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, 2007  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.  21,751,539  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).                                                ̈Yes    þNo   -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, 2007 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 4 (Information on the Corporation  Property, Plants and Equipment), Item 7 (Major Shareholders), 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, 2007, or reflect any events that have occurred after the Form 20-F was filed on May 11, 2007.     -4-   Glossary of Termsanastomosinga network of branching and rejoining fault surfaces or surface traces, braidedandesitea dark-coloured, fine-grained extrusive rockantimonya chemical element, chemical symbol Sbargillitea compact rock derived from mudstonearsenica chemical element, chemical symbol Asarsenopyritea mineral composed of iron, arsenic and sulfur (FeAsS)Aschemical symbol for arsenicAuchemical symbol for goldBachemical symbol for bariumbaritea mineral composed of barium, sulfur and oxygen (BaSO4)basalta fine-grained extrusive rock with a lower silica content than andesiteBichemical symbol for bismuthbismutha chemical element, chemical symbol Bibismuthinitea mineral composed of bismuth and sulphur (Bi2S3)brecciarock composed of angular broken rock fragments held together by a mineral cement or in a fine-grained matrixcarbonate-muscovitea mixture of calcium, iron and magnesium carbonates and muscovite mica in altered rockschalcedonya cryptocrystalline variety of quartz with lower density and indices of refraction than ordinary quartzchalcopyritea mineral composed of copper, iron and sulfur (CuFeS2)cherta hard, dense or compact sedimentary rock consisting dominantly of interlocking quartz crystals or amorphous silicaclasticcomposed of sedimentary grainsCretaceousfinal period of the Mesozoic era spanning 135 to 65 million years before the presentCuchemical symbol for copperdacitea fine-grained extrusive rock with more potassium and sodium than andesiteenargitea grayish-black mineral Cu3AsS4Eocenethe second epoch of the Tertiary period spanning 58 and 37 million years before present   -5-   Glossary of Termsfeldspara major rock forming silicate mineralfelsicapplied to an igneous rock having abundant light-coloured minerals (quartz, feldspars, muscovite)gossanan iron-bearing weathered product overlying a sulphide depositgranitean igneous rock consisting of quartz and orthoclase with hornblende or biotite as mafic constituentsgranodioritea plutonic igneous rock consisting of quartz, calcic feldspar, and orthoclase with biotite, hornblende or pyroxene as mafic constituentshectare (ha)metric unit of area equal to 10,000 square metres (2.471 acres)hornblendeThe commonest mineral of the amphibole group, usually black, dark green or brownhydrothermala term applied to heated water or fluidJurassicsecond period of the Mesozoic era spanning 190 to 135 million years before the presentmaficapplied to an igneous rock having dark-colored minerals (ferromagnesian) containing iron and/or magnesiummarcasitelight yellow or grayish mineral (FeS2) resembling pyritemesothermalconditions of ore deposition of intermediate temperatures and depthsMesozoicera of geologic time spanning 245 to 66 million years before the presentmineralsa homogeneous naturally occurring chemical substancenet smelter returnthe proceeds received from a smelter or refinery after the deduction of processing, shipping costs and related costsorea mineral or aggregate of minerals which can be mined at a profitmonzoniteplutonic rocks intermediate between syenite and diorite containing approximately equal amounts of alkali feldspar and plagioclaseorthogneissa metamorphic rock derived from gneissPermianthe last period of the Paleozoic era from 286 to 245 million years agoPIMAPortable infrared mineral analyzer (spectrometer) that can be used for qualitative identification of minerals in the fieldplagioclaseone of a group of triclinic feldsparsplutonic rocksigneous rocks formed below the earths surfaceporphyryan igneous rock of any composition that contains conspicuous crystals in a fine-grained groundmass  -6-   Glossary of Termsppmabbreviation for units of measure in parts per millionPrecambrianall geologic time and its corresponding rocks before the beginning of the Paleozoic era ( 570 million years before present)Proterozoicthe more recent of the two great divisions of the Precambrianpyritea mineral composed of iron and sulfur (FeS2)pyroclasticformed by volcanic explosion or aerial expulsion from a volcanic ventpyrrhotitea mineral composed of iron and sulfur (FeS)rhyoliteextrusive igneous rocks with high potassium and silica contentsericitizationa hydrothermal or metamorphic process involving the introduction of, replacement by, or alteration to sericitic muscovitesilicificationthe introduction of or replacement by silicatelluriuma silvery-white to brownishblack mineral, the native semi-metallic element Temineral tenure numbernumber assigned by Provincial, Territorial or State authorities to mineral claimstetrahedritea steel-gray to iron-black isometric mineral which commonly occurs in characteristic tetrahedral crystals associated with copper oresTriassicthe first period of the Mesozoic era thought to have covered a span of time between 245 and 208 million years before the presenttuffa general term for all consolidated pyroclastic rockstungstena metallic element with the chemical symbol WUTEMUniversity of Toronto Electromagnetic System used to measure variances in ground conductivity which may indicate the presence of mineralized materialVHMSvolcanic-hosted massive sulphide  a style of mineral deposit thought to have been emplaced on ancient seafloorVLF-EMvery low frequency electromagnetic survey used to identify variances in ground conductivity which may indicate the presence of mineralized material   -7-  FORWARD-LOOKING STATEMENTS   This Annual Report contains forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Certain statements in this Report constitute forward looking statements. These forward looking statements are not guarantees of Rimfires future operational or financial performance and are subject to risks and uncertainties. When used in this Annual Report, the words estimate, intend, expect, anticipate and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of this Annual Report. These statements are subject to risks and uncertainties that could cause results to differ materially from those contemplated in such forward-looking statements. Actual operational and financial results may differ materially from the Corporations expectations contained in the forward looking statements as a result of various factors, many of which are beyond the control of the Corporation. These factors include, but are not limited to, the need for additional financing to fully execute the Corporations business plan, the risk factors as set forth in more detail in Item 3 - Key Information - Risk Factors,adverse technical factors associated with exploration and development of the Corporations properties, changes in Canadian or U.S. tax or other laws or regulations, and material changes in capital expenditures.    -8-   TABLE OF CONTENTSPART IPageITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not amended11ITEM 2OFFER STATISTICS AND EXPECTED TIMETABLE
Not amended11ITEM 3KEY INFORMATION11ITEM 4INFORMATION ON THE CORPORATION20ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Not amended84ITEM 6DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Not amended84ITEM 7MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS85ITEM 8FINANCIAL INFORMATION
Not amended87ITEM 9THE OFFERING AND LISTING
Not amended87ITEM 10ADDITIONAL INFORMATION
Not amended87ITEM 11QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK87ITEM 12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not amended91   -9-   TABLE OF CONTENTSPART IIPageITEM 13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not amended93ITEM 14MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not amended93ITEM 15CONTROLS AND PROCEDURES93ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT
Not amended92ITEM 16BCODE OF ETHICS
Not amended92ITEM 16CPRINCIPAL ACCOUNTANT FEES AND SERVICES
Not amended92ITEM 16DEXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not amended92ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not amended92  PART IIIITEM 17

ITEM 18FINANCIAL STATEMENTS

FINANCIAL STATEMENTS92ITEM 19EXHIBITS93   -10-  PART I     ITEM 1   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not Applicable.     ITEM 2   OFFER STATISTICS AND EXPECTED TIMETABLE Not Applicable.   ITEM 3   KEY INFORMATION CURRENCY AND EXCHANGE RATES  All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated. The following tables set forth:  (i) the average rates of exchange for each of the Corporations fiscal years ending January 31, for the Canadian dollar, expressed in U.S. dollars, calculated by using the average of the exchange rates on the last day of each month during the period.  (ii) the high and low exchange rate for each month during the previous six months,  in each case based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York.  Fiscal Year ended 
January 31st20072006200520042003Average Rate During Period$0.8475$0.8339$ 0.7763$ 0.7305$ 0.6392  March 2007February 2007January 2007December 2006November 2006October 2006High Rate$0.8673$ 0.8631$ 0.8586$ 0.8760$ 0.8869$ 0.8965Low Rate$0.8467$ 0.8437$ 0.8457$ 0.8582$0.8715$ 0.8784  On March 30, 2007, 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 $1.1530 US = $1.00 CDN.  SELECTED FINANCIAL DATA  The selected consolidated financial information set out below has been obtained from financial statements which reflect the Corporation's operations in the mineral exploration business.   -11-  The following table summarizes information pertaining to operations of the Corporation for the last five fiscal years.  Year
Ended
2007 ($)Year
Ended
2006 ($)Year
Ended
2005 ($)Year
Ended
2004 ($)Year
Ended
2003 ($)
(restated)Mineral Property Revenues$   233,276$    199,777$    414,338$   223,626$   158,224Loss from Operations(3,091,183)(2,025,514)(1,601,214)(980,325)(491,779)Net Loss(2,772,497)(1,823,606)(1,495,680)(901,405)(507,303)Per Share(0.13)(0.10)(0.09)(0.07)(0.04)Current Assets5,214,1533,005,2243,064,5641,132,4701,088,282Mineral Property InterestsNILNILNILNILNILOther Assets144,43590,26488,46144,16331,175Total Assets5,358,5883,095,4883,153,0251,176,6331,119,457Current Liabilities845,43099,579219,98561,01846,663Long-Term Liabilities68,78235,36335,363NILNILShareholders Equity4,444,3762,960,5462,897,6771,115,6151,072,794Shares Outstanding 
(number of shares)21,751,53919,999,53917,855,22013,615,62112,334,621  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 fiscal year end balance sheet.  On January 31, 2004, the Corporation adopted the new accounting recommendations of the Canadian Institute of Chartered Accountants on accounting for share-based compensation of employees and non-employees during the year. These recommendations established the following standards for the measurement, recognition and disclosure of compensation and other costs arising from the issue of share purchase options and other share-based payments to employees and non-employees. When options to purchase shares are issued to employees or directors, the fair value of the options on the date of the grant are recognized as compensation expense, with a corresponding increase in contributed surplus, over the period during which the related options vest. When options to purchase shares are issued to non-employees in return for goods and services, the fair value of the options issued are recognized as an  -12-  expense, with a corresponding increase in contributed surplus, in the period in which the goods or services are received or are expected to be received. The consideration received on the exercise of share options is credited to share capital. The Corporation accounted for these recommendations on a retroactive basis, and accordingly increased share-based compensation expense by $10,240 for the year ended January 31, 2003 and deficit and contributed surplus by $255,520 at January 31, 2003.  Except as disclosed in Note 12 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 48, Accounting for Uncertainty in Income Taxes. Under FIN 48, the Corporation cannot recognize the tax benefit from an uncertain tax position in its financial statements unless the Corporation concludes that it is more likely than not the benefit will be sustained on audit, on the resolution of any related appeals, or in litigation. This judgment is based solely on an analysis of the applicable legal authorities. It may not take into account (i) the probability that the Corporation will not face a tax audit, (ii) if audited, the probability a tax auditor will not challenge the benefit, or (iii) the probability that issues can be traded. If this more likely than not standard is met, then the tax benefit the Corporation recognizes in its financial statements is the largest amount of the tax benefit that, in the Corporations judgment, is greater than 50% likely of being realized in a settlement with the taxing authorities. This standard will be 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 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.  -13-  The following table shows the effect of these differences on the summary financial information:  Year
Ended
2007
($)Year
Ended
2006
($)Year
Ended
2005
($)Year
Ended
2004
($)Year
Ended
2003 ($)
(restated)Loss from Operations(2,855,014)(1,867,972)(1,560,189)(980,325)(491,779)Net Loss(2,536,328)(1,808,564)(1,454,655)(901,405)(507,303)Loss Per Share(0.12)(0.10)(0.08)(0.07)(0.05)Mineral Property Interests434,736198,56741,025--Total Assets5,793,3243,294,0553,194,0501,176,6331,119,457Shareholders Equity4,879,1123,159,1132,938,7021,115,6151,072,794   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 are provided to the Corporation pursuant to a January 1, 2007 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").   -14-  Conflict of Interest  Certain of the directors of the Corporation are also directors and officers of other corporations engaged in the business of mineral exploration and mine development. It is possible that a conflict of interest may arise between their duties as a director of the Corporation and their duties as a director or officer of other corporations. All such conflicts of interest must be disclosed by a director under British Columbia corporate law and a director must act in the best interest of both corporations. A director in such a conflict of interest position must abstain from voting on all resolutions with respect to the two competing corporations. (See Item 6: Certain Affiliations)  Legal Proceedings Against Foreign Directors  The Corporation is incorporated under the laws of the Province of British Columbia, Canada, and all of the Corporations six 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.  -15-  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, 2007 was $10,092,940.  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.  -16-  The trading price of mineral exploration and mining companies is largely influenced by international metal prices. As the Corporation raises funds through the sale of its common shares, a significant decrease in the price of precious and base metals will adversely affect the Corporations ability to fund its operations.  Forfeiture of Mineral Claims  The Corporation holds an interest in a number of exploration properties with respect to which certain cash payments, exploration expenditures and share issuances are required to maintain the Corporations interests in such properties. For those of the Corporations properties acquired through the staking of claims, a failure by the Corporation to incur exploration expenditures or make cash payments to the appropriate government agency in lieu of exploration expenditures will result in the forfeiture of the title to the mining claims back to the State of Alaska, State of Nevada, Yukon Territory, Province of British Columbia or the State of New South Wales, Australia, as the case may be. Once forfeited, the areas previously covered by the claims will be available for staking by other parties.  For those of the Corporations properties held under option agreement, if the Corporation does not fulfill its obligations under the terms of any such option agreement, such agreement will terminate and title to the property will revert to the grantor of the original option.  Competition  The mineral industry is very competitive. The Corporation must compete with other companies possessing superior financial resources and technical facilities. This competition is not only for the acquisition of mining interests, but also for retention of the services of qualified employees.  No Assurance of Titles  The Corporations mineral property interests may be subject to prior unregistered agreements, transfers or native land claims and title may be affected by undetected defects. Substance and continuity of title may also be affected by political instability and the vagaries of law as they exist and are applied in foreign jurisdictions. Surveys have not been carried out on all of the Corporations mineral properties and therefore, in accordance with the laws of the jurisdiction in which such properties are situated, their existence and area could be in doubt.  -17-  General Operating Risks  Permits and Licenses  The operations of the Corporation require licenses and permits from various governmental authorities. The Corporation may not be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects. All properties are presently without any known body of commercial ore.  The Corporations Adam, Auddie, Jake, Kizmet, Nechako, PWG, RDN, Thorn, Tide, Vavenby and Williams Properties are located in British Columbia, Canada. The Adam Property consists of 2 mineral claims comprising 1,823 hectares. The Auddie Property consists of 2 claims comprising 674 hectares. The Jake Property consists of 66 claims covering 28,256 hectares. The Kizmet Property consists of 93 mineral claims comprising 34,078 hectares. The Nechako Property consists of 6 claims comprising 2,594 hectares. The PWG Project consists of 18 claims comprising 6,567 hectares. The RDN Property consists of 26 mineral claims comprising 14,092 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 45 claims covering 22,306 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 Echo, Fer, Simpson and Wernecke Breccia Properties are located in Yukon Territory, Canada. 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 2,010 claims. All of these mineral claims are governed by the Quartz Mining Act and are subject to a required assessment work or cash in lieu of $100 each year. As the Corporation has paid all required assessments and filing fees, valid title to the mineral claims is recorded in the name of the Corporation or the Joint Venture partner.  The Corporations Poncho Property is located in the State of 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 $125 (US) per claim plus a Nye County renewal fee of $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.   -18-  The Corporations Goodpaster Properties (Bou-Swede, California-Surf, Eagle-Hawk, and ER-Ogo-Fire,) are located in the State of Alaska. The properties consist of 1,654 state mining claims totaling 182,320 acres. The mineral claims are subject to a required assessment or cash in lieu of $2.50 (US) per acre per year. The annual claim rental fees of $25-$100 (US) per claim, depending on size and location date, are due in November. As the Corporation has paid all required assessments and filing fees, valid title to the mining claims is recorded in the name of Rimfire Alaska with the Alaska Department of Natural Resources.  The Corporations Lachlan Project is located in the State of New South Wales, Australia. The project consists of nine Exploration License Applications comprising 324 units covering 92,673 hectares. The Exploration Licenses, if granted, 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.    -19-  ITEM 4   INFORMATION ON THE CORPORATION  HISTORY AND DEVELOPMENT OF THE CORPORATION  The Corporation was incorporated under the laws of the Province of British Columbia on May 7, 1991 under the name of Bull Pine Explorations Ltd. The Corporation changed its name to Rimfire Minerals Corporation on November 4, 1997 to better reflect corporate strategies and focus. The Corporation completed the transition process under the Business Corporations Act (British Columbia) in August 2004. At the annual general meeting held in 2004, the shareholders approved the new Articles of Incorporation and increased share capital to authorize an unlimited number of common shares (Common Shares), without par value. There were 21,751,539 Common Shares issued and outstanding as fully paid and non-assessable as of January 31, 2007. The registered and records office of the Corporation is located at Suite 700, 700 West Pender Street, Vancouver, British Columbia, V6C 1G8.  BUSINESS OVERVIEW  The Corporation is a natural resource company engaged in the acquisition and exploration of precious and base metal mineral properties. The Corporation carried out minimal mineral property acquisition and exploration between its incorporation in 1991 and 1993. The Corporation then became inactive and remained so until 1997 when it acquired an interest in the RDN Property, located in British Columbia.  In addition to the RDN Property, the Corporation currently holds interests in the Adam, Jake, Kizmet, Nechako, PWG, Thorn, Tide, Vavenby and Williams Properties in British Columbia, the Echo, Fer, Simpson and Wernecke Breccia Properties in the Yukon Territory, the Poncho and Gila24 properties in Nye County, Nevada and a number of properties in the Goodpaster Mining District of Alaska. The Corporation has received tentative approval for eight exploration licences in New South Wales, Australia. A description of the Corporation's mineral exploration properties is set out below this Item 4 under the subheading Property, Plants and Equipment.  NONE OF THE MINERAL PROPERTIES IN WHICH THE CORPORATION HOLDS AN INTEREST CONTAIN ANY KNOWN ORE OR MINERAL RESERVES. ALL EXPLORATION PROGRAMS PROPOSED FOR ANY MINERAL PROPERTIES IN WHICH THE CORPORATION HAS AN INTEREST ARE EXPLORATORY IN NATURE.  The Common Shares of the Corporation were listed and posted for trading on the Vancouver Stock Exchange on June 28, 1999 under the trading symbol RFM. On November 29, 1999, the listing was transferred to the TSX Venture Exchange (formerly Canadian Venture Exchange) as part of the merger of the Alberta Stock Exchange and Vancouver Stock Exchange.   -20-  The Corporation does not prepare business plans for any of its properties. Business plans are not customarily prepared for mineral exploration programs or properties. As is industry standard, the Corporation will prepare a work program for each of the mineral properties upon which it will carry out exploration work. Although a program is completed within a specified budget, the specific nature and type of exploration work completed may vary from the original work program depending on results obtained during the program.  The Corporation has raised and will continue to raise all but a very minor portion of its future working capital and exploration funds through the sale of its securities from treasury. The Corporation may periodically receive cash payments and securities as property option payments from third parties pursuant to the terms of existing or future option agreements.  The Corporation's long-term goal is to identify high potential mineral properties that have received little if any recent exploration work, enhance their value through initial exploration and market them to joint venture partners. The Corporation plans to maintain significant interests in a number of projects and have joint venture partners raise and spend the money necessary to thoroughly evaluate the potential of such mineral properties.  Prior to commencing any exploration activities in any of the State of New South Wales, Australia, State of Alaska, State of Nevada, Yukon Territory or Province of British Columbia, the Corporation or the party intending to carry out a work program on a mineral property is required to apply to the appropriate Mining Division of the State, Territorial or Provincial government for a number of permits or licences related to mineral exploration activities. These permits or licences include water and surface use permits,  occupation permits, fire permits, and timber permits. Prior to being issued the various permits or licences, the applicant must file a detailed work plan with the applicable government agency. Permits are issued on the basis of the work plan submitted and approved by the governing agency. Additional work on a given mineral property or a significant change in the nature of the work to be completed would require an amendment to the original permit or licence.  As part of the permit or licensing requirements, the applicant may be required to post an environmental reclamation bond in respect to the work to be carried out on the mineral property. The amount of such bond is determined by the amount and nature of the work proposed by the applicant. The amount of a bond may also be increased with increased levels of development on the property.  The Corporation has or will make application to the appropriate agencies for permits and licences relating to those properties upon which the Corporation intends to carry out work during the 2007 exploration season. For those mineral properties in which the Corporation has an interest but is not the operator of the work programs, application for the required permits and licenses and the posting of the reclamation bonds will be made by the party entitled to carry out exploration work on the property. The Corporation believes that it is currently in compliance with all applicable environmental laws and regulations in the State of New South Wales, Australia, State of Alaska, the State of Nevada, the Yukon Territory and the Province of British Columbia.  -21-  The Corporation is unaware of any legal proceedings, either threatened or pending, to which the Corporation is or is likely to be a party, or of which any of its properties or assets is or is likely to be the subject, that are material to the business and affairs of the Corporation.  The Corporation currently holds interests in mineral properties located in British Columbia, Yukon Territory, Nevada, Alaska and Australia. None of the mineral properties in which the Corporation holds any interest is currently being operated as a producing mine.  Most of these mineral properties are located in areas that experience significant low temperatures and snowfall in winter, therefore the exploration season is generally limited to the June-October window of more clement weather. Planning for exploration and compilation of reports on completed programs and new project research continues on a year-round basis.  The table below illustrates the Corporations expenditures on exploration activities for the last three fiscal years. The figures below have been prepared in accordance with generally accepted accounting principles (GAAP) in Canada. Except as explained in Note 12 of the Corporations financial statements, the figures below are consistent with U.S. GAAP.  Year
Ended
2007 ($)Year
Ended
2006 ($)Year
Ended
2005 ($)Exploration Costs1,538,2951,116,1721,105,733Mineral Property Acquisition307,542202,167217,385  Note: All figures shown above are in Canadian Dollars.  The total exploration and acquisition expenses for the period February 1, 2006 to January 31, 2007 were $1,845,837. A private placement was undertaken during April 2006 which raised $2,494,757, net of share issue costs.   -22-  The Corporations plan for fiscal 2007 is to obtain joint venture partners to continue exploration of the Fer in southeast Yukon, and the Jake and Kizmet properties in BC. The Corporation may conduct additional exploration on the Jake property. The Corporation will fund exploration jointly with Northgate Minerals Corporation on the Vavenby Project. The Corporation will also fund preliminary exploration work on the Auddie and PWG properties. If exploration licences are granted, the Corporation will conduct preliminary exploration on the Lachlan project in Australia. There will be drill programs on three properties with joint venture partners; however, there is no requirement for the Corporation to finance these exploration programs. Under the Thorn Property agreement, Cangold Limited has completed their initial earn-in and may propose a drill program for the 2007 field season. The Corporation can choose to participate by paying 49% of the costs or can choose dilution of ownership at a rate of 1% reduction for each $50,000 not contributed to the program. Under the Wernecke Breccia Property agreement, Fronteer Development Group Inc. (Fronteer) has completed their initial earn-in of $2,000,000 in exploration. The Corporation can choose to participate by paying 20% of the expenditures or can choose dilution of ownership based on initial deemed contributions of $2,000,000 by the Corporation and $8,000,000 by Fronteer. Other option agreements are also close to completing their initial earn-in. If and when the initial earn-in is complete, the Corporation will be required to share exploration expenditures with the joint venture partner on a 49/51, or 40/60 basis depending on the option agreements. (see Item 4: Property Plants and Equipment below).  ORGANIZATIONAL STRUCTURE  The Corporation has three (3) wholly-owned subsidiaries, Rimfire Alaska, Ltd. ("Rimfire Alaska"), which was incorporated under the laws of the State of Alaska on August 19, 1998 for the purpose of holding the Corporation's Alaskan mineral property interests, Rimfire Nevada Ltd. (Rimfire Nevada) which was incorporated under the laws of the State of Nevada on January 4, 2005 for the purpose of holding the Corporation's Nevada mineral property interests and Rimfire Australia Pty Ltd. (Rimfire Australia) which was incorporated under the laws of the State of Victoria, Australia on August 23, 2006 for the purpose of conducting exploration in Australia.  Rimfire Alaska is authorized to issue 100 no par value common shares. The only shareholder of Rimfire Alaska is the Corporation and it holds all issued and outstanding company shares. The registered office of Rimfire Alaska, Ltd. is located at Suite 700, 700 West Pender Street, Vancouver, BC V6C 1G8.  Rimfire Nevada is authorized to issue 75,000 no par value common shares. The only shareholder of Rimfire Nevada is the Corporation and it holds all issued and outstanding company shares. The registered office of Rimfire Nevada Ltd. is located at Suite 260, 6121 Lakeside Drive, Reno Nevada 89511.  Rimfire Australia is authorized to issue 10,000 common shares. The only shareholder of Rimfire Australia is the Corporation and it holds all issued and outstanding company shares. The registered office of Rimfire Australia is located at Suite 205, The Cliveden, 4 Bridge Street, Sydney NSW 2000, Australia.  -23-  INTERCORPORATE RELATIONSHIPS  RIMFIRE MINERALS CORPORATION(British Columbia)
BC0405623100%100%100%RIMFIRE ALASKA, LTD.RIMFIRE NEVADA LTD.RIMFIRE AUSTRALIA PTY LTD.(Alaska)
File 64596-D(Nevada)
File 105C-05(Australia)
ACN 121-382-554  -24-    [rfmannual20fa12007001.jpg]  -25-  PROPERTY, PLANTS AND EQUIPMENT  The Corporation is in the exploration stage and its properties are presently without a known body of commercial ore. Its mineral property interests are the following:  · The Adam Property located in the Skeena Mining Division of British Columbia, approximately 70 kilometres northwest of Stewart.  · Auddie Property located in the Omineca Mining Division of British Columbia, approximately 42 kilometres west of Germanson Landing.  · The Jake Property located in the Kamloops Mining Division of British Columbia, approximately 13 km west of Clearwater.  · The Kizmet Property located in the Atlin Mining Division of British Columbia, approximately 130 kilometres northwest of Telegraph Creek.  · The Nechako Property located in the Omineca Mining Division of British Columbia, approximately 215 kilometres west of Prince George.  · The PWG Property located in the Omineca Mining Division of British Columbia, approximately 60 kilometres southwest of Houston.  · The RDN Property located in the Liard Mining Division of British Columbia, approximately 120 kilometres northwest of Stewart, British Columbia and 50 kilometres north of the Eskay Creek Mine.  · The Thorn Property located in the Atlin Mining Division of British Columbia, approximately 120 kilometres northwest of Telegraph Creek.  · The Tide Property located in the Skeena Mining Division of British Columbia, approximately 36 kilometres north of Stewart, British Columbia.  · The Vavenby Project located in the Kamloops Mining Division of British Columbia, consists of two claims groups, the Blue River group located 15 kilometres southwest of the town of Blue River and the Robert claim group located 16 kilometres east-southeast of the town of Vavenby.  · The Williams Property 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 Alaska Properties located in the Goodpaster Mining District, Alaska, 65 kilometres northeast of Delta Junction.   -26-  · The Fer Property located in the Watson Lake Mining District of Yukon Territory, approximately 20 kilometres west of Cantung in the Northwest Territories and approximately 200 kilometres north of Watson Lake, Yukon Territory.  · The Echo Property located in Dawson City Mining District of Yukon Territory, approximately 65 km south-southwest of Dawson City.  · The Simpson Property located in the Watson Lake Mining District of Yukon Territory, approximately 105 km northwest of Watson Lake, Yukon Territory.  · The Wernecke Breccia property located in the Mayo Mining District of Yukon Territory, approximately 180 km northeast of Mayo, Yukon Territory.  · The Poncho property located in Nye County Nevada approximately 60 kilometres northwest of Tonopah, Nevada.  At present, the Corporation does not intend to undertake any exploration at its own expense on theAdam, Echo, Alaska, Fer, Nechako, RDN, Simpson, Thorn, Tide, or Williams, properties for the fiscal year ending January 31, 2008. Option agreements in place require other corporations to complete exploration programs on some of these properties. These are described in more detail in the description of each property in this Item 4 below.  In the event that joint venture partners are not obtained for the remaining properties, the Corporation may pay the required carrying costs from working capital or allow these claims to be returned to the vendor or be forfeited to the State, Province or Territory as the case may be.  The Corporations head office occupies 1,445 square feet of office space leased under agreement with Equity Engineering Ltd. The Corporation has purchased furnishings, computers and office equipment. Photocopier and plotter are available for use from Equity and are billed on a cost-recovery basis. The rent, as of April 30, 2007, is $5,080 per month. Telephone and internet access charges are in addition to this amount.  The Corporations principal mineral properties are detailed below.     -27-  RDN Property, Liard Mining Division  [rfmannual20fa12007002.jpg]   -28-  [rfmannual20fa12007003.jpg]  -29-  Location and Introduction  The RDN Property is located in the Liard Mining Division of British Columbia approximately 120 kilometres northwest of Stewart, British Columbia and 50 kilometres north of the Eskay Creek Mine. The property is comprised of a total of 26 claims and covers approximately 14,092 hectares.  Work can be carried out on the RDN Property from mid June to mid September.  Two British Columbia Provincial Government Orders-in-Council, 1589(1972) and 440 (1983) have stated that ground below 580 metres above sea level may be subject to flooding for hydro-electrical development, and although mineral exploration and development may be carried out below this level, compensation will not be payable in the event of flooding. In the event that a commercially exploitable mineral deposit is discovered in those areas subject to the Orders-in-Council, a subsequent decision by the Government of British Columbia to flood the area for water resource or hydro-electric generating purposes will not entitle the title holders to the mineral deposit to any form of compensation. The lands in question lie along More Creek and its tributaries, which affect portions of the RDN 10 and14-17A mineral claims. To date, no significant mineralised areas have been identified in areas subject to the Orders-in-Council.  Property History  Regional exploration in the area was conducted by several mining companies from the 1960's to the early 1980's, which resulted in the discovery of porphyry and vein style mineralization at the nearby Snip, Johnny Mountain and Sulphurets areas. The RDN 1-4 claims were staked by two private individuals (collectively, the Prospectors) and Equity Engineering Ltd. of Vancouver, British Columbia in November 1987. In 1988, a limited prospecting, silt sampling and rock sampling program was completed on the claims.  In October 1989, Noranda Exploration Company ("Noranda") optioned the RDN 1-4 claims, and staked the GOZ claims to the north. Noranda carried out a program of sampling and conducted airborne magnetic and aeromagnetic surveys over the property. In 1990, Noranda and High Frontier Resources, an exploration joint venture partner, carried out geochemical and geophysical surveys and a 15 hole diamond drilling program. This work resulted in the discovery of several gold-bearing quartz chalcopyrite-pyrite veins within felsic tuffs and the definition of a gold soil anomaly designated the Jungle Soil Anomaly.  The program was continued in 1991 with expanded geophysical surveys and the drilling of an additional 15 diamond drill holes. In 1991, Noranda terminated its option on the RDN Property and allowed the GOZ claims to lapse. The GOZ claims were subsequently restaked as the RDN 5-8 and 11-13 claims.   -30-  In 1990, Adrian Resources Limited ("Adrian"), Skeena Resources Limited and Noranda carried out a work program in the area of the current RDN 9 and 10 claims. The work consisted of geochemical and geophysical surveys. In 1991, Noranda completed additional geophysical surveying and sampling, and Adrian conducted a work program consisting of detailed geological mapping and sampling.  The RDN Property was optioned to Pathfinder Resources Limited in 1994, and in 1994, 1995 and 1996 Pathfinder carried out work programs which included soil sampling, geological mapping, prospecting, and geophysical surveying.  Property Acquisition  On July 31, 1997, the Corporation purchased a one-third interest in the RDN Property for $150,000 from Equity Engineering Ltd. On March 6, 2000, the Corporation increased its interest in the RDN Property from a one-third interest to 100% by acquiring a 66.66% interest from Neil Debock and Rocky Saliken pursuant to an option agreement dated as of July 31, 1997 and amended October 8, 1998. The consideration paid to Messrs Debock and Saliken under the option agreement was an aggregate 133,330 Corporation Common Shares. Messrs. Debock and Saliken have retained a 1.34% net smelter return royalty interest in the RDN Property. The royalty interest may be reduced to a 0.67% net smelter return royalty at any time prior to or after the commencement of commercial mining operations on the property through the payment to Messrs. Debock and Saliken of an aggregate $666,666 ($333,333 to each individual ).  The Corporation signed an option agreement and subsequent amendments, effective March 29, 2004, with Northgate Minerals Corporation (Northgate) which provides that Northgate can earn a 51% interest in the RDN Property on completion of the following:  Fund exploration expenditures of: · not less than $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)  Rimfire will be project operator until Northgate has earned its 51% interest. Northgate may earn an additional 9% by completing a feasibility study and funding all expenditures up to completion of the feasibility study.  -31-  On December 14, 2005, Rimfire purchased 100% of the LL property, which is contiguous with the RDN, for $30,000 cash with a net smelter return royalty of 2%. This royalty can be purchased at any time for $2,000,000. The purchase of the LL property was funded 60% by Northgate and 40% by Rimfire.  On February 21, 2007, the Corporation signed an amendment suspending the terms of the option agreement with Northgate until such time as road access to the RDN property is constructed. The road construction is scheduled for completion in late 2008 with third party access probable in 2009. Some of the RDN claims will be split into a separate property to be referred to as the Grizzly Property. The Grizzly Property will be owned 100% by the Corporation and will no longer form part of the RDN Joint Venture Agreement.  The following table details the claims that comprise the RDN property with legal identification (Mineral Tenure) size, expiry date, and location.  ClaimMineral TenureArea (ha)Expiry DateLocationRDNKC 1504798316.37December 31, 2016104G017KC 2504799316.213December 31, 2016104G017MOR2501927299.329December 31, 2016104G007RDN 1&2502738670.153December 31, 2016104B097RDN 3&4&135012271111.923December 31, 2016104B097RDN 5&75018321162.807December 31, 2016104G008RDN 6&8501862846.243December 31, 2016104B097RDN 9501812774.248December 31, 2016104G007RDN 10502756457.823December 31, 2016104G007RDN 11&12502758704.855December 31, 2016104G007RDN 14&15502751931.516December 31, 2016104G017RDN 16502752404.486December 31, 2016104G007RDN 17501895457.21December 31, 2016104G007RDN 17A518112123.24December 31, 2016104G007REST *5129732281.03December 31, 2008104B087REST NORTH *512962194.366December 31, 2008104B087REST EAST*512958335.938December 31, 2008104B087REST FRAC*51739353.008December 31, 2008104B097GrizzlyBodgen510806263.362December 31, 2016104G017LL 1501122421.636December 31, 2016104G017LL 2501153351.253December 31, 2016104G017Luc504982104.457December 31, 2016104G017Narby 1504758421.543December 31, 2016104G017RDN 19535726351.13December 31, 2016104G017RDN 20535728421.21December 31, 2016104G017RDN 21535729315.94December 31, 2016104G017   -32-  * The REST claims are owned by Northgate Minerals and are being jointly explored with the RDN group of claims.  Regional Geology  The RDN Property and surrounding area are underlain by mid-Paleozoic and Mesozoic island arc successions which have been covered to the east by clastic sediments of the Bowser Basin.  Property Geology  The RDN Property is underlain by a moderately folded faulted mosaic of Jurassic age Hazelton Group volcanic and sedimentary rocks and co-eval felsic intrusions in the central area, and Triassic age mixed rocks of the Stuhini Group to the east. Permian age sedimentary, volcanic and intrusive rocks are in fault contact with the Hazelton Group rocks on the western side of the RDN Property. The Forrest Kerr Fault is this bounding structure.  Mineralization  A variety of styles of mineralization are present on the RDN Property.  Possible VHMS style mineralization is found at the Marcasite Gossan showing. There, Hazelton Group dacite flows are cut by a sulphidic stockwork of marcasite, pyrite, chalcedony and/or pyrobitumen and/or barite. In addition, several cobbles of very fine grained pyrite with an apparent bedded texture indicative of VHMS style of sulphide deposition were found a few metres downslope from the Marcasite Gossan outcrop. Less than 75 metres upslope is somewhat similar stockwork mineralization, referred to as the Upper Marcasite Gossan. Base metals and silver are elevated at the Upper Marcasite showing, whereas the Lower Marcasite showing has low base and precious metals. This mineralization occurs at a felsic volcanic-argillite-basalt interface in a similar setting to gold rich VHMS deposits elsewhere in the Hazelton Group. The 1999 drilling confirmed that stratigraphy is conformable and upright in this area. The area underlying the Jungle Soil Anomaly may also host VHMS deposits, as float found in the area includes pyritic chert, rhyolite and silicified argillite. The Jungle soil anomaly is a gold-arsenic-silver-lead geochemical anomaly covering approximately 100 by 450 metres. A third area known as the Blind Fault area may also host VHMS deposits, as native silver and tetrahedrite was discovered at a volcanic/ sediment contact with associated alteration in 2004. A fourth area known as the Arctic Grid area may also host VHMS deposits as surface and drilling work, in 2005 and 2006, has returned weakly elevated zinc, silver and arsenic at the contact between Hazelton Group mudstones and rhyolite flows.  The majority of the remaining mineralized zones on the RDN Property are mesothermal veins and vein systems. The veins are planar and thought to be related to fault structures and brittle failure. They are clearly cross-cutting, and thus younger than parts of the hosting Hazelton Group felsic volcanic rocks. Fragments of these veins are also found in some clastic units of the Hazelton Group, indicating their emplacement to be broadly contemporaneous with deposition of the Hazelton Group.   -33-  The Baseline and Main showings are fault-hosted quartz-sulphide breccia veins, up to 8.3 metres wide with high lead-zinc and moderate gold-silver values. The Wedge Zone consists of dozens of quartz-sulphide veins spread over an area of 500 x 2,700 metres.  Individual veins tend to pinch and swell and are affected by considerable structural dislocation. The Wedge Zone area is marked by a strong lead-zinc-gold-silver-arsenic soil geochemical anomaly.  The Boundary Zone veins are copper-gold rich, between 10 and 30 centimetres in width, planar to anastomosing, and consist of semi-massive chalcopyrite and pyrite.  The Grizzly showing area of the RDN is prospective for copper gold porphyry related mineralization. In 2006, a chip sampling program re-sampled previous trenches and also filled in large areas not previously sampled yielding a 38.0 metre interval of 1.1 g/t gold and 0.74% copper. The exposed dimensions of the Grizzly showing are approximately 350 metres long by 50 to 100 metres wide. Soil sampling by previous workers indicate an area of about 1 square kilometre with highly anomalous copper, gold and molybdenum results. This area is still open to the north, east and southeast and is largely talus covered.  Surface Exploration, Geophysics and Drill Programs  The 2000 UTEM survey showed a series of electromagnetic conductors along the contact between the felsic volcanics and overlying sedimentary rocks, a stratigraphic position thought to be favourable for hosting VHMS mineralization. This was followed by a diamond drill program in 2001 to test the conductors. Thirteen holes, totaling 2256 m, were drilled in the Wedge Zone and near Sand Lake, Marcasite Gossan and Boundary Zones.  During 2002, Homestake completed drilling of a total of 1072 metres in 9 holes. Eight of these holes were collared in the Jungle Zone geochemical anomaly, which is situated on the NE Downpour Grid. A single hole was located 700 metres northwest of the Jungle Zone Anomaly. No geochemical results of economic significance were returned from this program; however, it is arguable that in all holes the target horizon was not reached. Due to severe technical difficulties encountered in the drilling, that included thick overburden and highly faulted ground, the drill program was halted and work focused on surface exploration. The surface program included mapping in areas where rhyolitic volcanic rocks had been identified in previous programs. In addition, contour soil sampling was carried out in areas that had not previously been sampled.  During 2003, Barrick Gold Corporation completed an exploration program consisting of surface mapping and sampling on areas of the property including the Arctic Grid and Boundary Zone examining Eskay Creek equivalent stratigraphy.   -34-  During 2004, Northgate completed 2499 metres of drilling in nine holes. Several precious-metal bearing intervals were intersected; however, these are interpreted as veins and breccias that are unlikely to have economic significance. The most important result of the program was the discovery of native silver and tetrahedrite at a volcanic/sediment contact in an area (Blind Fault) that has not been previously explored. This discovery, along with discovery of a gold and silver mineralized boulder in a second area (Arctic grid) that has only been superficially explored was considered encouraging.  During 2005, six drillholes were completed for a total of 1,470 metres in two target areas: Blind Fault and Arctic Grid. Three holes in the Blind Fault area targeted a 300 x 50 metre zone of vein and disseminated silver-lead-zinc mineralization in volcanic and sedimentary rocks where native silver was discovered in 2004. Continuous surface channel sampling in 2005 returned 24.7 metres averaging 24.9 g/t silver with similar grades encountered in the drillholes. Drilling at the Arctic Grid target intersected stratigraphy equivalent in age and geological setting to that hosting the Eskay Creek deposit.  During 2006, an airborne geophysical survey was conducted over the Arctic Grid and LL areas of the property, and a four hole (1350 metre) drill program on the Arctic Grid target successfully tested the Eskay Creek time equivalent mudstone  rhyolite contact encountering anomalous zinc, arsenic, and silver in hole RDN-06-49. Hole RDN-06-47 intersected a narrow interval of fault-controlled silver mineralization above the prospective horizon. This mineralization is of limited significance and will not be followed up.  The work program was conducted by Equity Engineering Ltd. under the direction of Murray Jones, P.Geo., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock samples. A technical report was filed on SEDAR on May 12, 2006. No material changes have occurred since the report was filed.  Future Exploration Programs  No work will be undertaken on the RDN Property in 2007. There are presently no on-going costs associated with holding the RDN claims. The Corporation is actively seeking partners to fund work on the Grizzly Property.   -35-  Thorn Property, Atlin Mining Division  [rfmannual20fa12007004.jpg]  -36-  [rfmannual20fa12007005.jpg]  -37-  Location and Introduction  The property consists of 25 mineral claims (16,970 hectares) and is located in the Atlin Mining Division, approximately 120 kilometres northwest of Telegraph Creek. Access is currently by float plane and helicopter, with the nearest road approximately 50 kilometres to the southeast at the Golden Bear mine. The Golden Bear Mine is connected to the Telegraph Creek-Dease Lake connector by 150 kilometres of gravel road. A road could be constructed from the Thorn property to the Golden Bear mine if warranted.  Property History  The earliest known work on the Thorn property was carried out by Kennco Explorations (Western) Limited in 1959 during a regional exploration program. This was followed by three years of seasonal exploration by Julian Mining Corporation (Julian) from 1963-65. Mapping and prospecting work resulted in the discovery of 17 mineral showings of three main types: (i) quartz-pyrite-tetrahedrite-enargite veins, (ii) structurally-controlled chalcopyrite-pyrite-quartz veins and (iii) areas of widespread, low-grade disseminated chalcopyrite. Diamond drilling was carried out (17 holes, 1204 m) on three showings.  In 1983, Inland Recovery Group Ltd. (Inland Recovery) acquired the Thorn property from J.R. Woodcock and carried out mapping, soil sampling and VLF-EM surveying near the junction of Camp and La Jaune creeks. The soil grid consisted of an 800-metre base-line trending 060° with perpendicular cross-lines spaced 50 metres apart and sampled at 25 metre intervals. Strong silver-gold-copper-zinc soil geochemical anomalies were revealed along Camp Creek and extending 600 metres westerly from Anacondas B Zone (Wallis, 1983; Woodcock, 1986).  In 1986, Inland Recovery and American Reserve Mining Corp. drilled eight holes (688 m) from three drill sites within the soil geochemical anomaly extending west from the B Zone. Core was altered and variably mineralized throughout, but only the highest-grade sections were split and analysed (Woodcock, 1987).  Kohima Pacific Gold Corp. (Kohima) staked the Stuart 1-3 claims in 1997 and acquired an option on the Checkmate claim. In 1998, Kohima conducted an alteration mineralogy study using a portable infrared spectrometer (PIMA) on select outcrops in Camp Creek, and drill core from three diamond drill holes from the 1986 campaign.  Property Acquisition  By agreement dated March 1, 2000 with Kohima, the Corporation was granted an option to acquire a 100% interest in the Thorn property (four claims). The Corporation exercised the option by making staged cash payments of $230,000 by March 2, 2005, issuing a total of 200,000 shares by March 1, 2003 and incurring exploration expenditures of $50,000 by March 1, 2001. The Corporation subsequently staked an additional seven claims surrounding the initial claim block, but lying within the Kohima area of interest covered by that agreement A further 19 claims have been staked over favourable geochemical targets between April 2003 and May 2004. This total of 30 claims was converted to 21 larger claims in the Mineral Titles Online map-staking initiative. The following table details the claims that comprise the Thorn property with legal identification (Mineral Tenure) size, expiry date, and location.   -38-   ClaimMineral TenureArea (ha)Expiry DateLocationCheckmate/
Stuart 15027411013.271December 31, 2014104K056Stuart 2&3502743929.37December 31, 2014104K056SUTL 1&35027781061.928December 31, 2010104K066SUTL 2&45027751213.627December 31, 2010104K066SUTL 1450958067.421December 31, 2010104K066SUTL 16509581269.823December 31, 2010104K066Thorn 1504172455.771December 31, 2014104K058Thorn 2504173303.841December 31, 2014104K058Thorn 3&4502745928.838December 31, 2014104K057Thorn 5&65012821351.952December 31, 2014104K057Thorn 7&135027461282.246December 31, 2014104K056Thorn 8&95027471299.004December 31, 2014104K057Thorn 10-11502748607.684December 31, 2014104K057Thorn 12502749404.688December 31, 2014104K066Thorn 14&15&165027501148.12December 31, 2014104K057Thorn 17525344421.706January 13, 2008104K056Thorn 18525348135.227January 13, 2008104K056Thorn 19525349337.412January 13, 2008104K056TUN 1502817591.891December 31, 2010104K056TUN 2&45012611336.35December 31, 2010104K057TUN 3502821423.076December 31, 2010104K046TUN 10554540405.856March 16, 2008104K057TUN 11554541372.327March 16, 2008104K047TUN 12554542304.3831March 16, 2008104K057TUN 13554543304.5185March 16, 2008104K047  The Corporation has earned 100% interest in the property, subject to net smelter royalty. Kohima has retained a 3.5% net smelter return royalty, of which the Corporation can purchase a 57% interest (being 2% of the 3.5% interest) for $3 million. In addition to the above, the Corporation will issue 200,000 common shares to Kohima upon the commencement of commercial mining operations on the Thorn property.  The Corporation signed an option agreement dated March 1, 2002 with Cangold Limited, formerly First Au Strategies Corporation (Cangold) under which Cangold earned a 51% interest in the property by making staged cash payments totaling $190,000, issuing a total of 250,000 shares to the Corporation and by incurring exploration expenditures of $1.2 million. Further development of the property will continue as a joint venture.  -39-  Regional Geology  The area around the Thorn property is underlain by mid-Paleozoic and Triassic island arc successions, Late Triassic and Jurassic sediments of the Whitehorse Trough and bimodal Late Cretaceous to Eocene volcanic and associated intrusive rocks.  Property Geology  The southern and western portions of the Thorn property are underlain by Upper Triassic Stuhini Group mafic volcanic and epiclastic rocks, which are locally overlain by Middle Jurassic coarse clastic rocks of the Takwahoni Formation.  These have been intruded by the Late Cretaceous Thorn Stock, which covers an area of approximately 1,500 x 4,000 metres, elongated northwesterly along La Jaune Creek. The Thorn Stock consists of two distinct phases of feldspar-quartz-biotite porphyry which have been pervasively altered. Chloritization is most extensive, but intense sericitization and/or argillization, accompanied by up to 20% disseminated pyrite, extends for several tens or hundreds of metres away from mineralized fracture systems.  Rhyolitic to andesitic subaerial volcanics are exposed on the north and northeast portions of the property; they are somewhat younger than the Thorn Stock. At the eastern end of the property, these have been intruded by poorly-mapped monzonite and granodiorite stocks and plugs of Late Cretaceous age.  Mineralization  Exploration on the Thorn property is directed at two deposit types: (1) high-sulphidation epithermal mineralization of the El Indio/Lepanto style; and (2) breccia  hosted silver-gold-lead-zinc mineralization discovered in the Oban Zone in 2002. A number of pyrite+enargite+tetrahedrite+quartz veins are hosted by sericitized and argillized feldspar-quartz-biotite porphyry of the Thorn Stock over an area of 1,400 x 2,000 metres. A strong structural control is evident for the veining, much of which trends 070° and dips steeply. Some of the more significant showings include:  · Catto Vein: Discovered in 2000, the recessive Catto Vein consists of massive pyrite, enargite and tetrahedrite in a fault paralleling the nearby contact between the porphyry and Stuhini andesites. Drill hole 86-6 may have intersected the Catto Vein approximately 50 metres along strike.  · Tamdhu Vein:Discovered in 2000, the Tamdhu Vein consists of chalcedonic quartz, pyrite, enargite and tetrahedrite. The vein has been traced for 30 metres on surface and has been intersected in drilling over a strike length of 70 metres in three holes.  · MP Vein:The MP Vein, which may form part of a wider system covered by boulders, consists of massive pyrite and enargite exposed in Camp Creek.   -40-  · Oban Zone:The Oban zone is an extensively altered heterolithic breccia pipe containing significant silver-lead-zinc and gold mineralization. Sulphide minerals in the breccia contrast with the massive sulphide vein mineralogies and include boulangerite (silver-bearing sulphosalt), sphalerite, pyrite and minor arsenopyrite, freibergite (silver-rich tetrahedrite), galena and possibly tellurides.  · Cardhu Vein:The Cardhu Vein is a poorly exposed sulphide/sulphosalt vein near the southwestern contact of the Thorn Stock, south of Spike Creek.  · B Zone:The B Zone is a 1-5 metre wide zone of vuggy silica, chalcedonic veining and quartz breccia with relatively minor pyrite, enargite and tetrahedrite, which has been traced for about 300 metres along strike. Five 1986 drill holes tested the B Zone.  · F Zone:F Zone is a broad zone of intense alteration with quartz-sulphide veining that can be traced for 200 metres.  · I Zone:The I Zone comprises numerous parallel 10-70 centimeter quartz-pyrite-tetrahedrite veins in sericitized porphyry, across a true width of 5-10 metres.  · Glenlivet Zone:The Glenlivet Zone, discovered in 2002, extends southwesterly for 220 metres from the western end of the F Zone and is comprised of sheeted pyrite-enargite veins filling fractures in clay-sericite altered porphyry.  · Talisker Zone:The Talisker Zone, discovered in 2004 by drilling a blind Induced Polarization geophysical anomaly, has been intersected by three drill holes over a 200 metre strike length and consists of disseminated and vein-style high sulphidation mineralization.  · Balvenie Zone: The Balvenie Zone, discovered in 2004, is hosted in strongly sericite altered Thorn Stock and consists of two sets of silica-pyrite-enargite-tetrahedrite veins. The Balvenie Zone was intersected by one drill hole in 2005.  The Stuhini Group mafic volcanics host several gold-bearing quartz+carbonate+chalcopyrite+ arsenopyrite veins within a few hundred metres of the Thorn Stock. Most of these veins are less than 70 centimeters wide and of limited economic significance.  The Outlaw Zone is a poorly understood area of silicification and scattered quartz veining located five kilometres southeast of the main enargite-tetrahedrite showings. The alteration, accompanied by strongly anomalous gold, arsenic and antimony soil geochemistry, covers an area of approximately 400 x 2,000 metres. Four drill holes tested a portion of the Outlaw Zone in 1987, showing the presence of widespread but erratic gold mineralization.  -41-  Surface Exploration, Geophysics and Drill Programs  A seven-hole, 498 metre drill program tested three showings over a 1.2 kilometre trend in 2002. Three shallow holes were collared at the Oban Breccia to test surface mineralization. All three holes intersected weakly mineralized breccia. A total of four holes were drilled to test the I Zone and Tamdhu Zone. All four holes intersected the target structures, confirming the continuity of vein mineralization.  In 2003, work conducted on behalf of Cangold (formerly First Au Strategies) focused on trenching within the Oban soil geochemical anomaly and drill-testing the Oban breccia pipe. 841 metres of trenching exposed approximately 10% outcrop consisting of weakly mineralized breccia pipe. Eight diamond drill holes totaling 876 metres of ATW core were completed.  Four holes (TH03-19 to TH0322) intersected significant zones of fine-grained pyrite-sphalerite-boulangerite mineralization occurring as matrix infill between breccia clasts.  The high grade intersections define a steeply northwest-dipping mineralized zone with an apparent width of 14-26 metres. Generally lower-grade zones (12-25 metre apparent width) flank this mineralized core.  In 2004, an Induced Polarization (IP) geophysical survey demonstrated a significant correlation between the IP geophysics and known silver-gold mineralization but also identified several new targets in areas of no outcrop. Later in the year, a drill program was completed consisting of 1810 m in 12 holes targeting the Oban Breccia Zone, massive sulphide veins in the Camp Creek Structural Corridor with 5 holes targeting IP geophysical anomalies. Drill hole THN04-29 tested part of a 500 m long IP anomaly and intersected 56.1 metres of 1.27 grams/tonne gold, 16.7 grams/tonne silver and 0.19% copper in a new zone dubbed the Talisker Zone. Prospecting prior to the commencement of the drill program resulted in the discovery of a quartz-barite boulder assaying 265 grams/tonne (7.7 ounces/ton) gold two kilometres north of the Camp Creek Structural Corridor in an area of the property that has not seen previous work.  Highlights of the 2005 exploration program included 17.4 kilometres of IP geophysical surveying and 655.8 metres of drilling in five holes. The 2005 IP helped to further outline and define the Talisker Zone, and located two new anomalies further north: the Balvenie and Cutty Sark Zones. Geological mapping and rock sampling during 2005 focused on the margins of the Thorn Stock and the overlying Windy Table Formation volcanic units as recent age dating of these rocks revealed that they may be affected by mineralizing events at the Thorn.  Two holes were drilled at the Talisker Zone, which has now been extended over a strike length of at least 200 metres with intercepts in both 2005 step out holes including 4.2 metres of 4.44 g/t gold, 407.9 g/t silver and 2.95 % copper in THN05-37. Two holes, which tested the new IP target at the Cutty Sark anomaly, intersected the first occurrences of lithologically controlled alteration on the property. One hole tested the far eastern extent of the Balvenie Zone, another vein system parallel to the Talisker Zone. The drilling and sampling programs were conducted under the direction of Henry Awmack, P.Eng., of Equity Engineering Limited, a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock, soil and silt samples. A technical report was filed on SEDAR on May 12, 2006.  -42-  Cangold Limited is operator for this project and proposed a drill program during 2006. This initial plan was later withdrawn and no work was completed on the project during the year.  Future Exploration Programs  The next stage of exploration on the Thorn property will be a diamond drill program focused on resource definition at the Talisker Zone and exploration drilling at several other IP geophysical targets identified in 2004 and 2005. There are currently no plans to conduct exploration on the property in 2007.  Williams Property, Liard Mining Division  [rfmannual20fa12007006.jpg]  -43-  [rfmannual20fa12007007.jpg]  Location and Introduction  The Williams property consists of 58 claims covering 26,136 hectares of mountainous terrain in north-central British Columbia, 330 kilometres north of Smithers. Access to the property is currently by helicopter and float-plane, with the nearest road 75 kilometres to the southeast. The Corporation has acquired a 100% interest in the property subject to a net smelter royalty.  Property History  The two main prospects (T-Bill and GIC) on the Williams property were independently discovered in the early 1980s by Cominco and Du Pont, following up highly anomalous stream geochemistry. These companies joined forces to drill a total of 3,023 metres on the T-Bill prospect in 1983 and 1984 before allowing the property to lie dormant. The Corporation optioned the core of the property in May 2001, and then later staked additional claims.   -44-  Property Acquisition  On May 17, 2001 the Corporation entered into an option agreement with Lorne Warren (Warren) and John Mirko (Mirko) to acquire a 100% interest in the BT claim, subject to a 2.5% net smelter royalty. On June 25, 2002, the Corporation subsequently acquired half of the interest and half of the net smelter royalty in the Williams Property from Mirko by issuing 75,000 common shares. The Corporation has earned the remaining 50% interest by paying the property vendors an aggregate $57,500 and issuing to the property vendors an aggregate 125,000 common shares. The Corporation will issue an additional 50,000 shares upon commencement of commercial production from the property. The Corporation can purchase 0.75% of the net smelter return for $1,000,000. Commencing in December 2005, an advance royalty payment of $5,000 per year is required to maintain the option agreement in good standing.  On July 20, 2006 the Corporation signed an option agreement with Arcus Development Group Inc. (Arcus) for Arcus to earn a 51% interest in the Williams property on completion of the following:  Cash payments 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 · $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 · an additional $750,000 on or before December 31, 2008 · an additional $1,000,000 on or before December 31, 2009 Issue shares of Arcus to the Corporation: · 100,000 common shares on or before December 31, 2006 (received) · an additional 100,000 common shares on or before December 31, 2007 · an additional 100,000 common shares on or before December 31, 2008 · an additional 100,000 common shares on or before December 31, 2009  Stikine Gold Corporation, during their tenure as optionor, staked an additional 6 claims, surrounding the original claim block to be included in the agreement. The Corporation has staked additional claims based on results of field work. The following table details the claims that comprise the Williams property with legal identification (Mineral Tenure) size, expiry date, and location.  Claim NameMineral TenureArea (hectares)Expiry DateLocationBT & BT15027641449.39December 31, 2014094E072BT2&3502770844.804December 31, 2014094E082BT 4514151241.631December 31, 2014094E072BT 5514152103.586December 31, 2014094E072BT 6514153431.419December 31, 2014094E071BT 7514154431.172December 31, 2014094E071  -45-   BT 8514156431.07December 31, 2014094E082BT 9514162414.052December 31, 2014094E071BT 10514163310.281December 31, 2014094E081BT 11522391413.788November 18, 2014094E081BT 12522392413.667November 18, 2014094E081BT 13522394241.247November 18, 2014094E081BT 14522395431.051November 18, 2014094E081GOS502766829.114December 31, 2014094E072ROK1 &2502768673.359December 31, 2014094E072NORTH 1514157430.824December 31, 2014094E082NORTH 2514158413.384December 31, 2014094E082NORTH 3514159430.735December 31, 2014094E082NORTH 4514160430.685December 31, 2014094E082WILL 1&2502774396.407December 31, 2014094E082WILL 3&4502773965.782December 31, 2014094E072WILL 5-18542677-5426905,864.022October 6, 2007094E082WILL 19-37542692-5427108,027.515October 6, 2007094E073WILL 38-40542712-5427141,240.941October 6, 2007094E082WILL 41549158276.0775January 12, 2008094E073  Regional Geology  The Williams property lies near the eastern edge of the Intermontane Belt in a fault mosaic of: Devonian to Permian Asitka Group carbonates and volcano-sedimentary rocks; the Carboniferous to Lower Triassic Cache Creek oceanic assemblage, including the Kutcho Formation; Triassic Stuhini and Takla volcano-sedimentary rocks; Lower Jurassic Toodoggone (subaerial) and undifferentiated Hazelton volcanic rocks and Laberge Group volcanic and epiclastic rocks.  The stratified rocks are intruded by a variety of Late Triassic and Early to Middle Jurassic stocks and batholiths of felsic to ultramafic composition. Most of the Early Jurassic quartz monzonites, granodiorites and quartz diorites are marked by a distinctive magnetic high signature; in particular, this applies to the intrusive immediately northeast of the Williams property. The quartz monzonite stock exposed on the southern part of the Williams property is the exception to this rule; it is characterized by a distinctive magnetic low almost ten kilometres across.   -46-  The Pitman Fault is a major E-W fault which passes 30 kilometres north of the Williams property. Alldrick, who traced the Pitman Fault for 300 kilometres, states that there is 3 kilometres of left-lateral movement along it with minimal vertical offset, and that movement occurred during Eocene to Oligocene time. Three of these major E-W faults have been mapped at the northern and southern extremities of the Williams property, one along the Stikine and Chukachida Rivers four kilometres south of the Gos claim and the other two passing through the BT 3 claim, north of the GIC occurrence. A fourth could reasonably be inferred along the valley between the T-Bill and the GIC prospects, downdropping undeformed Upper Triassic Takla Group volcanics to the north against deformed Paleozoic Asitka Group rocks to the south.  Property Geology  The T-Bill prospect is underlain by penetratively deformed Devono-Permian Asitka Group metavolcanics which have been altered to carbonate-muscovite-quartz schist over an area of 1,200 x 2,300 metres. This alteration is confined to the core of a northeasterly-trending structural dome and is controlled both by foliation and by steep cross-cutting structures. Gold-rich quartz-arsenopyrite veins, locally with visible gold, are broadly co-spatial with the carbonate-muscovite alteration, although they extend into unaltered chlorite schists with only centimetre-scale alteration envelopes. Individual veins generally cut across foliation and are rarely wider than 30 centimeters, although swarms of veinlets are common. Potential for a bulk-mineable target is indicated by broad low-grade intersections. The T-Bill prospect is marked by a strong 2 x 3 kilometre gold-arsenic soil geochemical anomaly whose limits reflect masking by till and talus cover as much as by changes in alteration and mineralization of the underlying bedrock.  The GIC prospect is centered less than two kilometres north of the T-Bill prospects northern edge, across a broad valley which may mark a major east-west fault. The GIC prospect is hosted by undeformed Takla Group volcanics, presumably down-dropped by the east-west fault, which have been hornfelsed, silicified and pyritized by a multiphase intrusion. A 500 x 900 metre, open-ended, gold-copper soil geochemical anomaly encloses two gossans. At the more prominent one, intensely silicified tuff is in contact with crowded feldspar porphyry. A more subtle gossan 500 metres to the southeast was formed from pyritic hornfels.  Mineralization  The Williams property hosts two main styles of alteration and gold-bearing mineralization; orogenic gold and arsenic-bearing veins and disseminations (T-Bill prospect); and porphyry-style copper, gold and molybdenum (GIC prospect). Previous drilling attempted to evaluate the T-Bill mineralization, however, that work was unsuccessful in determining with any certainty the orientation of the veins and associated alteration. In 2003, WG03-10 targeted the T-Bill prospect and intersected 6.92 metres of mineralization plus three other quartz vein zones with visible gold. An oriented core system was employed during the drilling suggesting a northwest  southeast trend to these high grade veins.   -47-  Surface Exploration, Geophysics and Drill Programs  An initial program of prospecting, silt and soil geochemistry and core re-examination and sampling was carried out in July 2001. Reconnaissance soil samples were collected along contour or compass lines in areas where previous soil geochemical anomalies had not been closed off, and where gold-bearing silt samples had never been followed up. Core from the 1983 and 1984 diamond drilling is stored at the 2001 campsite. The 1983 core and holes 84-6 to 84-9 were inaccessible, due to collapse of their core racks. The first five 1984 holes could be recovered, but were in poor condition from animal disturbance. They were examined and 14 previously unsampled sections were split for analysis. Rock samples were taken from mineralized and altered rocks during the course of prospecting.  Stikine carried out a 3-D Induced Polarization (IP) geophysical survey in September 2002. The survey was undertaken to define areas of higher chargeability reflecting increased sulphide content and higher resistivity reflecting silicification. The survey defined a large chargeability anomaly, measuring 400 by 300 metres, immediately north of the area tested by the previous drilling. This anomaly is also coincident with a broad 700 by 1,000m resistivity anomaly. Contour soil samples from the northwest portion of the chargeability/resistivity anomaly are highly anomalous in gold for over 800 metres.  In 2003, Stikine conducted an 11-hole (2855 metre) drill program targeting the 800 by 450 metre resistivity anomaly, returning only anomalous gold values. One hole, WG03-10, targeted the T-Bill prospect and intersected high grade vein mineralization (6.92 metres of 6.0 grams/tonne gold.) Additional gold mineralization was intersected further down the hole.  The 2005 exploration program focused on the GIC prospect. Mapping, prospecting, and soil sampling followed by geophysical surveys outlined a compelling new copper-gold porphyry target. Induced Polarization (IP) surveys at the GIC prospect identified a strong 600 by 1800 metre chargeability high anomaly coincident with and adjacent to known gold and copper mineralization. A 500 x 1,400 metre, east-west trending copper soil geochemical anomaly, enclosing two discrete 300 x 500-750 metre gold soil anomalies lies to the north, partially overlapping the northern edge of the GIC chargeability anomaly. The rest of the geophysical anomaly is masked by glacial till except for an isolated outcrop where a chip sample returned 0.22 % copper and 0.22 g/tonne gold over 3.73 metres. Several gossans lie within the soil anomaly.  During 2006, Arcus conducted a five-hole (881 metre) program of diamond drilling. The program confirmed that alteration mineralogy and mineralization consistent with porphyry-style hydrothermal systems is present at the GIC. All holes intersected anomalous gold, copper and molybdenum concentrations over broad intervals. Drilling mainly targeted the till-covered southern flank and core of the IP chargeability, which drilling has shown to be a result of strong pyrite mineralization.  The sampling programs were conducted by Equity Engineering Ltd. The 2006 program was conducted under the direction of Jim Lehtinen, P.Geo, a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report was filed on SEDAR on February 27, 2007.  -48-  Future Exploration Programs  Exploration programs on the Williams property planned for 2007 will investigate the newly acquired claims and may include further induced polarization geophysical surveys at the GIC prospect.  Tide Property, Skeena Mining Division  [rfmannual20fa12007008.jpg]   -49-  [rfmannual20fa12007009.jpg] Location and Introduction  The Tide Property, consists of four claims covering 2,964 hectares and is located approximately 36 kilometres north of Stewart, British Columbia The Tide property covers a group of precious metal-bearing polymetallic mineral occurrences in the Stewart area of northwestern British Columbia. They were discovered in the 1980s through follow-up of highly anomalous silt and soil geochemistry. The following table details the claims that comprise the Tide property with legal identification (Mineral Tenure) size, expiry date, and location.  Claim NameMineral TenureArea (hectares)Expiry DateLocationBow-1501145269.314December 31, 2016104B030Bow-2&35011851149.882December 31, 2016104B030Bow 4&Arrow5012131060.109December 31, 2016104B030BOW 5503002484.808December 31, 2016104B030   -50-  Property History  The East Gold Mine, surrounded on three sides by the Tide property, was first worked in 1926 and produced 46 tonnes of hand-picked ore grading 1,126 grams/tonne gold and 3,106 grams/tonne silver from narrow quartz-sulphide veins.  The first recorded work on the Tide property was done by Northair Mines Ltd., who carried out extensive silt and soil sampling from 1980 to 1986, discovering and blast-trenching several gold-bearing showings, and drilling 455 metres in two holes. Austral Pacific Gold Corporation and Claimstaker Resources Ltd. optioned the Tide property from 1988 to 1990, carrying out extensive mapping and ground geophysical surveys. Claimstaker drilled four holes totaling 120 metres in 1990, but three were abandoned in overburden. The best intersection from the three completed drill holes in 1986 and 1990 assayed 4.11 grams/tonne gold over 0.76 metres.  The Northair claims were allowed to lapse in 1993 and were re-staked by Hemlo Gold Mines Inc. (now Newmont Canada Limited) as the Bow-1 to -4 and Arrow claims, which constitute most of the current Tide property. In 1994, Hemlo carried out property-wide mapping and took soil samples on reconnaissance contour and ridge/spur lines. Detailed soil/talus and chip sampling in 1995 and 1996 were confined to higher elevations at the Northpit, 36, Riptide and Southpit zones.  Property Acquisition  The Corporation purchased the Tide property in August 2001 from Newmont Canada Limited for a total cash expenditure of $10 with an underlying agreement to give Newmont Canada Limited a 1.5% net smelter royalty in the event the property becomes commercially feasible to mine.  On October 28, 2002, and amended on July 25, 2003, October 20, 2003 and November 20, 2003, the Corporation granted Plutonic Capital Corp. (Plutonic) an option to earn a 51% interest in the property on completion of a combination of cash and share payments and exploration expenditures. In an option amendment agreement dated November 20, 2003, Plutonic assigned the agreement to Serengeti Resources Inc. (Serengeti). As compensation for this amendment, Serengeti issued 100,000 shares to the Corporation Effective October 27, 2006, this agreement was assigned to American Creek Resources Ltd. (American Creek). Upon exercise of the option, Serengeti retains a 1% NSR upon the 51% interest earned by American Creek. American Creek has assumed the following obligations from the original and amended agreements with Plutonic and has earned their 51% interest in the property:  Cash payments to the Company of: · $2,000 upon signing of the agreement (received) · $13,000 upon regulatory approval (received) · $15,000 on or before July 24, 2003 (received) · $25,000 on or before December 31, 2004  (as amended September 9, 2004-received) · $35,000 on or before December 31, 2005  (as amended September 9, 2004-received) · $40,000 on or before December 31, 2006  (as amended September 9, 2004-received)  -51-  Issue shares of American Creek to the Company or pay: · 50,000 common shares or $20,000 on or before August 15, 2003 (received) · 75,000 common shares or $35,000 on or before July 24, 2004 (received) · 75,000 common shares or $60,000 on or before December 31, 2005
(as amended September 9, 2004) (received) · 75,000 common shares or $85,000 on or before December 31, 2006 
(as amended September 9, 2004) (received) Fund exploration expenditures of at least: · $185,000 on or before June 30, 2004 (completed) · an additional $250,000 on or before December 31, 2004 (completed) · an additional $400,000 on or before December 31, 2005 (completed) · an additional $600,000 on or before January 15, 2007 (as amended October 27, 2006-completed)  In consideration of the second extension, dated October 20, 2003, Plutonic issued an additional 100,000 common shares to the Corporation.  On February 8, 2007, the Corporation signed a letter of agreement with American Creek for a second option whereby American Creek can earn: · an additional 9% interest by funding a further $3.5 million in exploration on or before December 31, 2010. · an additional 5% interest by funding a bankable feasibility study, · and, at the Corporations election, earn another 5% interest by providing 100% of the initial project development financing. American Creek will be operator for the 2007 exploration program.  Regional Geology  The Stewart mining camp lies along the western margin of the Intermontane tectonic belt, adjacent to the Coast Plutonic Complex. The area is underlain by the Hazelton Group, a Lower to Middle Jurassic island-arc complex, and its coeval stocks, sills and dykes of the Texas Creek Plutonic Suite. The Hazelton Group has been folded into north-northwest trending, doubly plunging syncline/anticline pairs with subvertical axial planes. Faults are abundant at both local and regional scales. Property Geology  The Tide property is largely underlain by andesitic ash tuffs and lapilli tuffs, with lesser argillite, wacke and augite-feldspar porphyritic andesite flows. These form part of the Norian to Pliensbachian Unuk River Formation at the base of the Hazelton Group and have been extensively hornfelsed by thick sills related to the roughly coeval Summit Lake Stock. This stock, centered south of the Tide property and dated at 192.8+2 Ma, is a 2 x 3 km body of fresh, medium- to coarse-grained, equigranular hornblende granodiorite. To the north, it tails off into a 200-1,000 metre wide sill complex, which extends northward through the Tide property. The sill complex is generally feldspar-hornblende+biotite porphyritic, is variably altered and appears related to precious metal-bearing mineralization on the Tide property.  -52-  Mineralization  Sulphide mineralization is widespread on the Tide property, with all significant occurrences discovered to date lying in a 1,700 x 3,200 metre area on the eastern flank of Tide Mountain. Mineralization appears to be spatially, and possibly genetically, related to the feldspar-hornblende porphyry sills of the Summit Lake Stock. The zones (Arrow, High-Grade, Brown Bear, 52 and part of the Southpit) within the sill, or proximal to its contacts, appear to be relatively enriched in silver, lead, zinc and antimony; those more distal to it (Northpit, 36, Riptide, Camp and part of the Southpit) are relatively enriched in gold and arsenic.  The distal gold-arsenic zones are dominated by quartz-pyrite-arsenopyrite veining emplaced within westerly-trending, steeply north-dipping fracture zones in hornfelsed volcanic and volcaniclastic rocks; they lie within a 500 metre wide band which parallels the sill complex and lies 100-900 metres west of its contact. The proximal group of mineral occurrences consists of polymetallic quartz-sphalerite-galena-pyrite+tetrahedrite+arsenopyrite veins at several orientations. This group is mainly hosted by sericitized feldspar-hornblende porphyry, but the Southpit veins are located up to 300 metres west of the sill contact. Both the distal and proximal groups contain locally high precious metal contents, including 53.0 grams/tonne gold (distal - Southpit Zone), 105 grams/tonne gold and 598 grams/tonne silver (proximal - Arrow Zone), and 593 grams/tonne gold and 14,708 grams/tonne silver (proximal - 52 Zone). Quartz-sulphide vein float in Eastgold Creek and veining in the East Gold Mine area, 500 metres north of the Tide property, have metal signatures similar to those of the polymetallic proximal mineralization, although the porphyry sills have not been mapped this far north.  Surface Exploration, Geophysics and Drill Programs  An initial program of mapping and prospecting was carried out in September 2001 from a camp on the road. Mapping and prospecting were carried out at a scale of 1:2,500, with rock samples taken from mineralized and altered outcrops and boulders.  In 2004, the Corporation conducted two phases of exploration: an early summer program of geological mapping, prospecting and soil geochemical sampling infilling areas with poor sample coverage followed by a fall program of diamond drilling consisting of four holes totaling 598 m and further prospecting.  Four reconnaissance holes, totaling 598 metres, were drilled by Serengeti Resources in late 2004 testing the Arrow, Southpit, High Grade Pit and 36 zones. Significant gold mineralization was intersected at the 36 Zone, where hole TIDE04-03 averaged 1 gram/tonne gold over 129.4 metres including 39.6 m at 1.93 grams/tonne gold.. This intersection is significant in that it tested a soil geochemical anomaly measuring 450 x 350 metres of greater than 0.5-gram/tonne gold that remains open in all directions. The hole was collared in the middle of the soil anomaly which is reflected in the mineralization found throughout its entire length. Prospecting work undertaken in conjunction with the drilling resulted in the discovery of a high grade vein structure, coined the 52 Zone, in the northeast corner of the property and the Brown Bear Zone which may be a continuation of the Arrow Zone mineralization. An airborne magnetics and electromagnetics geophysical survey was flown over the property in the spring of 2005 to aid in drill targeting and identifying structural trends on the property.  -53-  The primary focus of the 2005 drilling was to follow up the 2004 drilling discovery of gold mineralization at the 36 Zone. Eight holes totaling 967 metres were drilled, four targeting the 36 Zone and four targeting the 52 Zone. The holes in the 36 Zone had mineralized intervals which extended the zone to the northeast, southwest and in depth. Infill soil geochemical sampling between the 36 Zone and the South Pit soil anomalies to the south showed that the two anomalies are continuous as defined by gold values in excess of 500 ppb (0.5 g/t) gold. This gold-arsenic+/-antimony anomaly is now approximately 500 metres by 2100 metres in size, with diamond drilling having tested an area of 170 by 350 metres. Favourable results from preliminary metallurgical studies show that this mineralization is amenable to leaching, with gold recoveries averaging 73-81%. Prospecting and trenching were completed at the 52 Zone. The diamond drilling, combined with the surface results, has shown mineralization in this zone to be highly variable in nature.  Exploration on the Tide property continued with a geological mapping, fracture density surveying and channel sampling program completed in September, 2006. The program focused on the 36, Southpit and Northpit Zones.  The sampling programs were conducted by Equity Engineering Ltd. under the direction of Scott Heffernan, P. Geo., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects) ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report was filed on SEDAR on April 13, 2007.  Future Exploration Programs  For 2007, the proposed exploration program will be a comprehensive program consisting of mapping, prospecting, channel sampling and 3,500 metres of diamond drilling. The 36, Northpit, Riptide and Camp Zones will be the focus of the 2007 exploration program.   -54-  Jake Property, Kamloops Mining Division  [rfmannual20fa12007010.jpg]    -55-  [rfmannual20fa12007011.jpg]  -56-  Location and Introduction  The Jake Property, consisting of 66 claims covering 28,256 hectares, is located in Kamloops Mining Division of British Columbia, approximately 13 km west of Clearwater, BC. This project was initiated based on the discovery of significant gold-copper-bismuth mineralization in boulders and sub-crop located along recently constructed logging roads. Gold mineralization was discovered in roadbed exposure and boulders concentrated over a 35 metre section of road cut. The Corporation signed an option agreement to earn a 100% interest in the Jake claims (1,204 hectares.) The surrounding claims were staked to cover geology with potential for Intrusion-Related Gold (IRG) mineralization. Access to the property is exceptional due to an extensive array of logging roads permitting access to the entire property.  Property History  The Jake showing was discovered in July of 2005 by prospector Mo Kaufman. Composite samples of gossanous boulders collected by Mr. Kaufman returned high grade results of 27.5 and 15.7 grams/tonne gold. 48% of float samples collected within 2.5 km of the showing also demonstrated anomalous gold values. To our knowledge, there has been no previously documented exploration in the local vicinity of the Jake showing, as boulders and subcrop in this area have only been recently exposed by two to four year-old logging roads. The Clearwater Peak showings are the only recorded mineral occurrences in the local region of the showing. They were discovered by follow-up prospecting of copper-zinc-gold anomalies in a soil survey conducted by Kerr, Dawson and Associates for Pan Ocean Oil Limited in 1972.  Property Acquisition  The Corporation signed an option agreement effective October 29, 2005 to earn a 100% interest in the Jake claims (1,204 hectares), subject to a 4% NSR, half of which can be purchased for US $2 million. The Corporation will make cash payments totaling USD$300,000 and complete an aggregate of $300,000 (Canadian) in exploration expenditures before October 29, 2009. The Corporation will make cash payments of: · USD$10,000 upon signing (paid) · USD$20,000 on or before October 29, 2006 (paid) · USD$25,000 on or before October 29, 2007 · 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 The following table details the claims that comprise the Jake property with legal identification (Mineral Tenure) size, expiry date, and location.  -57-   Claim NameMineral TenureArea (hectares)Expiry DateLocationClearwater Peak[1]50827280.212December 31, 2009092P069CLO 1[2]518670240.691December 31, 2009092P069CLO 2[2]519684200.651December 31, 2009092P069JAKE 1-8521792 - 5217993,831.18December 31, 2008092P069JAKE 9-15521800 - 5218063,369.13December 31, 2007092P069JAKE 16-17521807 - 521808961.942December 31, 2008092P069JAKE 18-19521810 - 521811961.591December 31, 2008092P069JAKE 20521812500.622December 31, 2007092P079JAKE 21521813480.974December 31, 2008092P069JAKE 22-28521814 - 5218203,385.569December 31, 2008092P069JAKE 29521821480.623December 31, 2008092P079JAKE 30-35521822 - 5218272,682.003December 31, 2007092P079JAKE 36521828320.279December 31, 2007092P078JAKE 37521830480.591December 31, 2007092P079JAKE 38-39521831 - 521832823.025December 31, 2007092P069JAKE 40-44521834 - 5218382,410.509December 31, 2007092P059JAKE 45-48521840 - 5218431,729.185December 31, 2007092P059JAKE 49521845482.47December 31, 2007092P060JAKE 69-71521866 - 5218681,405.874December 31, 2007092P060JAKE 72-76521869 - 5218741,764.013December 31, 2007092P069JAKE 77521876502.11December 31, 2007082M051JAKE 78521878401.031December 31, 2007092P070JON[2]520106300.879December 31, 2009092P069MELI[2]521756120.325December 31, 2009092P069SID[2]520105100.279December 31, 2009092P069TOM[2]519188240.702December 31, 2009092P069  [1] Clearwater Peak property purchased in May 2006 [2] Original Jake property optioned from M. Kaufman in October 2005   -58-  Regional Geology  The Jake property straddles the boundary between the eastern Intermontane Belt to the west and the Omineca Belt to the east. The geology of this area has been the focus of significant mapping and geochronology by the British Columbia Geological Survey. The north-south long axis of the project area follows the Lemieux Creek Fault, which separates the Lemieux Creek Formation of the Quesnel Terrane from the Upper Paleozoic Fennel Formation of the Slide Mountain Terrane to the west. The Lemieux Creek Succession is a sedimentary sequence comprised of phyllites, slates, siltstones, quartzite and calcareous quartzite. The Jake showing occurs within mafic rocks of the Fennel Formation, which is largely composed of pillowed to massive basalt with minor bedded chert and gabbro. The claims continue east within the Slide Mountain Terrane across a thrust faulted boundary into metamorphic rocks of the Kootenay Terrane. In this region the Quesnel, Slide Mountain and Kootenay Terrane boundaries are all cross-cut by batholithic granite intrusions.   Property Geology  The Jake showing occurs within basaltic to gabbroic boulders and subcrop of the Fennel Formation near an inflection in the northwest-trending portion of the Lemieux Creek Fault. The showing consists of four similar boulders distributed obliquely over a recently built logging road bed and extending for 35 metres. A single 15 cm wide quartz cobble with visible gold and bismuthinite was located 250 m further south of the heavily mineralized boulders.  Mineralization  Mineralization within the boulders is characterized by bull quartz veins with banded and net-textured pyrrhotite ± chalcopyrite ± pyrite ± bismuthinite. Disseminated pyrrhotite (up to 3%) also occurs as blebs in pillow basalts that display hornfelsic textures and secondary epidote and quartz. This style of vein mineralization and a gold-copper-bismuthinite metal association is similar to other Cretaceous-aged gold-quartz vein systems in the area and highlights the potential of this region to host Intrusion-Related Gold deposits analogous to those in the Tintina Gold Belt of the Yukon and Alaska.  Surface Exploration and Geophysics  The Corporation conducted a limited property examination prior to acquiring the claims. This included channel sampling, mapping and prospecting. The results were sufficiently encouraging to prompt the option agreement and subsequent staking of related claims.  In March 2006, the Corporation undertook an initial ground magnetics and VLF electromagnetics survey to identify targets for additional exploration later in the year. Mechanical trenching was conducted at the original discovery exposing six veins over the length of the 74 metre trench. In July 2006, the Corporation undertook a prospecting and property-wide silt sampling program to follow up on the initial ground work.  -59-  The sampling programs were conducted under the direction of Mark Baknes, P.Geo., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) Eco-Tech Laboratory Ltd. of Kamloops and ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report has not been filed on the Jake Property.  Future Exploration Programs  It is anticipated that a trenching program at the Jake Showing to follow up gold-bearing quartz veins exposed in the initial trenching program will be undertaken early in 2007. The Corporation intends to seek a third party to undertake this work. A technical report has not been filed on the Jake Property. The Corporations other British Columbia and Yukon properties include:  Adam Property, Skeena Mining Division  The Adam property, consisting of two claims (1,823 hectares) covers a copper-gold porphyry prospect in the Unuk River area of northwestern British Columbia. The property lies in the Coast Mountains, approximately 70 kilometres northwest of Stewart and 20 kilometres southwest of the Eskay Creek Mine. A well-maintained gravel road connects the Eskay Creek Mine to their concentrate-shipping port facilities at Stewart, British Columbia. Eventual road access to the Adam property from the Eskay Creek Mine Road would be relatively easy to construct, without any major river crossings and mainly across the Prout Plateau. Alternatively, the Adam property is 50 kilometres upstream along the Unuk River from tidewater at Burroughs Bay, Alaska.  The Unuk River area lies along the western margin of the Intermontane tectonic belt, adjacent to the Coast Plutonic Complex. The area is underlain by more than 5,000 metres of Upper Triassic Stuhini Group and Lower Jurassic Hazelton Group volcano-sedimentary arc-complex lithologies. The Upper Triassic and Lower to Middle Jurassic volcanic rocks are accompanied by coeval intrusions throughout the map area. Economically most important is the Texas Creek Plutonic Suite, which comprises a group of Early Jurassic granodioritic stocks, dykes and sills in the Stewart-Unuk-Iskut area.  In August and September 2002, the Corporation carried out 1:2,500 scale mapping, prospecting and soil geochemistry over the Adam property from two fly camps. No additional work has been completed since then.  The Corporation intends to seek a third party to undertake further mapping, prospecting and an induced polarization survey over the Evan prospect, which could lead to diamond drilling.  Auddie Property, Omineca Mining Division  The Auddie Property, consisting of two claims (674 hectares) is located in the Quesnel Trough in north-central British Columbia. The Auddie is a grassroots porphyry copper-gold exploration target with access via the Omineca Mining Road, approximately 42 kilometres west of Germanson Landing and 45 kilometres northeast of Takla Landing.   -60-  A prospector discovered the Auddie in a 60 metre outcrop exposure on a recently constructed logging road. Chip sampling by the Corporation in October 2006 yielded one interval which assayed 0.16% copper and 0.02 g/t gold over 28 metres. A second interval averaged 0.31% copper and 0.02 g/t gold over 15 metres. These two intervals are separated by a 17 metre gap in sampling where bedrock is obscured by stockpiled, but mineralized, road fill material. Overburden covers outcrop at either end of the mineralized section, and as such, the full extent of this mineralization is unknown. Mineralization is hosted in porphyritic to equigranular monzonite with pervasive potassium feldspar alteration. Chalcopyrite and pyrite mineralization occurs on fractures and in quartz veinlets.  Rimfire has an option to earn a 100% interest in the Auddie Property for $115,000 in staged cash payments over four years and a minimum exploration expenditure of $30,000 in 2007. Rimfires interest is subject to a 1% NSR, half of which can be purchased for $1 million.  The Corporation plans to conduct preliminary surface exploration during 2007.    Kizmet Property, Atlin Mining Division  The Kizmet property consisting of 93 claims (34,078 hectares) is located in northwest B.C., approximately 90 km south of Atlin B.C. The main target of exploration on this property is epithermal gold-copper-silver-lead-zinc vein and breccia mineralization analogous to that found on the Corporations Thorn property to the south. It is believed that the epithermal mineralization in the district is strongly linked to a newly recognized suite of Cretaceous aged volcanic and plutonic rocks informally referred to as the Windy Table Suite. The Kizmet property was a joint venture with Barrick Gold Corporation (Barrick). The Corporation contributed claims totalling 27,939 hectares to the joint venture while Barrick contributed claims covering an area of 67,865 hectares. In January 2006, the number of claims was reduced to 93 totalling 34,078 hectares. In November 2006, Barrick gave notice of termination of the joint venture. The claims have reverted to 100% ownership by the Corporation, subject to a 1% NSR in favour of Barrick Gold Corporation.  The property is located on the western flank of the Stikine Terrane, which is locally comprised of the Triassic Stuhini Group (variable marine clastic sedimentary rocks, sub-marine mafic volcanic rocks, and lesser carbonate rocks), overlain by upper Triassic Sinwa Formation limestone and lesser argillite, all of which is overlain by middle Jurassic Laberge Group clastic sedimentary rocks. The aforementioned comprise the basement rocks on the Kizmet property and are intruded by Cretaceous volcano-plutonic complexes that are associated with known gold-silver-copper-lead-zinc showings.  A regional sampling, prospecting and mapping program was conducted during the late summer of 2004 Geological mapping and age-dating identified a Cretaceous-aged belt of volcanic and associated intrusive rocks distinct in age with coincident strong gold-silver-arsenic geochemical signature. Geological highlights include discovery of several precious metal-rich base metal veins, a zone of precious metal-rich silicified sedimentary rock, iron-zinc skarn and sedimentary-hosted gold-bearing disseminated sulphides.  -61-  During the summer of 2005, Barrick conducted a prospecting, mapping and stream sediment sampling program that identified several anomalous areas that will require more detailed work. No additional work was completed during 2006. A technical report has not been filed on the Kizmet Project.  No exploration program has been planned for 2007. The Corporation intends to seek joint venture partners for some or all of the claims.  Nechako Property, Omineca Mining Division  The Nechako property consisting of 6 claims (2,594 hectares) is located in northwest B.C., approximately 215 kilometres west of Prince George. The main target of exploration is epithermal goldsilver veins. Prospecting and sampling programs conducted during 2006 failed to achieve desired results. The property will be allowed to lapse.  PWG Project, Omineca Mining Division  The PWG Project consists of four separate property claim groups, comprising the Lynx, Copper Starr, FireCat and Tess properties. The properties are located between 50 kilometres and 65 kilometres west and southwest of the town of Houston, British Columbia in the Omineca Mining Division. All four properties are early stage prospects with potential to host porphyry copper-gold mineralization or vein precious-metals mineralization.  Effective March 31, 2007, the Corporation signed an option agreement to purchase 100% interest in the PWG properties. The Corporation is to make an initial cash payment of $40,000 and fund exploration expenditures of $50,000 on or before March 1, 2008. The Corporation may elect to option any or all of the claims upon delivery of written notice not later than March 31, 2008. To earn a 100% interest in each property, subject to a 1.5% NSR, two-thirds of which can be purchased for $1 million, the Corporation will make cash payments of: · $15,000 within 10 days of the Claim Election Notice (Notice) · $20,000 on or before the first anniversary of the Notice, · $30,000 on or before the second anniversary of the Notice · $45,000 on or before the third anniversary of the Notice.  Vavenby Project, Kamloops Mining Division  In December 2005, the Corporation signed an agreement with Northgate Minerals Corporation (Northgate) to cooperatively generate new exploration properties. Scoping studies led to two areas of interest, near Blue River in southern British Columbia and in west-central Yukon. Each company contributed $150,000 to the joint venture in 2006.   -62-  The Vavenby properties, which include the Blue River and Robert claim groups, were staked to cover anomalous results from a regional silt and soil sampling program conducted during 2006 as part of the Corporations Northgate Alliance in southern British Columbia. The Blue River claim group consists of 37 claims totaling 18,307 hectares located 15 km southwest of the town of Blue River. The Robert claim group consists of 8 claims totaling 4,000 hectares located 16 kilometeres east-southeast of the town of Vavenby.  The Blue River and Robert properties were staked for their potential to host Intrusion-Related Gold mineralization based on conceptual geological targeting and silt sampling results collected in 2006. Both properties are located in the central portion of the Kootenay Terrane in south-central British Columbia where Proterozoic to Paleozoic basement rocks are intruded by Cretaceous granitic batholiths that are inferred to be associated with gold occurrences elsewhere in the belt. The Blue River property is centered on the Cretaceous Blue River batholith, which intruded Proterozoic to Paleozoic metamorphic rocks of the Shuswap Assemblage. The Robert property lies within 10 kilometres of the gold-associated Cretaceous Baldy Batholith and is centered on a smaller Cretaceous to Tertiary granite that intruded meta-sedimentary rocks of the Shuswap Assemblage and Lower Cambrian metavolcanic rocks of the Eagle Bay Assemblage.  During 2007, additional prospecting and sampling will be carried out to ascertain the value of the property. Northgate has agreed to remain as an exploration partner.  Echo Property, Dawson Mining District, Yukon  The Echo Property is comprised of a total of 72 contiguous claims and covers approximately 1,458 hectares. The property is located approximately 65 km south-southwest of Dawson City, Yukon, adjacent to the Matson Creek access road. The property was staked to cover anomalous results from a soil and silt sampling program conducted pursuant to an alliance agreement with Northgate Minerals Corporation.   The first phase of exploration in 2006 consisted of helicopter-supported silt sampling during June followed by a second phase of helicopter-supported reconnaissance soil sampling, prospecting, mapping, and in-fill silt sampling in August and September. Based on results of these programs, the Corporation plans follow-up exploration, including detailed soil grids, further reconnaissance soil and silt sampling and prospecting to be completed during the summer of 2007.  Fer Property, Watson Lake Mining District, Yukon  The Fer Property is comprised of a total of 118 contiguous mining claims and covers approximately 2,450 hectares. The Fer Property is located 20 kilometres west of the town of Tungsten in the Northwest Territories, and is approximately 200 kilometres north of Watson Lake, Yukon Territory. The Cantung Highway passes five kilometres northeast of the Fer Property; however the Fer Property is best accessed by helicopter. If warranted, no problems are foreseen in constructing road access to the property from the Cantung Highway.  -63-  The Fer Property is underlain by a broadly folded sequence of coarse siliciclastic, calcareous and phyllitic, continental margin sediments of the late Proterozoic to early Cambrian Hyland Group. The nearest intrusion is an elongate, Cretaceous-aged granite body which lies four kilometres southwest of the Fer Property. Hyland Group rocks host gold mineralization in numerous occurrences from the southeastern Yukon to the Dawson City area, covering approximately 750 kilometres within the Tintina Gold Belt.  The FER Property was originally staked by Westmin Resources Limited in 1996 and was located to cover the strongest cluster of anomalous gold and arsenic results from a regional fine sediment sampling program conducted by Westmin in 1994. The survey was designed to test for Telfer-style, sediment-hosted gold deposits in the Hyland Group sedimentary rocks, and covered approximately 7000 square kilometres, stretching from the B.C.-Yukon border to the headwaters of the Hyland River. There is no record of exploration work on the property prior to this program. Work by the Corporation in 1998 consisted of soil sampling, detailed mapping of the anomalous soil zones and prospecting.  Pursuant to an Option and Joint Venture Agreement dated as of July 1, 1998, with Boliden Westmin (Canada) Limited, ("Boliden") as amended October 11, 2000, the Corporation acquired a 51% interest in the Fer Property. Bolidens interest in the property has been sold to Breakwater Resources Ltd. (Breakwater). If either partys interest decreases to below 7.5% that partys interest will be automatically extinguished and converted to a net smelter royalty return interest of 2%. The Corporation and Breakwater are at arm's length to one another.  The Corporation does not consider the Fer Property to be a principal property. The Corporation intends to seek a third party to option the Corporations interest in the property.  Simpson Property, Watson Lake Mining District  The Simpson Property lies in the Simpson Range of the Pelly Mountains of south-eastern Yukon, approximately 105 km northwest of Watson Lake. The Robert Campbell Highway passes the Simpson at its nearest point 35 km to the east. The property consists of 8 mining claims (873 hectares) located in the Watson Lake Mining District. The property was initially staked in 2003. The Corporation owns the property outright, with no underlying royalties.  The Simpson exploration target was defined on the basis of several anomalous government silt samples in an area underlain by prospective lithologies belonging to the Yukon Tanana Terrane. Preliminary prospecting and sampling was carried out in the general area during 2002 under the auspices of the Yukon Mining Incentives Program. Work on the Simpson confirmed that the geology is permissive for VMS mineralization and there is evidence of the existence of felsic volcanic units. Silt and soil results are highly anomalous in a suite of elements consistent with VMS-style mineralization and they are at levels considered anomalous in the nearby districts. Unfortunately, the limited program did not identify the source of the geochemical anomalies.  -64-  During 2003, a program of mapping, prospecting and geochemical sampling attempted to locate the source of the anomalous geochemistry defined by earlier programs. The program was successful in further defining existing soil geochemical anomalies, outlining new soil geochemical anomalies, and identifying in-situ felsic stratigraphy. The Corporation does not consider the Simpson Property to be a principal property.    Wernecke Breccia, Yukon [rfmannual20fa12007012.jpg]  -65-  [rfmannual20fa12007013.jpg]  -66-  The Wernecke Breccia properties, consisting of 2300 claims, are situated in the Wernecke Mountains, approximately 180 kilometres northeast of Mayo in east-central Yukon. Access to the property is via fixed wing aircraft to Copper Point airstrip and then by helicopter to the property. The property is situated in typical alpine, glaciated terrain, with elevations ranging from 1065 to 2165 metres above sea level.  In January 2006, the Corporation signed an agreement with Fronteer Development Group Inc. (Fronteer) to acquire 700 mineral claims and a proprietary geoscience dataset covering the Wernecke Breccia property from Newmont Exploration Canada Limited (Newmont) and NVI Mining Ltd., a subsidiary of Breakwater Resources Ltd. (NVI).  Fronteer has completed the required $2 million in exploration expenditures. Newmont and NVI retain a total 2% NSR. There is a 7.5% to 15% Net Profits Interest payable to the underlying vendors. Fronteer is operator of the project and has funded 100% of the exploration costs to earn an 80% interest, with the Corporation earning the remaining 20% interest. Effective November 15, 2006, a Joint Venture was formed between Fronteer and the Corporation, and ongoing exploration expenses will be shared pro-rata subject to dilution for non participation. Should either partys interest fall below 5%, their interest will be converted to a 3% Net Profits Interest after payback of capital and elimination of the vendors Net Profits Interest.  The Wernecke Breccias have been explored for copper, uranium and gold in the 1960s, 1970s, and 1980s. However, as iron oxide copper-gold (IOCG) deposits are relatively recently described, early exploration was not able to take advantage of this model. In the mid 1990s, Newmont Exploration Limited made a strong effort to advance the exploration of the Wernecke Breccias for their gold and copper potential, spending a total of (US)$5.5 million on more than 20 properties. Newmont flew a regional airborne magnetic and radiometric survey and conducted extensive geochemical sampling and geological mapping prior to drilling twelve prospects for a total of 14,600 metres.  The Wernecke Breccia property is located within a regional-scale belt of iron oxide dominated breccias which host significant copper-gold-cobalt mineralization. These breccias share many of the characteristics of iron oxide copper-gold (IOCG) deposits on a world wide scale. IOCG deposits have the potential to produce high unit value ore due to their multi-element nature and can form very large tonnage deposits, as best exemplified by the Olympic Dam deposit in South Australia. At Olympic Dam, ore is mined for copper, uranium, gold and silver. Several lines of evidence suggest that at the time of formation of the Wernecke Breccias, the Stuart Shelf of South Australia, the geological host terrane of the Olympic Dam deposit, was attached to the Yukon, as part of the Proterozoic super-continent of Rhodinia. The Olympic Dam deposit and the breccias in the Wernecke Mountains have identical ages of approximately 1.59 Ga. Other geological features, such as the intra-cratonic setting and orogenic history, are similar in style and timing between the two regions.  During 2006, Fronteer completed a $2.8 million exploration program comprised of prospecting, geological mapping, geochemical sampling and an airborne gravity geophysical survey. Through the course of the program, Fronteer evaluated 48 target areas for their potential to host Olympic Dam-style copper-gold-uranium and stand-alone uranium deposits. Surface sample results have been compiled for two target areas; the Thunder Mountain property and Fireweed prospect.  -67-  The Thunder Mountain property is a new gold-uranium-copper anomaly. A total of 25 samples were taken over an area of approximately 400 by 550 metres. Copper-bearing breccia was also noted nearby. The Fireweed prospect is a new uranium prospect where 93 boulders of iron oxide-potassium feldspar-silica altered chlorite schist were collected over a 200 by 400 metre area and averaged 0.22% U3O8. Twenty-two samples assayed in excess of 0.14% U3O8.  Fronteer also completed a 9,750-line-kilometre airborne gravity survey over the region. Survey data will be combined with surface geochemistry results and proprietary magnetic and radiometric data obtained from Newmont Exploration of Canada Ltd. to select drill targets for 2007 programs.  During 2007, Fronteer expects to carry out a program of field mapping, sampling, and prospecting. There will be a minimum of 7,500 metres in a diamond drill program.  Alaska Properties, Goodpaster Mining District  [rfmannual20fa12007014.jpg]  -68-  [rfmannual20fa12007015.jpg]  Location and Introduction  The Corporation holds an interest in four mineral exploration properties in the Goodpaster Mining District of Alaska, through its wholly-owned subsidiary, Rimfire Alaska, Ltd. The Corporation currently owns 100% of the Bou-Swede, California-Surf, Eagle-Hawk, and ER-Ogo-Fire Properties.  The Corporations Alaska properties lie within east-central Alaska, 65 kilometres northeast of Delta Junction. Access to the properties is by helicopter based out of Delta Junction. Teck Cominco/Sumitomo operates a restricted access road from Delta Junction. Teck Cominco/Sumitomo also maintains an airstrip in the area. This infrastructure has been used to assist with access to the Corporations Alaska properties. A seasonal airstrip is located on the eastern edge of the California/Surf property discussed below.   -69-  Property History  There is no documented exploration history for any of the properties previous to the Corporations acquisition through staking. The region was geologically mapped and silt sampled by government entities and by reconnaissance programs conducted by mining company syndicates in the 1970s and 1980s. Only government data was available in the public domain.  Property Acquisition  In 1998, the Corporation completed a comprehensive compilation of all publicly available data for a large area in east central Alaska, creating an exploration model to identify plutonic-related gold targets. This model provided a basis for the systematic definition and priority ranking of specific geological and geophysical targets in the area.  The Corporation, through Rimfire Alaska, then staked or acquired from arms-length third parties interests in over 1,600 mining claims in the Goodpaster Mining District (the Alaska Properties). The Corporation staked additional claims in August 2003 and March 2004. Property agreements have been amended to include 37 claims staked by AngloGold. Late in 2005, data from previous programs and newly published government surveys was re-interpreted and new targets defined. Subsequently, the Corporation staked 842 claims covering 53,695 ha (132,680 acres). The Corporation now has an interest in 1,654 claims totalling 182,800 acres.  The Corporation signed an option agreement dated February 22, 2007 with with Evanachan Limited, which was subsequently transferred to McEwen Capital Corporation (McEwen)., covering the Goodpaster properties. The agreement was subsequently assigned to Rubicon Minerals Corporation (Rubicon), subject to Rubicon shareholder approval. The terms of the agreement provide that the partner will fund a total of US$4.8 million in exploration over 6 years to earn a 60% interest in the Alaska properties including a $230,000 reimbursement of the Corporation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 Corporations election, may obtain an additional 5% interest (for a total of 75%) by providing a project financing loan to be repaid from the Corporations free cash flow upon production.  The specific mining claims in the Goodpaster Mining District in which the Corporation holds an interest are set out in the following table:  ProjectClaimMineral Tenure (ADL)LocationBou - SwedeBou 21-22594583-594584Fairbanks M., Township 7S, Range 18EBou 31-32594593-594594Fairbanks M., Township 7S, Range 18EBou 41-42594603-594604Fairbanks M., Township 7S, Range 18EBou 51-52594613-594614Fairbanks M., Township 7S, Range 18EBou 61-62594623-594624Fairbanks M., Township 7S, Range 18EBou 71-72594633-594634Fairbanks M., Township 7S, Range 18E  -70-   ProjectClaimMineral Tenure (ADL)LocationBou - SwedeBou 1-7651861-651867Fairbanks M., Township 7S, Range 18ESWD 1-38651938-651975Fairbanks M., Township 6S, Range 14E/15ESWD 39-182651976-652119Fairbanks M., Township 7S, Range 14E/15ESWD 183-246652120-652183Fairbanks M., Township 8S, Range 15ECal-SurfBEV 1-64606861-606923Fairbanks M., Township 6S, Range 15E/16EBND 1-95606924-607017Fairbanks M., Township 6S, Range 16E/17EBNDN 1-70651868-651937Fairbanks M., Township 5S, Range 16E/17ECEN 17-80594779 - 594842Fairbanks M., Township 6S, Range 16EHAB 22-30595093  595101Fairbanks M., Township 6S, Range 17EHAB 34-43595105  595114Fairbanks M., Township 6S, Range 17EHAB 47-56595118 - 595127Fairbanks M., Township 6S, Range 17ELCC 14-20595141 - 595147Fairbanks M., Township 6S, Range 17ELCC 24-30595151 - 595157Fairbanks M., Township 6S, Range 17ELCC 4-10595131 - 595137Fairbanks M., Township 6S, Range 17ELH-1-16644745-644760Fairbanks M., Township 6S, Range 17EPAR 1-11595382  595392Fairbanks M., Township 6S, Range 15E/16EPAR 14-24595395  595405Fairbanks M., Township 6S, Range 15E/16EPAR 27-37595408  595418Fairbanks M., Township 6S, Range 15E/16EPAR 40-50595421  595431Fairbanks M., Township 6S, Range 15E/16EPAR 53-121595434 - 595502Fairbanks M., Township 6S, Range 15E/16EPC-1-25644761-644785Fairbanks M., Township 6S, Range 16EScot 1-27605472 - 605498Fairbanks M., Township 5S, Range 15E/16ESHARP 29-33595531  595535Fairbanks M., Township 6S, Range 17ESHARP 43-47595545  595549Fairbanks M., Township 6S, Range 17ESHARP 57-61595559  595563Fairbanks M., Township 6S, Range 17ESHARP 71-75595573 - 595577Fairbanks M., Township 6S, Range 17ESHARP 85-89595587 - 595591Fairbanks M., Township 6S, Range 17ESHARP 99-103595601  595605Fairbanks M., Township 5S, Range 17ESS-1-42644786 - 644827Fairbanks M., Township 5S/6S, Range 17ESTER 35-40595663 - 595668Fairbanks M., Township 6S, Range 17ESTER 45-50595673 - 595678Fairbanks M., Township 6S, Range 17ESTER 55-60595683 - 595688Fairbanks M., Township 6S, Range 17ESTER 65-70595693 - 595698Fairbanks M., Township 6S, Range 17ESTER 75-80595703 - 595708Fairbanks M., Township 6S, Range 17ESTER 85-90595713 - 595718Fairbanks M., Township 5S, Range 17E  -71-   ProjectClaimMineral Tenure (ADL)LocationEagle-HawkEagle 1-106579385-579490Fairbanks M., Township 7S, Range 11E/12EEX 1-20605507-605526Fairbanks M., Township 7S, Range 11E/12EEX21-33641468-641480Fairbanks M., Township 7S, Range 11E/12ESAND 1-39605420 - 605458Fairbanks M., Township 7S, Range 11E/12EEagle-HawkEGLE 1-362652208-652569Fairbanks M., Township 7S, Range 11E/12EER-Ogo-FireER 3-12579158-579167Fairbanks M., Township 5S, Range 13EER 15-24579170-579179Fairbanks M., Township 5S, Range 13EER 27-36579182-579191Fairbanks M., Township 5S, Range 13EER 39-48579194-579203Fairbanks M., Township 5S, Range 13EER 51-60579206-579215Fairbanks M., Township 5S, Range 13EER 63-72579218-579227Fairbanks M., Township 5S, Range 13EER 75-84579230-579239Fairbanks M., Township 5S, Range 13EER 87-96579242-579251Fairbanks M., Township 5S, Range 13EER 99-108579254-579263Fairbanks M., Township 5S, Range 13EER 111-120579266-579275Fairbanks M., Township 5S, Range 13EFire 4-12579034-579042Fairbanks M., Township 5S, Range 13EFire 16-56579046-579086Fairbanks M., Township 5S, Range 13EJAZZ 1-13605459-605471Fairbanks M., Township 5S, Range 13EOgo 35-39595262-595266Fairbanks M., Township 5S, Range 14EOgo 42-76595269-595303Fairbanks M., Township 5S, Range 14E/13EOgo 143-154595370-595381Fairbanks M., Township 5S, Range 13EZAPPA 1-4605091 - 605094Fairbanks M., Township 5S, Range 13E  Regional Geology  The Alaska properties lie within rocks of the Yukon-Tanana Terrane (YTT), bounded to the north by the Tintina Fault and to the south by the Denali Fault systems. The YTT in east-central Alaska consists of a Precambrian to middle Paleozoic metamorphic sequence of sedimentary and magmatic rocks. Mineralization and plutonic gold deposits in Alaska and the Yukon are directly associated and often hosted within Cretaceous aged plutons. In this region, recent evidence indicates that mineralization is associated with Cretaceous-related aged plutons which are characterized by a lower magnetic susceptibility forming linear arrays of magnetic lows. One of these linear arrays, which is associated with gold occurrences in the area, has been termed the Pogo Trend. The northeast structures are thought to have been important in controlling the distribution of Cretaceous intrusions through significant horizontal and vertical displacements. The vertical movements on these northeast structures are important since the style and grade of mineralization in plutonic-gold systems are strongly influenced by depth of formation.  -72-  Individual Properties  Mark Baknes, P.Geo, Vice President, Exploration for the Corporation, is the Qualified Person for these projects as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) A technical report was filed on SEDAR on May 12, 2006. :  California-Surf  The Corporation, through Rimfire Alaska Inc., held a 30% joint venture interest in these properties. The joint venture partner, Western Keltic Mines Alaska Inc. (Western Keltic), held the remaining 70% interest in the properties.  In August 2003, Western Keltic sold its 70% interest in these claims to the Corporation, subject to a 1.75% NSR (of which 1% may be bought for $1,000,000), for the following payments (all payments in Canadian currency):  · $25,000, or 50,000 common shares at the election of the Corporation, upon completion of $1,500,000 exploration expenditures subsequent to the agreement, · $50,000, or 50,000 common shares at the election of the Corporation, upon completion of an aggregate $3,000,000 exploration expenditures subsequent to the agreement, 100,000 shares upon obtaining a positive feasibility study for placing any part of the property into commercial production.  Property Geology and Exploration  The Beverly area lies in the southwest corner of the California-Surf property and consists of the PAR, Cen and PC claims. An exploration, development and mine operating agreement, dated June 22, 2004 was signed with AngloGold which was terminated in November 2004. During this period, AngloGold completed a program of soil sampling along the anomalous portions of lines sampled in 1999 and 2000 to verify previously defined anomalies. Very little sampling was done beyond the areas of previous work.  The Scot area is comprised of the Scot 1-27 state mining claims and is located along the Pogo trend. It is underlain by undifferentiated paragneiss and orthogneiss which are cut by mid-Cretaceous aged northwest trending dykes. The Shawnee Peak mineral occurrence lies adjacent to the south and is host to gold-bearing quartz veins associated with similar granitic dykes and hosted in orthogneiss.  The SE Surf area lies in the southeast corner of the California-Surf property and consists of the HAB, LCC and LH claims. Three distinct gold soil anomalies are coincident with strong bismuth, arsenic, antimony and weaker silver, molybdenum and tungsten. The three soil anomalies have dimensions of 2.4 kilometres by 0.5 km, 1.2 kilometres by 1.1 kilometres and 2.2 kilometres by 0.5 kilometres and are oriented in an east-west direction with a weak north-south component. Mineralization has been found in boulders over an area measuring 250 by 200 metres and consists of intensely quartz- and sericite-altered porphyritic granite. Although the anomalous gold in soils has associated high bismuth, no elevated bismuth has been found in rock samples collected to date. This indicates that there may be other styles of gold-bismuth-bearing mineralization that have yet to be found.  -73-  The Boundary area is situated toward the northern edge of the California-Surf claim group on the south side of a granitic body. This property is comprised of the SHARP, STER and SS state mining claims. The main gold soil anomaly, measuring 800 by 350 metres, wraps around a prominent ridge. A broader anomaly, defined by bismuth and arsenic with spotty gold, measures 2.5 by 1.5 kilometres and is centred on the main gold anomaly. Four distinct mineralized surface showings of quartz boulders have been discovered within a 1.0 by 1.5 kilometres area that is central to a moderately intense zone of pervasive quartz-sericite alteration. Two mineralization types have been distinguished: 1) shallow-dipping shear-hosted quartz veins; 2) narrow tensional quartz stockwork veins. The shear-hosted veins are variably textured and contain milky white quartz (Type 1), strongly brecciated-sheared quartz (Type 3) and granular quartz with interstitial sericite, feldspar and tourmaline (Type 2).  Drilling during September 2000 (4 holes, 827.1 m) at the Boundary Property revealed three styles of gold mineralization, and indicated that gold mineralization is more widespread than indicated by surface sampling. The highest gold values are hosted in 1-5 centimeter quartz-pyrite-pyrrhotite veinlets that locally contain visible gold intergrown with bismuthinite. Broader zones of elevated gold values are found in quartz-sericite altered or sheared gneiss locally cut by hairline quartz-pyrite-calcite stringers. Less commonly, quartz-pyrite-bismithunite possibly with arsenopyrite and/or gold veinlets occurs in pegmatitic marginal phases of granitic dykes. The strong gold-bismuth correlation, associated alteration and gold-bearing pegmatitic granite indicate a geological setting not unlike other plutonic gold-type deposits in the region.  In 2001, work consisted of an airborne radiometric and magnetic survey over the California-Surf property, limited auger soil sampling and a 619 m drill hole in the Boundary area, which was followed by a regional soil sampling program evaluating six geochemical-geophysical target areas.  Late in 2005, data from previous programs and newly published government surveys was re-interpreted and new targets defined. Subsequently, the Corporation staked 842 claims covering 53,695 ha (132,680 acres).  The Corporations 2006 field program investigated the claims staked in 2005 as well as high priority targets generated in previous programs. A total of 243 silt, 1403 soil and 158 rock samples were collected. Anomalous results in soils and silts were obtained in the newly surveyed Boundary North area, which is located approximately 2 km north of the previously referred to Boundary area. These results are considered very encouraging and will be the focus of further follow up.  Future Exploration Programs  The Corporation is operator for the 2007 field program. A comprehensive sampling and prospecting program followed by drilling of 4-5 holes has been proposed.  -74-  Eagle-Hawk Property  On January 30, 2002, the Corporation signed an exploration, development and mine operating agreement with AngloGold Ashanti (U.S.A) Exploration (AngloGold) whereby AngloGold can earn a 50% interest in the Eagle property. A December 17, 2003 amendment included the Sand claims (staked by the Corporation) and the EX claims (staked by AngloGold) in the agreement. Effective December 31, 2005, a termination agreement was signed whereby AngloGold relinquished 100% ownership of the claims subject to an NSR of 2%, one-half of which can be purchased for US $1,000.000. In January 2006, the Corporation staked 362 claims (Hawk) near the Eagle property.  Property Geology and Exploration  The Eagle property is comprised of the Eagle 1-106, Sand 1-39 and EX 1-33 state mining claims and is located along the Big Swede magnetic trend. The Eagle property is underlain by mid-Cretaceous aged granitic rocks and older intrusive rocks known as orthogneiss. A magnetic low feature corresponds closely with the granitic body. The Hawk property is comprised of the EGLE 1-362 state mining claims. They surround the Eagle Property to the south and east.  During September 2000, Hyder Gold Inc. completed a five hole, 274.3 metre diamond drilling program on the Eagle property. The aim of the program was to test portions of the gold soil geochemical anomaly. Drill hole EA00-03 encountered weakly porphyritic granite which was consistently cut by quartz, quartz-calcite and, less commonly, quartz-pyrite-arsenopyrite veinlets.  In 2002 and 2003, AngloGold conducted auger soil surveys as well as tree bark sampling for biogeochemical studies. Both techniques defined areas of anomalous gold-arsenic and bismuth geochemistry. These geochemical results define a 1500 metre by 3000 metre gold-arsenic-bismuth-tungsten soil anomaly. Recovery of rock chips from soil sample pits revealed extensive alteration and in some instances quartz-carbonate stringer-style mineralization.  Two phases of work were completed on the Eagle property in 2004; soil sampling to expand the previous focused soil grid to its current length of 6 km with lines ranging from 0.7 to 1.8 km in length, and a drill program of 9 holes totaling 2778 m. Mineralization intersected during drilling consists of quarts-sulphide vein stockworks containing gold hosted in a granitic stock. A total of 24 narrow intercepts containing greater than 1 gram/tonne gold were intersected. A deep penetrating EM survey was carried out late in the season which defined a strong northeast fault zone coincident with anomalous geochemistry.  During 2006, the Corporation conducted a regional exploration program on these claims. Of particular significance are anomalous gold in silt results obtained from a continuous area to the east, southeast and south of the granitic body that has thus far been the focus of exploration. This anomalous zone extends 5 kilometres outward from the granitic body forming a 10 kilometre arc.   -75-  Future Exploration Programs  The Corporation is operator for the 2007 field program. A comprehensive sampling & prospecting program followed by drilling of 3-4 holes has been proposed as well as follow-up of the newly defined anomalous region to the east and south of the granitic body.  ER-Ogo-Fire Property  On January 30, 2002, the Corporation signed an exploration, development and mine operating agreement with AngloGold Ashanti (U.S.A) Exploration Inc. (AngloGold) whereby AngloGold could earn a 50% interest in the ER-Ogo-Fire property. A December 17, 2003 amendment included the Jazz claims (staked by the Corporation) and the Zappa claims (staked by AngloGold) in the agreement. Effective December 31, 2005, a termination agreement was signed whereby AngloGold relinquished 100% ownership of the claims subject to an NSR of 2%, one-half of which can be purchased for US $2,000.000.  Property Geology and Exploration  The ER-Ogo-Fire property is comprised of 219 claims covering approximately 4,270 hectares. The ER-Ogo-Fire Property is underlain by gneisses of the Paleozoic Yukon-Tanana Terrane representing strongly metamorphosed sedimentary and igneous rocks. The gneisses are intruded by late Cretaceous aged granitic intrusions which outcrop extensively on the property. Gold-bearing quartz vein material has been sampled on a ridge lying between the two areas of intrusive outcrop.  Auger soil sampling surveys in 2003 expanded the geochemically anomalous area beyond that outlined by reconnaissance style surveys conducted in 2002. Results of the geochemical survey defined a 1500 by 300 metre gold-arsenic-bismuth-antimony soil anomaly. Six diamond drill holes totaling 2161 metres tested four widely spaced areas within the soil anomaly. Drilling intersected widespread quartz-sericite-pyrite alteration enveloping multiple quartz sulphide veins and vein breccias. A total of 32 intercepts of greater than 1 gram/tonne gold were intersected. A ground geophysical survey conducted late in the season appears to outline early granitic phases that are believed to form a prospective host rock for veining.  During 2004, AngloGold completed a NSAMT (Natural Source Audio Frequency Magneto-Telluric) geophysical survey, soil geochemical sampling and three drill holes totaling 997 m on the ER project. Drilling further defined a northwest trending vein structure that is open to the northwest and downdip. Hole ER04-7, following up on a 0.5 m intercept that assayed 63 grams/tonne gold in 2003, intersected 4.1 grams/tonne gold over 1.3 metres.  During 2006, the Corporation conducted a regional exploration program on these claims. Soil and silt sampling gave generally spotty anomalous results to the northwest of past drilling, however, a small cluster of anomalous gold in soils were obtained in association with large quartz boulders approximately 3.5 km to the southwest of previous drilling.  -76-  Future Exploration Programs  The Corporation is operator for the 2007 field program. A comprehensive sampling & prospecting program followed by drilling of 3-4 holes has been proposed.  Bou-Swede Property  The Bou group of 19 claims and the Swede group of 246 claims are located along the Pogo Trend. Rimfire Alaska holds a 100% interest in the property with no underlying royalties. Rocks underlying the Bou property are almost exclusively granite. Mineralization on this property consists of quartz veins and mineralized and altered granite has been found in two general areas. At the Thunder showing, quartz vein boulders with gold, arsenic and antimony have been found over a 300 by 300 metre area, along the trace of a northeast trending fault structure. The Cairn showing lies 2 kilometres south of the Thunder and is defined by a gold-bearing quartz vein boulder train measuring 50 by 300 metres that extends along the trace of an east-west structure. Strongly anomalous gold, bismuth, arsenic and antimony soil anomalies extend beyond the current limits of sample coverage.  Future Exploration Programs  The Corporation is operator for the 2007 field program. A comprehensive sampling & prospecting program followed by drilling of 2-3 holes has been proposed.   -77-  Australia  Lachlan Fold Belt Properties  [rfmannual20fa12007016.jpg] Location and Introduction  The Lachlan Fold Belt in New South Wales Australia is richly endowed with a diversity of deposit types that host in excess of 150 million ounces of gold. Significant porphyry copper gold, epithermal gold, volcanogenic massive sulphide (VMS), gold-copper skarn, sediment-hosted disseminated gold and intrusion-related gold deposits.   -78-  Property Acquisition  The Corporation has applied for exploration licences covering 92,673 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 will be held by Rimfire Australia Pty. Ltd., a wholly owned subsidiary of Rimfire Minerals Corporation. The Corporation paid a fee for use of the study and upon designation of project areas, the Corporation will pay additional fees based on project designation and exploration expenditures. BWG will retain a 2% net smelter royalty in all designated projects. During the two-year license period, the Corporation must make total eligible exploration expenditures of at least USD$150,000.  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.  Regional Geology  The Eastern Lachlan Fold belt constitutes a subsection of the Tasman Fold Belt, which stretches from the Queensland-New South Wales border across Victoria and into Tasmania. The Neoproterozoic to Triassic orogenic belt preserves accreted arc and back-arc terrains and subduction zones sediments all of which were subjected to extensional and contractional tectonics. Silurian-Devonian post orogenic granitoids intrude the supracrustal rocks. Ordovician and Silurian island arc intermediate to mafic volcanics, sub-volcanics and intrusions of the Macquarie Arc, preserved as fault bound north-south trending belts, contain the bulk of the known copper-gold mineralization in the region. Furthermore, high grade copper-gold porphyry deposits are most closely constrained to distinctive alkalic magmatic suites.  Exploration  A limited property examination tour was conducted late in 2006. Available data is being compiled and exploration plans prepared for reconnaissance work to be completed when exploration licences are granted. To date, the Corporation has been granted three exploration licences and received tentative approval for five more. A final exploration licence is still in the application stage. No mining claims or exploration licences have been acquired from third parties.   -79-  Future Exploration Programs  It is anticipated that exploration will commence in late 2007 to coincide with spring/summer in Australia.  Nevada  Walker Lane Alliance  [rfmannual20fa12007017.jpg]  -80-  [rfmannual20fa12007018.jpg]  -81-  Location and Introduction  The Corporation holds an interest in one mineral property in the State of Nevada. The Poncho property is located 60 kilometres to the northwest of Tonopah in southwestern Nevada halfway between the cities of Reno and Las Vegas. There is road access to the property.  Property Acquisition  In January 2005, the Corporation signed an agreement with Newmont Capital Limited (Newmont) targeting a defined project area in Nevadas Walker Lane Mineral Belt. The Corporation has committed to making US $300,000 in expenditures within the project area during the term of the two year agreement. The expenditures were completed in January 2007. The Corporation may, at its discretion, acquire one or more properties within the project area boundaries in which to conduct further exploration work. Upon acquisition of any property interest, Newmont will be granted a Net Smelter Return Royalty of 2.0% to 3.0% on a sliding scale based on the price of gold. Newmont will have a one-time right to enter a 50:50 Joint Venture upon the Corporation completing expenditures of US $300,000 on an acquired property. When this right is exercised, Newmont will relinquish the Net Smelter Return Royalty, manage the Joint Venture, and solely fund the next US $1,000,000 in exploration to earn its 50% interest.  The Corporation 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.  During the first half of 2005, the Corporation identified potential targets for exploration and conducted limited field examinations. The Corporation staked 118 claims covering 2,344 acres (949 hectares). During 2006, the Corporation leased the Gila24 claims covering 1,440 acres (583 hectares) from Silverthorn Exploration, Inc. (Silverthorn) by making annual cash payments that escalate over time. The Corporation has an option to acquire these claims subject to a 2% net smelter royalty for a cash payment of US $500,000 to US $5,000,000 depending on the date of exercise of the option. The following table details the claims that comprise the Poncho property with legal identification (Mineral Tenure) and location.  ClaimMineral Tenure (ADL)LocationPoncho 1-47640574-640620Nye County, Township7N/ 8N, Range 38EPoncho 50-51650460-650461Nye County, Township7N/ 8N, Range 38EPoncho 52-120650462-650530Nye County, Township7N/ 8N, Range 39EGila24 1-72890467-890538Nye County, Township7N, Range 38E, 39E   -82-  Regional Geology  The Poncho property is situated within a 700 km long by 300 km wide geological corridor called the Walker Lane Belt (WLB). This belt straddles the California  Nevada border and trends northwestward within western Nevada marking the transition between two contrasting geological provinces; the Basin and Range to the northeast and the massive Sierra Nevada batholith to the west. The WLB is a distinctive structural corridor that is considered the inboard manifestation of the San Andreas Fault system.  The oldest rocks exposed in the central Walker Lane are Middle and Upper Cambrian siliclastic and carbonate rocks. This basement stratigraphy was deformed by both the Mississippian Antler and Triassic Sonoma orogenies. This composite structural package was then intruded by Jurassic to Upper Cretaceous plutons. From approximately 34 Ma until the present day, the WLB has been the focus of episodic volcanism, including andesite stratvolcanoes, rhyolite flow domes and mafic lava flows. Large-scale structures within the WLB are thought to have partially controlled the localization of volcanism and associated precious metal deposits. The intensity and extensive nature of hydrothermal systems driven by this volcanic-structural regime is marked by over 40 epithermal deposits in the Walker Lane that account for 46.7 million ounces of gold and 436 million ounces of silver in production and resources.  Property Geology  The central portion of the Poncho property is comprised of a window of uplifted Mesozoic limestones, dolomites and siliclastic rocks, flanked by overlying Tertiary volcanic rocks and minor sediments. A series of silica caps, up to 600 m in diameter, occur at the contact between the Mesozoic sedimentary rocks and the Tertiary volcanic rocks near the intersection of a regional, northwest-trending Walker Lane fault, and smaller, second-order northeast-trending faults. The silica caps are composed of multi-stage hydrothermal breccias with extensive silicification, and are interpreted to represent zones of structurally-focused hydrothermal upwelling. Near the same level as the silica caps are local occurrences of siliceous sinter and travertine deposits, features defining the paleo-surface within epithermal centres. Veins feeding the silica caps exhibit chalcedonic banding, silica after bladed calcite and needle adularia. These textures are evidence for multiple episodes of boiling, which often indicate a favourable environment for gold accumulation.  Mineralization  Exploration on the Poncho property is targeting low sulphidation gold-silver bearing epithermal veins. The main areas of the current exploration program are in the southwest side of the Poncho property, where a series of silica caps, up to 600 m in diameter, occur at the contact between the Mesozoic sedimentary rocks and Tertiary volcanic rocks near the intersection of a regional, northwest-trending Walker Lane fault, and smaller, second-order northeast-trending faults. Silica caps are composed of multi-stage hydrothermal breccias with extensive silicifcation, and are interpreted to represent zones of structurally-focused hydrothermal upwelling. At the same elevation as the silica caps are local occurrences of siliceous sinter and travertine deposits, features defining the paleo-surface within epithermal centres. A system of veins, with individual veins measuring several metres wide up to 15 metres wide, trend into the silica caps. These veins exhibit chalcedonic banding, silica after bladed calcite and needle adularia all of which are interpreted as boiling textures that favour gold-silver mineralization.  -83-  Surface Exploration, Geophysics and Drill Programs  During 2006, mapping and prospecting programs identified potential drill targets. In January 2007 drilling commenced, targeting vein structures. Drilling was suspended in February and recommenced in mid-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. Results have not yet been compiled from this program.  A technical report has not been filed for the Nevada Properties. The Qualified Person for this property is Mark Baknes, P.Geo. Vice President, Exploration for the Corporation.  Future Exploration Programs  Further exploration plans will depend on the results of the current drill program.  Estimated Administrative Expenditures  The Corporation expects that total administrative costs to carry out the Corporations proposed exploration and development programs for the period February 1, 2007 to January 31, 2008 will be approximately $926,760. The estimated administrative expenses will be financed from existing working capital. The estimated average monthly breakdown is as follows:  ITEMAverage Month12 Month PeriodAccounting & legal$            4,175$          50,100Insurance3,51042,120Investor services2,45029,400Management services11,300135,600Office4,24050,880Marketing and promotion17,500210,000Rent5,20062,400Salaries & support services26,075312,900Travel & entertainment2,78033,360TOTAL$       77,230$       926,760  ITEM 5   OPERATING AND FINANCIAL REVIEW AND PROSPECTS  Not Amended  ITEM 6   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  Not Amended  -84-  ITEM 7    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  MAJOR SHAREHOLDERS  The following table sets forth security ownership of those parties owning five percent (5%) or more of the outstanding common shares of the Corporation as at January 31, 2007.  Name,
Municipality of ResidenceNumber of Common Shares of the Corporation beneficially owned or directly/indirectly controlledPercentage of Issued Share CapitalThe Canadian Depository
for Securities Limited 
Toronto, ONCommon Shares: 17,839,62982.02%Depository Trust Company 
New York, NYCommon Shares: 3,119,40814.34%Henry J. Awmack, P.Eng.
Vancouver, B.C.
Chairman of the Board for the CorporationCommon Shares: 1,352,001
Options: 95,0006.22%  The voting rights attached to all shares of the Corporation are equal. No shareholder or group of shareholders holds or is entitled to exercise any preferential voting rights with respect to shares of the Corporation.  The Corporation has not paid any dividends since its incorporation and does not anticipate the payment of dividends in the foreseeable future. At present, the Corporations policy is to retain earnings, if any, to finance exploration on its properties. The payment of dividends in the future will depend upon, among other factors, the Corporations earnings, capital requirements and operating conditions.  The only significant change in ownership over the past three fiscal years is the gradual dilution of Mr. Awmacks holding due to private placements completed by the Corporation. While his actual shareholdings remain the same, at January 31, 2006 it represented 6.79% of the outstanding shares of the Corporation and 7.57% at January 31, 2005.  As at January 31, 2005, Prudent Bear Fund held 2,000,000 common shares which represented 11.2% of issued share capital. The Fund currently holds less than 5% of the outstanding shares.   -85-  RELATED PARTY TRANSACTIONS  As at March 30, 2007, the Corporation was indebted to Equity Engineering Ltd. and Equity Geoscience, Ltd. (collectively Equity), in the amount of $26,162 for consulting services provided by Equity. Equity is not at arm's length to the Corporation, as two of the principals of Equity are David A. Caulfield and Henry J. Awmack who are directors and officers of the Corporation. The services provided by Equity to the Corporation are provided at rates no less favorable to the Corporation than would be available from unaffiliated third parties providing similar services. It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Corporation from time to time, and Equity will be remunerated for such services at Equitys standard commercial rates.  During February and March of 2007, the Corporation paid Equity $11,287 for geological consulting services and $36,243 for providing general corporate and administrative services composed of $1,231 for investor services, $21,748 for management services, $440 for office services, $10,157 for rent and $2,668 for support services.  As at January 31, 2007, the Corporation was indebted to Equity, in the amount of $54,391 for consulting services provided by Equity. During the year ended January 31, 2007, the Corporation paid Equity $736,281 for geological consulting services and $235,389 for providing general corporate and administrative services composed of $1,611 for insurance, $6,282 for investor services, $129,999 for management services, $8,061, for office services, $62,336 for rent and $27,100 for support services.  As at January 31, 2006, the Corporation was indebted toEquity Engineering Ltd. (Equity) in the amount of $36,846 for consulting services provided by Equity.  During the year ended January 31, 2006, the Corporation paid Equity $206,763 for geological consulting services and $244,871 for providing general corporate and administrative services composed of $1,117 for insurance, $4,279 for investor services, $99,305 for management services, $5,810 for office services, $62,696 for rent and $71,663 for support services.  During the fiscal year ended January 31, 2005, the Corporation paid Equity $431,996 for geological consulting services, excluding costs paid by joint venture partners, and $203,098 for providing general corporate and administrative services. General corporate and administrative services provided by Equity during the period consisted of the following: $14,457  insurance $3,711 - investor services; $96,462- management services; $12,026  office; $39,172 rent; and $37,270 - support services. The increases in these amounts reflect additional office space and services utilized by the increase in Rimfire staff.  Equity is one of the underlying vendors who own a 7.5 to 15% Net Profits Interest (NPI) in the Wernecke Breccia property. Equitys share of the NPI is 40%. In addition, two of the directors and officers of the Corporation each own 20% of a different company which is entitled to 10% of the NPI.   -86-  Except as disclosed above, during the previous three fiscal years up to March 31, 2007, no insider of the Corporation, director or officer, or associate or affiliate of such persons, has or has had any material beneficial interest in any transaction or in any proposed transaction, which has or will materially affect the Corporation. The Corporation has not made any loans (including guarantees of any kind) to or for the benefit of any of the directors, officers, employees or related parties.  INTERESTS OF EXPERTS AND COUNSEL  Not Applicable.  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, 2007 and 2006
Statements of Loss and Deficit, Statements of Cash Flows,
Statement of Changes in Shareholders Equity, and Statements of Mineral Property Expenditures
all for the fiscal years ended January 31, 2007, 2006, and 2005
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended January 31, 2007
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.   -87-  The Corporations financial instruments can be categorized into three main groups:  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, cash and short-term investments (category a) represents approximately $3,875,001 of the Corporations total assets of $5,358,588 (or 72% of the total assets). However, all the term deposits and cash (49% of total assets) have fixed interest rates for the near-term. Therefore the cash flows are known and measurable and do not represent a material risk to the Corporation. All term deposits are cashable at the Corporations option without loss of interest.  Short-term investments (23% of total assets) have fixed maturity dates ranging from 4 months to one year. If the Corporation does not hold these investments to maturity, there would be a loss of interest as they are sold in the secondary marketplace. Upon maturity, these investments are either converted to cash or re-invested in similar secured instruments.  During the fiscal year ended January 31, 2007, interest rates on the Corporations deposits ranged from 2.6% to 4.15%, depending on the principal invested and the term of the investment. During the same period, Canadian T-Bill rates ranged from 3.31% to 4.61% with an average rate of 4.09%.  If interest rates declined or increased as shown below, the Corporations total receipts, consisting of revenue from mineral property operations, gain on marketable securities and interest income, would be affected as follows, based on the fiscal year-end balances:  Effect on  total receiptsIncrease/decrease in interest rate20072006-0.50%$(20,873)(3.8%)$(14,180)(6.2%)-0.25%(10,437)(1.9%)(7,090)(3.1%)-0.10%(4,175)(0.8%)(2,836)(1.2%)+0.50%20,8733.8%14,1806.2%+1.00%41,7477.5%28,36012.5%+1.50%62,62011.3%42,54018.7%  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, 2007. 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, 2007. Actual financial results for the coming fiscal year will vary since the balances of accounts are expected to decline as funds are used for Corporation expenses.  -88-  The difference between the forecast figures for the fiscal year ended January 31, 2007 compared to the same figures for the fiscal year ended January 31, 2006 relates to other sources of revenue which are not subject to interest rate risk. During the fiscal year ended January 31, 2007, sales of marketable securities resulted in a gain whereas in the previous fiscal year the sales resulted in a loss. This difference of $232,146 offsets the interest rate variation from the slight increase in cash and short term investments subject to interest rate risk.  Foreign currency exchange risk  Foreign currency cash deposits (category b) represent approximately $299,652 of the Corporations total assets (6% of total assets). The Corporation has limited exposure to foreign exchange risk, restricted to payment of current trade accounts payable in US Dollars or Australian Dollars where most of the Corporations cash assets are denominated in Canadian Dollars. The Corporation maintains bank accounts in US and Australian Dollars from payments received in US or Australian Dollars to pay these trade accounts.  During the fiscal year ended January 31, 2007, U.S. Dollar exchange rates varied by up to 3% below the average exchange rate and up to 4% above the average exchange rate. During the same period, Australian dollar exchange rates ranged from a low of 7% below the average exchange rate to a high of 4% above the average exchange rate. The U.S. Dollar exchange rate for January 31, 2007 was 4% above the average exchange rate for the year while the Australian dollar exchange rate for January 31, 2007 was 6% above the average exchange rate for the year.  Effect on total assetsIncrease/decrease in 
foreign exchange rates20072006-20%$(51,037)(1.0%)$(6,730)(0.2%)-10%(25,519)(0.5%)(3,365)(0.1%)-5%(12,759)(0.2%)(1,682)(0.1%)+5%12,7590.2%1,6820.1%+10%25,5190.5%3,3650.1%+20%51,037(1.0%)6,7300.2%  The foregoing analysis was prepared using foreign exchange rates in effect as of the balance sheet date, January 31, 2007. A standard escalation factor was applied to the exchange rates to illustrate the effect on total assets reported on the balance sheet of a variation in foreign exchange rates between 20% below and 10% 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.   -89-  The difference between the forecast figures for the fiscal year ended January 31, 2007 compared to the same figures for the fiscal year ended January 31, 2006 relates to the foreign cash balances which are subject to foreign exchange rate risk. During the fiscal year ended January 31, 2007, the Corporation received mineral property revenues in US Dollars which were maintained in US dollar accounts to pay anticipated mineral exploration expenditures.  Equity price risk  Marketable securities (category c) represent approximately $643,168 of the Corporations total assets of $5,358,588 (or 12% of the total assets). At the end of each reporting period, the fair values of securities which are traded on a recognized exchange are reported at the bid price on the balance sheet date or the last date on which the shares traded, reduced by an appropriate discount where there are trading restrictions. The resulting unrealized gains or losses are included in the determination of comprehensive income. When gains or losses are realized, the amount is transferred from Other Comprehensive Income to the Statement of Operations.  Most of the marketable securities are junior mineral exploration companies whose shares are relatively volatile. Accordingly the reported value of the Corporations portfolio is subject to variation depending on market conditions. Each company has unique characteristics which determine the value of the shares. These characteristics include the knowledge and experience of management, commodity focus, exploration projects and results and the companys specific financial situation. As a group, share prices will react to global economic changes and variation in commodity prices. Individual share prices are generally more volatile than the value of the portfolio as a whole.  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, 2007, the Venture Index rose 15% with the closing value 9% higher than the average Venture Index value. The minimum Venture Index value was 14% lower than the average Venture Index value, while the highest Venture Index value was 22% higher than the average Venture Index value. The aggregate value of the Corporations portfolio increased 370%. This increase in aggregate portfolio value was driven by a change of business operations for one company and extremely good results for another company. Neither of these two factors constitutes a recurring event which would continue to increase the value of the Corporations marketable securities portfolio beyond the average of the Venture Index.  Effect on total assetsIncrease/decrease in 
Venture Index20072006-20%$ (126,634)(2.36%)$(36,494)(1.18%)-10%(63,317)(1.18%)(18,247)(0.59%)+10%63,3171.18%18,2470.59%+20%126,6342.36%36,4941.18%+30%189,9503.54%54,7401.77%   -90-  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 and 20% below the value as of January 31, 2007.  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 increases in the Corporations portfolio of marketable securities. During the fiscal year ended January 31, 2008, the Corporation received marketable securities received as property option payments which increased the overall market value of the portfolio subject to equity price risk. Marketable securities sold during the year did not offset this increase. The second factor is the overall increase in Venture Index which was reflected in an increase in the fair market value of the Corporations portfolio of marketable securities.  Commodity price risk  The future revenue and profitability of the Corporation will be dependent, to a significant extent, upon prevailing spot market prices for metals. Metal prices are subject to wide fluctuations in response to changes in supply of and demand for metals, market uncertainty and a variety of additional factors that are beyond the control of the Corporation. The Corporations mineral properties are in the exploration phase with no identified mineral resources or reserves. Accordingly the Corporation is not generating any operating revenues and is therefore not subject to any short term volatility in the prices of metals. As the Corporation is in the exploration phase, the above factors have had no material impact on operations or income. No futures or forward contracts have been entered into by the Corporation.   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.   -91-  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, 2007, 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.    b) Managements annual report on internal control over financial reporting  Not applicable, pursuant to temporary rules of the Securities and Exchange Commission  c) Attestation report of the registered public accounting firm  Not applicable, pursuant to temporary rules of the Securities and Exchange Commission  d) Changes in internal control over financial reporting  There has been no change in the Corporations internal control over financial reporting that occurred during the period covered by this Form 20-F, that has materially affected or is reasonably likely to materially affect, the Corporations internal control over financial reporting.  -92-  ITEM 16A   AUDIT COMMITTEE FINANCIAL EXPERT Not Amended  ITEM 16B   CODE OF ETHICS Not Amended  ITEM 16C   PRINCIPAL ACCOUNTANT FEES AND SERVICES Not Amended   ITEM 16D   EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable  ITEM 16E   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Not applicable    PART III     ITEM 17   FINANCIAL STATEMENTS  The following financial statements are attached and incorporated herein:  Description of Statement

Consolidated Balance Sheets for the fiscal years ended January 31, 2007 and 2006
Statements of Loss and Deficit, Statements of Cash Flows,
Statement of Changes in Shareholders Equity, and Statements of Mineral Property Expenditures
all for the fiscal years ended January 31, 2007, 2006, and 2005
Notes to Consolidated Financial Statements
Management Discussion and Analysis for the year ended January 31, 2007
Schedule II  Valuation Allowance  ITEM 18   FINANCIAL STATEMENTS  See Item 17     -93-  ITEM 19   EXHIBITS  Exhibit NumberDescription1.8Articles of Incorporation effective August 5, 2004(1)4.30Management Contract between Equity Engineering Ltd. and Rimfire Minerals Corporation effective January 1, 2007(2)4.33Option Agreement between Northgate Minerals Corporation and Rimfire Minerals Corporation dated March 29, 2004(1)4.35Registrar and Transfer Agent Agreement between Pacific Corporate Trust Company and Rimfire Minerals Corporation dated September 1, 2004(1)4.36Amendment to Option Agreement between Rimfire Minerals Corporation, Plutonic Capital and Serengeti Resources Inc. dated September 9, 2004(1)4.37Amendment to RDN Property Option Agreement between Northgate Minerals Corporation and Rimfire Minerals Corporation dated November 19, 2004(1)4.38Agreement between Newmont Capital Limited and Rimfire Minerals Corporation dated January 5, 2005 regarding Walker Lane(1)4.39Termination Agreement between AngloGold Ashanti (U.S.A.) Exploration Inc. and Rimfire Alaska, Ltd. effective December 31, 2005 (Eagle Property)(3)4.40Termination Agreement between AngloGold Ashanti (U.S.A.) Exploration Inc. and Rimfire Alaska, Ltd. effective December 31, 2005 (ER Property)(3)8.1List of Subsidiary Companies of Rimfire Minerals Corporation(1)11.1Corporate Governance Policy adopted November 20, 2002(4)11.2Code of Ethics  Board of Directors dated January 31, 2003(4)11.3Code of Ethics  Chief Executive Officer dated January 31, 2003(4)11.4Code of Ethics  Chief Financial Officer dated February 28, 2003(4)11.5Incentive Stock Option Plan(6)31.1Certification by Chief Executive Officer(5)31.2Certification by Chief Financial Officer(5)32.1Certification by Chief Executive Officer(5)32.2Certification by Chief Financial Officer(5)  (1) Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated May 25, 2005.  (2) Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated May 11, 2007.   -94-  (3) Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated May 26, 2006.  (4) Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated July 7, 2003.  (5) Filed as exhibits in connection with this document.  (6) Incorporated herein by reference to the exhibits as filed in connection with the Registrants Form 20-F dated July 26, 2004.  -95-  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    -96-    RIMFIRE MINERALS CORPORATION  Consolidated Financial Statements Years Ended January 31, 2007, 2006 and 2005      -97-    MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING  The accompanying consolidated financial statements of Rimfire Minerals Corporation and all information in this annual report are the responsibility of management. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and, where appropriate, include managements best estimates and judgments. Management has reviewed the financial information presented throughout this report and has ensured it is consistent with the consolidated financial statements.  Management maintains a system of internal control designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, and that financial information is timely and reliable.  The Board of Directors is responsible for ensuring that management fulfils its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out this responsibility principally through its Audit Committee.  The Board of Directors appoints the Audit Committee, and all of its members are independent directors. The Audit Committee meets periodically with management and the shareholders auditors to review financial statements and reports prepared by management, internal controls, audit results, accounting principles and related matters. The Board of Directors approves the consolidated financial statements on recommendation from the Audit Committee.  Hay and Watson, an independent firm of Registered Chartered Accountants, was appointed by the shareholders at the last annual meeting to examine the consolidated financial statements and provide an independent professional opinion.  Jason S. Weber Dorothy Miller  Jason S. Weber, P.Geo Dorothy G. Miller President & Chief Executive Officer Chief Financial Officer   -98-  [rfmannual20fa12007020.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, 2007 and 2006 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, 2007 (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, 2007 and 2006 and the results of its operations and its cash flows for each of the years in the three year period ended January 31, 2007 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 12 to the consolidated financial statements.  Our previous report dated March 31, 2007 has been withdrawn and the consolidated financial statements have been revised for a reclassification of investment income on the statements of operations and statements of cash flows, enhanced segmented disclosures, and disclosure of differences between generally accepted accounting principles in Canada and the United States relating to mineral property acquisition costs.  For further explanation of the revisions, see Note 2 in the Notes to the Consolidated Financial Statements.  Hay & Watson  Independent Registered Chartered Accountants Vancouver, Canada March 21, 2007, except as to Notes 2, 10 and 12 which are as of October 30, 2008  -99-  [rfmannual20fa12007020.gif]  Comment by Independent Registered Chartered Accountants on Canada  United States of America Reporting Difference  The standards of the Public Company Oversight Board (United States) for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when there are changes in accounting principles that have a material effect on the comparability of the Companys financial statements, such as the changes described in Note 2 to the consolidated financial statements. Our report to the shareholders dated March 31, 2007, except as to Notes 2, 10 and 12 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 March 31, 2007, except as to Notes 2, 9 and 10 which are as of October 30, 2008  -100-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of OperationsYears Ended January 31(Expressed in Canadian Dollars)Mineral Property Operations200720062005RevenueOption proceeds$168,500$163,500$358,630Project management fees64,77636,27755,708233,276199,777414,338ExpensesAcquisition costs307,542202,167217,385Exploration expenditures1,538,2951,116,1721,105,733Reclamation obligations33,418-35,363Joint venture reimbursements(560,058)(33,988)(145,641)Exploration tax credits(32,702)(18,736)(122,227)1,286,4951,265,6151,090,613Loss from mineral property operations(1,053,219)(1,065,838)(676,275)Other OperationsRevenueOther2,4697,9003,274ExpensesAccounting and legal61,87740,93427,389Depreciation53,92033,98017,344Foreign exchange losses7,5198,1964,713Investor services41,50036,47863,471Management services117,469116,80492,820Marketing and promotion109,75277,23484,316Office112,13478,95998,950Rent65,45463,83239,172Salaries and support services367,688255,550163,503Share-based compensation1,040,212206,689292,149Travel and entertainment62,90848,92044,3862,040,433967,576928,213Loss from other operations(2,037,964)(959,676)(924,939)Loss before the undernoted(3,091,183)(2,025,514)(1,601,214)Gain (loss) on marketable securities182,882(49,264)35,819Interest income135,80468,67269,715Loss before Income Taxes(2,772,497)(2,006,106)(1,495,680)Future Income Tax Recovery (Note 7)-182,500-Net Loss$(2,772,497)$(1,823,606)$(1,495,680)Basic and Diluted Loss Per Share$(0.13)$(0.10)$(0.09)Weighted average number of shares outstanding21,414,92818,656,97417,231,840  -101-     RIMFIRE MINERALS CORPORATIONConsolidated Balance SheetsJanuary 31(Expressed in Canadian Dollars)20072006ASSETSCurrentCash and cash equivalents$2,951,298$2,836,027Short-term investments1,223,356-Marketable securities643,16888,370Accounts receivable360,60764,635Prepaid expenses35,72416,1925,214,1533,005,224Office, Computer, and Field Equipment, less accumulateddepreciation of $124,203 (2006- $70,282)78,40561,564Project Reclamation Deposits(Note 3)66,03028,700Mineral Property Interests(Note 4)--$5,358,588$3,095,488LIABILITIESCurrentAccounts payable and accruals$284,218$62,733Payable to related party (Note 6)54,39136,846Exploration funding deposits506,821-845,43099,579Mineral Property Reclamation Obligation (Note 9)68,78235,363914,212134,942SHAREHOLDERS EQUITYShare Capital(Note 5)12,120,7429,358,013Contributed Surplus (Note 5)1,845,676922,976Deficit(10,092,940)(7,320,443)Accumulated Other Comprehensive Income(Note 2)570,898-4,444,3762,960,546$5,358,588$3,095,488APPROVED BY THE BOARDDavid A. CaulfieldDirectorHenry J. AwmackDirector  -102-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of Cash FlowsYears Ended January 31(Expressed in Canadian Dollars)Cash Flows Used for Operating Activities200720062005Mineral property operationsPaid for acquisition costs$    (322,640)$   (175,818)$  (208,635)Paid for exploration costs(1,522,174)(1,178,878)(1,087,862)Exploration reimbursements received560,05833,988145,641Exploration tax credits/grants received-122,22962,157Exploration funding (paid) received506,821(97,806)97,806Project management fees received63,27836,29358,061Reclamation deposits (paid) received(36,021)15,700(24,200)Option proceeds received145,000150,000295,130Other operationsPaid for supplies and services(963,859)(688,520)(597,035)Received from related party17,5453,478658Other revenue received1,7951,063757(1,550,197)(1,778,271)(1,257,522)Cash Flows Used for Investing ActivitiesInterest revenue received79,23063,67667,332Proceeds from sale of marketable securities222,48115,73666,958Purchase of short-tem investments(1,210,800)--Purchase of office and field equipment(70,761)(51,483)(37,442)(979,850)27,92996,848Cash Flows From Financing ActivitiesCommon shares issued for cash2,700,7011,895,0293,208,200Share issue costs(55,383)(32,743)(241,357)2,645,3181,862,2862,966,843Increase in Cash and cash equivalents115,271111,9441,806,169Cash and cash equivalents, Beginning of Year2,836,0272,724,083917,914Cash and cash equivalents, End of Year$ 2,951,298$2,836,0272,724,083Supplemental Information on Non-Cash TransactionsMineral property interest acquisition costs$              -$              -$       (8,750)Shares issued for acquisition ofmineral property interests--8,750Marketable securities received(23,500)(13,500)(63,500)Mineral property interest option proceeds23,50013,50063,500Share-based compensation expense1,040,213206,689292,149Shares issued for Mineral Deposits Research  Unit--9,878membership  -103-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of  Comprehensive IncomeYears Ended January 31(Expressed in Canadian Dollars)200720062005Net Loss$(2,772,497)$(1,823,606)$(1,495,680)Other comprehensive incomeChanges in fair value of investments659,682--Realized gains on sale of investments(182,882)--Other comprehensive income476,800--Total comprehensive loss$(2,295,697)$(1,823,606)$(1,495,680)  The accompanying notes are an integral part of these consolidated financial statements    -104-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of Changes in Shareholders EquityYears Ended January 31(Expressed in Canadian Dollars)200720062005Common Shares (Note 5)Balance, beginning of year$9,358,013$7,467,987$4,447,484Issued for:Cash - private placement2,550,000-2,659,200Cash - private placement
(flow-through shares)-500,000-Cash  exercise of share purchase warrants8,5001,245,029506,500Cash  exercise of share purchase options142,200150,00042,500Mineral properties--8,750Membership fee--10,000Transfer from contributed surplus on the exercise of share purchase options117,512210,24034,910Future income taxes related to
flow-through share issue-(182,500)-Share issue costs(55,483)(32,743)(241,357)Balance, end of year12,120,7429,358,0137,467,987Contributed SurplusBalance, beginning of year922,976926,527669,288Share-based compensation1,040,212206,689292,149Transfer to common shares on exercise of share purchase options(117,512)(210,240)(34,910)Balance, end of year1,845,676922,976926,527DeficitBalance, beginning of year(7,320,443)(5,496,837)(4,001,157)Net loss for the year(2,772,497)(1,823,606)(1,495,680)Balance, end of year(10,092,940)(7,320,443)(5,496,837)Accumulated Other Comprehensive IncomeBalance, beginning of year (Note 2)94,098--Changes in fair value of investments476,800--Balance, end of year570,898--Shareholders Equity$4,444,376$2,960,546$2,897,677  -105-     RIMFIRE MINERALS CORPORATIONConsolidated Statements of Mineral Property ExpendituresYears Ended January 31(Expressed in Canadian Dollars)CanadaAlaskaAustraliaNevadaTotalCumulative net expenditures, 
January 31, 2004$1,790,383$44,662$            -$            -$1,835,045Acquisition Costs190,33024,152-2,903217,385Exploration Expenditures1,023,76556,227-25,7411,105,733Exploration Tax Credits(122,227)---(122,227)Joint Venture Reimbursements(145,641)---(145,641)Reclamation Obligations35,363---35,363Option Proceeds(263,500)(95,130)--(358,630)Net expenditures, year ended 
January 31, 2005718,090(14,751)-28,644731,983Acquisition Costs84,152104,692-13,323202,167Exploration Expenditures739,439194,786-181,9471,116,172Exploration Tax Credits(18,736)---(18,736)Joint Venture Reimbursements(33,988)---(33,988)Option Proceeds(163,500)---(163,500)Net expenditures, year ended 
January 31, 2006607,367299,478-195,2701,102,115Acquisition Costs79,81816,297182,36729,060307,542Exploration Expenditures826,874452,21052,982206,2291,538,295Exploration Tax Credits(32,702)---(32,702)Joint Venture Reimbursements(184,772)(375,286)--(560,058)Reclamation Obligations6,088--27,33033,418Option Proceeds(168,500)---(168,500)Net expenditures, year ended 
January 31, 2007526,80693,221235,349262,6191,117,995Cumulative net expenditures, 
January 31, 20073,642,646422,610235,349486,5334,787,138Less write-downs and abandonments(633,063)(6,290)(22,746)-(662,099)Net cumulative expenditures 
on active mineral properties charged to operations, from inception to January 31, 2007$3,009,583$  416,320$ 212,603$486,533$4,125,039  -106-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (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 conform in all material respects with accounting principles generally accepted in the United States of America, except as described in Note 12 to the consolidated financial statements. These consolidated financial statements include the following significant policies:  Operations and Basis of Consolidation  The Company was incorporated on May 7, 1991 as Bull Pine Explorations Ltd. and commenced mineral exploration operations in Canada in 1991. The Company changed its name to Rimfire Minerals Corporation on November 4, 1997. One of the Companys wholly-owned subsidiary companies, Rimfire Alaska, Ltd., which was incorporated on August 19, 1998, conducts exploration of mineral properties located in the State of Alaska. A second wholly-owned subsidiary company, Rimfire Nevada Ltd., which was incorporated on January 4, 2005, conducts exploration of mineral properties located in the State of Nevada. 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 cash.  Short-term Investments  Short-term investments include bankers acceptances with maturities of one year or less at the date of acquisition.   -107-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  1. SIGNIFICANT ACCOUNTING POLICIES   Marketable Securities  Marketable securities are classified as available-for-sale securities, which are reported at fair value. At the end of each reporting period, the fair values of securities which are traded on a recognized exchange are reported at the bid price on the balance sheet date or the last date on which the shares traded, reduced by an appropriate discount where there are trading restrictions.  The resulting unrealized gains or losses are included in the determination of comprehensive income. When gains or losses are realized, the amount is transferred from other comprehensive income to the statement of operations. When declines in value are significant and not considered temporary, the write-down in value will be 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 4.  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. 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.   -108-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (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 for 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. 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.  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.  -109-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  1. SIGNIFICANT ACCOUNTING POLICIES   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.  Foreign Currency Translation  Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using historical rates. Revenue and expense items are translated at exchange rates prevailing at the time of the transaction. Foreign exchange gains and losses are included in operations.  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.  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.  Use of Estimates  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.   -110-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   2. ACCOUNTING CHANGES  The Company adopted the new 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 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. Since this is 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. Current unrealized gains or losses in value for available-for-sale financial assets 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 Statements of Operations. The transition provisions of these recommendations do 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.  The Company has reclassified certain items in the Consolidated Statements of Operations, Consolidated Statements of Cash Flows and Note 12 (regarding differences between generally accepted accounting principles in Canada and the United States). The reclassification has no effect on net loss, net loss per share, accumulated deficit or increase in cash and cash equivalents. A summary of the changes to the financial statements is provided in the following table:  Consolidated Statements of Operations  Other Operations200720062005RevenueAs originally presented138,27376,57272,989Reclassification of interest received(135,804)(68,672)(69,715)Revised2,4697,9003,274  Loss from other operationsAs originally presented(1,902,160)(891,004)(855,224)Reclassification of interest received(135,804)(68,672)(69,715)Revised(2,037,964)(959,676)(924,939)  Loss before the undernoted  (revised)Loss before the undernoted(3,091,183)(2,025,514)(1,601,214)Reclassified gain on marketable securities182,882(49,264)35,819Reclassified interest income135,80468,67269,715   -111-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   2. ACCOUNTING CHANGES (continued)   Consolidated Statements of Cash Flows 200720062005Cash Flows Used for Operating ActivitiesAs originally presented(1,470,967)(1,714,595)(1,190,190)Reclassified interest received(79,230)(63,676)(67,332)Revised(1,550,197)(1,778,271)(1,257,522)Cash Flows Used for Investing ActivitiesAs originally presented(1,059,080)(35,747)29,516Reclassified interest received79,23063,67667,332Revised(979,850)27,92996,848    3. 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.  4. MINERAL PROPERTY INERESTS  Expenditures on mineral property interests during the years ended January 31 were: 200720062005Acquisition Costs$ 307,542$ 202,167$217,385Exploration CostsAircraft and helicopter129,550171,480261,871Camp64,86272,52258,846Chemical analysis130,99238,75152,832Drafting5,57911,93713,148Drilling and trenching73,92049,76387,046Equipment rental30,72815,74116,228Freight10,49311,35012,341Geological and engineering526,522319,943354,662Geophysical surveying132,17668,922-Maps and reproductions22,80013,42117,341Materials33,41224,34630,249Project management64,48673,45297,443Reclamation expense645--Recording and filing255,627216,41567,720Travel56,50328,12936,0061,538,2951,116,1721,105,733Exploration tax credits and grants(32,702)(18,736)(122,227)Joint venture reimbursements(560,058)(33,988)(145,641)Reclamation obligations33,418-35,3631,286,4951,063,448873,228  -112-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. MINERAL PROPERTY INTERESTS (continued)    200720062005Option Proceeds(168,500)(163,500)(358,630)Net Expenditures For the Year1,117,9951,102,115731,983Cumulative Net Expenditures, 
Beginning of Year3,669,1432,567,0281,835,045Cumulative Net Expenditures, End of Year4,787,1383,669,1432,567,028Property Write-downs and Abandonments(662,099)(571,931)(302,917)Net Cumulative Expenditures On 
Active Mineral Properties Charged to 
Operations From Inception$ 4,125,039$3,097,011$2,264,111  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:  Thorn Property, British Columbia  On March 1, 2000, the Company acquired a 100% interest in the Thorn mineral property, subject to a 3.5% net smelter return (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) has earned a 51% interest in the Thorn property pursuant to an option agreement dated March 2002. CANGOLD is operator for the project.  RDN Property, British Columbia  On July 31, 1997, the Company acquired a 100% interest in the RDN mineral claims, subject to a 1.34% NSR. The Company may purchase one-half of the NSR for $666,666.  The Company signed an option agreement, effective March 29, 2004, with Northgate Minerals Corporation (Northgate) which provides that Northgate can earn a 51% interest in the RDN Property on completion of 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)  -113-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. MINERAL PROPERTY INTERESTS (continued)   RDN Property, British Columbia (continued)  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.  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. The road construction is scheduled for completion in late 2008 with third party access probable in 2009. Some of the RDN claims will be split into a separate property to be referred to as the Grizzly Property. The Grizzly Property will be owned 100% by the Corporation and will no longer form part of the RDN Joint Venture Agreement.  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 · $40,000 on or before December 31, 2008 · $100,000 on or before December 31, 2009  -114-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. MINERAL PROPERTY INTERESTS (continued)   Williams Property, British Columbia (continued)  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 · an additional $750,000 on or before December 31, 2008 · an additional $1,000,000 on or before December 31, 2009 Issue shares of Arcus to the Company: · 100,000 common shares on or before December 31, 2006 (received) · an additional 100,000 common shares on or before December 31, 2007 · an additional 100,000 common shares on or before December 31, 2008 · an additional 100,000 common 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.  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.  In October 2002, the Company granted Plutonic Capital Corp. (Plutonic) an option to earn a 51% interest in the property on completion of a combination of cash and share payments and exploration expenditures. In an option amendment agreement dated November 20, 2003, Plutonic assigned the agreement to Serengeti Resources Inc. (Serengeti). As compensation for this amendment, Serengeti issued 100,000 shares to the Company. Effective October 27, 2006, this agreement was assigned to American Creek Resources Ltd. (American Creek). Upon exercise of the option, Serengeti retains a 1% NSR upon the 51% interest earned by American Creek. American Creek has assumed the following obligations from the original and amended agreements with Plutonic and has earned their 51% interest in the property:  Cash payments to the Company of: · $2,000 upon signing of the agreement (received) · $13,000 upon regulatory approval (received) · $15,000 on or before July 24, 2003 (received) · $25,000 on or before December 31, 2004  (as amended September 9, 2004-received) · $35,000 on or before December 31, 2005  (as amended September 9, 2004-received) · $40,000 on or before December 31, 2006  (as amended September 9, 2004-received)  -115-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. MINERAL PROPERTY INTERESTS (continued)   Tide Property, British Columbia (continued)  Issue shares of American Creek to the Company or pay: · 50,000 common shares or $20,000 on or before August 15, 2003 (received) · 75,000 common shares or $35,000 on or before July 24, 2004 (received) · 75,000 common shares or $60,000 on or before December 31, 2005
(as amended September 9, 2004) (received) · 75,000 common shares or $85,000 on or before December 31, 2006 
(as amended September 9, 2004) (received) Fund exploration expenditures of at least: · $185,000 on or before June 30, 2004 (completed) · an additional $250,000 on or before December 31, 2004 (completed) · an additional $400,000 on or before December 31, 2005 (completed) · an additional $600,000 on or before January 15, 2007 (as amended Oct 27, 2006-completed)  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, earn another 5% interest by providing 100% of the initial project development financing.  American Creek will be operator for the 2007 exploration programs.  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 will retain 100% interest in the Kizmet claims, subject to a 1% NSR.   -116-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. 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 · 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  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.  Auddie Property  Effective January 29, 2007, the Company signed an option agreement to purchase 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 · $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.  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.   -117-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. MINERAL PROPERTY INTERESTS (continued)   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 Breakwater Resources Ltd. (Breakwater). If either partys interest subsequently decreases to below 7.5%, that partys interest will be automatically converted to an NSR of 2%.  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 has funded the required $2 million in exploration expenditures. Newmont and NVI retain a total 2% NSR. There is a 7.5% to 15% Net Profits Interest (NPI) payable to the underlying vendors.Fronteer is operator of the project and funded 100% of the exploration expenditures to earn an 80% interest, with the Company earning the remaining 20% interest. 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.  Goodpaster Properties, Alaska  On February 22, 2007, the Company signed an option agreement with Evanachan Limited, which was subsequently transferred to McEwen Capital Corporation (McEwen). The agreement encompasses the following four Goodpaster properties. The terms of the agreement provide that McEwen 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, McEwen 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.   -118-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. 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 50,000 common shares at the election of the Company, upon funding of $1,500,000 of exploration expenditures subsequent to the agreement, · $50,000, or 50,000 common shares at the election of the Company, upon funding of an aggregate $3,000,000 of exploration expenditures subsequent to the agreement, · 100,000 shares upon obtaining a positive feasibility study for placing any part of the property into commercial production.  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.  Lachlan Fold Belt Project, Australia  In September 2006, the Company signed an agreement with BWG whereby Rimfire 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 exploration expenditures of at least USD$150,000 aggregate for the target areas.   -119-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)  4. 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. The Company has committed to funding USD$300,000 in exploration expenditures within the project area during the term of the two year agreement. The Company may, at its discretion, acquire one or more properties within the project area boundaries in which to conduct further exploration work. 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. Newmont will have a one-time right to enter a 50:50 Joint Venture upon the Companys expenditures of USD$300,000 on an acquired property. When this right is exercised, Newmont will relinquish the NSR, manage the Joint Venture, and solely fund the next USD$1,000,000 in exploration expenditures to earn its 50% interest. The Corporation staked 118 claims in the area.  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 each anniversary from March 31, 2007 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 100% of the NSR can be purchased 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$2,000,000 after March 31, 2014   -120-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   5. SHARE CAPITAL  Authorized:      Unlimited common shares without par value Issued and fully paid common shares Number of SharesAmountJanuary 31, 200413,615,621$ 4,447,484Issued for cashPrivate placement, net of issue costs of $235,1032,996,9072,424,097Exercise of warrants, net of issue costs of $2,7421,110,000503,758Exercise of share purchase options, net of issue costs of $3,245 and including transfer from contributed surplus on the exercise of options100,00074,165Issued for Mineral Deposits Research Unit membership,net of issue costs of $1227,6929,878Issued for mineral property interests, net of issue costs of $14525,0008,605January 31, 200517,855,2207,467,987Issued 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 vested 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 vested options175,000259,522Exercise of warrants, net of issue costs of $505,0008,450January 31, 200721,751,539$12,120,742  -121-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   5. SHARE CAPITAL (continued)  The Company issues share purchase options to directors, officers, and employees of the Company and persons who provide ongoing services to the Company under an incentive stock option plan. Under the plan, the Company has reserved 2,172,154 shares to be issued pursuant to share purchase options. The exercise price of share purchase options will be no less than the closing price of the shares on the date on which the option is granted less the discount permitted by the TSX Venture Exchange. Options will expire no later than five years from the grant date, except that they will expire within thirty days when the holder is no longer qualified to hold the option (other than for cause, when the option will expire immediately). Individual grants in excess of 30,000 shares vest over two years with one-half vesting immediately, one-quarter vesting on the first anniversary date of the grant and the remaining one-quarter vesting on the second anniversary date. Individual grants of up to 30,000 shares vest immediately.  Details of outstanding share purchase options are as follows: January 31, 2007January 31, 2006Number of sharesWeighted average exercise priceNumber of sharesWeighted average exercise priceOutstanding at beginning of year1,195,000$    0.991,645,000$    0.70Granted900,0001.78150,0001.23Exercised175,0000.79600,0000.25Outstanding at end of year1,920,0001.381,195,0000.99Options exercisable at 
end of year1,607,5001.301,130,0001.00  Options OutstandingOptions ExercisableExpiry DateNumber of sharesExercise priceNumber of sharesExercise price15-Jan-0875,000$    0.6075,000$     0.6018-Dec-08455,0000.95455,0000.9518-Jun-09125,0000.96125,0000.9609-Dec-09230,0001.21230,0001.2122-Dec-10135,0001.23135,0001.2317-July-11700,0001.70425,0001.7011-Jan-12200,0002.04162,5002.041,920,0001,607,500  -122-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (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, 2007 was $1.67 per share (2006 - $1.06; 2005 - $0.83). 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, 2007January 31, 2006January 31, 2005Volatility164%137%110%Risk-free interest rate4.32%3.84%2.60%Expected life5 years5 years4.6 yearsExpected dividend yield---  The following warrants, issued on April 13, 2006, are outstanding as of the date of these financial statements.  WarrantsNumber ofIssue PriceSharesPer ShareExpiry DateBroker Warrants135,000$1.7013-April-08Share Purchase Warrant1,572,0002.2513-April-081,707,000  The warrants were issued with a conversion feature whereby commencing August 13, 2006 if the common shares of the Company trade on any exchange for a period of 20 consecutive trading days at a price of $2.50 per share or greater before April 13, 2007 or $2.75 per share or greater before April 13, 2008 the Company may, at its option and by notice in writing to each holder, require the holder of the warrants to exercise the warrants within 30 days, failing which the warrants will be deemed to have expired.  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 officers and significant shareholders of the Company. Balances payable to Equity for fees and reimbursement of costs incurred on behalf of the Company have been separately disclosed as Payable to Related Party. Fees charged to the Company by Equity are on the same basis as those charged by Equity to unrelated third parties.  -123-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   6. RELATED PARTY TRANSACTIONS (continued)  During the year ended January 31, 2007, the Company paid Equity $736,281 (2006 - $206,763, 2005 - $431,996) for geological consulting services and $235,389 (2006-$244,871, 2005 - $203,099) for providing general corporate and administrative services composed of $1,611 (2006 - $1,117, 2005 - $14,457) for insurance, $6,282 (2006 - $4,279, 2005 - $3,711) for investor services, $129,999 (2006 -$99,305, 2005 - $96,462) for management services, $8,061 (2006 - $5,810, 2005 - $12,026) for office services, $62,336 (2006 - $62,696, 2005 - $39,172) for rent and $27,100 (2006 - $71,663, 2005 - $37,270) for support services.  It is anticipated that Equity will continue to provide geological consulting and administrative support services to the Company from time to time, and will be remunerated for such services at the rate charged by Equity to all its customers.  Equity is one of the underlying vendors who own a 7.5 to 15% Net Profits Interest (NPI) in the Wernecke Breccia property (Note 4). Equitys share of the NPI is 40%. In addition, two of the directors and officers of the Company each own 20% of a different company which is entitled to 10% of the NPI.      7. INCOME TAXES  The Companys future income tax assets are:  January 3120072006Future income tax assets (liabilities)Mineral property interests$      885,431$      661,872Other assets11,46017,603Net change in fair value of investments(97,395)-Tax loss carry-forwards1,530,9701,140,3672,330,4661,819,842Valuation allowance(2,330,466)(1,819,842)Net future income tax assets$                    -$                       -  -124-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   7. INCOME TAXES (continued)  A reconciliation of the provision for recovery of income taxes is as follows:  Year ended January 31200720062005Loss before income taxes$    (2,772,497)$     (2,006,106)$ (1,495,680)Statutory tax rate34.12%35.6%37.6%Recovery of income taxes based on combined Canadian and provincial statutory rates$       945,976$        714,174$       562,376Add (deduct):Non-deductible expensesShare-based compensation(354,920)(73,581)(109,848)Other(149,182)40,91895,014Tax effect of current period losses not recognized(441,874)(681,511)(547,542)Future income tax asset not previously recognized-182,500-Future income tax recovery$                   -$         182,500$                  -  At January 31, 2007, the Company has unrecognized non-capital losses for income tax purposes of approximately $4,134,000 that may be used to offset future taxable income. If unused, these losses will expire as follows:  2008$       298,0002009322,0002010350,0002011413,0002015553,0002016884,00020171,314,000$ 4,134,000   -125-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   8. FINANCIAL INSTRUMENTS  (a) Fair value of financial instruments  The Companys financial instruments include cash, short term investments, marketable securities, accounts receivable and accounts payable, payable to related party and joint venture deposits. The carrying values of these instruments in these financial statements approximate their fair values.  (b) Foreign exchange risk  The Company incurs certain expenses in currencies other than the Canadian dollar. As such, the Company is subject to foreign exchange risk as a result of fluctuations in exchange rates.  (c) Market risk  The Companys financial instruments include marketable securities which are publicly traded and therefore are subject to the market risks that affect all publicly traded securities. Some of these shares are thinly traded which could result in lower quoted market values.  (d) Interest risk  The Companys financial instruments may include bankers acceptances and treasury bills. These instruments bear a fixed rate of interest and a fixed maturity date. 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.  9. 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.   -126-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   10. 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:  200720062005Canada$    2,927,535$    2,797,535$    2,618,968Alaska7,03425,818105,115Australia4,355--Nevada12,37412,674-$    2,951,298$    2,836,027$    2,724,083  All other assets are held solely 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, 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)$(1,823,606)included in Net LossMineral property revenue199,777---199,777Interest income67,699837-13668,672Gain (loss) on marketable securities(49,264)---(49,264)Future income tax recovery182,500---182,500Amortization(33,980)---(33,980)Share-based compensation(206,689)---(206,689)   -127-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   10. SEGMENT INFORMATION (continued)  CanadaAlaskaAustraliaNevadaTotalNet Loss for the year ended
January 31, 2005$ (1,477,656)$ 13,667$              -$ (31,691)$(1,495,680)included in Net LossMineral property revenue319,20895,130--414,338Interest income69,67243--69,715Gain (loss) on marketable securities35,819---35,819Amortization(17,344)---(17,344)Share-based compensation(292,149)---(292,149)  Exploration expenditures on the Companys mineral properties by geographic segments are shown in the Consolidated Statement of Mineral Property Expenditures.  11. SUBSEQUENT EVENTS  Effective March 31, 2007, the Company signed an option agreement to purchase 100% interest in a group of four properties, Tess, Firecat, Copper Star and Lynx, collectively called the PWG Project. The Company is to make an initial cash payment of $40,000 and fund exploration expenditures of: $50,000 on or before March 1, 2008. The Company may elect to option any or all of the claims upon delivery of written notice not later than March 31, 2008. To earn a 100% interest in each property, subject to a 1.5% NSR, two-thirds of which can be purchased for $1 million, the Company will make cash payments of:  · $15,000 within 10 days of the Claim Election Notice (Notice) · $20,000 on or before the first anniversary of the Notice · $30,000 on or before the second anniversary of the Notice · $45,000 on or before the third anniversary of the Notice. ·   -128-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   12. 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 12 (b) and (f) have been restated to identify a difference between accounting for mineral property acquisition costs under Canadian GAAP and US GAAP. The Company had previously interpreted US GAAP to consider the lack of identifiable reserves as sufficient evidence to impair and write off the carrying value of the mineral property acquisition costs. However, the Company has reconsidered the requirements of Emerging Issues Task Force (EITF) Abstract 04-2 and has concluded that the lack of reserves is not conclusive evidence of impairment under US GAAP. The Company has therefore amended this note to identify the accounting for these costs as a difference between Canadian and US GAAP.  -129-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   12. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (c) Earnings per share  The weighted average number of shares outstanding used in the calculation of earnings per share under Canadian GAAP includes shares held in escrow. These shares are excluded in the calculation under U.S. GAAP. As of January 31, 2007 there are no shares held in escrow.  (d) 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.  (e) 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.  (f) Reconciliation  The effect of the differences between Canadian GAAP and U.S. GAAP on the consolidated financial statements is summarized as follows:  Consolidated Balance Sheets  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)    -130-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   12. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (f) Reconciliation (continued)  Consolidated Balance Sheets  2006Canadian GAAPAdjustment
(a,b)U.S. GAAPMineral property interest acquisition costsPreviously reported$                -$               -$                 -Restated (b)-198,567198,567Share capital9,358,013142,5009,500,513Deficit(7,320,443)56,067(7,264,376)  Consolidated Statements of Operations  Previously reported200720062005Net loss under Canadian GAAP$(2,772,497)$(1,823,606)$(1,495,680)Reversal of acquisition costs (b)236,169157,54241,025Impairment provision (b)(236,169)(157,542)(41,025)Future income tax recovery (a)---Deferred tax benefit (a)---Net loss under U.S. GAAP$(2,772,497)$(1,823,606)$(1,495,680)Weighted average number of shares outstanding under Canadian GAAP21,414,92818,656,97417,231,840Escrow shares--29,865Weighted average number of shares outstanding under U.S. GAAP21,414,92818,656,97417,201,975Basic and diluted loss per share 
under U.S. GAAP (c)$(0.13)$(0.10)($0.09)  -131-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   12. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (f) Reconciliation (continued)  Consolidated Statements of Operations  Restated200720062005Net loss under Canadian GAAP$(2,772,497)$(1,823,606)$(1,495,680)Net mineral property interest acquisition costs (b)236,169157,54241,025Future income tax recovery (a)-(182,500)-Deferred tax benefit (a)-40,000-Net loss under U.S. GAAP$(2,536,328)$(1,808,564)$(1,454,655)Weighted average number of shares outstanding under Canadian GAAP21,414,92818,656,97417,231,840Escrow shares--29,865Weighted average number of shares outstanding under U.S. GAAP21,414,92818,656,97417,201,975Basic and diluted loss per share 
under U.S. GAAP (c)$(0.12)$(0.10)($0.08)   -132-  RIMFIRE MINERALS CORPORATION  Notes to the Consolidated Financial Statements January 31, 2007, 2006 and 2005 (Expressed in Canadian Dollars)   12. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)  (f) Reconciliation (continued)  Consolidated Statements of Cash Flows (d)  200720062005Net loss$  (2,772,497)$ (1,823,606)$(1,495,680)Adjustments to reconcile net loss to net cash used by operating activitiesDepreciation53,92033,98017,344Foreign exchange losses7,5198,1964,713Reclamation obligations33,418-35,363Share-based compensation1,040,212206,689292,149Non-cash option proceeds(23,500)(13,500)(63,500)Gain (loss) on sale of marketable securities(182,882)49,264(35,819)Interest income(135,804)(68,672)(69,715)Future Income Tax Recovery-(182,500)-Increase in accounts receivable(239,398)134,087(99,250)Increase in prepaid expenses(19,532)(9,307)8,078Increase in reclamation deposits(37,330)15,700(24,200)Increase in accrued expenses218,856(30,796)75,189Increase in exploration funding deposits506,821(97,806)97,806Total adjustments1,222,30045,335238,158Net cash used for operating activities(1,550,197)(1,778,271)(1,257,522)  Consolidated Statements of Comprehensive Loss  200720062005Comprehensive loss under Canadian GAAP$(2,295,697)$(1,823,606)$(1,495,680)Net adjustments to operations236,16915,04241,025Changes in fair value of investments (e)-94,098116,535Taxes arising on changes in fair value---Total comprehensive loss under U.S. GAAP$(2,059,528)$(1,714,466)$(1,338,120)    -133-


RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     1.1 Date The information in this form includes financial results for the year ending January 31, 2007 with other information current to April 15, 2007. 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.  In 2006, Rimfire was able to advance projects in the Companys project portfolio as well as adding new ones to the project pipeline. Drilling was completed at the RDN and Williams projects, and subsequent to year end, at the Poncho, Nevada. Work at the Jake and Tide projects, BC, Goodpaster, Alaska and Wernecke Breccia, Yukon Territory was completed in preparation for drilling anticipated in 2007.  Adding new early stage projects was also a priority in 2006 and for the first time the Company left North America to acquire early-stage gold exploration properties in the Lachlan Fold Belt, New South Wales, Australia. This opportunity came to Rimfire through the relationship the Company built with BWG Mining and the use of their Neural Network data mining process in Rimfires endeavours in the Walker Lane Mineral Belt of Nevada. New early stage project generation is the focus of the Northgate Exploration Alliance, where two grassroots gold targets were investigated in western Canada.  In keeping with the Companys joint venture business model, the past year saw the creation of new partnerships to explore the Companys Williams, Tide and Goodpaster District properties.  It is anticipated that all three of these projects will figure significantly in the companys exploration exposure over the next few years.  In total, Rimfire saw exploration on 10 projects in North America and Australia in 2006, including work on wholly-owned projects being readied for joint-venture. The Company continues to execute the business of mineral exploration following the joint venture model.  2006 Exploration Overview  British Columbia  The Companys partner, Northgate Minerals Ltd., completed a 1350 metre drilling program in August at the RDN, testing the Eskay Creek time-equivalent mudstone-rhyolite contact at the Arctic Grid. Groundwork was also undertaken at the Grizzly Showing, a copper-gold porphyry target. This program was followed by a five-hole, 864 metre drilling program at the Williams Property. Drilling, funded by Arcus Development Group Inc., tested the GIC porphyry gold-


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     copper target. Subsequent to the completion of the program, new claims were added, increasing the property size by 250%. Mapping and prospecting, targeting the Crest Anomaly (36 Zone), on the Tide Property was completed by Serengeti Resources Inc. prior to assigning their option to American Creek Resources Ltd. in October.  Alaska  The Company consolidated its land position in the Goodpaster District, reacquiring the Eagle and ER-Ogo-Fire properties from AngloGold Ashanti (U.S.A.) Exploration Inc. Crews conducted a reconnaissance program to assess new claims Rimfire acquired in late 2005, as well as mapping and prospecting to further define high priority targets generated in previous programs. During the fourth quarter, Evanachan Limited, a private company owned by Robert McEwen, signed an option agreement to explore the Companys portfolio of Goodpaster District properties, in east-central Alaska.  Australia  The Company signed an agreement with BWG granting the Company exclusive rights to use a data mining study of the Lachlan Fold Belt, New South Wales Australia, conducted by BWG. Using targeting maps generated from the study, Rimfire Australia Pty Ltd. applied for nine exploration licences covering high-priority gold exploration targets.  Nevada  A drill program was started in January 2007 at the Poncho Property, Nevada targeting vein structures underlying a series of silica caps. Approximately 1575 metres (5200 feet) of drilling was planned with at least two holes testing each target area. Drilling was suspended in early February when the drill contractor was unable to reach the planned target depths due to equipment limitations. The program was completed by another contractor at the end of March 2007.  Yukon Territory  Fronteer Development Group Inc. evaluated 48 target areas in the Wernecke Mountains of the Yukon Territory for Olympic Dam-style copper-gold-uranium potential. Fronteer conducted rock and soil sampling, prospecting, mapping and an airborne gravity geophysical survey covering the project area.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     Financial Overview for Fiscal Year Ended January 31, 2007  The Company completed a private placement in April 2006 consisting of 1,572,000 units at a price of $1.70 per unit with each unit consisting of one common share and one non-transferable share purchase warrant. The net proceeds were $2,494,757 after payment of share issue costs of $55,243.  Net exploration expenditures were nearly the same as in the previous fiscal year. While both exploration and acquisition expenditures were higher than before, the joint venture reimbursement, options proceeds and management fees were also higher resulting in similar total expenditures.  General and administrative expenditures have doubled from the previous year. Over half of this cost is the $1,040,212 attributable to stock options granted to directors and employees during the year. The second factor increasing administrative expenditures is the addition of geological staff during the year. Increasing the Companys geological expertise has permitted expansion into new areas of exploration while managing existing projects appropriately.  The Companys working capital as of January 31, 2007 was $4,368,723, comprised primarily of cash, term deposits and short-term investments, compared to $2,905,645 at the end of the previous fiscal year. The 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.  Commencing this fiscal year, the Company has added a Statement of Comprehensive Income which records unrealized gains and losses on marketable securities. The recent increases in the stock market have resulted in an increase of $476,800 in the fair value of shares which are available for sale since the end of the previous fiscal year. The opening balance of accumulated other comprehensive income was adjusted by $94,098 to reflect the excess of fair value of securities over the cost basis used in the balance sheet for the year ended January 31, 2006. The overall gain in fair value from the cost initially recorded for these shares is $570,898. 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.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     The following table summarizes information pertaining to operations of the Company for the last three fiscal years ended January 31, 2007:  2007
($)2006
($)2005
($)Mineral Property Revenues233,276199,777414,338Net Income (Loss)(2,772,497)(1,823,606)(1,495,680)Per Share(0.13)(0.10)(0.09)Total assets5,358,5883,095,4883,153,025Long-Term Liabilities68,78235,36335,363Cash 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 12 to the consolidated financial statements and which include the following significant policies: • Marketable securities are classified as available-for-sale securities, which are reported at fair value. At the end of each reporting period, the fair values of securities which are traded on a recognized exchange are reported at the bid price on the balance sheet date or the last date on which the shares traded reduced by an appropriate discount where there are trading restrictions. Securities which are not listed on a recognized exchange are recorded at cost then valued at the most recent private placement price prior to the balance sheet date. • The Companys mineral property interests are composed of mineral properties owned by the Company and rights to ownership of mineral properties, which the Company can earn through cash or share payments, incurring exploration expenditures and combinations thereof. The Company accounts for its mineral property interests whereby all acquisition and exploration costs are charged to expense as incurred and all property sales and option proceeds received are credited to income. When the existence of a mineral reserve on a property has been established, future acquisition, exploration and development costs will be capitalized for that property. After commercial production on the property commences, the net capitalized costs will be charged to future operations using the unit of production method based on estimated recoverable reserves on the property.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     • When options to purchase shares are issued to employees or directors, the fair value of the options on the date of the grant is recognized as compensation expense, with a corresponding increase in contributed surplus, over the period during which the related options vest. When options to purchase shares are issued to non-employees in return for goods and services, the fair value of the options issued is recognized as an expense, with a corresponding increase in contributed surplus, in the period in which the goods or services are received or are expected to be received. The consideration received on the exercise of share options is credited to share capital. When options are exercised, previously recorded compensation is reclassified from contributed surplus to share capital to fully reflect the consideration for the shares issued. • The Company follows the asset and liability method of accounting for income taxes.  Under this method, future income tax assets and liabilities are recorded based on temporary differences between the carrying amount of balance sheet items and their corresponding tax bases.  In addition, the future tax benefits of income tax assets, including unused tax losses, are recognized, subject to a valuation allowance, to the extent that it is more likely than not that such future benefits will ultimately be realized.  Future income tax assets and liabilities are measured using substantively enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized. • Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using historical rates. Revenue and expense items are translated at exchange rates prevailing at the time of the transaction. Foreign exchange gains and losses are included in the determination of income. • The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding share purchase options and warrants, in the weighted average number of common shares outstanding during the year, if dilutive For this purpose, the treasury stock method is used for the assumed proceeds upon the exercise of stock options that are used to purchase common shares at the average market price during the year. Common share equivalents have been excluded from the computation of diluted earnings per share for the periods presented as including them would have been anti-dilutive. 1.4 Results of Operations For the year ended January 31, 2007, Rimfire incurred a net loss of $2,772,497 ($0.13 per share) compared to a net loss of $1,823,606 ($0.10 per share) in the previous year. Revenue nearly doubled as interest revenue increased from $68,672 to $135,804 and joint venture management fees increased by $28,499 with new option agreements for the Williams property and Northgate Alliance. Option proceeds were nearly the same in both years.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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 nearly half of the total expenditures and 78% of the increase from the previous year. Other expenditures which increased are office expenses, which includes printing and mailing costs for the annual report and meeting materials, and salaries and support services which reflects the increased number of full-time staff in the Company. Accounting and legal expenses have also increased primarily as a result of increased regulatory compliance costs.  Exploration expenditures, excluding those by joint-venture partners, totaled $1,538,295 ($1,116,172), and property acquisition expenditures totaled $307,542 ($202,167). These costs were offset by joint venture reimbursements totaling $560,058 ($33,988). 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, 2007, exploration tax credits are $32,702 ($18,736). Option proceeds were $168,500 ($163,500) while joint venture management fees were $64,776 ($36,277).  Several factors affect the comparison of current fiscal year exploration expenditures to previous years. The first is the initiation of two option agreements which resulted in increased option proceeds and joint venture reimbursements while reducing the Companys overall exploration expenditures. Another factor was the acquisition costs associated with applications for exploration licences in Australias Lachlan Fold Belt. Exploration work in Nevada, for the Walker Lane Alliance project, and in British Columbia and Yukon, for the Northgate Alliance and Wernecke Breccia project, increased exploration expenditures for the current fiscal year. The Company has acquired several new grass-roots projects within British Columbia which will increase anticipated exploration expenditures for the coming fiscal year.  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:  British Columbia  RDN  The RDN Property is located in the Liard Mining Division of British Columbia, approximately 120 kilometres northwest of Stewart, British Columbia. This property, covering approximately 14,092 hectares, is currently optioned to Northgate Minerals Corporation. The RDN property has had a protracted history of exploration; beginning in the late 1980s and spurred on in the 1990s by the discovery of gold-silver-rich massive sulphide in similar rocks at Eskay Creek, 50 kilometres to the south. The RDN property is largely underlain by Jurassic Hazelton Group stratigraphy similar in age, lithology and geochemistry to the Eskay Creek volcanogenic massive sulphide (VMS) deposit.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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 will be split into a separate property to be referred to as the Grizzly Property which will be owned 100% by the Corporation.  During 2006, an airborne geophysical survey was conducted over the Arctic Grid and LL areas of the property, and a four hole (1350 metre) drill program on the Arctic Grid target successfully tested the Eskay Creek time equivalent mudstone  rhyolite contact encountering anomalous zinc, arsenic, and silver in hole RDN-06-49. Hole RDN-06-47 intersected a narrow interval of fault-controlled silver mineralization above the prospective horizon. This mineralization is of limited significance and will not be followed up.  The Grizzly showing area of the RDN is prospective for copper  gold porphyry related mineralization. In 2006, a chip sampling program re-sampled previous trenches and also filled in large areas not previously sampled yielding a 38.0 metre interval of 1.1 g/t gold and 0.74% copper. The exposed dimensions of the Grizzly showing are approximately 350 metres long by 50 to 100 metres wide. Soil sampling by previous workers indicate an area of about 1 square kilometre with highly anomalous copper, gold and molybdenum results. This area is still open to the north, east and southeast and is largely talus covered.  The work program was conducted by Equity Engineering Ltd. under the direction of Murray Jones, P.Geo. ALS Chemex Labs Ltd. of North Vancouver analyzed drill core samples as well as the rock samples. A technical report was filed on SEDAR on May 12, 2006. No material changes have occurred since the report was filed.  Thorn  The Thorn Property is located in the Atlin Mining Division of British Columbia, approximately 120 kilometres northwest of Telegraph Creek. This property, covering 16,970 hectares, is a joint venture with Cangold Limited who has acquired a 51% interest in the property. The Thorn high-sulphidation vein system is hosted by feldspar-quartz-biotite-phyric diorite of the Late Cretaceous (ca. 91 Ma) Thorn Stock, which intrudes Upper Triassic Stuhini Group volcanic and sedimentary rocks. These high-sulphidation silver-gold-copper-bearing veins represent the prime exploration targets on the Thorn property. Lesser focus will be placed on the Oban Zone, although potential for additional breccia pipes should be considered.  Cangold Limited is operator for this project and withdrew initial plans for a drill program during 2006. There are currently no plans to conduct exploration on the property in 2007. A technical report was filed on SEDAR on May 12, 2006.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     Tide  The Tide Property is located in the Skeena Mining Division of British Columbia, approximately 36 kilometres north of Stewart, British Columbia. This property, covering 2,960 hectares, is currently optioned to 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.  Exploration on the Tide property was comprised of a geological mapping, fracture density surveying and channel sampling program completed in September, 2006. The program focused on the 36, Southpit and Northpit Zones.  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 will be operator for the 2007 exploration program.  The sampling program was conducted by Equity Engineering Ltd. under the direction of Scott Heffernan, P. Geo. ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report was filed on SEDAR on April 13, 2007.  Williams  The Williams Property, covering 10,727 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 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.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     The 2006 program was funded by partner Arcus Development Group Inc. and tested the GIC porphyry target, an open-ended 600 by 1800 metre Induced Polarization (IP) chargeability high anomaly flanked by anomalous copper-gold soil geochemistry and copper-gold mineralization on surface. The five-hole (881 metre) program confirmed that alteration mineralogy and mineralization consistent with porphyry-style hydrothermal systems is present at the GIC. All holes intersected anomalous gold, copper and molybdenum concentrations over broad intervals. Drilling mainly targeted the till-covered southern flank and core of the IP chargeability, which drilling has shown to be a result of strong pyrite mineralization.  The sampling programs were conducted by Equity Engineering Ltd. under the direction of Jim Lehtinen, P.Geo. ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report was filed on SEDAR on February 27, 2007.  Jake Property  The Jake Property, covering 28,256 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 and complete an aggregate of $300,000 (Canadian) in exploration expenditures before October 29, 2009. The surrounding claims were staked to cover geology prospective for high grade intrusion related gold mineralization.  In March 2006, the Company undertook an initial ground magnetics and VLF electromagnetics survey to identify targets for additional exploration later in the year. Mechanical trenching was conducted at the original discovery exposing six veins over the length of the 74 metre trench. In July 2006, the Company undertook a prospecting and property-wide silt sampling program to follow up on the initial ground work.  The sampling programs were conducted under the direction of Mark Baknes, P.Geo., a Qualified Person as required by NI 43-101 (Standards of Disclosure for Mineral Projects.) Eco-Tech Laboratory Ltd. of Kamloops and ALS Chemex Labs Ltd. of North Vancouver analyzed the samples. A technical report has not been filed on the Jake Property.  Expenditures by the Company, excluding payments made by joint venture partners, on the British Columbia properties during the fiscal year ended January 31, 2007 were:


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007      JakeRDNThornTideWilliamsAcquisition costs$  35,815$         -$     5,375$   7,729$     7,148Exploration costsAircraft and helicopter-----Camp10,953151995560Chemical analysis24,953----Drafting6602101,090-845Drilling & trenching5,400----Equipment rentals6,632-20-20Freight478----Geological & engineering83,6917,55010,7385,03011,372Geophysical surveying8,925----Maps and reproductions4,5966890164219Materials3,456-6-7Project management8,7185871,470-354Recording and filing17,434-2,349--Travel4,310-1,3961731,433180,2068,43018,1695,32214,310Exploration tax credits(23,439)(1,095)(1,865)(20)(937)Joint venture payments-----Reclamation obligations953---5,135157,7207,33516,3045,30218,508Option proceeds-(60,000)-(53,500)(55,000)Cumulative Net ExpendituresBeginning of Year35,795779,6301,090,232(102,755)391,002Property write-down or abandonment-----End of Year$229,330$ 726,965$ 1,111,911$(143,224)$ 361,658


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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. The Company owns 100% of these claims.  • 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.  • Echo Property, consisting of 72 claims, is located in the Dawson Mining District of 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.  • 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.  • 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.  • Nechako property covering 2,594 hectares is located in the Omineca Mining Division of British Columbia, approximately 215 kilometres west of Prince George. The Company owns 100% of these claims.  • PWG Property covering 1,898 hectares is located in the Omineca Mining Division of British Columbia near the town of Houston, BC.  • 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.  • Vavenby Project 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.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     • Wernecke Breccia Property is a group of 28 properties, consisting of 2010 claims, situated in the Wernecke Mountains, approximately 180 kilometres northeast of Mayo in east-central Yukon. The Company owns 20% of the group in a joint venture with the operator, Fronteer Development Group Inc. The secondary vendors retain a total 2% NSR as well as the 7.5-10% Net Profits Interest retained by the original vendors.  The following table shows the detailed expenditures for the Companys other properties during the fiscal year. AdamFerNorthgate AllianceWerneckeOtherAcquisition costs$       -$       -$   6,829$   6,623$   10,299Exploration costsAircraft and helicopter--78,754-3,388Camp-65618,9352582,471Chemical analysis--48,764-1,528Drafting--640--Drilling & trenching-----Equipment rentals-30510,614-234Freight--5,439--Geological & engineering2043,626114,68846,51551,314Geophysical surveying---121,588-Maps and reproductions17487,034432,721Materials--9,528-430Project management--27,043-900Recording and filing-10,5009,960--Travel-21617,7531,5132,81022115,351349,152169,91765,796Exploration tax credits(3)-(2,415)-(2,928)Joint venture payments-(5,145)(179,627)--Reclamation obligations-----21810,206167,110169,91762,868Option proceeds-----Cumulative Net ExpendituresBeginning of Year62,700104,129-9,619182,917Property write-down or abandonment--(10,484)-(60,210)End of Year$62,918$114,335$163,455$186,159$  195,874


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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 transferred to McEwen Capital Corporation covering the Goodpaster properties. The agreement was subsequently assigned to Rubicon Minerals Corporation (Rubicon), subject to Rubicon shareholder approval. The terms of the agreement provide that the partner 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 Eagle-Hawk claim groups are subject to a 2% NSR in favour of AngloGold Ashanti (U.S.A.) Exploration Inc. The California-Surf is subject to a 1.75% NSR in favour of Western Keltic Mines Ltd. Bou-Swede is wholly owned by Rimfire Alaska, Ltd.  During July and August of 2006, a program of surface mapping and sampling was initiated on the Companys properties. This included property wide silt sampling of streams on ground acquired in late 2005, and both reconnaissance and follow up soil sampling, mapping and prospecting of targets generated from previous programs.  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 12, 2006.  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. Upon the completion of expenditures of USD$300,000 on an acquired property, Newmont will have a one-time right to enter a 50:50 Joint Venture. When this right is exercised, Newmont will relinquish the NSR, manage the Joint Venture, and solely fund the next USD$1,000,000 in exploration expenditures to earn its 50% interest.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     On June 16, 2006, the Company leased the Gila24 claims covering 1,440 acres (583 hectares) from Silverthorn Exploration, Inc. (Silverthorn) by making annual cash payments that escalate over time. The Company has an option to acquire these claims subject to a 2% NSR for a cash payment of USD$500,000 to USD$5,000,000 depending on the date of exercise of the option.  During 2006, mapping and prospecting programs identified potential drill targets. In January 2007, drilling commenced targeting vein structures. Drilling was suspended in February and recommenced in mid-March, 2007. Three strong vein structures, some with at least three kilometres of strike potential were tested. Approximately 1575 metres (5200 feet) of drilling was completed with at least two holes testing each target area. Results have not yet been compiled from this program.  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 applied for exploration licences covering 92,673 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. Three licences, covering 35,998 hectares, have been granted as of the date of this report. The licences will be 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. Available data is being compiled and exploration plans prepared for reconnaissance work to be completed when additional exploration licences are granted.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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.  Expenditures by the Company during the fiscal year ended January 31, 2007 (all amounts in Canadian Dollars) were:  AlaskaAustraliaNevadaAcquisition costs$ 16,297$ 182,367$    29,060Exploration costsAircraft and helicopter47,408--Camp15,5515,07510,634Chemical analysis50,8761,6813,190Drafting454-1,680Drilling & trenching--68,520Equipment rentals6,3201,6164,967Freight4,482-94Geological and engineering104,00634,11553,673Geophysical surveying1,663--Maps and reproductions1,4653,4022,222Materials12,1593027,524Project management24,84454516Reclamation--645Recording and filing170,158-45,226Travel12,8246,7377,338452,21052,982206,229Exploration tax credits---Joint venture payments(375,286)--Reclamation obligation--27,33076,92452,982233,559Option proceeds---Cumulative Net ExpendituresBeginning of Year323,099-223,914Property write-down or abandonment-(22,746)-End of Year$   416,320$212,603$   486,533


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007      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 Adam, Alaska, Fer, Nechako, RDN, Simpson, Thorn, Tide, or Williams properties for the 2007 fiscal year. Option agreements in place require other corporations to complete exploration programs on some of these properties.  In the event that joint venture partners are not obtained for the remaining properties, the Corporation may pay the required carrying costs from working capital or allow these claims to be returned to the vendor or be forfeited to the State, Province or Territory as the case may be.  CANGOLD is the operator for the Thorn property and the Company will have the option to contribute 49% of the expenditures for the project or face dilution of the Companys interest at the rate of 1% reduction for each $50,000 of the proportionate share of the program in which the company does not participate.  Fronteer Development Group Inc. is the operator for the Wernecke Breccia property. The Company will have the option to contribute 20% of the expenditures for the project or face dilution of the Companys interest based on total deemed initial contributions of $10 million.  1.5 Summary of Quarterly Results The following table summarizes information regarding the Company's operations on a quarterly basis for the last two fiscal years.  Quarter EndedMineral Property
RevenueIncome
(loss)Income (loss)
per shareJanuary 31, 2007$      95,810$    (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)January 31, 2006124,943(515,970)(0.03)October 31, 200518,353(513,695)(0.03)July 31, 200515,891(567,371)(0.03)April 30, 200540,590(226,570)(0.01)


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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. 1.6 Liquidity The Companys working capital as of January 31, 2007 was $4,368,723 comprised primarily of cash, term deposits and short-term investments, compared to $2,905,645 at the end of the previous fiscal year. The short-term investments are intended to take advantage of higher returns available with slightly less liquidity while maintaining the integrity of the principal invested. These investments have maturities ranging from 4 months to one year at rates up to 1% above those available on term deposits. The term deposits and cash are sufficient to complete the planned exploration initiatives for the current fiscal year without a requirement for additional financing.  The Corporations number of issued and outstanding shares was 21,751,539 at January 31, 2007. The placement completed during the first quarter represents most of the increase from the 19,999,539 common shares that were issued and outstanding at the previous fiscal year-end. During the year, 900,000 employee stock options were granted and 175,000 options were exercised. 1,020,000 previously granted director and employee options exercisable before December 2010 remain outstanding.  A private placement was completed on April 13, 2006 with net proceeds of $2.5 million. Share issue costs were $55,243. The private placement consisted of 1,572,000 units at a price of $1.70 per unit with each unit consisting of one common share and one non-transferable share purchase warrant ("Warrant"). Each Warrant entitles the holder to purchase one additional common share at a price of $2.00 per share before April 13, 2007 and $2.25 per share before April 13, 2008. The Warrants contain a provision whereby if, during the term of any unexercised Warrant, the common shares of the Corporation trade on any exchange for a period of 20 consecutive trading days at a price of $2.50 per share or greater in year one or $2.75 per share or greater in year two the Corporation may, at its option and by notice in writing to each holder, require the holder of the Warrant to exercise such Warrant within 30 days, failing which the Warrant will be deemed to have expired. There were 1,572,000 share purchase warrants issued. 140,000 Brokers warrants at an exercise price of $1.70 were issued in conjunction with the placement. The expiry date for all warrants is April 13, 2008. If all remaining options and warrants are exercised, a maximum of $5.4 million will be added to the Corporations treasury, and shares outstanding will total 25,066,039.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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 rent on office premises which requires 6-month written notice. The other current obligations are statutory withholding and payroll taxes.  1.7 Capital Resources The companys primary capital assets are mineral property interests. The company expenses all costs related to mineral properties so they do not appear on the Companys balance sheet as an asset.  None of the property agreements are binding on the Company or on the Companys option partners, with the exception of the Walker Lane Alliance where total expenditures required by the agreement 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:   PropertyAmountDate of paymentAdamcash in lieu and filing $8,037August 31, 2007Auddiecash in lieu and filing $2,696November 3, 2007Fer51% of cash in lieu and filing $6,319June 10, 2007JakeCash payment of USD$25,000
(approximately $30,000)October 29, 2007Kizmetcash in lieu and filing $131,059January 11, 2008RDNNilThorn49% of cash in lieu and filing $3,856January 4, 2008TideNil


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007      PropertyAmountDate of paymentVavenby50% of compilation and exploration to a maximum of $150,000
Or 50% of cash in lieu and filing $24,537May 1, 2007

September 30, 2007Wernecke Breccia20% of exploration expenditures estimated to be $1.2 millionMay 1, 2007WilliamsAdvance royalty payment $5,000December 15, 2007Alaska propertiesNilAustraliaProject exploration USD$150,000 (approximately $185,000)September 1, 2008NevadaLease payment of USD$20,000 
(approximately $22,600)
Claim rental fee USD$25,365 
(approximately $30,438)March 31, 2008
August 31, 2007  All of these payments can be made from current assets without any requirement to pursue additional financing. 1.8 Off-Balance Sheet Arrangements The Company does not utilize off-balance sheet arrangements. 1.9 Transactions with Related Parties The Companys mineral property evaluation and exploration projects are managed by Equity Engineering Ltd. and Equity Geoscience, Ltd. (collectively Equity), companies indirectly owned and operated by officers and significant shareholders of the Company. Balances payable to Equity for fees and reimbursement of costs incurred on behalf of the Company have been separately disclosed as Payable to Related Party. Fees charged to the Company by Equity are on the same basis as those charged by Equity to unrelated third parties.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     During the year ended January 31, 2007, the Company paid Equity $736,281 (2006 - $206,763, 2005 - $431,996) for geological consulting services and $235,389 (2006-$244,871, 2005 - $203,099) for providing general corporate and administrative services composed of $1,611 (2006 - $1,117, 2005 - $14,457) for insurance, $6,282 (2006 - $4,279, 2005 - $3,711) for investor services, $129,999 (2006 -$99,305, 2005 - $96,462) for management services, $8,061 (2006 - $5,810, 2005 - $12,026) for office services, $62,336 (2006 - $62,696, 2005 - $39,172) for rent and $27,100 (2006 - $71,663, 2005 - $37,270) 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.  Equity Engineering Ltd. is one of the underlying vendors who own a 7.5 to 15% Net Profits Interest (NPI) for the Wernecke Breccia property. Equitys share of the NPI is 40%. In addition, two of the directors and officers each own 20% of a different company which is entitled to 10% of the NPI.  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.  The drill program conducted on the Nevada properties during January increased exploration expenses during the fourth quarter. Joint venture reimbursements were also significantly higher with the finalization of the joint venture agreement for the Alaska properties during the fourth quarter. The decision to participate in the Wernecke Breccia joint venture resulted in payment of the Companys share of the exploration expenditures in excess of Fronteers required earn-in during the final quarter.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     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 during 2006 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. 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 current fiscal year. This 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. Since this is 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. 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.  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.


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     1.14 Financial Instruments and Other Instruments The company does not employ a hedging strategy or a foreign exchange protection strategy. The majority of the Companys income and expenses are denominated in Canadian dollars. The income which is received in U.S. Dollars is preserved in a U.S. Dollar account for use in paying U.S. Dollar denominated expenses.  1.15 Other Requirements Disclosure controls and procedures and internal control over financial reporting  In November 2006 a comprehensive review of risk factors facing the Company was undertaken by management and the board of directors. Mitigating controls and procedures were identified wherever possible. New procedures were implemented in a couple of cases where it was evident that controls were not robust enough to ensure appropriate disclosure in a timely manner. Some controls were implemented as a secondary detection mechanism if the initial controls failed to prevent errors from occurring. None of the newly implemented controls constitute a material or significant change in internal controls.  As part of the comprehensive review of corporate controls and procedures, the Company utilized the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control  Integrated Framework. Parts of this framework were not appropriate for use by the Company as they referred to positions and/or job functions which do not exist in a smaller organization. The Company integrated aspects of the second document produced by COSO, Internal Control over Financial Reporting  Guidance for Smaller Public Companies into the initial review. The Company will review the final document annually to ensure that controls are still functioning as described and serving the purposes for which they were designed.  Management has assessed the effectiveness of disclosure controls and of the design of internal controls over financial reporting and found no material deficiencies or significant weaknesses. In common with many smaller companies with few staff there is less than optimal segregation of duties. This has been addressed with the implementation of additional review and approval procedures by people who are not involved in the initial recording of financial transactions.  The Company has filed an alternative form of Annual Information Form on SEDAR at www.sedar.com. The Company also files technical reports on all material properties, press releases and material change reports on SEDAR. The company is a foreign private issuer as defined by the Securities and Exchange Commission in the United States. As such, the Company files an annual report on Form 20-F and interim reports and other filings on Form 6-K. These reports are available on EDGAR at www.sec.gov/edgar.shtml. Additional information about the company can be accessed at the companys website (www.rimfireminerals.com.)


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RIMFIRE MINERALS CORPORATION  Management Discussion and Analysis For the year ended January 31, 2007     Additional Disclosure for Venture Issuers without Significant Revenue Please refer to the Statement of Loss and Deficit and Note 4 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, 2007.  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.


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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 AssetsYear Ended2007$(1,819,842)$(683,675)$75,656$97,395$(2,330,466)2006(1,556,483)(346,151)82,792-(1,819,842)  [1] The 2006 and 2007 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.


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