UN1TED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 20-F/A-1 Amendment No. 1 (Mark One)   ̈ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934  OR  þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2008  OR   ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR   ̈SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report..  For the transition period from ______________ to_______________  Commission file 0-31100  Rimfire Minerals Corporation (Exact name of Registrant as specified in its charter)  Not Applicable (Translation of Registrants name into English)  British Columbia (Jurisdiction of incorporation or organization)  Suite 1350  650 West Georgia Street, Vancouver, British Columbia, Canada, V6B 4N9 (Address of principal executive offices)  Securities registered or to be registered pursuant to Section 12(b) of the Act.  NONE.  Title of each class Name of each exchange on which registered  -1-  Securities registered or to be registered pursuant to Section 12(g) of the Act.  Common Shares without par value (Title of Class)  Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act.  Not Applicable (Title of Class) Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.25,607,251  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  Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP  ̈International Financial Reporting Standards as issued by the International Accounting Standards Board  ̈Otherþ  If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. þItem l7 ̈Item l8  If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ̈YesþNo  -2-  (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)  Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  ̈Yes ̈No   -3-    EXPLANATORY NOTE  This Amendment No. 1 to the Registrants Annual Report on Form 20-F for the fiscal year ended January 31, 2008 is filed in response to comments from the Commissions Staff of the Division of Corporation Finance with respect to the Registrants disclosures under Item 3 (Key Information), Item 11 (Quantitative and Qualitative Disclosure about Market Risk), Item 15 (Disclosure Controls and Procedures), Item 17 (Financial Statements) and Item 19 (Exhibits). Pursuant to Rule 12b-15 under the Exchange Act, this Amendment No. 1 sets forth the complete text of the above-referenced Items and all amendments thereto, and includes new certifications pursuant to Rules 13a-14(a) and 15d-14(a) and Rules 13a-14(b) and 15d-14(b) under the Exchange Act.  Other than as expressly set forth above, this Amendment No. 1 does not, and does not purport to, amend, update or restate the information in any Item of the Registrants Annual Report on Form 20-F for the fiscal year ended January 31, 2008, or reflect any events that have occurred after the Form 20-F was filed on May 21, 2008.     -4-  FORWARD-LOOKING STATEMENTS   This Report contains forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Certain statements in this Report constitute forward looking statements. These forward looking statements are not guarantees of Rimfires future operational or financial performance and are subject to risks and uncertainties. When used in this Annual Report, the words estimate, intend, expect, anticipate and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of this Annual Report. These statements are subject to risks and uncertainties that could cause results to differ materially from those contemplated in such forward-looking statements. Actual operational and financial results may differ materially from 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.   -5-   TABLE OF CONTENTSPART IPageITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not amended8ITEM 2OFFER STATISTICS AND EXPECTED TIMETABLE
Not amended8ITEM 3KEY INFORMATION8ITEM 4INFORMATION ON THE CORPORATION
Not amended16ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Not amended16ITEM 6DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Not amended16ITEM 7MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Not amended16ITEM 8FINANCIAL INFORMATION
Not amended16ITEM 9THE OFFER AND LISTING
Not amended16ITEM 10ADDITIONAL INFORMATION
Not amended16ITEM 11QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK16ITEM 12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not amended20   -6-   TABLE OF CONTENTSPART IIPageITEM 13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not amended20ITEM 14MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not amended20ITEM 15CONTROLS AND PROCEDURES20ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT
Not amended22ITEM 16BCODE OF ETHICS
Not amended22ITEM 16CPRINCIPAL ACCOUNTANT FEES AND SERVICES
Not amended22ITEM 16DEXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not amended22ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not amended22  PART IIIITEM 17

ITEM 18FINANCIAL STATEMENTS

FINANCIAL STATEMENTS22

22ITEM 19EXHIBITS
Not amended23   -7-  PART I     ITEM 1   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS  Not Applicable.     ITEM 2   OFFER STATISTICS AND EXPECTED TIMETABLE  Not Applicable.  ITEM 3   KEY INFORMATION  CURRENCY AND EXCHANGE RATES  All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated. The following tables set forth:  (i) the average rates of exchange for each of 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 exchange rate for each month during the previous six months,  in each case based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York.  Fiscal Year ended 
January 31st20082007200620052004Average Rate During Period$0.9437$0.8475$0.8339$ 0.7763$ 0.7305  April
 2008March 2008February 2008January 2008December 2007November 2007High Rate$ 0.9979$ 1.0162$ 1.0291$ 1.0096$ 1.0221$ 1.0908Low Rate$ 0.9739$ 0.9841$ 0.9815$ 0.9714$ 0.9789$ 0.9993  On April 30, 2008, the noon buying rate in New York City for cable transfer in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York was $0.9909 US = $1.00 CDN.  SELECTED FINANCIAL DATA  The selected consolidated financial information set out below has been obtained from financial statements which reflect the Corporation's operations in the mineral exploration business.   -8-  The following table summarizes information pertaining to operations of the Corporation for the last five fiscal years.  Year
Ended
2008Year
Ended
2007Year
Ended
2006Year
Ended
2005Year
Ended
2004Mineral Property Revenue$341,203$233,276$199,777$414,338$223,626Loss from Operations(4,329,386)(3,091,183)(2,025,514)(1,601,214)(980,325)Net Loss(3,241,987)(2,772,497)(1,823,606)(1,495,680)(901,405)Per Share(0.13)(0.13)(0.10)(0.09)(0.07)Current Assets9,082,0865,214,1533,005,2243,064,5641,132,470Mineral Property InterestsNILNILNILNILNILOther Assets202,290144,43590,26488,46144,163Total Assets9,284,3765,358,5883,095,4883,153,0251,176,633Current Liabilities218,075845,43099,579219,98561,018Long-Term Liabilities53,30868,78235,36335,363NILShareholders Equity9,012,9934,444,3762,960,5462,897,6771,115,615Shares Outstanding
(number of shares)25,607,25121,751,53919,999,53917,855,22013,615,621  The Corporations financial statements have been prepared in accordance with accounting principles generally accepted in Canada. 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 January 31, 2006 balance sheet.  Except as disclosed in Note 10 of the financial statements, the financial statements conform in all material respects with U.S. GAAP.  The Financial Accounting Standards Board has issued FASB Interpretation Number (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.   -9-  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 Company has no identifiable mineral reserves from which to determine potential future cash flows, all acquisition costs and exploration costs of mineral property interests have been expensed as incurred for Canadian GAAP purposes. Emerging Issues Task Force (EITF) Abstract 04-2 requires acquisition costs of mineral property interests to be recorded as tangible assets, and the aggregate carrying amount reported as a separate component of property, plant and equipment. Statement of Financial Accounting Standard (SFAS) 144, and EITF 04-3 also require these assets to be tested for recoverability whenever events or changes in circumstances indicate the carrying value may not be recoverable. Accordingly, for U.S. GAAP purposes, acquisition costs of mineral property interests would be recorded as tangible assets when incurred.  The following table shows the effect of these differences on the summary financial information:  Year
Ended
2008
($)Year
Ended
2007
($)Year
Ended
2006
($)Year
Ended
2005
($)Year
Ended
2004
($)Loss from Operations(4,270,235)(2,855,014)(1,867,972)(1,560,189)(980,325)Net Loss(3,505,336)(2,536,328)(1,808,564)(1,454,655)(901,405)Loss Per Share(0.14)(0.12)(0.10)(0.08)(0.07)Mineral Property Interests493,887434,736198,56741,025-Total Assets9,778,2635,793,3243,294,0553,194,0501,176,633Shareholders Equity9,506,8804,879,1123,159,1132,938,7021,115,615    -10-  CAPITALIZATION AND INDEBTEDNESS  Not Applicable.  REASONS FOR THE OFFER AND USE OF PROCEEDS  Not Applicable.  RISK FACTORS  The Corporation is engaged in the business of preliminary or early stage mineral exploration and mine development. The Corporation holds no interests in any producing mines or commercial ore deposits. The Corporation is subject to many of the material risks customarily encountered by early stage exploration and mine development companies. Additional risks are included which are specific to the operations and business plan of the Corporation.  Specific Corporate Risks  Employment Contracts/Reliance Upon Officers  The Corporation is largely dependent upon the personal efforts and abilities of its corporate officers. The loss or unavailability to the Corporation of these individuals may have a materially adverse effect upon the Corporation's business. Investors will be relying on management's judgment with respect to the operation of the Corporation. The Corporation does not presently have "key person" life insurance on the lives of any of its officers. (See Item 6 "Directors, Senior Management and Employees").  The Corporation has not entered into an employment contract with any of its executive officers. The services of David A. Caulfield, President and Chief Executive Officer until November 30, 2007 and Director, Business Development for the remainder of the year are provided to the Corporation pursuant to a January 1, 2008 management agreement with Equity Engineering 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)   -11-  Legal Proceedings Against Foreign Directors  The Corporation is incorporated under the laws of the Province of British Columbia, Canada, and all of the Corporations 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.  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, 2008 was $13,334,927.   -12-  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.  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.  -13-  Competition  The mineral industry is very competitive. The Corporation must compete with other companies possessing superior financial resources and technical facilities. This competition is not only for the acquisition of mining interests, but also for retention of the services of qualified employees.  No Assurance of Titles  The Corporations mineral property interests may be subject to prior unregistered agreements, transfers or native land claims and title may be affected by undetected defects. Substance and continuity of title may also be affected by political instability and the vagaries of law as they exist and are applied in foreign jurisdictions. Surveys have not been carried out on all of the Corporations mineral properties and therefore, in accordance with the laws of the jurisdiction in which such properties are situated, their existence and area could be in doubt.  General Operating Risks  Permits and Licenses  The operations of the Corporation require licenses and permits from various governmental authorities. The Corporation may not be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects. All properties are presently without any known body of commercial ore.  The Corporations Auddie, Grizzly, Jake, Kizmet, Quesnel Trough, RDN, Thorn, Tide, Vavenby and Williams Properties are located in British Columbia, Canada. The Auddie Property consists of 2 claims comprising 674 hectares. The Grizzly Property consists of 17 claims covering 6,104 hectares. The Jake Property consists of 65 claims covering 27,754 hectares. The Kizmet Property consists of 33 mineral claims comprising 18,445 hectares. The Quesnel Trough Properties consist of 83 claims covering 36,060 hectares. The RDN Property consists of 18 mineral claims comprising 11,441 hectares. The Thorn Property consists of 25 mineral claims comprising 16,970 hectares. The Tide Property consists of 4 mineral claims comprising 2,964 hectares. The Vavenby Project consists of 34 claims covering 16,497 hectares. The 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 BLVD, Echo, Fer, Simpson and Wernecke Breccia Properties are located in Yukon Territory, Canada. The BLVD Property consists of 100 claims, the Echo Property consists of 72 claims, the Fer Property consists of 118 claims, the Simpson Property consists of 8 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.  -14-  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 is leased from Silverthorn Exploration, Inc., consists of 72 claims covering 1,440 acres. These claims are subject to the same fees as the Poncho Property. Valid title to these claims remains with the vendor.  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.  The Corporations Lachlan Project is located in the State of New South Wales, Australia. The project consists of nine Exploration Licenses comprising 324 units covering 92,674 hectares. The Exploration Licenses are subject to minimum expenditure requirements of A$20,000 plus A$500 per unit per year.  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 $0.76 and $1.80 during 2004, between $0.93 and $1.90 during 2005, between $1.45 and $2.64 during 2006 and between $2.02 and $2.31 during the first quarter of fiscal 2007. 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.   -15-  ITEM 4   INFORMATION ON THE CORPORATION  Not Amended  ITEM 5   OPERATING AND FINANCIAL REVIEW AND PROSPECTS  Not Amended  ITEM 6   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  Not Amended  ITEM 7    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  Not Amended  ITEM 8   FINANCIAL INFORMATION  The following financial statements are attached and incorporated herein:  Description of Statement

Consolidated Balance Sheets for the fiscal years ended January 31, 2008 and 2007
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, 2008, 2007, and 2006
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended January 31, 2008
Schedule II  Valuation Allowance  ITEM 9   THE OFFERING AND LISTING  Not Amended  ITEM 10   ADDITIONAL INFORMATION  Not Amended  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:   -16-  a) term deposits, Canadian cash and bankers acceptances 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 $8,218,250 of the Corporations total assets of $9,284,376 (or 81% of the total assets). However, all the term deposits and cash (77% of total assets) have fixed interest rates for the near-term (average 148 days to maturity). Therefore the cash flows are known and measurable and do not represent a material risk to the Corporation. All term deposits are cashable at the Corporations option without loss of interest. The short term to maturity and the Corporations intent to hold these instruments to maturity indicates that interest rate risk will not affect the reported fair values of these financial instruments.  Short-term investments (4% of total assets) have fixed maturity dates of less than 4 months. If the Corporation does not hold these investments to maturity, there would be a loss of interest as they are sold in the secondary marketplace. Upon maturity, these investments are either converted to cash or re-invested in similar secured instruments.  During the fiscal year ended January 31, 2008, interest rates on the Corporations deposits ranged from 2.75% to 4.25%, depending on the principal invested and the term of the investment. During the same period, Canadian T-Bill rates ranged from 3.20% to 4.81% with an average rate of 4.23%.  If interest rates declined or increased as shown below, the Corporations total receipts, consisting of revenue from mineral property operations, gain on marketable securities and interest income, would be affected as follows, based on the fiscal year-end balances:  Effect on total receiptsIncrease/decrease in interest rate20082007-1.50%$(118,905)(12.4%)$(62,620)(11.3%)-1.00%(79,270)(8.3%)(41,747)(7.5%)-0.50%(39,365)(4.1%)(20,873)(3.8%)+0.50%39,3654.1%20,8733.8%+1.00%79,2708.3%41,7477.5%  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, 2008. 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, 2008. 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, 2008 compared to the same figures for the fiscal year ended January 31, 2007 relates to the increased cash balances which are subject to interest rate risk. During the fiscal year ended January 31, 2008, the Corporation completed a significant private placement which increased the cash balances and therefore interest receipts.  -17-   Foreign currency exchange risk  Foreign currency cash deposits (category b) represent approximately $732,777 of the Corporations total assets (7.9% of total assets). The Corporation has limited exposure to foreign exchange risk, restricted to payment of current trade accounts payable in US Dollars or Australian Dollars where most of the Corporations cash assets are denominated in Canadian Dollars. The Corporation maintains bank accounts in US and Australian Dollars from payments received in US or Australian Dollars to pay these trade accounts.  During the fiscal year ended January 31, 2008, U.S. Dollar exchange rates varied by up to 10% below the average exchange rate and up to 11% above the average exchange rate. During the same period, Australian dollar exchange rates ranged from a low of 4% below the average exchange rate to a high of 4% above the average exchange rate. The U.S. Dollar exchange rate for January 31, 2008 was 5% below the average exchange rate for the year while the Australian dollar exchange rate for January 31, 2008 was the same as the average exchange rate for the year. If exchange rates fluctuated within a range of 15% above or below the year end closing rates as published by the Bank of Canada, the effect on the Corporations total assets would be less than 2%.  Effect on total assetsIncrease/decrease in 
foreign exchange rates20082007-15%$(111,027)(1.2%)$(38,278)(0.7%)-10%(74,018)(0.8%)(25,519)(0.5%)-5%(37,009)(0.4%)(12,759)(0.2%)+5%37,0090.4%12,7590.2%+15%111,0271.2%38,2780.7%+25%185,4062.0%63,7961.2%  The foregoing analysis was prepared using foreign exchange rates in effect as of the balance sheet date, January 31, 2008. 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 15% below and 25% 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, 2008 compared to the same figures for the fiscal year ended January 31, 2007 relates to the foreign cash balances which are subject to foreign exchange rate risk. During the fiscal year ended January 31, 2008, 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 $522,668 of the Corporations total assets of $9,284,376 (or 5.6% 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  -18-  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.  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, 2008, the Venture Index dropped 14% with the closing value 15% lower than the average Venture Index value. The minimum Venture Index value was 20% lower than the average Venture Index value, while the highest Venture Index value was 12% higher than the average Venture Index value. The aggregate value of the Corporations portfolio decreased 30%. Part of this decrease was the result of selling the highest performing securities during the 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 Index20082007-30%$(146,900)(1.58%)$(189,950)(3.54%)-20%(97,934)(1.05%)(126,634)(2.36%)-10%(48,967)(0.53%)(63,317)(1.18%)+10%48,9670.53%63,3171.18%+20%97,9341.05%126,6342.36%+30%$146,9001.58%189,9503.54%  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, 2008.  The difference between the forecast figures for the fiscal year ended January 31, 2008 compared to the same figures for the fiscal year ended January 31, 2007 relate to the reduction in the Corporations portfolio of marketable securities. During the fiscal year ended January 31, 2008, the Corporation sold some marketable securities which reduced the overall market value of the portfolio which is subject to equity price risk. Marketable securities received as property option payments did not fully offset the value of the marketable securities which were sold.  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  -19-  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.  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 17 CFR 240.13a-15 or 240.15d-15, the Chief Executive Officer and Chief Financial Officer of the Corporation have concluded that, as of fiscal year ended January 31, 2008, 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.    -20-  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 fiscal year ended January 31, 2008. Based on the changes made to the notes to the financial statements since this evaluation was conducted, management has concluded that the Corporations internal control over financial reporting was not effective as of the fiscal year ended January 31, 2008. A specific weakness was identified in the classification and completeness of financial information prepared under Canadian GAAP and US GAAP. This deficiency is not a material weakness in the system of internal control over financial reporting as it is unlikely to result in substantial changes to reported financial information. The deficiency will be remedied by providing sufficient resources to the Corporations financial staff to ensure that financial information conforms in all material respects with Canadian GAAP and that appropriate reconciliations are provided to show differences between Canadian GAAP and US GAAP.  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.   -21-  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.  ITEM 16A   AUDIT COMMITTEE FINANCIAL EXPERT  Not Amended  ITEM 16B   CODE OF ETHICS  Not Amended  ITEM 16C   PRINCIPAL ACCOUNTANT FEES AND SERVICES  Not Amended  ITEM 16D   EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES   Not applicable  ITEM 16E   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS   Not applicable    PART III     ITEM 17   FINANCIAL STATEMENTS     Consolidated Balance Sheets for the fiscal years ended January 31, 2008 and 2007
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, 2008, 2007, and 2006
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended January 31, 2008
Schedule II  Valuation Allowance  ITEM 18   FINANCIAL STATEMENTS  See Item 17  -22-  ITEM 19   EXHIBITS  Exhibit NumberDescriptionPage1.8Articles of Incorporation effective August 5, 2004(3)4.30Management Contract between Equity Engineering 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)31.1Certification by Chief Executive Officer(6)31.2Certification by Chief Financial Officer(6)32.1Certification by Chief Executive Officer(6)32.2Certification by Chief Financial Officer(6)  (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.   -23-  (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 document. .  -24-


SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.   RIMFIRE MINERALS CORPORATION  By:Jason S. WeberJason S. WeberPresident & Director  Date: April 3, 2009   -25-


RIMFIRE MINERALS CORPORATION  Consolidated Financial Statements Years Ended January 31, 2008, 2007 and 2006       [rfmannual20fa12008002.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 Miller   Jason S. Weber, P.Geo Dorothy G. Miller President & Chief Executive Officer Chief Financial Officer  -27-    [rfmannual20fa12008004.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, 2008 and 2007 and the consolidated statements of operations, of comprehensive loss, of shareholders equity, of mineral property expenditures and of cash flows for each of the years in the three year period ended January 31, 2008 (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, 2008 and 2007 and the results of its operations and its cash flows for each of the years in the three year period ended January 31, 2008 in accordance with Canadian generally accepted accounting principles.  Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. The effect of the application of United States generally accepted accounting principles is summarized in Note 10 to the consolidated financial statements.  Our previous report dated April 28, 2008 has been withdrawn and the consolidated financial statements have been revised for a reclassification of investment income on the statements of operations and statements of cash flows, enhanced segmented disclosures, and disclosure of differences between generally accepted accounting principles in Canada and the United States relating to mineral property acquisition costs.  For further explanation of the revisions, see Note 2 in the Notes to the Consolidated Financial Statements.  Hay & Watson  Independent Registered Chartered Accountants Vancouver, Canada April 28, 2008, except as to Notes 2, 9 and 10 which are as of October 30, 2008  -28-    [rfmannual20fa12008006.gif]  Comment by Independent Registered Chartered Accountants on Canada  United States of America Reporting Difference  The standards of the Public Company Oversight Board (United States) for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when there are changes in accounting principles that have a material effect on the comparability of the Companys financial statements, such as the changes described in Note 2 to the consolidated financial statements. Our report to the shareholders dated April 28, 2008, except as to Notes 2, 9 and 10 which are as of October 30, 2008, is expressed in accordance with Canadian reporting standards which do not require a reference to such a change in accounting principles in the report of the independent registered chartered accountants when the change is properly accounted for and adequately disclosed in the financial statements.  Hay & Watson  Independent Registered Chartered Accountants Vancouver, Canada April 28, 2008, except as to Notes 2, 9 and 10 which are as of October 30, 2008   -29-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of OperationsYears Ended January 31(Expressed in Canadian Dollars)200820072006Mineral Property OperationsRevenueOption proceeds$148,143$168,500$163,500Project management fees193,06064,77636,277341,203233,276199,777ExpensesAcquisition costs165,477307,542202,167Exploration expenditures2,495,6171,538,2951,116,172Reclamation obligations(11,371)33,418-Exploration expenditure reimbursements(38,963)(560,058)(33,988)Exploration tax credits(4,872)(32,702)(18,736)2,605,8881,286,4951,265,615Loss from mineral property operations(2,264,685)(1,053,219)(1,065,838)Other OperationsRevenueOther9772,4697,900ExpensesAccounting and legal60,46561,87740,934Depreciation48,24153,92033,980Foreign exchange losses47,2337,5198,196Investor services85,39241,50036,478Management services144,638117,469116,804Marketing and promotion124,232109,75277,234Office158,822112,13478,959Rent71,32365,45463,832Salaries and support services477,634367,688255,550Share-based compensation768,6941,040,212206,689Travel and entertainment79,00462,90848,9202,065,6782,040,433967,576Loss from other operations(2,064,701)(2,037,964)(959,676)Loss before investment transactions(4,329,386)(3,091,183)(2,025,514)Gain (loss) on marketable securities344,041182,882(49,264)Interest income270,858135,80468,672Loss before Income Taxes(3,714,487)(2,772,497)(2,006,106)Future Income Tax Recovery (Note 7)472,500-182,500Net Loss$(3,241,987)$(2,772,497)$(1,823,606)Basic and Diluted Loss Per Share$  (0.13)$  (0.13)$  (0.10)Weighted average number of shares outstanding24,366,86921,414,92818,656,974  -30-     RIMFIRE MINERALS CORPORATIONConsolidated Balance SheetsJanuary 31(Expressed in Canadian Dollars)20082007ASSETSCurrentCash and cash equivalents$7,604,417$2,951,298Cash restricted for flow-through expenditures291,274-Short-term investments322,5591,223,356Marketable securities522,668643,168Accounts receivable298,604360,607Prepaid expenses42,56435,7249,082,0865,214,153Mineral Property Interests(Note 3)--Project Reclamation Deposits(Note 4)139,41066,030Office, Computer, and Field Equipment, less accumulateddepreciation of $119,898 (2007- $124,203)62,88078,405$9,284,376$5,358,588LIABILITIESCurrentAccounts payable and accruals$145,954$284,218Payable to related party (Note 6)72,12154,391Exploration funding deposits-506,821218,075845,430Mineral Property Reclamation Obligation (Note 8)53,30868,782271,383914,212SHAREHOLDERS EQUITYShare Capital(Note 5)17,704,25312,120,742Contributed Surplus (Note 5)4,264,2691,845,676Deficit(13,334,927)(10,092,940)Accumulated Other Comprehensive Income(Note 2)379,398570,8989,012,9934,444,376$9,284,376$5,358,588APPROVED BY THE BOARDDavid A. CaulfieldDirectorJason S. WeberDirector  -31-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of Cash FlowsYears Ended January 31(Expressed in Canadian Dollars)200820072006Cash Flows Used for Operating ActivitiesMineral property operationsPaid for acquisition costs$    (135,916)$(322,640)$ (175,818)Paid for exploration costs(2,346,438)(1,522,174)(1,178,878)Exploration reimbursements received32,855560,05833,988Exploration tax credits and grants received14,418-122,229Exploration funding (paid) received(506,821)506,821(97,806)Project management fees received194,84063,27836,293Reclamation deposits (paid) received(73,380)(36,021)15,700Option proceeds received61,644145,000150,000Other operationsPaid for supplies and services(1,219,489)(963,859)(688,520)Received from related party17,72917,5453,478Other revenue received8811,7951,063(3,959,677)(1,550,197)(1,778,271)Cash Flows Used for Investing ActivitiesInterest revenue received202,12579,23063,676Proceeds from sale of marketable securities359,541222,48115,736Sale (purchase) of short-term investments935,202(1,210,800)-Purchase of office and field equipment(32,917)(70,761)(51,483)Cash restricted for flow-through expenditures(291,274)--1,172,677(979,850)27,929Cash Flows From Financing ActivitiesCommon shares issued for cash7,603,9502,700,7011,895,029Share issue costs(163,831)(55,383)(32,743)7,440,1192,645,3181,862,286Increase in Cash and Cash Equivalents4,653,119115,271111,944Cash and Cash Equivalents,
Beginning of Year2,951,2982,836,0272,724,083Cash and Cash Equivalents, End of Year$7,604,417$2,951,298$2,836,027Supplemental Information on Non-Cash TransactionsMarketable securities received(86,500)(23,500)(13,500)Mineral property interest option proceeds86,50023,50013,500Share-based compensation expense1,034,4861,040,212206,689  -32-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of Comprehensive LossYears Ended January 31(Expressed in Canadian Dollars)200820072006Net Loss$(3,241,987)$(2,772,497)$(1,823,606)Other comprehensive (loss) incomeChanges in fair value of investments152,541659,682-Realized gains on sale of investments(344,041)(182,882)-Taxes arising on changes in fair value
of investments (Note 7)---Other comprehensive (loss) income(191,500)476,800-Comprehensive Loss$(3,433,487)$(2,295,697)$(1,823,606)  The accompanying notes are an integral part of these consolidated financial statements  -33-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of Shareholders EquityYears Ended January 31(Expressed in Canadian Dollars)200820072006Common Shares (Note 5)Balance, beginning of year$ 12,120,742$ 9,358,013$ 7,467,987Issued for:Cash - private placement5,000,0002,550,000-Cash - private placement
(flow-through shares)1,500,000-500,000Cash  exercise of warrants939,5008,5001,245,029Cash  exercise of options164,450142,200150,000Fair value assigned to warrants issued on private placement(1,429,905)--Transfer from contributed surplus on the exercise of share purchase options143,660117,512210,240Share issue costs(734,194)(55,483)(215,243)Balance, end of year17,704,25312,120,7429,358,013Contributed SurplusBalance, beginning of year1,845,676922,976926,527Share-based compensation1,034,4861,040,212206,689Fair value assigned to warrants issued on private placement1,429,905--Agents warrants issued as a commission on private placement97,862--Transfer to common shares on exercise of share purchase options(143,660)(117,512)(210,240)Balance, end of year4,264,2691,845,676922,976DeficitBalance, beginning of year(10,092,940)(7,320,443)(5,496,837)Net loss for the year(3,241,987)(2,772,497)(1,823,606)Balance, end of year(13,334,927)(10,092,940)(7,320,443)Accumulated Other Comprehensive IncomeBalance, beginning of year (Note 2)570,89894,098-Other comprehensive income(191,500)476,800-Balance, end of year379,398570,898-Shareholders Equity$ 9,012,993$ 4,444,376$ 2,960,546  -34-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of Mineral Property ExpendituresYears Ended January 31(Expressed in Canadian Dollars)CanadaAlaskaAustraliaNevadaTotalCumulative net expenditures,
January 31, 2005$2,508,473$29,911$            -$    28,644$2,567,028Acquisition Costs84,152104,692-13,323202,167Exploration Expenditures739,439194,786-181,9471,116,172Exploration Tax Credits(18,736)---(18,736)Reimbursements(33,988)---(33,988)Net expenditures, year ended 
January 31, 2006770,867299,478-195,2701,265,615Acquisition 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, 20082,103,73975,145124,460302,54402,605,888Cumulative net expenditures, 
January 31, 20086,078,385497,755359,809789,0777,725,026Less write-downs and abandonments(997,326)(6,290)(22,746)-(1,026,362)Less option proceeds(480,143)---(480,143)Net cumulative expenditures 
on active mineral properties charged to operations, from inception to January 31, 2008$4,600,916$491,465$337,063$789,077$6,218,521  -35-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (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 10 to the consolidated financial statements. These consolidated financial statements reflect the following significant policies:  Operations and Basis of Consolidation  The Company was incorporated on May 7, 1991 as Bull Pine Explorations Ltd. and commenced mineral exploration operations in Canada in 1991. The Company changed its name to Rimfire Minerals Corporation on November 4, 1997. One of the Companys wholly-owned subsidiary companies, Rimfire Alaska, Ltd., which was incorporated on August 19, 1998, conducts exploration of mineral properties located in the State of Alaska. A second wholly-owned subsidiary company, Rimfire Nevada Ltd., which was incorporated on January 4, 2005, conducts exploration of mineral properties located in the State of Nevada. A third wholly-owned subsidiary, Rimfire Australia Pty Ltd. which was incorporated on August 23, 2006, conducts exploration of mineral properties located in New South Wales, 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).  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 is obligated to spend $291,274 on eligible flow-through expenditures in British Columbia before December 31, 2008. This amount is reported in the balance sheet as cash restricted for flow-through expenditures.  Comprehensive income  Comprehensive income comprises the Companys net income and other comprehensive income. Other comprehensive income 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. The Companys comprehensive income, components of other comprehensive income, and accumulated other comprehensive income are presented in the Consolidated Statements of Comprehensive Loss and the Consolidated Statements of Shareholders Equity.  -36-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)   1. SIGNIFICANT ACCOUNTING POLICIES   Financial assets and financial liabilities  The Companys financial assets and financial liabilities are classified as follows: · Accounts receivable are classified as loans and receivables. They are measured at amortized cost. At January 31, 2008, the recorded amount approximates 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, 2008, the recorded amount approximates 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 until the instrument is either sold or suffers an impairment that is other than temporary. · 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, 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 income using the effective interest rate method.  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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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 expected value.  Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. To reduce credit risk, cash and cash equivalents are on deposit at major financial institutions.  -37-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)   1. SIGNIFICANT ACCOUNTING POLICIES   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.  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%  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.  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.  -38-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)   1. SIGNIFICANT ACCOUNTING POLICIES   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 obligations is based on the estimated cash flow required to settle the obligations, 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 obligations 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.  Share-Based Compensation  The Company issues options to purchase shares under the terms described in Note 5. 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 expense is reclassified from contributed surplus to share capital to fully reflect the consideration for the shares issued.  -39-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (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.  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 though the recognition 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.  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.   -40-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)   1. SIGNIFICANT ACCOUNTING POLICIES   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 5) have been excluded from the computation of the diluted loss per share for the periods presented as including them would have been anti-dilutive.  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, amongst other things, the recoverability of accounts receivable and marketable securities.


2. ACCOUNTING CHANGES  The Company adopted the new accounting recommendations of the Canadian Institute of Chartered Accountants (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. The fair value of marketable securities which are classified as available-for-sale was $182,468 at January 31, 2006. 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.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     2. ACCOUNTING CHANGES (continued)  The Company has reclassified certain items in the Consolidated Statements of Operations, Consolidated Statements of Cash Flows and Note 10 (regarding differences between generally accepted accounting principles in Canada and the United States). The reclassification has no effect on net loss, net loss per share, accumulated deficit or increase in cash and cash equivalents. A summary of the changes to the financial statements is provided in the following tables:  Consolidated Statements of Operations  Mineral Property Operations200820072006RevenueAs originally presented685,244416,158150,513Reclassification of gain on marketable securities(344,041)(182,882)49,264Revised341,203233,276199,777  Loss from mineral property operationsAs originally presented(1,920,644)(870,337)(1,115,102)Reclassification of gain on marketable securities(344,041)(182,882)49,264Revised(2,264,685)(1,053,219)(1,065,838)  Other Operations200820072006RevenueAs originally presented271,835138,27376,572Reclassification of interest received(270,858)(135,804)(68,672)Revised9772,4697,900  Loss from other operationsAs originally presented(1,793,843)(1,902,160)(891,004)Reclassification of interest received(270,858)(135,804)(68,672)Revised(2,064,701)(2,037,964)(959,676)  Loss before the undernoted  (revised)Loss before the undernoted(4,329,386)(3,091,183)(2,025,514)Reclassified gain on marketable securities344,041182,882(49,264)Reclassified interest income270,858135,80468,672


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     2. ACCOUNTING CHANGES (continued)   Consolidated Statements of Cash Flows  200820072006Cash Flows Used for Operating ActivitiesAs originally presented(3,398,011)(1,248,486)(1,698,859)Reclassified interest received(202,125)(79,230)(63,676)Reclassified proceeds from sale of marketable securities(359,541)(222,481)(15,736)Revised(3,959,677)(1,550,197)(1,778,271)Cash Flows Used for Investing ActivitiesAs originally presented611,011(1,281,561)(51,483)Reclassified interest received202,12579,23063,676Reclassified proceeds from sale of marketable securities359,541222,48115,736Revised1,172,677(979,850)27,929


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS  Expenditures on mineral property interests during the years ended January 31 were: 200820072006Acquisition Costs$165,477$ 307,542$ 202,167Exploration CostsAircraft and helicopter369,289129,550171,480Camp137,25364,86272,522Chemical analysis147,796130,99238,751Drafting16,1035,57911,937Drilling and trenching377,26573,92049,763Equipment rental70,71030,72815,741Freight15,02410,49311,350Geological and engineering949,190526,522319,943Geophysical surveying132,722132,17668,922Maps and reproductions15,07122,80013,421Materials26,54733,41224,346Project management99,54464,48673,452Reclamation expense1,234645-Recording and filing80,092255,627216,415Travel57,77756,50328,1292,495,6171,538,2951,116,172Exploration tax credits and grants(4,872)(32,702)(18,736)Exploration expenditure reimbursements(38,963)(560,058)(33,988)Reclamation obligations(11,371)33,418-2,440,411978,9531,063,448Total Acquisition and Exploration Costs2,605,8881,286,4951,265,615Option Proceeds(148,143)(168,500)(163,500)Net Expenditures For the Year2,457,7451,117,9951,102,115Cumulative Net Expenditures, 
Beginning of Year4,787,1383,669,1432,567,028Cumulative Net Expenditures, End of Year7,244,8834,787,1383,669,143Property Write-downs and Abandonments(1,026,362)(662,099)(571,931)Net Cumulative Expenditures On 
Active Mineral Properties Charged to 
Operations From Inception$ 6,218,521$ 4,125,039$3,097,212


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  The analysis of these expenditures by geographic area is reported in the Statements of Mineral Property Expenditures.  The Companys commitments to earn or acquire its mineral property interests are:  RDN Property, British Columbia  On July 31, 1997, the Company acquired a 100% interest in the RDN mineral claims, subject to a 1.34% net smelter return (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 the following:  Fund exploration expenditures of: · not less than $1,000,000 before December 31, 2004 (completed) · not less than an aggregate of $2,000,000 on or before December 31, 2005 
(as revised November 19, 2004) (completed) · 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: · $25,000 upon closing of the agreement (received) · $40,000 on or before March 1, 2005 (received) · $60,000 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 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.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  RDN Property, British Columbia (continued)  On December 14, 2005, the Company (40%) and Northgate (60%) purchased 100% of the LL property, which is contiguous with the RDN, for $30,000 cash, subject to an NSR of 2%. This royalty can be purchased at any time for $2,000,000.  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 will no longer form part of the RDN Joint Venture Agreement.  Grizzly Property, British Columbia  The Company has a 100% interest in this property, subject to the underlying RDN royalties, pursuant to an amendment of the RDN Joint Venture Agreement dated February 21, 2007. On January 28, 2008, the Company signed a letter of intent with Inmet Mining Corporation (Inmet) which provides that Inmet can earn a 60% interest in the property on completion of the following:  Fund exploration expenditures of: · not less than $400,000 before August 31, 2008 · an additional $400,000 on or before the first anniversary · 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 subsequent to year-end) · $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


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  Jake Property, British Columbia  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 is to 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 each of the third through ninth anniversary dates (a total of USD $210,000) · USD$35,000 on or before October 29, 2015  The Company 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)  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) to earn a 51% interest in the property on completion of the following:  Cash payments to the Company of: · USD$25,000 on or before July 31, 2007 (received) · USD$30,000 on or before each anniversary date of July 31, 2008 through July 31, 2014 (a total of USD $210,000) · 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 common shares of Island Arc to the Company: · 100,000 shares within 15 days of receiving regulatory approval (received) · 100,000 shares on or before March 31, 2008 (received subsequent to year end) · 200,000 shares on or before March 31, 2009 · 200,000 shares on or before March 31, 2010 · 250,000 shares within 10 days of announcement of mineral resource estimate


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  Tide Property, British Columbia  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. American Creek was operator for the 2007 exploration programs.  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.  Williams Property, British Columbia  On May 17, 2001 the Company acquired a 100% interest in the Williams property, subject to a 1.25% NSR. The Company will issue an additional 50,000 common shares upon commencement of commercial production from the property. The Company can purchase 0.75% of the NSR for $1,000,000. Advance royalty payments of $5,000 per year, commencing in December 2005, are payable to the underlying vendor.  On July 20, 2006 the Company signed an option agreement with Arcus Development Group Inc. (Arcus) for Arcus to earn a 51% interest in the Williams property on completion of the following:  Cash payments to the Company of: · $25,000 upon completion of financing (received) · $20,000 on or before December 31, 2006 (received) · $25,000 on or before December 31, 2007 (received) · $40,000 on or before December 31, 2008 · $100,000 on or before December 31, 2009 Fund exploration expenditures of: · not less than $350,000 on or before December 31, 2006 (completed) · an additional $400,000 on or before December 31, 2007 (completed) · an additional $750,000 on or before December 31, 2008 · an additional $1,000,000 on or before December 31, 2009


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)      3. MINERAL PROPERTY INTERESTS (continued)  Williams Property, British Columbia (continued)  Issue common shares of Arcus to the Company: · 100,000 shares on or before December 31, 2006 (received) · an additional 100,000 shares on or before December 31, 2007 (received) · an additional 100,000 shares on or before December 31, 2008 · an additional 100,000 shares on or before December 31, 2009  Arcus can earn an additional 9% interest for a total interest of 60% by incurring an additional $3,000,000 in exploration expenditures on or before December 31, 2011. Arcus and the Company have two directors in common. The decision to option the property was made with the common directors abstaining. Arcus terminated the option agreement effective February 25, 2008.  Wernecke Breccia Property, Yukon  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 (Newmont) and NVI Mining Ltd., a subsidiary of Breakwater Resources Ltd. (NVI). Fronteer is 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.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  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 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 Company is to complete exploration expenditures of $30,000 in 2007 (completed).  FER Property, Yukon  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. If either partys interest decreases below 7.5%, that partys interest will be automatically converted to an NSR of 2%.  Kizmet Property, British Columbia  The Company signed a joint venture agreement with Barrick Gold Corporation (Barrick), effective February 26, 2005, to explore the Kizmet claims contributed by each company. Barrick paid the Company $75,000. In January 2006, the number of claims was reduced to 93 totalling 34,078 hectares. On November 22, 2006 Barrick served notice of withdrawal from this agreement. The Company retains 100% interest in the Kizmet claims, subject to a 1% NSR.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  Northgate Exploration Alliance  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 72 claims in the Yukon were staked on behalf of the Alliance. Upon acquisition of a 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 Company and Northgate. The Company was operator during the compilation and field examination phases of the project.  PWG Project, British Columbia  Effective March 31, 2007, the Company signed an option agreement to purchase a 100% interest in a group of four properties, Tess, Firecat, Copper Star and Lynx, collectively called the PWG Project. The Company made the initial cash payment of $40,000 and funded the required exploration expenditure of $50,000. The Company has elected to terminate the option effective November 27, 2007.  Thorn Property, British Columbia  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 will 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.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  Yukon Uranium Property, Yukon  On July 9, 2007 the Company signed a letter of agreement with Longview Capital Partners (Longview) to stake 400 claims and then grant Longview an option to acquire the claims subject to a 2% NSR. To exercise the option, Longview must: · reimburse the costs of staking the claims (received) · fund aggregate expenditures of $1,500,000 by July 9, 2012 · issue an aggregate of 1,000,000 shares of a new public company to the Company by July 9, 2011 (200,000 shares received to date)  Goodpaster Properties, Alaska  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, Alaska  The Company holds a 100% interest in 265 claims staked in December 2005.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  Goodpaster Properties, Alaska (continued)  California-Surf property, Alaska  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, or at the election of the Company, the issue of 50,000 common shares upon funding of an aggregate of $1,500,000 of exploration expenditures subsequent to August 2003 (paid subsequent to year end), · $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, Alaska  Pursuant to the terms of an agreement dated December 31, 2005 with AngloGold Ashanti (U.S.A) Exploration Inc., 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, Alaska  Pursuant to the terms of an agreement dated December 31, 2005 with AngloGold Ashanti (U.S.A) Exploration Inc., 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.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  Lachlan Fold Belt Project, Australia  In September 2006, the Company signed an agreement with BWG whereby the Company has been 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 will pay additional fees based on project designation and exploration expenditures. BWG will retain a 2% NSR in all designated projects. During the two year licence period, the Company must make eligible aggregate exploration expenditures of at least USD$150,000 for the target areas.  Effective April 10, 2008, the Company entered into a letter of agreement for an option/joint venture arrangement with Jaguar Minerals Limited (Jaguar) to explore the Springfield gold project. 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.  The Company will issue: · 100,000 common shares upon definition of a Joint Ore Reserves Committee (JORC) compliant gold resource of 500,000 oz, · 500,000 common shares upon definition of a JORC compliant gold resource of 1,000,000 oz,  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.


-54-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     3. MINERAL PROPERTY INTERESTS (continued)  Walker Lane Project, Nevada  In January 2005, the Company signed an agreement with Newmont Capital Limited (Newmont) targeting a defined project area in Nevadas Walker Lane Mineral Belt. On the Companys acquisition of any property interest, Newmont will be 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 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 subsequent to year end) · 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 Company 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 Company 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  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.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     5. SHARE CAPITAL  Authorized: Unlimited common shares without par value  Issued and fully paid common shares Number of SharesAmountJanuary 31, 200517,855,220$  7,467,987Issued for cashExercise of warrants, net of issue costs of $3,2311,128,8191,241,798Exercise of share purchase options, net of issue costs of $235 and including transfer from contributed surplus on the exercise of options600,000360,005Flow-through shares, net of issue costs of $29,277 and future income taxes of $182,500415,500288,223January 31, 200619,999,5399,358,013Issued 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, 200721,751,539$12,120,742Issued 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, 200825,607,251$17,704,253


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     5. 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 2,553,225 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 date on which the option is granted less the discount permitted by the TSX Venture Exchange. Options will expire no later than five years from the grant date, except that they will expire within thirty days when the holder is no longer qualified to hold the option (other than for cause, when the option will expire immediately). 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, 2008January 31, 2007Number of sharesWeighted average exercise priceNumber of sharesWeighted average exercise priceOutstanding at beginning of year1,920,000$    1.381,195,000$    0.99Granted635,0001.85900,0001.78Exercised(182,500)0.90(175,000)0.79Expired(17,500)1.70--Outstanding at end of year2,355,0001.541,920,0001.38Options exercisable at 
end of year2,045,0001.501,607,5001.30  The following share purchase options are outstanding at January 31, 2008.  Options OutstandingOptions ExercisableExpiry DateNumber of sharesExercise priceWeighted Average LifeNumber of sharesExercise price18-Dec-08380,000$      0.950.88380,000$      0.9518-Jun-09125,0000.961.38125,0000.9609-Dec-09230,0001.211.86230,0001.2122-Dec-10120,0001.232.89120,0001.2317-July-11665,0001.703.46536,2501.7011-Jan-12200,0002.043.95181,2502.0416-July-12365,0002.004.46265,0002.0010-Dec-12270,0001.654.86207,5001.652,355,0003.112,045,000


-57-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     5. SHARE CAPITAL (continued)  The weighted average grant-date fair value of share purchase options granted during the year ended January 31, 2008 was $1.68 per share (2007 - $1.67; 2006 - $1.06). The Company determines the fair value of the options granted during a year for the purposes of determining share-based compensation expense using the Black-Scholes option pricing model using the following weighted average assumptions:  January 31, 2008January 31, 2007January 31, 2006Volatility186%164%137%Risk-free interest rate4.44%4.32%3.84%Expected life3.4 years5 years5 yearsExpected dividend yield---  The total share-based compensation expense charged against operations for the year ended January 31, 2008 was $1,034,486 (2007 - $1,040,212; 2006 - $206,689).  Details of outstanding warrants are as follows:  January 31, 2008January 31, 2007Number of sharesWeighted average exercise priceNumber of sharesWeighted average exercise priceOutstanding at beginning of year1,707,000$    2.21-$          -Issued3,040,2922.721,712,0002.43Exercised(472,000)2.23(5,000)1.70Outstanding at end of year4,275,292$    2.571,707,000$    2.21  The following warrants are outstanding at January 31, 2008. Number ofIssue PriceSharesPer ShareExpiry DateBroker Warrants120,000$1.7013-April-08139,0802.0005-July-09Share Purchase Warrant1,115,0002.2513-April-082,901,2122.7505-July-094,275,292  Subsequent to the year ended January 31, 2008, warrants to purchase 1,235,000 shares expired unexercised.


-58-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     6. RELATED PARTY TRANSACTIONS   The Companys mineral property evaluation and exploration projects are managed by Equity Engineering 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.   During the year ended January 31, 2008, the Company paid Equity $35,777 (2007 - $736,281, 2006 - $206,763) for geological consulting services and $234,271 (2007 - $235,389, 2006 - $244,871) for providing general corporate and administrative services composed of $6,364 (2007 $6,282, 2006 - $4,279) for investor services, $131,775 (2007 - $129,999, 2006 -$99,305) for management services, $9,412 (2007 - $9,672, 2006 - $6,928) for office services, $67,908 (2007 - $62,336, 2006 - $62,696) for rent and $18,812 (2007 - $27,100, 2006 - $71,663) for support services.  It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and 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.


-59-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     7. INCOME TAXES  The Companys future income tax assets are:  January 3120082007Future income tax assets (liabilities)Mineral property interests$          961,479$            885,431Other assets9,80411,460Investments(59,755)(97,395)Tax loss carry-forwards1,592,8851,530,9702,504,4132,330,466Valuation allowance(2,504,413)(2,330,466)Net future income tax assets$                    -$                       -  A reconciliation of the provision for recovery of income taxes is as follows:  Year ended January 31200820072006Loss before income taxes$    (3,714,487)$   (2,772,497)$  (2,006,106)Combined Canadian and provincial statutory tax rates31.5%34.12%35.6%Recovery of income taxes based on combined statutory tax rates$     1,169,118$       945,976$       714,174Add (deduct):Non-deductible expensesShare-based compensation(324,918)(354,920)(73,581)Other(570,243)(149,182)40,918Tax effect of current period losses not recognized(273,957)(441,874)(681,511)Future income tax asset not previously recognized472,500-182,500Future income tax recovery$         472,500$                   -$       182,500


-60-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     7. INCOME TAXES (continued)  At January 31, 2008, the Company has unrecognized losses for income tax purposes of approximately $4,706,000 which may be used to offset taxable incomes of future years. If unused, these losses will expire as follows:  2009$       322,0002010350,0002011413,0002015553,0002026884,00020271,314,0002028870,000$ 4,706,000  8. ENVIRONMENTAL  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.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     9. SEGMENT INFORMATION  The Company operates in one industry segment only within four geographic areas: Canada, Alaska, Australia, and Nevada. All subsidiaries are operated as one entity with management in common located at the Companys head office.  The following table shows the cash attributable to each geographic area for the fiscal years ending January 31:  200820072006Canada$      7,515,281$      2,927,535$     2,797,535Alaska4,9037,03425,818Australia79,3764,355-Nevada4,85712,37412,674$      7,604,417$      2,951,298$     2,836,027  All other significant assets, including equipment, are held in Canada.  The following tables show the net loss attributable to each geographic area, and the significant components thereof, for each fiscal year:  CanadaAlaskaAustraliaNevadaTotalNet Loss for the year ended
January 31, 2008$(2,850,950)$     43,186$(128,506)$(305,717)$(3,241,987)included in Net LossMineral property revenue216,583124,620--341,203Interest income265,6451535,0573270,858Gain (loss) on marketable securities344,041---344,041Future income tax recovery472,500---472,500Amortization(48,241)(48,241)Share-based compensation(768,694)(768,694)


-62-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     9. SEGMENT INFORMATION (continued)  CanadaAlaskaAustraliaNevadaTotalNet Loss for the year ended
January 31, 2007$(2,155,512)$ (98,804)$(248,238)$(269,943)$(2,772,497)included in Net LossMineral property revenue232,920356--233,276Interest income135,659130-15135,804Gain (loss) on marketable securities182,882---182,882Future income tax recovery-----Amortization(53,920)---(53,920)Share-based compensation(1,040,212)---(1,040,212)  CanadaAlaskaAustraliaNevadaTotalNet Loss for the year ended
January 31, 2006$ (1,317,545)$ (305,843)$              -$ (200,218)$(1,823,606)included in Net LossMineral property revenue199,777---199,777Interest income67,699837-13668,672Gain (loss) on marketable securities(49,264)---(49,264)Future income tax recovery182,500---182,500Amortization(33,980)---(33,980)Share-based compensation(206,689)---(206,689)  Exploration expenditures on the Companys mineral properties by geographic area are shown in the Consolidated Statement of Mineral Property Expenditures.


-63-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES  These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) which, with respect to the Company, differ in certain respects from United States generally accepted accounting principles (U.S. GAAP). The significant differences between US GAAP and Canadian GAAP are as follows:  (a) 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 (restated)  The Company's accounting policy under Canadian GAAP is to expense the acquisition of mineral properties as incurred until there are identifiable reserves on a property, when they will be capitalized and amortized over production from the property. Mineral property acquisition costs are capitalized under US GAAP, unless there is evidence that they are impaired and not recoverable, when they are written off.  Note 10(b) and (e) have been restated to identify a difference between accounting for mineral property acquisition costs under Canadian GAAP and US GAAP. The Company had previously interpreted US GAAP to consider the lack of identifiable reserves as sufficient evidence to impair and write off the carrying value of the mineral property acquisition costs. However, the Company has reconsidered the requirements of Emerging Issues Task Force (EITF) Abstract 04-2 and has concluded that the lack of reserves is not conclusive evidence of impairment under US GAAP. The Company has therefore amended this note to identify the accounting for these costs as a difference between Canadian and US GAAP.


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (c) Statements of cash flows  Both CICA Handbook Section 1540 and SFAS 95 recommend use of the direct method of presenting statements of cash flows. However, SFAS 95 also requires that when the direct method of reporting cash flow from operating activities is used, a reconciliation of net income to net cash flow from operating activities shall be provided in a separate schedule. This reconciliation is presented below.  (d) Comprehensive income  SFAS 115 requires that available-for-sale investments should be measured at fair value in the statement of financial position with unrealized gains/losses reported in other comprehensive income until realized. Adoption of CICA recommendations for the recognition, measurement and disclosure of financial instruments, hedges and comprehensive income, which became effective for the fiscal year ended January 31, 2007, has eliminated this difference. The reconciliation below shows the effect of this difference in prior years.  (e) 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  2008Canadian GAAPAdjustment
(a,b)U.S. GAAPMineral property interest acquisition costsPreviously reported$                -$               -$                 -Restated (b)-493,887493,887Share capital17,704,253322,50018,026,753Deficit(13,334,927)171,387(13,163,540)


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (e) Reconciliation  Consolidated Balance Sheets  2007Canadian GAAPAdjustment
(b)U.S. GAAPMineral property interest acquisition costsPreviously reported$                -$               -$                 -Restated (b)-434,736434,736Share capital12,120,742-12,120,742Deficit(10,092,940)434,736(9,658,204)  Consolidated Statements of Operations  Previously reported200820072006Net loss under Canadian GAAP$(3,241,987)$(2,772,497)$(1,823,606)Reversal of acquisition costs (b)165,477307,542202,167Impairment provision (b)(165,477)(307,542)(202,167)Future income tax recovery (a)(472,500)-(182,500)Deferred tax benefit (a)150,000-40,000Net loss under U.S. GAAP$(3,564,487)$(2,772,497)$(1,966,106)Basic and diluted loss per share 
under U.S. GAAP$(0.15)$(0.13)($0.11)


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RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (e) Reconciliation  Consolidated Statements of Operations  Restated200820072006Net loss under Canadian GAAP$(3,241,987)$(2,772,497)$(1,823,606)Net mineral property interest acquisition costs (b)59,151236,169157,542Future income tax recovery (a)(472,500)-(182,500)Deferred tax benefit (a)150,000-40,000Net loss under U.S. GAAP$(3,505,336)$(2,536,328)$(1, 808,564)Basic and diluted loss per share 
under U.S. GAAP$(0.14)$(0.12)($0.10)  Consolidated Statements of Comprehensive Loss  Previously reported200820072006Comprehensive loss under Canadian GAAP$(3,433,487)$(2,295,697)$(1,823,606)Net adjustments to operations(322,500)--Changes in fair value of investments (d)--94,098Taxes arising on changes in fair value---Total comprehensive loss under U.S. GAAP$(3,755,987)$(2,295,697)$(1,729,508)  Restated200820072006Comprehensive loss under Canadian GAAP$(3,433,487)$(2,295,697)$(1,823,606)Net adjustments to operations(263,349)236,16915,042Changes in fair value of investments (d)--94,098Taxes arising on changes in fair value---Total comprehensive loss under U.S. GAAP$(3,696,836)$(2,059,528)$(1,714,466)


-67-


RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2008, 2007 and 2006 (Expressed in Canadian Dollars)     10. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (e) Reconciliation (continued)  Consolidated Statements of Cash Flows (c)  200820072006Net loss under Canadian GAAP$  (3,241,987)$  (2,772,497)$ (1,823,606)Adjustments to reconcile net loss to net cash used by operating activitiesDepreciation48,24153,92033,980Foreign exchange losses47,2337,5198,196Reclamation obligations(11,371)33,418-Share-based compensation1,034,4861,040,212206,689Non-cash option proceeds(86,500)(23,500)(13,500)Gain (loss) on sale of marketable securities(344,041)(182,882)49,264Interest income(270,858)(135,804)(68,672)Future income tax recovery(472,500)-(182,500)Increase in accounts receivable62,003(239,398)134,087Increase in prepaid expenses(6,840)(19,532)(9,307)Increase in project reclamation deposits(73,380)(37,330)15,700Increase in accounts payable / accrued expenses(137,342)218,856(30,796)Increase in exploration funding deposits(506,821)506,821(97,806)Total adjustments(717,690)1,222,30045,335Net cash used for operating activities$  (3,959,677)$  (1,550,197)$  (1,778,271)


-68-


RIMFIRE MINERALS CORPORATION   Management Discussion 
and Analysis    Form 51-102F1 For the year ended January 31, 2008


-69-  Management Discussion and Analysis   1.1 Date  The information in this form includes financial results for the year ending January 31, 2008 with other information current to April 30, 2008.  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.  2007 saw significant advancement of the companys joint-venture business model. New partnerships were established with Inmet Mining on the Grizzly project, American Creek on the Tide Project and Island Arc on the Jake Project. In addition, a staking agreement was established with Longview Capital Partners for the Yukon Uranium Project. The Company anticipates additional joint venture relationships to be developed in the coming year.  Jason Weber, P. Geo. was appointed President and CEO of the company in November 2007. Mr. Weber has been with the company since its inception, is an experienced geologist with tremendous communications skills, and is respected by his peers, shareholders and the investment community. Outgoing CEO David Caulfield has been named Chairman and has taken on a new management position as Director of Business Development.  Early in April 2008, the Company completed a purchase agreement to acquire a 100% interest in the Thorn property, subject to underlying royalties, in British Columbia and a joint venture agreement to explore the Springfield property in New South Wales, Australia.  The Company completed a $6.5 million financing in 2007 and as of January 31, 2008 has working capital in excess of $8 million.  2007 Exploration Overview  In 2007, Rimfire doubled its exploration expenditures from the previous year with work programs completed on 13 projects in North America and 1 in Australia. Drilling was completed at the Tide and Jake projects in British Columbia, Wernecke Breccia in the Yukon, Goodpaster District in Alaska, and Poncho in Nevada. Work at the Grizzly and Williams properties in BC and the Lachlan Fold Belt properties in Australia was completed in preparation for drilling anticipated in 2008. In addition, Rimfire continued work on early stage gold projects developed through an Exploration Alliance with Northgate Minerals Corporation as well as gold-copper targets in the Quesnel Trough of BC.   -70-  Management Discussion and Analysis   British Columbia  The Company gained a new partner, Inmet Mining Corporation, to explore the Grizzly alkalic copper-gold porphyry target. A program of surface geochemistry, geophysics and diamond drilling will be undertaken in 2008 on this project that shows geological similarity to the Galore Creek deposit. The Companys partner, Island Arc Exploration Corporation, funded comprehensive work at the Jake project including ground geophysics, trenching and drilling of the Jake vein showing. Work on the Tide project, where American Creek Resources Ltd. is earning a 60% interest, continued to focus on the 36 Zone and  Crest Anomaly with 1835 metres of drilling completed in eight holes. Arcus Development Group Inc. funded a surface program evaluating the porphyry potential of newly acquired tenures at the Williams project, before relinquishing their option and returning the property to the Company.  Alaska  Rubicon Minerals Corporation funded a surface and drilling program on the Goodpaster District properties that focused on the California Surf claim group. The drilling successfully intersected 7.4 metres of quartz vein material that is anomalous in gold values. Rubicon is planning to conduct a program during 2008 that will follow-up on this result and other targets within the group.  Australia  The Company has been granted nine exploration licenses in the Lachlan Fold Belt, New South Wales, Australia. Exploration licenses cover targets generated by BWG in a data mining study completed in the region. The Company is conducting surface programs to define targets for drill testing later in 2008.  Nevada  The Company completed approximately 1,575 metres of reverse circulation drilling in seven holes testing low sulphidation epithermal gold-silver bearing vein targets on its Poncho property in the Walker Lane District of Nevada. Results contain anomalous gold and trace elements that indicate the vein targets warrant deeper drill testing.  Yukon Territory  A large drilling and surface campaign was conducted on the Wernecke Breccia project in Yukon where the Company is 20% partner with Fronteer Development Corporation. Drilling targeted Iron-Oxide-Copper-Gold+/-Uranium, and stand alone uranium targets, and encountered encouraging copper +/- gold mineralization at the Hoover and Pagisteel targets.   -71-  Management Discussion and Analysis   Financial Overview for Fiscal Year Ended January 31, 2008  The Company completed a $6.5 million private placement in July 2007 consisting of flow-through and non-flow-through private placement units. The net cash proceeds were $6,338,982 after payment of share issue costs of $163,018. The Company renounced some flow-through expenditures using the look-back rule. As of January 31, 2008, the Company is obligated to spend $291,274 on eligible flow-through expenditures in B.C. before December 31, 2008.  During 2007, the Company more than doubled exploration expenditures in comparison to the previous year. This increased the net loss from mineral properties from $870,337 in 2006 to $1,920,644 in 2007. Mineral property revenues increased from $416,158 to $685,244 due to increases in project management revenue related to new joint venture option agreements and gains on the sale of marketable securities received as option payments.  General and administrative expenditures increased by 1% overall although increased interest revenue reduced the net loss from other operations from $1,902,160 in 2006 to $1,793,843 in 2007. The largest component increase for administrative expenses was in investor services, which include dissemination of information to investors, transfer agent services and regulatory fees to maintain a public company. A second significant change occurred in foreign exchange losses. 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 slipped from an average of $1.18 Canadian in 2006 to an average of $1.06 in 2007.  A factor which affected both administrative and mineral property expenses in 2007 was the allocation of share-based compensation from the granting of incentive stock options to mineral property exploration expenditures. The total for the year was allocated to each mineral property based on time allocations of field staff. This adjustment had the effect of reducing administrative expenses while increasing exploration expenses.  The Companys working capital as of January 31, 2008 was $8,864,011 comprised primarily of cash, term deposits and short-term investments, compared to $4,368,723 at the end of the previous fiscal year. The short-term investments are intended to take advantage of higher returns available with slightly less liquidity while maintaining the integrity of the principal invested. The Company does not invest in asset-backed commercial paper, preferring to safeguard the value of cash by investing in treasury bills and bankers acceptances. These investments have maturities ranging from 4 months to one year at rates up to 1% above those available on term deposits. The term deposits and cash are sufficient to fund general and administrative expenditures for the current fiscal year without a requirement for additional financing. Exploration initiatives may require additional cash to complete as planned.   -72-  Management Discussion and Analysis   1.3 Selected Annual Performance  The selected consolidated financial information set out below has been obtained from financial statements, which reflect the Companys operations in the mineral exploration business.  The following table summarizes information pertaining to operations of the Company for the last three fiscal years ended January 31, 2008:  200820072006Mineral Property Revenues$      341,203$      233,276$     199,777Net Income (Loss)(3,241,987)(2,772,497)(1,823,606)Per Share(0.13)(0.13)(0.10)Total assets9,284,3765,358,5883,095,488Long-Term Liabilities53,30868,78235,363Cash 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 10 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. • 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.  -73-  Management Discussion and Analysis   • 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.  Results of Operations  For the year ended January 31, 2008 Rimfire incurred a net loss of $3,241,987 ($0.13 per share) compared to a net loss of $2,772,497 ($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.  The most significant item comprising general and administrative expenses is share-based compensation expense for incentive stock options granted to directors, officers and employees during the fiscal year. This item accounts for one-third of the total expenditures. The variance from the previous year results 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 on specific properties.  Salaries and support services accounted for 40% of the increase in total expenditures reflecting the increased number of full-time staff in the Company. The largest change in a single component of administrative expenditures was investor services, which include dissemination of information to investors, preparation of an annual report, 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  -74-  Management Discussion and Analysis   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 slipped from an average of $1.18 Canadian in 2006 to an average of $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 totaling $38,963 ($560,058). The majority of the exploration expenditures were made on the Wernecke Breccia property which is a joint venture with Fronteer Development Group. The Company 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 company is currently conducting reconnaissance field work.  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, 2008 exploration tax credits are $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 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 $148,143 ($168,500) while joint venture management fees were $193,060 ($64,776).  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:  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 has signed a letter of agreement to option the Grizzly Property. 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.  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. The cause of this anomaly has yet to be investigated.  -75-  Management Discussion and Analysis   Preliminary exploration plans for 2008 include a comprehensive program of geological mapping, Induced Polarization (IP) geophysics, and trenching to provide drill targets by year-end. 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, including a minimum $300,000 program in 2007. 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.  A 6.3 line-kilometre induced polarized geophysical (IP) survey was completed over the Jake showing area in June. Based on the results of this survey, a trenching program was carried out in September. Results from one trench at the Jake Showing include 7.7 g/t gold over 2.8 metres from a series of quartz-pyrrhotite-pyrite-chalcopyrite-bismuthinite veins. Trenching on the flanks of a second IP anomaly (the Jake Offset) located 300 metres north of the Jake Showing and measuring 300 metres in length, exposed narrow mineralized structures that returned 12.5 g/t gold over 0.1 metres. A third chargeability anomaly that lies approximately 225 metres east of the Jake Showing was trenched, uncovering a 1.0 metre 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.  Seven diamond drill holes totalling 1083.2 metres were cored in the central portion of the Jake property between November 12 and 29, 2007. 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 g/t gold over 1.5 metres beneath the surface trenching result.  The vein was intersected a further 11 metres  down dip and 15 metres along strike returning 1.54 g/t gold over 0.40 metres and 7.18 g/t gold over 0.10 metres. Drill results from the Jake Offset include 4.64 g/t gold over 0.50 metres, while drilling of the eastern target returned 0.11 g/t gold over 0.20 metres.  The drilling program was conducted by Equity Engineering Ltd. under the direction of Henry Awmack, P.Eng., a Qualified Person as required by NI 43-101. Assays were completed by ALS Chemex Labs of North Vancouver, BC. A technical report was filed on SEDAR on April 29, 2008.   -76-  Management Discussion and Analysis   Tide Property, British Columbia  The Tide Property is located in the Skeena Mining Division of British Columbia, approximately 36 kilometres north of Stewart, British Columbia. This property, covering 2,960 hectares, is currently optioned to American Creek Resources Ltd. (American Creek) The Tide property lies in the heart of the Early Jurassic Stewart-Unuk-Iskut metallogenic belt, which hosts a number of silver-gold+copper vein and porphyry deposits associated with 193-198 Ma porphyritic intrusives.  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. Their interest can be increased to 65% interest by funding a bankable feasibility study, and, at Rimfires election, to a 70% interest by providing 100% of the initial project development financing. American Creek was operator for the 2007 exploration program.  American Creek conducted an exploration program consisting of 1835 metres 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 m @ 1.00 g/t gold, 121.7 m @ 0.72 g/t gold), and other bulk tonnage gold targets within the Crest soil anomaly. In addition to drilling, crews completed 318 metres 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 2008.  Every hole drilled in the 2007 program returned anomalous gold values over large widths, including Tide07-13, which averaged 0.49 g/t gold over the entire 207 metre length of the hole and Tide07-14 which averaged 0.33 g/t gold over the entire 247 metre length. Highlights include Hole Tide07-13, aimed at testing the southern extents of the 36 Zone, which included two separate intervals of 43.6 metres of 1.0 g/t gold and 22.5 metres of 0.94 g/t gold. Two holes were completed at the Northpit target, located 375 metres east of the 36 Zone, that returned 0.92 g/t gold over 19.0 metres and 1.02 g/t gold over 15.0 metres.  One hole at the Riptide target, located 600 metres east of the 36 Zone, returned 0.27 g/t gold over 11.1 metres.  The program was conducted by Equity Engineering Ltd. under the direction of Henry Awmack, P.Eng., a Qualified Person as required by NI 43-101. Assays were completed by ALS Chemex Labs of North Vancouver, BC. A technical report was filed on SEDAR on April 30, 2008.  Wernecke Breccia, Yukon Territory  In January 2006, the Company signed an agreement jointly 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 (Newmont) and NVI Mining Ltd., a subsidiary of Breakwater Resources Ltd. (NVI). Fronteer has staked additional claims under the agreement for a total of 1,926 claims. Newmont and NVI retain a total 2% NSR in addition to a 7.5% to 15% Net Profits Interest payable to the underlying vendors.   -77-  Management Discussion and Analysis   Fronteer is operator for the project and commenced a $6 million exploration program early in May. 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 6538 metres in 28 holes were drilled.  The most encouraging results from this years 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 m of strike length. Two of the best results include 0.56% copper and 0.11 grams per tonne gold over 89 meters, including 0.82% copper and 0.17 grams per tonne gold over 39 meters in HV07-22 and 0.56% copper  and 0.16 grams per 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 per tonne gold over 17.3 meters while a another 16.4 m interval in hole HV07-21 returned 0.86% copper and 0.22 grams per tonne gold. At the Pagisteel prospect the only hole drilled this year returned a 6.1 m interval of 2.57% copper and 0.97 g/t gold. The Pagisteel prospect is characterized by a 4-km long trend of anomalous gold and copper soil and rock geochemistry that is largely covered with overburden.  The program was conducted by Equity Engineering Ltd. under the direction of Jim Lehtinen, P.Geo who is a qualified person under National Instrument 43-101. Assays were completed by ALS Chemex Labs of North Vancouver, BC. A technical report was filed on SEDAR on April 29, 2008.  Williams Property, British Columbia  The 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 property was optioned to Arcus Development Group Inc. (Arcus). The option agreement was terminated effective February 25, 2008.  The Williams property covers two distinct gold-bearing prospects in north-central British Columbia. The T-Bill prospect is a 3 km2 area of carbonate-sericite alteration, highly anomalous gold-arsenic soil geochemistry and gold-bearing quartz-sulphide veining. Drilling in 1983, 1984 and 2003 intersected twelve separate two-metre intercepts grading greater than 12 g/tonne gold. A single 2003 drill hole (WG03-10) oriented to better intersect this structural corridor intersected four separate vein zones. The GIC prospect, located three kilometres to the north, is a previously unrecognized porphyry gold-copper target consisting of a poorly explained 0.7 km2 gold-copper soil geochemical anomaly centred on a prominent gossan. Arcus funded a five-hole, 881-metre diamond drill program designed to test the GIC gold-copper porphyry target in September 2006 that identified porphyry style alteration and pyrite dominant mineralization coincident with an Induced Polarization (IP) chargeability high anomaly.   -78-  Management Discussion and Analysis   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 metre molybdenum, copper+/-gold-in-soil anomaly (Mo > 16 ppm, Cu > 129 ppm). 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. Eighteen historic holes have been drilled within a 900 by 500 metre area to date resulting in 11 separate 2.0 metre intersections in excess of 12.0 g/t gold, including 35.0 g/t gold and 24.8 g/t over 2.0 metres. Potential for large low-grade gold style targets is evidenced by intersections from the same area that include 1.1 g/t gold over 75 metres (true width). Hand trenching of the T-Bill veining confirmed managements interpretation that the vein swarm is steeply dipping with a northwest/southeast strike.  The 2007 work program was conducted under the direction of Jim Lehtinen, P.Geo.., of Equity Engineering Ltd., a Qualified Person for the purpose of National Instrument 43-101. Assays were completed by ALS Chemex Labs of North Vancouver, BC. A technical report was filed on SEDAR on February 27, 2007.  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, 2008 were: GrizzlyJakeTideWerneckeWilliamsAcquisition costs$   1,732$  28,231$     1,443$     6,173$     5,000Exploration costsAircraft and helicopter3,697--363,323-Camp2,81551228999,328121Chemical analysis62-30359,259409Drafting75--14,143-Drilling & trenching---261,988-Equipment rentals1,4141,37352349,134-Freight10--12,54760Geological & engineering47,22731,54820,248310,17712,512Geophysical surveying---8,368-Maps and reproductions412842252,327218Materials9264-17,172-Project management155172296,35837Reclamation-490---Recording and filing1,381--3,745-Travel4,5191,33822020,9926561,85936,33921,6101,318,86113,422  -79-  Management Discussion and Analysis    GrizzlyJakeTideWerneckeWilliamsExploration tax credits(338)(291)(149)-(113)Joint venture payments-----Reclamation obligations-394(1,795)-(525)61,52136,44219,6661,318,86112,784Total Acquisition and Exploration Costs63,25364,67321,1091,325,03417,784Option proceeds-(53,143)--(35,000)Net Expenditures63,25311,53021,1091,325,034(17,216)Cumulative Net ExpendituresBeginning of Year-229,330(143,115)186,160361,691Property write-down or abandonment-----End of Year$63,253$240,860($122,006)$1,511,194$344,475  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 was conducted during the second quarter of 2007. A 6 line-kilometre induced polarization geophysical survey was completed during the third quarter.  • Echo & BLVD Properties, consisting of 172 claims, are located in Yukon Territory, approximately 65 km south-southwest of Dawson City. The company holds a 50% interest in these claims as part of the Northgate Alliance. An exploration program consisting of mapping, soil and rock sampling, and prospecting was completed on both properties during 2007.   -80-  Management Discussion and Analysis   • Fer Property, consisting of 118 claims, is located in the Watson Lake Mining District of Yukon Territory, approximately 20 kilometres west of Tungsten in the Northwest Territories and approximately 200 kilometres north of Watson Lake, Yukon Territory. The Company owns a 51% interest in these claims. NVI Mining Ltd. holds the remaining 49% interest in the claims. The Company has resigned as Operator of the project.  • Chachani Property, covering 3,452 hectares, is located in the Liard Mining Division of British Columbia, approximately 148 kilometres north-northwest of Stewart.  • Kizmet Property, covering 34,078 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 Barrick Gold Corporation.  • Poker Creek Property, covering 13,021 hectares, is located in the Liard Mining Division of British Columbia, approximately 220 kilometres north-northwest of Stewart.  • PWG Project covering 7,422 hectares is located in the Omineca Mining Division of British Columbia near the town of Houston, BC. This property consists of four claim groups. The Company made the initial cash payment of $40,000 and has completed the required exploration expenditures of $50,000. During 2007, field programs consisting of mapping, prospecting and soil sampling surveys were completed on all four claim groups. After a review of the results, all four of the claim groups were returned to the vendor.  • 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 33,003 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.  • Simpson Property, consisting of 8 claims, is located in the Watson Lake Mining District of Yukon Territory, approximately 105 kilometres northwest of Watson Lake, Yukon Territory. The Company owns 100% of these claims.   -81-  Management Discussion and Analysis   • Thorn Property, covering 16,970 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 $100,000 and issuing 100,000 shares. In the event a third party partner becomes involved in the exploration and development of the property, the Company pay to Cangold 25% of any cash or share payments received from the third party partner.  • Vavenby Project, covering 16,497 hectares located in the Kamloops Mining Division of British Columbia, consists of two claims groups; the Blue River group located 15 kilometres southwest of Blue River and the Robert claim group located 16 kilometres east-southeast of Vavenby. The Company owns 50% of these claims as part of the Northgate Alliance. A program of soil sampling, mapping and prospecting was completed in August 2007.  • Yukon Uranium Project, consisting of 400 claims, is located in Yukon Territory, approximately 60 km west-southwest of Dawson City. The company holds a 100% interest in these claims subject to a 1% NSR. The claims, which target anomalous uranium geochemistry in stream sediment and soil samples, were staked during the second quarter as part of an agreement signed with Longview Capital Partners.  The following table shows the detailed expenditures for the Companys other properties during the fiscal year.   -82-  Management Discussion and Analysis    AuddieNorthgate AlliancePWGQuesnel TroughThornOtherAcquisition costs$ 16,292$ 19,397$ 42,171$          -$          -$       563Exploration costsAircraft and helicopter----9401,329Camp9,4515,7855,3011,05752973Chemical analysis3,57719,04320,088-798834Drafting----188-Drilling & trenching------Equipment rentals1,7722,1757,395--874Freight1733461,05336-112Geological & engineering49,78666,85791,72027,9783,79057,602Geophysical surveying27,627--94,395--Maps and reproductions840867821-2185,864Materials5535831,5851,381-2,580Project management331676421703841,006Reclamation------Recording and filing1,1117,4486,87914,1624,35119,477Travel4,8624583,943447-1,91399,785103,729139,427139,62610,72192,564Exploration tax credits(839)(2)(1,114)(802)(147)(1,077)Joint venture payments-(30,109)--(2,778)(6,076)Reclamation obligations----(385)(9,060)98,94673,618138,313138,8247,41176,351Total Acquisition and Exploration Costs115,23893,015180,484138,8247,41176,914Option proceeds-----(60,000)Net Expenditures115,23893,015180,484138,8247,41116,914Cumulative Net ExpendituresBeginning of Year12,829164,108--1,111,9681,086,613Property write-down or abandonment-(72,182)(180,484)--(111,598)End of Year$128,067$184,941$            -$138,824$1,119,379$991,929  -83-  Management Discussion and Analysis   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 182,800 acres (74,000 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.  The 2007 exploration program initially consisted of 4 holes drilled on the California-Surf group for a total of 957 metres. A combination of grid and reconnaissance mapping, prospecting and soil sampling (670 samples) was carried out on the California-Surf, Eagle-Hawk, and Bou-Swede properties. Results obtained in hole CN07-1 included a 7.4 m quartz vein intersection that averaged 1.2 g/t gold including 2.5 metres averaging 2.2 g/t 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 metres, to follow up the result of CN07-1. Significant assay results from a 12.2 metre section of quartz-pyrite stringers returned anomalous levels of gold (70 ppb gold over 1.2 metres.)  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.  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.  -84-  Management Discussion and Analysis   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 been granted nine exploration licences covering 92,674 hectares in the Lachlan Fold Belt, New South Wales, Australia. The licences encompass all available high-priority targets identified in a Neural Network data study conducted by a private company, BWG. BWG has granted Rimfire 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 licences are held by Rimfire Australia Pty. Ltd., a wholly owned subsidiary of Rimfire Minerals Corporation. The Company paid a fee for use of the study and upon designation of project areas, the Company will pay additional fees based on project designation and exploration expenditures. BWG will retain a 2% NSR in all designated projects. During the two-year license period, the company must make total eligible exploration expenditures of at least USD$150,000.  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 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 Rimfire's exploration licence applications. A limited property examination tour was conducted late in 2006 followed by data compilation and preparation of exploration plans for reconnaissance.  An exploration program, budgeted at $300,000, was initiated during the fourth quarter of 2007 and consisted of surface sampling and mapping in concert with surface geophysical surveys to define targets for drill testing later in 2008. The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Company. A technical report has not been filed for this project.   -85-  Management Discussion and Analysis   Effective April 10, 2008 the Company entered into an option/joint venture arrangement 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 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 $5 million in exploration. Upon definition of a Joint Ore Reserves Committee (JORC) compliant gold resource of 500,000 oz, Jaguar shall be issued 100,000 common shares. Upon definition of a JORC compliant gold resource of 1M oz, Jaguar shall be issued 500,000 common shares. Should the Company receive cash and/or share payments as a result of a subsequent option/joint venture with a third party, Jaguar is entitled to 25% of the proceeds. If the Company decides to sell its interest in the project outright prior to earning 100% of the project, Jaguar would receive 40% of all proceeds. Once the Company has exercised the 100% option, Jaguar would receive 15% of proceeds of any sale.  Expenditures by the Company during the fiscal year ended January 31, 2008 (all amounts in Canadian Dollars) were:  AlaskaAustraliaNevadaAcquisition costs$      29,939$        (9,811)$     24,347Exploration costsAircraft and helicopter---Camp6194,0206,930Chemical analysis512-42,911Drafting1,529168-Drilling & trenching--115,277Equipment rentals-2,1433,907Freight--687Geological and engineering46,861115,71467,170Geophysical surveying-2,332-Maps and reproductions3231,414900Materials-1,2411,296Project management14913256Reclamation--744Recording and filing(5,615)-27,153Travel8287,22610,96645,206134,271278,197  -86-  Management Discussion and Analysis    AlaskaAustraliaNevadaExploration tax credits---Joint venture payments---Reclamation obligation---45,206134,271278,197Total Acquisition and Exploration Costs75,145124,460302,544Option proceeds---Net Expenditures75,145124,460302,544Cumulative Net ExpendituresBeginning of Year416,320212,603486,533Property write-down or abandonment---End of Year$491,465$337,063$789,077  The notes accompanying the consolidated financial statements contain additional details regarding option or joint venture agreements for each property.  At present, the Corporation does not intend to undertake any exploration at its own expense on the Auddie, Fer, Grizzly, Alaska, Jake, Kizmet, Quesnel Trough, RDN, Simpson, Thorn, Tide, or Williams properties for the 2008 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.   -87-  Management Discussion and Analysis   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.   Quarter
EndedMineral Property
Revenue
$Income
(loss)
$Income (loss)
per share
$January 31, 2008102,324(483,850)(0.02)October 31, 2007176,826(691,247)(0.03)July 31, 200749,772(1,593,077)(0.07)April 30, 200712,281(473,813)(0.02)January 31, 200795,810(607,770)(0.03)October 31, 200675,086(607,082)(0.03)July 31, 20061,858(1,220,675)(0.05)April 30, 200660,522(336,970)(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, 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.  -88-  Management Discussion and Analysis   The Corporations number of issued and outstanding shares was 25,607,251 at January 31, 2008. The placement completed during the second quarter 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 Company completed a $6.5 million non-brokered private placement consisting of flow-through and non-flow-through units. The Company 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 entitles 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. Cash share issue costs totalled $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.  On December 31, 2007 the Company 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 Company 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 Company is obligated to spend $291,274 on eligible flow-through expenditures in B.C. before December 31, 2008. The renunciation of flow-through benefits results 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 Company.  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 $84,937. The other current obligations are statutory withholding and payroll taxes.  1.7 Capital Resources  The companys primary capital assets are mineral property interests. The company expenses all costs related to mineral properties so they do not appear on the Companys balance sheet as an asset.  None of the property agreements are binding on the Company or on the Companys option partners, with the exception of the Lachlan Fold Belt where total expenditures required by the agreement of US$ 150,000 must be completed by September 2008. Eligible expenditures of $44,611 were completed by fiscal year end. If management chooses to continue with exploration, the following schedule indicates payments to be made by the Company in the coming year:  -89-  Management Discussion and Analysis    PropertyAmountDate of paymentAuddie$40,000 option paymentJanuary 31, 2009Fer51% of cash in lieu and filing $6,319June 10, 2008GrizzlyAssessment and filing of $15,191November 9, 2008Jake$30,000 (USD)October 29, 2008KizmetCash in lieu and filing $57,086December 31, 2008Quesnel TroughFiling fees of $13,388June 13, 2008RDNCash in lieu and filing $12,603December 31, 2008ThornCash in lieu & filing $20,486December 31, 2008TideNilWernecke Breccia20% of expenditures (no estimate available)December 31, 2008WilliamsAdvance royalty payment $5,000December 15, 2008Alaska propertiesNilAustraliaProject exploration USD$150,000September 1, 2008NevadaLease payment of USD$20,000
Claim rental fee USD$25,365March 31, 2008 (paid)
August 31, 2008  All of these payments can be made from current assets without any requirement to pursue additional financing.  -90-  Management Discussion and Analysis   1.8 Off-Balance Sheet Arrangements  The Company does not utilize off-balance sheet arrangements.  1.9 Transactions with Related Parties  The Companys mineral property evaluation and exploration projects are managed by Equity Engineering Ltd. 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.  During the year ended January 31, 2008, the Company paid Equity $35,777 (2007 - $736,281, 2006 - $206,763) for geological consulting services and $234,271 (2007 -$235,389, 2006 - $244,871) for providing general corporate and administrative services composed of $6,364 (2007 - $6,282, 2006 - $4,279) for investor services, $131,775 (2007 - $129,999, 2006 - $99,305) for management services, $9,412 (2007 - $9,672, 2006 - $6,928) for office services, $67,908 (2007 - $62,336, 2006 -$62,696) for rent and $18,812 (2007 - $27,100, 2006 - $71,663) for support services. The cost of support services reflects additional administrative support offset by transferring some personnel to the Companys direct payroll. The company now purchases general liability and property insurance independently from Equity Engineering Ltd, so this amount is no longer paid to a related company.  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 and officers each indirectly own 22% of a 7.5 to 15% Net Profits Interest (NPI) for the Wernecke Breccia property.  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.  When flow-through expenditures are renounced to investors, the Company records the equivalent tax liability as a share issue cost. The Company has determined that the renounced tax losses were not likely to be realized; therefore the tax liability associated with the renunciation is reversed as an income tax recovery in the Consolidated Statement of Operations. This has the effect of reducing the reported net loss for the quarter from $956,350 to $483,850.  -91-  Management Discussion and Analysis   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 2007 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 accounting recommendations of the Canadian Institute of Chartered Accountants for the recognition, measurement and disclosure of financial instruments, hedges and comprehensive income effective for the fiscal year ended January 31, 2007. This policy requires 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. For the first year in which this policy is 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. Current unrealized gains or losses in value are recognized in other comprehensive income. When 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 Statement of Operations. The transition provisions do not require restatement of previous financial statements. 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.  -92-  Management Discussion and Analysis   Flow-through shares transfer the tax benefits of Canadian exploration expenditures from the Company to the individual investor. As a result, the Company may be liable for future income taxes. Accounting recommendations of the Canadian Institute of Chartered Accountants require that the cost of future income taxes related to the resulting temporary difference is recorded as a cost of issuing the securities to the investors on the date when the forms renouncing the expenditures are filed. This policy came into effect for all shares issued after March 19, 2004. The company issued flow-through shares in June 2005 and renounced the expenditures in January 2006; therefore this policy was implemented for the fiscal year ended January 31, 2006.  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 the design. 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. Subsequent to year end, it was discovered that different interpretations of GAAP and financial reporting standards resulted in a different application of these standards than is shown in the attached financial statements. The weakness will be remedied by providing the resources to financial staff to ensure that financial statement disclosure conforms in all respects with Canadian GAAP and that appropriate reconciliations are provided to show the differences between Canadian GAAP and US GAAP. All other controls appear to be operating as designed to ensure correct recording, processing and reporting of financial information.  -93-  Management Discussion and Analysis   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 5 of the financial statements for details of share issues prior to January 31, 2008.  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.    -94-


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 Ended2008$(2,330,466)$(322,737)$178,951$(30,161)$(2,504,413)2007(1,819,842)(683,675)75,65697,395(2,330,466)  [1] The 2007 and 2008 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 Company. [3] Other changes reflect the tax effect of fair value of marketable securities included in accumulated other comprehensive income.


-95-