australia) to explore the Barmedman licence. Inmet Australia can earn a 60% interest in the project by funding exploration expenditures of A$5,000,000 over four years and making cash payments to the Company of A$250,000. The Company will be operator until completion of the option requirements.  Springfield Property  Effective October 21, 2008, the Company signed an option agreement with Jaguar Minerals Limited (Jaguar) to explore the Springfield gold project. The Company can earn a 51% interest in the project by spending A$1,000,000 on exploration over four years. Following this, the parties will either continue exploration together under a joint venture agreement, or Jaguar may elect not to contribute, allowing the Company to earn 100% of the project by spending A$5 million in exploration expenditures.  The Company is required to issue 100,000 common shares upon definition of a Joint Ore Reserves Committee (JORC) compliant gold resource of 500,000 ounces, and 500,000 common shares upon definition of a JORC compliant gold resource of 1,000,000 ounces.  Should the Company receive cash and/or share payments as a result of a subsequent option/joint venture with a third party, Jaguar is entitled to 25% of the proceeds. If the Company decides to sell its interest in the project outright prior to earning 100% of the project, Jaguar would receive 40% of all proceeds of any sale. Once the Company has exercised the 100% option, Jaguar would receive 15% of all proceeds of any sale.  -32-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    3. MINERAL PROPERTY INTERESTS   Victoria Goldfields  Effective June 27, 2008, the Company signed a letter of agreement for a farm-in and joint venture with Northgate Australian Ventures (Northgate Ventures) for three mining tenements in the Stawell Corridor of the Victoria Goldfields. The Company must fund a total of A$370,000 in exploration by March 31, 2009. The Company can earn a 50% interest in one or all of the three properties by funding an additional A$500,000 per property by March 31, 2011 with a minimum expenditure of A$150,000 per property per year.  Upon the Company earning a 50% interest in one or more properties, Northgate Ventures will have the option to earn a 60% interest in the property by funding an additional A$1.5 million in exploration expenditures within 3 years, to form a 50:50 joint venture with the Company or elect not to contribute and allow the Company to earn a 100% interest in the property by funding an additional A$2 million in exploration expenditures over 4 years.  Nevada  Walker Lane Project  In January 2005, the Company signed an agreement with Newmont Capital Limited (Newmont Capital) targeting a defined project area in Nevadas Walker Lane Mineral Belt. On the Companys acquisition of any property interest, Newmont Capital was granted an NSR of 2.0% to 3.0% on a sliding scale based on the price of gold. The Company has completed funding USD$300,000 in exploration expenditures on the Poncho property. Newmont has waived their right to enter a 50:50 Joint Venture.  On June 16, 2006 the Company signed a mining lease agreement with Silverthorn Exploration, Inc. (Silverthorn) to acquire a 100% interest in the Gila 24 Property. The Company was required to make total cash payments of USD $290,000 on or before March 31, 2014 and additional payments of USD$100,000 each anniversary from March 31, 2015 until the option was exercised or the agreement was terminated. The Company had the option to purchase the property, subject to a 2% NSR, 100% of which may also have been purchased. This agreement was terminated February 23, 2009 when the Gila 24 property was returned to the vendor.   -33-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     4. PROJECT RECLAMATION DEPOSITS  Project reclamation deposits represent term deposits in favour of regulatory authorities held as site restoration deposits. The amount of the deposit 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 deposit will be increased. When reclamation work is completed on a project, the deposit is released to the Company.  5. RELATED PARTY TRANSACTIONS   Some of the Companys mineral property evaluation and exploration projects are managed by Equity Exploration Consultants Ltd. and Equity Geoscience, Ltd. (collectively Equity), companies indirectly owned and operated by two directors 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.  At the end of the fiscal year, the Company was indebted to Equity in the amount of $41,133 (2008-$72,121) for project expenses and consulting services provided by Equity to option and/or joint venture projects being operated by the Company. During the year ended January 31, 2009, the Company paid Equity $22,209 (2008 - $35,777, 2007 - $736,281) for geological consulting services and $159,094 (2008 - $234,271, 2007 - $235,389) for providing general corporate and administrative services composed of $1,606 (2008 - $6,364, 2007 $6,282) for investor services, $129,918 (2008 - $131,775, 2007 - $129,999) for management services, $2,807 (2008 - $9,412, 2007 - $9,672,) for office services, $18,124 (2008 - $67,908, 2007 - $62,336) for rent and $6,638 (2008 - $18,812, 2007 - $27,100) for support services. These amounts were accounted for at the exchange amounts agreed to by the parties.  It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and will be remunerated for such services at the rate charged by Equity to all its customers.  Two of the directors each indirectly own 22% of a 7.5% to 15% Net Profits Interest (NPI) in the Wernecke Breccia property (Note 3). The claims were originally staked and explored by a company in which they hold an interest. When the property was sold to the Newmont and NVI Mining Ltd, their company retained an NPI of varying amounts depending on the claim group.  -34-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     6. LEASE OBLIGATIONS  The Company signed a sublease, which expires November 30, 2010, for office space occupied by the head office. The Company has made a prepayment of the final two months lease payments. The following table shows the required lease and estimated operating cost expense over the next three fiscal years.  Fiscal year endedJanuary 31, 2010January 31, 2011January 31, 2012Lease payment$    72,804$    48,536-Operating costs(est.)54,60336,402-Total$   127,406$    84,938-  7. RECLAMATION OBLIGATIONS  The Companys 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. Managements current estimate of reclamation and other future site restoration costs to be incurred for existing mineral property interests has been included in these financial statements as Mineral Property Reclamation Obligations.    -35-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     8. SHARE CAPITAL  Authorized: Unlimited common shares without par value  Issued and fully paid common shares Number of SharesAmountJanuary 31, 200619,999,539$  9,358,013Issued for cashPrivate placement, net of issue costs of $55,2431,572,0002,494,757Exercise of share purchase options, net of issue costs of $190 and including transfer from contributed surplus on the exercise of options175,000259,522Exercise of warrants, net of issue costs of $505,0008,450January 31, 200721,751,53912,120,742Issued for cashPrivate placement, net of issue costs of $204,0012,601,2124,795,999Flow-through shares, net of issue costs of $56,879 and future income taxes of $472,500600,000970,621Exercise of share purchase options, net of issue costs of $620 and including transfer from contributed surplus on the exercise of options182,500307,490Exercise of warrants, net of issue costs of $194472,000939,306Fair value assigned to warrants issued on private placement-(1,429,905)January 31, 200825,607,25117,704,253Issued for mineral property acquisition net of issue costs of $155100,000128,845January 31, 200925,707,251$17,833,098     -36-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     8. SHARE CAPITAL (continued)  The Company issues share purchase options to directors, officers and employees of the Company and persons who provide ongoing services to the Company under an incentive stock option plan. Under the plan, the Company has reserved 2,570,725 shares to be issued pursuant to share purchase options. The exercise price of share purchase options will be no less than the closing price of the shares on the TSX Venture Exchange on the date on which the option is granted. Options will expire no later than five years from the grant date, except that they will expire within thirty days when the holder is no longer qualified to hold the option (other than for cause, when the option will expire immediately). Individual grants in excess of 30,000 shares vest over two years with one-half vesting immediately, one-quarter vesting on the first anniversary date of the grant and the remaining one-quarter vesting on the second anniversary date. Individual grants of up to 30,000 shares vest immediately.  Details of outstanding share purchase options are as follows:  January 31, 2009January 31, 2008Number of sharesWeighted average exercise priceNumber of sharesWeighted average exercise priceOutstanding at beginning of year2,355,000$      1.541,920,000$    1.38Granted435,0000.47635,0001.85Exercised--(182,500)0.90Expired(355,000)0.95--Forfeit/Cancelled(180,000)1.68(17,500)1.70Outstanding at end of year2,255,000$     1.412,355,000$    1.54Options exercisable at end of year2,101,250$     1.422,045,000$    1.50   -37-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     8. SHARE CAPITAL (continued)  The following share purchase options are outstanding at January 31, 2009.  Options OutstandingOptions ExercisableExpiry DateNumber of sharesExercise priceWeighted Average Remaining LifeNumber of sharesExercise price18-Jun-09125,000$     0.960.38125,000$        0.9609-Dec-09205,0001.210.85205,0001.2122-Dec-10110,0001.231.89110,0001.2317-July-11665,0001.702.46665,0001.7011-Jan-12125,0002.042.95125,0002.0416-July-12340,0002.003.46290,0002.0010-Dec-12250,0001.653.86218,7501.6516-July-13165,0000.904.46127,5000.9019-Dec-13270,0000.204.88235,0000.202,255,0002.942,101,250  The weighted average grant-date fair value of share purchase options granted during the year ended January 31, 2009 was $0.18 per share (2008 - $1.68; 2007 - $1.67). The Company determines the fair value of the options for the purposes of determining share-based compensation expense using the Black-Scholes option pricing model and using the following weighted average assumptions:  January 31, 2009January 31, 2008January 31, 2007Volatility60%186%164%Risk-free interest rate1.71%4.44%4.32%Expected life3.6 years3.4 years5 yearsExpected dividend yield---  The total share-based compensation expense charged against operations for the year ended January 31, 2009 was $407,392 (2008 - $1,034,486, 2007 - $1,040,212).  -38-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     8. SHARE CAPITAL (continued)  Details of outstanding warrants are as follows:  January 31, 2009January 31, 2008Number of sharesWeighted average exercise priceNumber of sharesWeighted average exercise priceOutstanding at beginning of year4,275,292$    2.571,707,000$    2.21Issued--3,040,2922.72Exercised--(472,000)2.23Expired(1,235,000)2.20--Outstanding at end of year3,040,292$    2.724,275,292$    2.57  The following warrants are outstanding at January 31, 2009.  Number ofIssue PriceSharesPer ShareExpiry DateBroker Warrants139,080$       2.0005-July-09Share Purchase Warrant2,901,2122.7505-July-093,040,292      9. INCOME TAXES  The Companys future income tax assets are: January 3120092008Future income tax assets (liabilities)Mineral property interests$         1,422,789$          961,479Other assets8,2329,804Investments(1,930)(59,755)Tax loss carry-forwards1,971,8051,592,8853,400,8952,504,413Valuation allowance(3,400,895)(2,504,413)Net future income tax assets$                       -$                     -   -39-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     9. INCOME TAXES (continued)  A reconciliation of the provision for recovery of income taxes is as follows: Year ended January 3120092008
(restated-Note 2)2007
(restated-Note 2)Loss before income taxes$    (2,928,764)$    (3,714,487)$  (2,772,497)Combined Canadian and provincial statutory tax rates30.0%31.5%34.12%Recovery of income taxes based on combined statutory tax rates$     878,629$     1,169,118$       945,976Add (deduct):Non-deductible expensesShare-based compensation(85,944)(324,918)(354,920)Other(396,611)(570,243)(149,182)Tax effect of current period losses not recognized(396,074)(273,957)(441,874)Future income tax asset not previously recognized  restatement of other comprehensive income (Note 2)(52,894)(29,204)71,520Future income tax asset not previously recognized-472,500-Future income tax (expense) recovery$    (52,894)$         443,296$         71,520  -40-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     9. INCOME TAXES (continued)  At January 31, 2009, the Company has unrecognized losses for income tax purposes of approximately $6,111,000 which may be used to offset taxable incomes of future years. If unused, these losses will expire as follows:  2010$      350,0002011414,0002015558,0002026940,00020271,339,00020281,190,00020291,320,000$ 6,111,000  10. CAPITAL MANAGEMENT  The Companys objective when managing capital, which is unchanged from prior years, is to safeguard the Companys ability to continue as a going concern in order to pursue the development of its mineral properties. The Company considers its capital to be shareholders equity.  The Company manages and adjusts its capital structure when changes to the risk characteristics of the underlying assets or changes in economic conditions occur. To maintain or adjust the capital structure, the Company may issue new shares or acquire or dispose of mineral property interests.  In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets which are revised periodically based on the results of its exploration programs, availability of financing and industry conditions. Annual and materially updated budgets are approved by the Board of Directors.  In order to maximize ongoing development efforts, the Company does not pay out dividends. The Companys investment policy is to invest any excess cash in liquid short-term interest-bearing instruments with maturities of one year or less.  When utilized, these instruments are selected with regard to the expected timing of expenditures from continuing operations.  -41-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     10. CAPITAL MANAGEMENT (continued)  The Company currently has sufficient working capital to meet its planned exploration operations and administrative expenses through the current operating period and for the following fiscal year. Actual funding requirements may vary from those planned due to a number of factors, including the progress of exploration and development activities. The Company believes it will be able to raise capital as required in the long term, but recognizes there will be risks involved that may be beyond its control.  11. RISK MANAGEMENT  The Companys activities expose it to a variety of financial risks, which include market risk, foreign currency risk, interest rate risk, credit risk, and liquidity risk. The Companys risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Companys financial performance.  Market Risk  The Companys financial instruments include marketable securities which are publicly traded and therefore are subject to the market risks that affect all publicly traded securities. Some of these investments are thinly traded which could result in lower quoted market values. The Company monitors the market of these securities and sells appropriate portions of the portfolio when price and market conditions permit. When the value of individual marketable securities is determined to have suffered impairment due to investee circumstances or project developments, the resulting loss is reported in the statement of operations as a loss on marketable securities.  Foreign Currency Risk  The Company incurs certain expenses in currencies other than the Canadian dollar. As such, the Company is subject to foreign exchange risk as a result of fluctuations in exchange rates. The Company manages this risk by maintaining bank accounts in both US Dollars and Australian Dollars to pay these expenses as they arise. Receipts in foreign currencies are maintained in those currencies.  -42-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     11. RISK MANAGEMENT (continued)  Interest Rate Risk  The Companys financial instruments may include bankers acceptances and treasury bills. These instruments bear a fixed rate of interest and a fixed maturity date of one year or less. If the Company is required to liquidate them prior to the maturity date, there is a risk that interest rates will have increased such that the market value of the instrument is less than the carrying or face value. The Company maintains term deposits with varying maturity dates to take advantage of changing interest rates and to ensure that sufficient funds are available when required.  Credit Risk  Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. To reduce credit risk, cash and cash equivalents are on deposit at major financial institutions. Accounts receivable consists mainly of accrued interest on cash and cash equivalents. As such, the Company considers this risk to be minimal.  Liquidity Risk  Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Accounts payable and accruals are due within the current operating period. The Company manages liquidity risk through the management of its capital structure (Note 10).  The Company uses sensitivity analysis to measure the effect on total assets or total receipts of reasonably foreseen changes in interest rates or foreign exchange rates. The analysis is used to determine if these risks are material to the financial position of the Company. On the basis of current market conditions, the Company has determined that a 1% change in interest rates would affect the expected total receipts by 8.8% and a 20% change in foreign exchange rates would affect the fair value of total assets by 0.7%. Actual financial results for the coming period will vary since the balances of financial assets are expected to decline as funds are used for Company expenses.  -43-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     12. OPERATING SEGMENTS  The Company operates in one industry segment only, mineral exploration, within four geographic areas: Canada, Australia, and the states of Alaska and Nevada in the United States of America. All operating segments are operated as one entity with management in common located at the Companys head office.  The following table shows the cash and cash equivalents attributable to each geographic area for the fiscal years ending January 31. All other assets, including equipment, are held solely in Canada.  200920082007Canada$5,807,416$      7,515,281$      2,927,535Alaska4,2234,9037,034Australia107,82979,3764,355Nevada1,5524,85712,374$ 5,921,019$      7,604,417$      2,951,298  The following tables show the net loss attributable to each geographic area, and the selected components thereof, for each fiscal year: Exploration expenditures on the Companys mineral properties by geographic segments are shown in the Consolidated Statements of Mineral Property Expenditures.  CanadaAlaskaAustraliaNevadaTotalNet Loss for the year ended
January 31, 2009$(1,971,596)$   (96,773)$   (865,177)$   (48,113)$   (2,981,658)Included in Net LossMineral property revenue205,79287542,920-249,587Interest income239,2551036,0602245,420Gain on sale of marketable securities141,806---141,806Future income tax expense(52,894)---(52,894)Depreciation(47,183)---(47,183)Share-based compensation(407,392)---(407,392)  -44-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)     12. OPERATING SEGMENTS (continued)  CanadaAlaskaAustraliaNevadaTotalNet Loss for the year ended
January 31, 2008$(2,880,035)$     43,186$(128,146)$(305,717)$(3,270,712)Included in Net LossMineral property revenue216,583124,620--341,203Interest income265,6451535,0573270,858Gain on sale of marketable securities344,041---344,041Future income tax recovery443,775---443,775Depreciation(48,241)---(48,241)Share-based compensation(1,034,486)---(1,034,486)  Net Loss for the year ended
January 31, 2007$(2,083,992)$ (98,804)$(248,238)$(269,943)$(2,700,977)Included in Net LossMineral property revenue232,920356--233,276Interest income135,659130-15135,804Gain on sale of marketable securities182,882---182,882Future income tax recovery71,520---71,520Depreciation(53,920)---(53,920)Share-based compensation(1,040,212)---(1,040,212)  13. 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) as follows:    -45-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    13. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)   (a) 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.  (b) Acquisition costs of mineral property interests  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. With the introduction of Emerging Issues Task Force (EITF) Abstract 04-2, effective April 30, 2004, 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.  (c) Statements of cash flows  Both CICA Handbook Section 1540 and Statement of Financial Accounting Standard (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.  -46-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    13. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)   (d) 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  2009Canadian GAAPAdjustments
(a,b)U.S. GAAPMineral property interest acquisition costs$                -$       741,264$       741,264Impairment  provision for mineral property acquisition costs previously capitalized-(527,266)(527,266)Cumulative mineral property interest acquisition costs213,998213,998Deficit(16,259,675)213,998(16,045,677)  2008Canadian GAAPAdjustments
(a,b)U.S. GAAPMineral property interest acquisition costs$                -$     493,709$     493,709Share capital17,704,253322,50018,026,753Deficit(13,278,017)171,209(13,106,808)   -47-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    13. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)   (d) Reconciliation (continued)  Consolidated Statements of Operations  200920082007Net loss under Canadian GAAP$   (2,981,658)$  (3,270,712)$  (2,700,977)Net mineral property interest acquisition costs (b)247,55558,975236,169Impairment loss recognized(527,266)--Future income tax recovery (a)-(472,500)-Deferred tax benefit (a)-150,000-Net loss under U.S. GAAP$(3,261,369)$(3,534,237)$(2,464,808)Basic and diluted loss per share 
under U.S. GAAP$        (0.12)$        (0.14)$         (0.12)  Consolidated Statements of Comprehensive Income (Loss)  200920082007Comprehensive loss under Canadian GAAP$    (3,281,392)$    (3,433,487)$   (2,295,697)Net adjustments to consolidated statements of operations(279,711)(263,525)236,169Comprehensive loss under U.S. GAAP$    (3,561,103)$    (3,697,012)$   (2,059,528)  -48-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2009, 2008 and 2007 (Expressed in Canadian Dollars)    13. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)   (d) Reconciliation (continued)  Consolidated Statements of Cash Flows (c)  200920082007Net loss under Canadian GAAP$   (2,981,658)$  (3,270,712)$  (2,700,977)Adjustments to reconcile net loss
 to net cash used by operating activitiesDepreciation47,18348,24153,920Foreign exchange (gains) losses(81,762)47,2337,519Reclamation obligations(12,339)(11,371)33,418Share-based compensation407,3921,034,4861,040,212Non-cash mineral property acquisition costs129,000--Non-cash mineral property option proceeds(11,000)(86,500)(23,500)Gain on sale of marketable securities(141,806)(344,041)(182,882)Interest income(245,420)(270,858)(135,804)Future income tax recovery52,894(443,775)(71,520)Increase in accounts receivable171,92362,003(239,398)Increase in prepaid expenses(6,273)(6,840)(19,532)Increase in project reclamation deposits11,358(73,380)(37,330)Increase in accounts payable and accruals(78,420)(137,342)218,856Increase in exploration funding deposits-(506,821)506,821Total adjustments242,730(688,965)1,150,780Net cash used for operating activities 
under Canadian GAAP$   (2,738,928)$    (3,959,677)$  (1,550,197)  14. COMPARATIVE AMOUNTS  The comparative amounts have been reclassified where necessary to conform with the presentation used in the current year.  -49-


[rimfireannual20f09final029.jpg]   RIMFIRE MINERALS CORPORATION   Management Discussion and Analysis    For the year ended January 31, 2009


1.1   Date  The information in this form includes financial results for the year ending January 31, 2009 with other information current to April 30, 2009.  1.2   Overall Performance  Rimfire Minerals Corporation is a 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, Australia, Nevada and Alaska.  Due to extreme market volatility and uncertainty that all junior exploration companies have experienced recently, the Company has taken steps to trim expenditures in non-essential areas and to ensure that exploration continues in a strategic manner to maximize discovery opportunities. The Company has cash in highly liquid term deposits which is sufficient to fund operations for at least two to three years, including continued exploration expenditures, and has no need for immediate financing. The Company will strive to identify opportunities that may arise during this downturn in order to build the Company and its exploration portfolio.  2008 Exploration Overview  In 2008, Rimfire focused exploration expenditures on projects in southern BC and the Lachlan Fold Belt in Australia. Joint venture partners completed drill programs at the Grizzly project in British Columbia, Boulevard in the Yukon, and Goodpaster District in Alaska. In addition, Rimfire continued work on early stage gold projects in northern BC.  British Columbia  The Companys new partner, Inmet Mining Corporation, funded a two-phase program to explore the Grizzly alkalic copper-gold porphyry target. The Phase I program of surface geochemistry, and geophysics, completed at the end of July, resulted in a correlation between surface mineralization at the Grizzly Showing and geophysical anomalies identified in the IP program. A second IP target with coincident molybdenum-gold-copper soil geochemistry occurred on the Mirko grid. The Phase II drilling program targeting these anomalies was completed in early October.  The Company conducted exploration on the Gillis Property in southern BC where previous work had identified anomalous gold-in-silt geochemistry in a number of drainage areas. The program expanded the soil sampling coverage to assess the extent of the anomalous area and to define possible trends to the mineralization. Prospecting and geological mapping in the same program uncovered several quartz vein showings containing gold and silver.





Yukon Territory  Encouraging trenching results from the Boulevard Project in Yukon were followed up with a diamond drill program from September  October, 2008. In coordination with the drill program, an IP, ground magnetometer and soil survey was completed to aid in refining drill targets.  Alaska  Rubicon Minerals Corporation funded a surface and drilling program on the Goodpaster District properties that focused on the ER claim group.  Australia  In the Lachlan Fold Belt of Australia, the Company completed an initial reconnaissance program of soil sampling and IP surveys on five of nine exploration licences in early 2008. This was followed up with an IP survey on the newly-acquired Springfield Property and a diamond drilling program on one of these exploration licences. A farm-in agreement has been concluded which will see Inmet Mining Australia conduct a drill program on another of the exploration licences included in the initial IP surveys.  The Company has entered a joint venture agreement for three exploration licences in the Stawell Corridor of the Victoria goldfields. Initial IP surveys will commence early in 2009.  Financial Overview for Fiscal Year Ended January 31, 2009  The Companys working capital as of January 31, 2009 was $6,041,336 comprised primarily of cash and term deposits, compared to $8,864,011 at the end of the previous fiscal year. The term deposits and cash are sufficient to fund general and administrative expenditures for the next two fiscal years without a requirement for additional financing. Strategic exploration initiatives can also be funded from the Companys cash on hand. If additional exploration is warranted, there may be a requirement for additional financing.





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, 2009:  200920082007Mineral Property Revenues$  249,587$     341,203$     233,276Net Income (Loss)(2,981,658)(3,270,712)(2,700,977)Per Share(0.12)(0.13)(0.13)Total assets6,464,2469,284,3765,358,588Long-Term Liabilities46,16753,30868,782Cash dividends declaredNILNILNIL  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 13 to the consolidated financial statements and which reflect the following significant policies:  • Marketable securities are classified as available for sale. Available for sale assets and liabilities are measured at fair value with unrealized gains and losses recorded in other comprehensive income until the instrument is either sold or suffers an impairment that is other than temporary. Tax consequences of the unrealized gains and losses recorded in other comprehensive income are recognized in the statement of operations as recovery of previously unrecognized tax losses. • 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 operations. The Company expenses the acquisition costs, as there are currently no identifiable mineral reserves on its interests and, therefore, there is no basis on which to estimate future cash flows for purposes of assessing the recoverability of those costs. 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 a 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. The proportion of the share-based compensation attributable to employee activity on each mineral property is charged to exploration expense. 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. When options are exercised, previously recorded compensation is reclassified from contributed surplus to share capital to fully reflect the consideration for the shares issued. • The Company follows the asset and liability method of accounting for income taxes.  Under this method, future income tax assets and liabilities are recorded based on temporary differences between the carrying amount of balance sheet items and their corresponding tax bases.  In addition, the future tax benefits of income tax assets, including unused tax losses, are recognized, subject to a valuation allowance, to the extent that it is more likely than not that such future benefits will ultimately be realized. Future income tax assets and liabilities are measured using substantively enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized. • 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 computed by dividing the net loss by the weighted average number of common shares outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding share purchase options and warrants, in the weighted average number of common shares outstanding during the year, if dilutive. For this purpose, the treasury stock method is used for the assumed proceeds upon the exercise of stock options that are used to purchase common shares at the average market price during the year. Common share equivalents have been excluded from the computation of diluted earnings per share for the periods presented as including them would have been anti-dilutive.





1.4   Results of Operations  For the year ended January 31, 2009 Rimfire incurred a net loss of $2,981,658 ($0.12 per share) compared to a net loss of $3,270,712 ($0.13 per share) in the previous year. Mineral property revenues decreased by 25% from $341,203 to $249,587 while interest revenue decreased by 10% from $270,858 to $245,240. Exploration expenditures decreased by 40% but acquisition costs more than doubled such that total mineral property expenditures ($1,979,556) were only 75% of the previous year ($2,605,888). In the last half of the year, significant efforts were made to limit exploration to strategic initiatives in order to conserve cash. General and administrative expenses were reduced by 20% from the previous year.  The most significant items comprising general and administrative expenses are salaries and share-based compensation expense for incentive stock options granted to directors, officers and employees during the fiscal year. Share-based compensation accounts for 20% of the total expenditures while salaries and support accounts for an additional 35%.  The increase in total administrative expenditures was comprised of increases in accounting and legal fees, rent and salaries. The Securities and Exchange Commission completed a scheduled review of the Corporations filings early in 2008. The costs associated with the response to these comments are reflected in increased legal and audit fees. The Company relocated the head office during the second quarter which resulted in an increase in monthly rent payments as well as additional office costs associated with setting up a new location. Salaries and support services increased reflecting the increased number of full-time staff in the Company.  Coupled with the increases were significant decreases in administrative expenditure. Share-based compensation was nearly one-third the figure in the previous year since lower exercise prices tend to result in lower fair market value assigned to the options. Foreign exchange translations resulted in a gain instead of a loss as the Companys US dollar accounts were revalued at a higher rate. The Company maintains US dollar accounts to make payments denominated in US dollars. When these accounts are adjusted to the prevailing exchange rate at the balance sheet date, the difference is shown as a foreign exchange gain or loss. The US dollar increased from year end rate of $1.0022 Canadian in 2008 to $1.2265 in 2009.  Exploration expenditures, excluding those by joint-venture partners, totaled $1,545,338 ($2,495,617), and property acquisition expenditures totaled $458,327 ($165,477). These costs were offset by exploration reimbursements totaling $9,362 ($38,963). The majority of the exploration expenditures were made on the Lachlan Fold Belt properties in Australia. Another major emphasis was the Gillis Property in British Columbia where expenditures eligible for flow-through renunciation were completed.





Acquisition expenditures are significantly increased with the Companys purchase of Cangolds 51% interest in the Thorn property and conclusion of two option agreements for Australian projects in the Lachlan Fold Belt and Victoria Goldfields. The Lachlan Fold Belt agreement, which terminated at the end of August, required the Company to make cash payments upon designation of project areas.  The British Columbia Mineral Exploration Tax Credit Program will reimburse the Company for 20% of eligible expenditures in that jurisdiction. For the fiscal year ended January 31, 2009 exploration tax credits are $2,408 ($4,872). The severity of the Mountain Pine Beetle attack has resulted in designation of an area where the tax credit will be 30% rather than the previous 20%. Most of the Companys active mineral properties fall within the designated zone. Flow though expenditures, which were renounced to investors, are not eligible for these tax credits which reduced the total credit receivable for the current fiscal year. Option proceeds were $103,920 ($148,143) while joint venture management fees were $145,667 ($193,060).  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:  Boulevard, Yukon Territory  The Boulevard Property, consisting of 238 claims, is located approximately 135 kilometres south of Dawson City, Yukon. The Boulevard Property is held jointly by Rimfire and Northgate Minerals, with each company having funded the initial $330,000 in exploration that led to staking of the property. To date, Northgate has funded approximately $1.4 million of the required $1.5 million in exploration expenditures to earn an additional 10% interest (for a total of 60%) in the property.  The exploration program was conducted under an Exploration Alliance with Northgate signed in December, 2005. This alliance targeted "Pogo-style" intrusion-related gold deposits in an area fitting the model criteria and possessing placer gold deposits without a known bedrock source. The Boulevard area was selected from a much larger regional compilation and reconnaissance silt sampling program that led to the identification of anomalous gold and pathfinder elements in creeks draining the Boulevard. Detailed soil sampling in 2007 outlined the multi-element geochemical anomaly that was tested by trenching in July 2008. In light of positive trench results, Rimfire and Northgate staked additional claims in the area.  Diamond drilling in September 2008 was focused on trenched areas with significant widths of gold mineralization. Five drill holes tested this mineralization at depth, returning 1.0 g/t gold over 1.8 metres in BV08-01, approximately 45 metres down dip from the trench, and 0.9 g/t gold over 18 metres including 1.9 g/t gold over 3.5 metres in BV08-03 approximately 5 metres down dip from the trench.Additional targets were identified from results of a magnetometer survey and previous soil geochemistry data. A total of 525 metres of core was drilled in seven holes from six different locations. In total, 4.85 line kilometres of IP and 45 line kilometres of magnetometer survey were completed. The soil survey grid was extended southeast from the existing Boulevard grid.





The work program was conducted by Equity Exploration Consultants Ltd. under the direction of Jim Lehtinen, P.Geo., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock samples. A technical report was filed on SEDAR on March 3, 2009.  Gillis Property, British Columbia  The Gillis Property, covering 6,182 hectares, is located in the Nicola Mining Division of British Columbia, approximately 30 kilometers south of Merritt. The Company signed an option agreement effective September 5, 2008 to earn a 100% interest in the property by funding a total of $300,000 in exploration and making cash payments totalling $165,000 by the third anniversary. The vendor will also be paid 2.5% of annual exploration expenditures until a positive decision to mine. Upon a public announcement by Rimfire of a NI 43-101 compliant gold resource of at least 500,000 oz, the Company will issue 250,000 shares to the vendors.  Previous work had identified anomalous gold-in-silt geochemistry in a number of drainage areas and very limited follow-up defined anomalous gold soil geochemistry with a few rock samples returning weakly anomalous gold values. During October 2008, Rimfire Minerals Corporation carried out a mapping, prospecting, and geochemical sampling program on the Gillis property. The sampling work was contracted to RIO Minerals Ltd. who completed 78.425 km of soil lines. A total of 64 rock samples were taken in addition to the 1712 soil samples.  Prospecting and mapping was focused on previous soil and silt anomalies located primarily in the western and central portions of the property. Prospecting has led to the discovery of three showings that have anomalous values of gold and silver in combination with other pathfinder elements. The Fort showing, located in one of the western drainages, consists of one 30 centimeter grab sample of quartz vein material which returned 19.65 g/t gold and 201 g/t silver. The SAV area, located 2 km southeast of the Fort showing, is a cluster of four anomalous gold samples. The third area, the South Side, is highlighted by a few anomalous gold float samples which lie within a multi-element soil anomaly with poor outcrop exposure.  A small program of mechanical trenching and further prospecting is anticipated in 2009. The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Company. A technical report has not been filed on SEDAR.





Grizzly Property, British Columbia  The Grizzly Property, covering 2,652 hectares, is located in the Liard Mining Division of British Columbia, approximately 50 kilometres east of the Galore Creek project and within four kilometres of the partially completed Galore Creek access road. The Company owns a 100% interest in these claims, subject to an underlying 2% NSR, 100% of which can be purchased for $2 million.  Inmet Mining Corporation (Inmet) signed an option agreement to acquire the Grizzly Property effective May 1, 2008. Under the terms of the agreement, Inmet can earn a 60% interest by funding at least $5 million in exploration at the Grizzly over four years, including $800,000 in the first year. Inmet will make staged cash payments totalling $250,000 over the earn-in period, including $50,000 received upon signing. Inmet terminated this agreement effective March 1, 2009.  The Grizzly copper-gold porphyry target shows a number of similarities to Galore Creek, including its geological setting, volcanic host rock geochemistry, regional magnetic and gravity geophysical signatures, hydrothermal alteration and metal signature. Rimfire geological crews re-sampled old trenches in 2006, yielding 38 metres averaging 0.74% copper and 1.1 g/t gold from a continuous chip sample. The Grizzly showings occur within a one square kilometre copper, gold and molybdenum-in-soil geochemical anomaly. A second area of anomalous gold and molybdenum soil geochemistry (the Mirko Grid) lies approximately 2 kilometres northwest.  During the second quarter of 2008, the Company completed a first phase program consisting of 32 line-kilometres of Induced Polarization (IP) geophysical survey, property-wide geological mapping, prospecting and soil sampling. The geophysical survey consisted of a pole-dipole array covering two-thirds of the 26 km2 Grizzly property at 400 metre line spacing and 200 metre line spacing over the Grizzly copper-gold showing. The survey was conducted by Scott Geophysics under the management of Equity Exploration Consultants Ltd. A total of 611 soil samples and 188 rock samples were collected and sent for assay. The portion of the IP survey covering the Mirko Gird returned coincident chargeability/resistivity high anomalies over the area of the soil anomalies. These coincident anomalies occur on three consecutive 400 metre spaced lines.





Copper  gold mineralization at the Grizzly showing, hosted by potassium-feldspar + biotite + chlorite + carbonate altered mafic volcanic rocks, is expressed in the IP survey as a chargeability high with resistivity values that are generally lower than unaltered mafic volcanic rocks. This geophysical signature extends to depth below unaltered sedimentary rocks (25 to 150 metres below surface) and defines an area of potential copper  gold mineralization that is 750 metres wide by 400 metres long that is open to the northeast, east and to depth. This area is also coincident with a one square kilometre copper, gold and molybdenum-in-soil geochemical anomaly.  Phase II of the Grizzly exploration program, conducted during September, consisted of 11 diamond drill holes for a total of 2128 metres. Eight of the drill holes targeted coincident copper  gold  molybdenum soil geochemical anomalies and IP anomalies in the Grizzly showing area, and three drill holes targeted coincident molybdenum soil geochemical anomalies and IP anomalies on the Mirko Grid. Two of these holes intersected numerous alteration zones with trace chalcopyrite disseminations and calcite-chalcopyrite veins in mafic volcanic rocks. Results include 53.73 metres of 0.11% copper and 0.19 g/t gold including 17.38 metres of 0.21% copper and 0.28 g/t gold in GRZ08-11. Three holes intersected moderately altered volcanic and intrusive rocks with abundant pyrite disseminations, but yielded no significant results.  Three of the holes targeted the Mirko Grid IP chargeability anomalies and coincident molybdenum-in-soil geochemical anomalies in an area of scarce outcrop exposure. Two holes intersected anomalous molybdenum mineralization with an intersection of 94.44 metres that averaged 0.02% molybdenum in GRZ08-09. The third hole, on the inferred continuation of the IP anomaly, did not return any significant mineralization.  The work program was conducted by Equity Exploration Consultants Ltd. under the direction of Henry Awmack, P.Eng., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock samples. A technical report has not been filed on SEDAR.  Jake Property, British Columbia  The Jake Property, covering 27,754 hectares, is located in Kamloops Mining Division of British Columbia, approximately 13 kilometres west of Clearwater, BC. The Company signed an option agreement effective October 29, 2005 to earn a 100% interest in the Jake claims (1,204 hectares), subject to a 4% NSR, half of which can be purchased for USD$2 million. The Company will make cash payments totalling USD$300,000 over ten years and has completed the required $300,000 (Canadian) in exploration expenditures. The surrounding claims were staked to cover geology prospective for high grade intrusion-related and orogenic gold mineralization.





Effective May 14, 2007 the Company signed an option agreement with Island Arc Exploration Corporation (Island Arc) whereby Island Arc will earn a 51% interest in the Jake Property by incurring $1,750,000 in exploration expenditures by March 31, 2010. In addition, Island Arc will make the underlying vendor payments, and issue 600,000 shares to the Company over the earn-in period of the agreement. An additional 250,000 shares will be issued upon announcement of a NI43-101 compliant mineral resource estimate. The agreement was terminated effective February 19, 2009.  An exploration program consisting of an induced polarization (IP) geophysical survey extending to the northwest and south of the Jake Showing and the area drilled in 2007 commenced in early August. A total of 21.5 kilometres of IP and 9.4 kilometres of magnetometer survey were performed. This work follows up on gold-bearing mineralization intersected in drill-testing buried IP geophysical anomalies in 2007. The results of the 2008 survey defined potential drill targets.  The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Company. A technical report was filed on SEDAR on April 29, 2008. There have been no material changes since that report.  Thorn Property, British Columbia  The Thorn property, covering 14,689 hectares is located in the Atlin Mining Division of British Columbia, approximately 120 kilometres northwest of Telegraph Creek. This property was a joint venture with Cangold Limited as operator. Cangold held a 51% interest in the property, subject to an underlying NSR. No program has been completed since the 2005 field season.  Effective April 11, 2008 the Company signed a purchase agreement to acquire Cangolds interest in the property by making a cash payment of $100,000 and issuing 100,000 shares. In the event a third party partner becomes involved in the exploration and development of the property, the Company pay to Cangold 25% of any cash or share payments received from the third party partner.  The next stage of exploration on the Thorn property will be a diamond drill program focused on resource definition at the Talisker Zone and exploration drilling at several other IP geophysical targets identified in 2004 and 2005. The Corporation is seeking a partner to advance exploration on the project. There are currently no plans to conduct exploration on the property in 2009.  The drilling and sampling programs during 2004 and 2005 were conducted under the direction of Henry Awmack, P.Eng., of Equity Exploration Consultants Limited, a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) 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 12, 2006. There have been no material changes since that date.





Expenditures by the Company, excluding payments made by joint venture partners, on the major British Columbia and Yukon properties during the fiscal year ended January 31, 2009 were:  BoulevardGillisGrizzlyJakeThornAcquisition costs$    2,400$   24,606$    4,208$           -$232,396Exploration costsAircraft and helicopter-44,896--5,024Camp5513,418185392272Chemical analysis1,19948,508--421Data management & maps5022,193944156Drilling & trenching-----Geological and engineering24,57784,23031,24626,9236,746Geophysical surveying----22,000Materials-1,946-364-Project management420--12122Reclamation---91-Recording and filing52915,486--5,059Travel7597,9681219017028,041218,64531,64627,91339,870Exploration tax credits-(2,478)(14)5682Joint venture payments(1,036)---(7,496)Reclamation obligations3,383-5,0311526,87530,388216,16736,66328,12139,331Total Acquisition and Exploration Costs32,788240,77340,87128,121271,727Option proceeds50,00011,000Net Expenditures32,788240,773(9,129)17,121271,727Cumulative Net ExpendituresBeginning of Year184,941-63,253240,8631,119,379Property write-down or abandonment-----End of Year$    217,729$    240,773$     54,124$    257,984$  1,391,106





Other Properties  The Companys other mineral property interests are:  • Adam Property, covering 1,823 hectares, is located in the Skeena Mining Division of British Columbia, approximately 70 kilometres northwest of Stewart. On April 16, 2007 the Company sold 100% of these claims to Paget Resources Ltd. for a cash payment of $10,000. The Company retains a 2% NSR.  • Auddie Property, covering 674 hectares, is located in the Omineca Mining Division of British Columbia, approximately 42 kilometres west of Germanson Landing. The Company has an option to earn a 100% interest in the claims for $115,000 in staged cash payments over four years and a minimum exploration expenditure of $30,000 in 2007. The Companys interest is subject to a 1% NSR, half of which can be purchased for $1 million. An initial field evaluation consisting of mapping and limited soil sampling followed by a 6 line-kilometre induced polarization geophysical survey was conducted during 2007. This agreement was terminated January 28, 2009 and the property was returned to the vendor.  • 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 100% interest in these claims, subject to a 2% NSR in favour of NVI Mining Ltd.  • Kizmet Property, covering 5,471 hectares, is located in the Atlin Mining Division of British Columbia, approximately 130 kilometres northwest of Telegraph Creek. The Company owns 100% of these claims subject to a 1% NSR in favour of RGLD Gold Canada, Inc.  • Poker Creek Property, covering 5,035 hectares, is located in the Liard Mining Division of British Columbia, approximately 220 kilometres north-northwest of Stewart. The Company owns 100% of these claims. In August 2008, a helicopter-supported seven day reconnaissance program of soil sampling, prospecting and geological mapping was carried out on the claims. Two soil lines returned highly anomalous results in copper and, to a lesser extent, gold over a roughly one by one kilometre area. Adjacent silt sample results indicate an area in excess of three kilometres east to west that is highly anomalous in both copper and gold. The metal signature and local geology of the area indicate potential for porphyry copper-gold-style mineralization.





• RDN Property, covering approximately 11,441 hectares, is located in the Liard Mining Division of British Columbia, approximately 120 kilometres northwest of Stewart, British Columbia. This property is currently optioned to Northgate Minerals Corporation, subject to an underlying NSR. On February 21, 2007, the Corporation signed an amendment suspending the terms of the Joint Venture Option agreement until such time as the Galore Creek road access is constructed across the RDN property.  • Quesnel Trough Project, covering 34,570 hectares, is located in the Cariboo Mining Division of British Columbia. A total of seven properties comprise the project and are located from 15 kilometres south of Prince George to 40 kilometres north of Fort St. James. The Company owns 100% of these claims. The project is targeting possible porphyry copper  gold mineralization based on regional geophysical anomalies. An approximately 2000 line kilometre helicopter airborne magnetics survey was completed over the project properties at 200 metre flight line spacing during November 2007 followed by surface reconnaissance programs in 2008.  • Tide Property, covering 2,964 hectares, is located in the Skeena Mining Division of British Columbia, approximately 36 kilometres north of Stewart, British Columbia. American Creek Resources Ltd. has earned 51% of the project. American Creek can earn an additional 9% interest by funding a further $3.5 million in exploration on or before December 31, 2010. Their interest can be increased to 65% interest by funding a bankable feasibility study, and, at the Companys election, to a 70% interest by providing 100% of the initial project development financing. American Creek is operator and did not conduct exploration on the property in 2008.  • Wernecke Breccia Project, consisting of 1926 claims, is situated in the Wernecke Mountains approximately 180 kilometers northeast of Mayo in east-central Yukon Territory. During 2007, the field program focused on a series of high priority drill targets designed to test iron-oxide-copper-gold systems +/- uranium and stand alone uranium targets, all of which are characterized by coincident geophysical, geological and geochemical anomalies. Many of these targets were newly defined in 2006, while some were historical targets that remain open for expansion Fronteer, who owns 80% of the project, and the Corporation will be seeking joint venture partners to continue exploration of the property.  • Williams Property, covering 26,136 hectares, 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. The Company is actively seeking a joint venture partner for the Williams Property.  • Yukon Uranium Project, consisting of 400 claims, was located in Yukon Territory, approximately 60 km west-southwest of Dawson City. The company holds a 100% interest in these claims subject to a 1% NSR. The claims, which target anomalous uranium geochemistry in stream sediment and soil samples, were staked during 2007 as part of an agreement signed with Longview Capital Partners. The claims lapsed in July 2008 terminating the agreement.  The following table shows the detailed expenditures for the Companys other properties during the fiscal year.  Poker CreekQuesnel TroughTideWernecke BrecciaWilliamsOther





Acquisition costs$          -$    2,759$          -$          -$     5,000$    1,425Exploration costsAircraft and helicopter21,540----14,177Camp4,2071,828174164,837Chemical analysis6,6445511853,257983805Data management & maps2,073949332,2671722,493Drilling & trenching------Geological and engineering23,27743,20419,8746,64222,40062,820Geophysical surveying-2,500-701--Materials1,41026---1,915Penalty for flow-through funds-----12,474Project management345512423421541Reclamation------Recording and filing6,08218,035---12,390Travel3,8373,038-1,160-7,20469,41570,64320,09715,00223,582119,656Exploration tax credits----(2)(52)Joint venture payments---(830)--Reclamation obligations----(3,008)(1,333)69,41570,64320,09714,17220,572118,271Total Acquisition and Exploration Costs69,41573,40220,09714,17225,572119,696Option proceeds------Net Expenditures69,41573,40220,09714,17225,572119,696Cumulative Net ExpendituresBeginning of Year5,209138,824(122,006)1,511,194344,4751,114,628Property write-down or abandonment-----(196,105)End of Year$ 74,624$ 212,226$(101,909)$1,525,365$   370,047$ 1,038,219





United States  Alaska Properties  The Alaska Properties, located in the Goodpaster Mining District, Alaska, 65 kilometres northeast of Delta Junction, consist of four claim groups totaling 183,920 acres (74,430 hectares). The Company signed an option agreement dated February 22, 2007 with Evanachan Limited which was subsequently assigned to Rubicon Minerals Corporation (Rubicon). The terms of the agreement provide that Rubicon will fund a total of USD$4.8 million in exploration over 6 years to earn a 60% interest in the Alaska properties including a $230,000 reimbursement of the Companys 2006 exploration expenditures. Upon vesting, the partner may obtain a further 10% interest in the properties by completing a feasibility study, and at the Companys election, may obtain an additional 5% (for a total of 75% interest) by providing a project financing loan to be repaid from the Corporations free cash flow upon production.  The ER-Ogo-Fire and portions of the Eagle-Hawk claim groups are subject to a 2% NSR in favour of AngloGold Ashanti (U.S.A.) Exploration Inc. Portions of the California-Surf are subject to a 1.75% NSR in favour of Western Keltic Mines Ltd. Bou-Swede is wholly owned by Rimfire Alaska, Ltd.  As operator Rubicon has completed a US $750,000 program in 2008 that included property-wide reconnaissance exploration including geological mapping, prospecting and soil sampling with limited drilling on the ER-Ogo-Fire property. Drilling targeted new mineralization found approximately 300 metres northwest of an area drilled in 2003 and 2004 by then-partner AngloGold Ashanti. Angular mineralized talus was identified over an area 100 metres in length, where nine of 40 samples returned in excess of 2.5 g/t gold. Three holes, totaling 300 metres, were completed to test this mineralization.  The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Company. A technical report was filed on SEDAR on May 7, 2008. There have been no material changes since that date.  Nevada Properties  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. The Company has completed the required exploration expenditures of USD $300,000 on the Poncho property. Newmont waived the one-time right to enter a 50:50 Joint Venture. The Company is now unrestricted except for an NSR to Newmont and will be actively seeking a partner to investigate these targets further.





Exploration on the Poncho property is targeting low sulphidation gold-silver bearing epithermal veins. In January 2007 drilling commenced, targeting vein structures. Drilling was suspended during February and then was completed by the end of March, 2007. Three strong vein structures, some with at least three kilometres of strike potential were tested. Approximately 1,575 metres (5,200 feet) of drilling was completed by the end of March with at least two holes testing each target area.  The 2007 exploration program targeted vein structures underlying a series of silica caps. Epithermal style veining with anomalous gold and silver concentrations was intersected in two of the four target areas. Pathfinder element geochemistry from the 2007 program shows vertical zonation and indicates that the prospective zones for gold deposition may occur at depths below the levels tested in this program (approximately 300 metres). Management has identified 2.1 kilometres of strike length that remains prospective below this level.  The Company will not be completing further work in the Walker Lane under the current Strategic Alliance agreement with Newmont. A technical report has not been filed for this property. The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Company.  Australia  Lachlan Fold Belt Properties  The Company has four exploration licences covering 57,536 hectares in the Lachlan Fold Belt, New South Wales, Australia. The original nine licences encompassed available high-priority targets identified in a Neural Network data study conducted by a private company, BWG. BWG granted the Company a two-year exclusive right to use the study's target maps and data to acquire licences and conduct exploration in the 120,000 square kilometre study area. The Company completed the required expenditures of USD$150,000 and designated project areas for which BWG will retain a 2% NSR. The Company will pay fees based exploration expenditures within the designated areas.  The Lachlan Fold Belt in New South Wales Australia is richly endowed with a diversity of deposit types that host in excess of 150 million ounces of gold. Deposit types include copper gold porphyry, epithermal gold, volcanogenic massive sulphide (VMS), gold-copper skarn, sediment-hosted disseminated gold and intrusion-related gold deposits.  The Company has signed an option/joint venture arrangement with Jaguar Minerals Limited (Jaguar) to explore the Springfield gold project in the Lachlan Fold Belt. The Springfield gold project lies 12 km south-southeast of the historic mining town of Gulgong and 80 km to the northeast of Newcrests Cadia Valley porphyry copper-gold mining complex.





Initially, it has been agreed that the Company can earn a 51% interest in the project by spending $1,000,000 on exploration over four years. Following this, the parties will either continue exploration together under a joint venture agreement, or Jaguar may elect not to contribute, allowing the Company to earn 100% of the project by spending $5 million in exploration. Upon definition of a Joint Ore Reserves Committee (JORC) compliant gold resource of 500,000 oz, Jaguar shall be issued 100,000 common shares. Upon definition of a JORC compliant gold resource of 1M oz, Jaguar shall be issued 500,000 common shares. Should the Company receive cash and/or share payments as a result of a subsequent option/joint venture with a third party, Jaguar is entitled to 25% of the proceeds. If the Company decides to sell its interest in the project outright prior to earning 100% of the project, Jaguar would receive 40% of all proceeds. Once the Company has exercised the 100% option, Jaguar would receive 15% of proceeds of any sale.  In early 2008, the Company completed reconnaissance exploration programs on five of the licences in the Lachlan Fold Belt (Barmedman, Walmer, Gollan, Goulburn, Mt. MacDonald) for a total of $330,000 in exploration. These programs consisted of soil and silt sampling, prospecting and geological mapping. In addition, Induced Polarization (IP) geophysical surveys were completed on the Barmedman and Walmer licences.  An exploration program was completed on the Springfield property in late September 2008, consisting of geological mapping, rock chip sampling, minor soil sampling and 23 line-km of IP surveys. The IP survey consisted of a dipole-dipole array with 100 metre a spacing and 100 to 400 metre line spacing.  The Company completed a diamond drilling program on the Trounce prospect on the Walmer property. This program was targeting geological and geophysical targets identified in the early 2008 reconnaissance exploration program. The Trounce prospect consists of a small outcropping of silicified sediments with quartz - pyrite veining and stockwork. Two of seven grab samples from the showing returned gold values of 2.4 and 3.6 g/t gold and the remaining five assayed from 0.21 to 0.61 g/t gold. On surface, the showing occurs within a subtle, north-south striking topographic high, coincident with anomalous gold soil geochemistry and a 40 metre-wide by 500 metre long chargeability and resistivity high. The diamond drilling program consisted of four diamond drill holes totalling 287 metres which returned no significant results. No future work is planned at Trounce.  Effective December 12, 2008, the Corporation signed a Farm-in agreement with Inmet Mining (Australia) Pty. Ltd. Under the terms of the agreement, Inmet can earn a 60% interest by funding at least A$5 million in exploration on the property over four years, including A$400,000 in the first year. Inmet will make staged cash payments totalling A$250,000 over the earn-in period, including A$50,000 upon signing of the agreement. The exploration plan for 2009 is to conduct diamond drilling to determine whether the IP chargeability anomaly reflects buried copper-gold mineralization. In addition, further geochemical techniques, such as MMI geochemical surveys are being contemplated to investigate the entire 388 km2 property.





The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Company. A technical report has not been filed on SEDAR  Victoria Goldfields Properties  Effective July 28th 2008, the Company entered into a new exploration partnership with Northgate Minerals Corporation, which granted the Company an option on its Stawell Corridor gold exploration properties in the State of Victoria, Australia.  The Stawell Corridor is a 240 km long belt bound by the Congee and Moyston faults and cored by Northgate's five million ounce Stawell Gold Mine (20 Mt at 8 g/t gold). Mineralization consists of gold-bearing quartz veins in iron-rich sediments associated with basalt centres. This deposit has been studied extensively, resulting in the identification of large-scale characteristics that can be used in the exploration for similar deposits elsewhere in the district. Geophysical techniques such as gravity and magnetics surveys have proven effective in targeting basalt centres associated with mineralization. These techniques will be important in evaluating the rest of the Stawell Corridor and refining targets for drilling.  The Company will be exploring three licences, totaling 120 km of the corridor length, representing all ground outside of a buffer around the Stawell Gold Mine. In addition to greenfields opportunities, more advanced targets exist including the 10 kilometre-long Murtoa target, which surrounds the Kewell gold resource. The Kewell resource, which Northgate has opted to exclude from this agreement, is reported to contain a non 43-101 compliant 100,000 ounce resource grading 6 g/t gold defined by 25 drillholes. Additional targets include kilometre-scale gravity anomalies that have been confirmed through drilling to reflect basalt centres at depth, with coincident gold and pathfinder element geochemical anomalies on surface.  Under the agreement, the Company agreed to conduct exploration to maintain the licenses in good standing for the current year (approximately A$370,000). The Company can then elect to conduct further exploration on any or all three of the licenses, earning a 50% interest on each by spending A$500,000 per license by March 31, 2011. Northgate then has the option on each license to: 1) carry out the next A$1.5 million to earn back a 10% interest (total 60%) and another 10% by reaching a production decision; 2) not participate and allow the Company to earn a 100% interest in the property by spending, or causing to have spent, an additional A$2 million over 4 years; or 3) participate in a 50/50 joint venture.  The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Company. A technical report has not been filed on SEDAR.





Expenditures by the Company during the fiscal year ended January 31, 2009 (all amounts in Canadian Dollars) were:  AlaskaAustraliaNevadaLachlan Fold BeltVictoria GoldfieldsAcquisition costs$               -$       160,433$      3,608$    21,492Exploration costsAircraft and helicopter4,145---Camp3,57550,1095,541103Chemical analysis4,60231,357-836Data management & maps4,2322,4024813Drilling & trenching-59,794--Geological and engineering68,900282,17266,7123,527Geophysical surveying-168,49510,659-Materials35614,506114-Project management1,77515--Reclamation-15-14,757Recording and filing---27,547Travel6,96138,3319,229-94,546647,19692,30346,783Exploration tax credits----Joint venture payments----Reclamation obligation---(23,439)94,546647,19692,30323,344Total Acquisition & Exploration Costs94,546807,62995,91144,836Option proceeds-42,920--Net Expenditures94,546764,70995,91144,836Cumulative Net ExpendituresBeginning of Year491,465359,809-789,077Property write-down or abandonment(69,041)(310,493)-(190,415)End of Year$  516,970$  814,025$  95,911$    643,498





The Annual Information Form accompanying the consolidated financial statements and this Management Discussion and Analysis contains 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 Alaska, Fer, Grizzly, Jake, Kizmet, Poker Creek, Quesnel Trough, RDN, Thorn, Tide, or Williams properties for the 2009 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.  Fronteer Development Group Inc. is the operator for the Wernecke Breccia property. The Company will have the option to contribute 20% of the expenditures for the project or face dilution of the Companys interest based on total deemed initial contributions of $10 million.  1.5   Summary of Quarterly Results  The following table summarizes information regarding the Company's operations on a quarterly basis for the last two fiscal years. These results have been restated to reflect income tax consequences of unrealized gains and losses on marketable securities which are now recognized in the computation of net income.  Quarter
EndedMineral Property
RevenueNet Income (loss)
(restated)Income (loss)
per shareJanuary 31, 2009$     57,008$     (533,918)$    (0.02)October 31, 2008109,580$ (971,870)$  (0.04)July 31, 200819,007(869,447)(0.03)April 30, 200863,992(606,424)(0.02)January 31, 2008102,324(519,023)(0.02)October 31, 2007377,037(726,121)(0.03)July 31, 200749,772(1,573,323)(0.07)April 30, 2007156,111(452,245)(0.02)





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. The addition of Australia, Nevada and southern BC projects has extended the exploration season to include portions of the first and last quarter of each year. In future, it is anticipated that exploration expenditures will be more consistent between quarters.  1.6   Liquidity  The Companys working capital as of January 31, 2009 was $6,041,336 comprised primarily of cash and term deposits, compared to $8,864,011 at the end of the previous fiscal year. The term deposits and cash are sufficient to complete the planned exploration initiatives for the current fiscal year without a requirement for additional financing. Due to extreme market volatility and uncertainty that all junior exploration companies have experienced recently, the Company has taken steps to trim expenditures in non-essential areas and to ensure that exploration continues in a strategic manner to maximize discovery opportunities. The Company has cash in highly liquid term deposits which is sufficient to fund operations for at least two to three years, including continued exploration expenditures, and has no need for immediate financing.  The Corporations number of issued and outstanding shares was 25,707,251 at January 31, 2009. The purchase of the Thorn property completed during the first quarter accounts for the increase from the 25,607,251 common shares that were issued and outstanding at the previous fiscal year-end. During the year, 435,000 employee stock options were granted at a weighted average strike price of $0.47 and 535,000 options expired or were forfeited. 1,820,000 previously granted director and employee options exercisable before December 2012 remain outstanding.  The Companys financial instruments are all fully cashable at any time so there are no restrictions on availability of funds. There is no long-term debt. The Companys current obligations include sublease commitments for office space. The lease expires November 30, 2010. Lease commitments for the remainder of the current fiscal year total $127,407. 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. For U.S. GAAP reconciliation, mineral property acquisition costs have been capitalized. As of the fiscal year ended January 31, 2009 this would have totalled $741,264. The change in commodity prices combined with changing economic situation for most junior producers and exploration companies makes it more difficult to joint venture or option mineral properties. Therefore, the Company would have written down the mineral property interests by $527,266 to reduce the portion allocated to properties for which there are no plans for active exploration in the coming fiscal year or joint venture agreements in place. This would result in total acquisition costs of $213,998 on active properties.  None of the property agreements are binding on the Company or on the Companys option partners, with the exception of the A$370,000 required on three exploration licenses acquired in the Stawell corridor under the Victoria Goldfields agreement with Northgate. If management chooses to continue with exploration, the following schedule indicates payments to be made by the Company in the coming year:   PropertyAmountDate of paymentBoulevardNilNilFerAssessment & filing $12,390June 10, 2009Gillis2.5% of exploration expenditures ($5,462)
$25,000 option paymentFebruary 28, 2009
September 5, 2009GrizzlyNilNilJake$30,000 (USD) option paymentOctober 29, 2009KizmetCash in lieu and filing $4,715December 31, 2009Poker CreekNilNilQuesnel TroughCash in lieu & filing fees of $138,280June 13, 2009RDNNilNilThornNilNil





PropertyAmountDate of paymentTideNilNilWernecke Breccia20% of expenditures (no estimate available)December 31, 2009WilliamsAdvance royalty payment $5,000
Cash in lieu & filing fees of $61,634December 15, 2009
December 31, 2009Alaska propertiesNilNilAustralia  Victoria GoldfieldsExploration A$370,000March 31, 2009NevadaClaim rental fee USD$15,753August 31, 2009  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 Exploration Consultants Ltd. and Equity Geoscience, Ltd. (collectively Equity), companies indirectly owned and operated by directors 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.  As at January 31, 2009, the Company was indebted to Equity, in the amount of $41,133 for project expenses and consulting services provided by Equity to option and/or joint venture projects being operated by the Company. During the year ended January 31, 2009, the Company paid Equity $22,209 (2008 - $35,777, 2007 - $736,281) for geological consulting services and $159,094 (2008 - $234,271, 2007 - $235,389) for providing general corporate and administrative services composed of $1,606 (2008 - $6,364, 2007 $6,282) for investor services, $129,918 (2008 - $131,775, 2007 - $129,999) for management services, $2,807 (2008 - $9,412, 2007 - $9,672) for office





services, $18,124 (2008 - $67,908, 2007 - $62,336,) for rent and $6,638 (2008 - $18,812, 2007 - $27,100) for support services. The cost of support services has decreased as some personnel have been transferred to the Companys direct payroll. The company now purchases general liability and property insurance independently from Equity Exploration Consultants Ltd, so this amount is no longer paid to a related company. Rent has been eliminated with the move of the Companys head office to separate office space.  It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and will be remunerated for such services at the rate charged by Equity to all its customers.  Two of the directors, David Caulfield and Henry Awmack, each indirectly own 22% of a 7.5 to 15% Net Profits Interest (NPI) in the Wernecke Breccia property. The claims were originally staked and explored by Antioch Investments Ltd. and Equity Exploration Consultants Ltd., in which they hold an interest. When the property was sold to Newmont and NVI Mining Ltd, these companies retained an NPI of varying amounts depending on the claim group.  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 stock options to directors, officers and employees. 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. Expenditures for salaries and support during the fourth quarter were slightly higher than average since unused compensatory time off is paid in cash at the end of each calendar year.  Reclamation obligations for each property with substantial exploration programs under the direction of the Company were re-evaluated to determine if allowances which had been previously estimated were still valid. Several properties had significant changes in exploration undertaken or reclamation work completed during 2008 which resulted in changes to the estimates for reclamation obligations. The new figures are reflected in the financial statements as a liability for the Company. 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. Several properties do not have reclamation obligations accrued as yet since no exploration work has been undertaken.





The Company is committed to sustainable resource development and ensures all its activities comply with regulatory requirements and strives to meet or exceed industry best practices. During the last quarter of 2007, the Company engaged an advisory service to develop a comprehensive community engagement policy and protocol to ensure that consistent standards are followed regardless of jurisdiction of the mineral exploration projects. The Company will continue to encourage two-way dialogue with members of the communities and traditional territories in which it operates.  1.11   Proposed Transactions  Not applicable  1.12   Critical Accounting Estimates  Not applicable  1.13   Changes in Accounting Policies including Initial Adoption  The Company adopted the method of accounting for unrecognized prior years tax loss carry forwards described in Emerging Issues Committee Abstract 172 (EIC-172), which was issued by the Canadian Institute of Chartered Accountants (CICA) in August 2008.  EIC-172 requires the tax benefit from the recognition of previously unrecognized tax loss carry forwards, which arise from the recording of unrealized gains on available-for-sale financial assets in other comprehensive income, to be recognized in operations. The transition provisions for EIC-172 require the accounting policy be applied retrospectively, with restatement of prior periods. Accordingly, the Company has included $56,910 (2008 - $85,635, 2007 - $14,115) in future income tax recoveries on the statement of operations from previously unrecognized tax loss carry forwards associated with unrealized gains on available-for-sale financial assets.  On February 1, 2008, the Company adopted three new accounting standards described in Section 1535, Capital Disclosures, Section 3862, Financial Instruments  Disclosuresand Section 3863, Financial Instruments  Presentation of the CICA Handbook. The requirements of these new standards are:  Capital Disclosures  Section 1535 requires the disclosure of an entitys objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital, whether the entity has complied with any external capital requirements and, if it has not complied, the consequences of such non-compliance. As a result of the adoption of this standard, additional disclosure on the Companys capital management has been included in Note 10 to the financial statements.





Financial Instruments - Disclosures and Financial Instruments  Presentation  Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments - Disclosure and Presentation, revising its disclosure requirements and carrying forward its presentation requirements. These new sections place increased emphasis on disclosure about the nature and extent of risks arising from financial instruments and how the entity manages those risks.  Section 3862 specifies disclosure which enable users to evaluate the significance of financial instruments for the entitys financial position and performance, the nature and extent of and exposure to risks arising from financial instruments and how the entity manages those risks.  As a result of the adoption of this standard, additional disclosure on these risks has been included in Note 11 to the financial statements.  Section 3863 establishes standards for the presentation and classification of financial instruments and non-financial derivatives. The adoption of this standard did not have any impact on the classification or presentation of the Companys financial instruments.  Future Accounting Changes:  International Financial Reporting Standards  Canada's Accounting Standards Board ratified a strategic plan in 2006 that will result in Canadian GAAP, as used by the Company, evolving and being converged with International Financial Reporting Standards (IFRS) over a transitional period to be completed by 2011. The International Accounting Standards Board also has projects currently under way that should result in new pronouncements which will be included in the convergence process. The Company would prepare the first interim report under IFRS for the period ending April 30, 2011 with the first annual report for the period ending January 31, 2012.  During 2008, the Company prepared for transition from Canadian generally accepted accounting principles (Canadian GAAP) to IFRS by completing a thorough review of published IFRS, a scoping study of current reporting in comparison to IFRS and identifying specific standards which will require adjustments in the Companys reporting or recording practices.  The Company is conducting a detailed assessment of the requirements of IFRS, with the intention of identifying differences, if any, in accounting policies, selecting the policies which are appropriate for the Company, identifying the appropriate disclosure in financial statements prepared under IFRS and developing an implementation plan to complete the transition to IFRS by February 1, 2011.





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  Disclosure controls and procedures and internal control over financial reporting  In November 2006, a comprehensive review of risk factors facing the Company was undertaken by management and the board of directors. Mitigating controls and procedures were identified wherever possible. New procedures were implemented in a couple of cases where it was evident that controls were not robust enough to ensure appropriate disclosure in a timely manner. Some controls were implemented as a secondary detection mechanism if the initial controls failed to prevent errors from occurring. None of the newly implemented controls constitute a material or significant change in internal controls.  As part of the comprehensive review of corporate controls and procedures, the Company utilized the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control  Integrated Framework. Parts of this framework were not appropriate for use by the Company as they referred to positions and/or job functions which do not exist in a smaller organization. The Company integrated aspects of the second document produced by COSO, Internal Control over Financial Reporting  Guidance for Smaller Public Companies into the initial review. The Company will review the final document annually to ensure that controls are still functioning as described and serving the purposes for which they were designed.  Management has assessed the effectiveness of disclosure controls and of the design of internal controls over financial reporting and found no material deficiencies or significant weaknesses. In common with many smaller companies with few staff there is less than optimal segregation of duties. This has been addressed with the implementation of additional review and approval procedures by personnel who are not involved in the initial recording of financial transactions. A regular evaluation of internal controls over financial reporting was conducted during 2007. No control failures or management overrides were identified during these reviews. All controls appear to be operating as designed to ensure correct recording, processing and reporting of financial information.





The Company has filed an 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 Consolidated Statements of Operations and Note 3 in the financial statements regarding the components of general and administrative and exploration costs for the Companys mineral property interests.  Disclosure of Outstanding Share Data  Please refer to Note 8 of the financial statements for details of share issues prior to January 31, 2009.  Forward-Looking Information  This MD&A may contain certain forward-looking statements. These forward-looking statements include estimates, forecasts, and statements as to managements expectations with respect to, among other things, future metal production and production costs, potential mineralization and reserves, exploration results, progress in the development of mineral properties, demand and market outlook for commodities and future plans and objectives of Rimfire Minerals Corporation. Forward-looking statements generally can be identified by the use of forward-looking terminology such as may, will, expect, intend, estimate, anticipate, believe, or continue or the negative thereof or variations thereon or similar terminology. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management are inherently subject to significant business, economic and competitive uncertainties and contingencies. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Rimfire expressly disclaims any intention, or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


RIMFIRE MINERALS CORPORATION  Schedule II - Valuation Allowance     ClassificationBalance at beginning of yearAdditions charged to costs and expenses [1]Deductions[2]Other[3]Balance at end of yearValuation Allowance for Deferred Tax Assets:Year Ended2009$(2,504,413)$(960,760)$119,258$(54,980)$(3,400,895)2008(2,330,466)(322,737)178,951(30,161)(2,504,413)  [1] The 2008 and 2009 increases in the valuation allowance for deferred tax assets are related to the tax effect of current period losses and deductible temporary differences. [2] The decrease in valuation allowance for deferred tax assets reflects changes in the enacted tax rate applicable to the Corporation. [3] Other changes reflect the tax effect of fair value of marketable securities.